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2016 (3) TMI 24 - AT - Income TaxEligibility of deduction under section 10A for assessee s STPI units in Mumbai and Pune - Held that - Respectfully There being no saving clause or any amendment while omitting sub-section (9) of section 10A of the Act, the result is that it is to be read as having never been passed and had never existed on the statute. In this view of the matter, we reverse the order of the CIT(A) on this issue and direct the Assessing Officer to allow the assessee s claim for deduction under section 10A of the Act for assessment year 2003-04. - Decided in favour of assessee
Issues Involved:
1. Deduction under Section 10A of the Income Tax Act, 1961. 2. Applicability of Section 10A(9) of the Act for assessment year 2003-04. 3. Alternate claim for deduction under Section 80HHE of the Act. Detailed Analysis: 1. Deduction under Section 10A of the Income Tax Act, 1961: The assessee, engaged in IT-enabled BPO services, initially claimed a deduction under Section 10A for its Mumbai Unit-1 and Pune Unit-1. The assessee's claim was initially allowed by the Assessing Officer. However, upon revision under Section 263, the CIT-10, Mumbai, set aside the deduction and directed re-examination in light of Section 10A(9). The Tribunal upheld the CIT's jurisdiction but allowed the assessee's alternate claim for deduction under Section 80HHE to be considered. 2. Applicability of Section 10A(9) of the Act for assessment year 2003-04: The core issue was whether the omission of Section 10A(9) by the Finance Act, 2003, effective from 1/4/2004, should be applied retrospectively. The assessee argued that the omission should be considered as if Section 10A(9) never existed, citing legislative intent and judicial precedents. The Tribunal referred to the Bangalore Bench's decision in GE Thermometrics India Pvt. Ltd., which held that omission without a saving clause implies the provision never existed. This view was upheld by the Karnataka High Court, which stated that the omission should be read as if the provision never existed, thus allowing the deduction under Section 10A. 3. Alternate claim for deduction under Section 80HHE of the Act: The Assessing Officer, upon re-assessment, disallowed the Section 10A deduction but allowed the alternate claim under Section 80HHE. The CIT(A) upheld the disallowance under Section 10A, leading to the present appeal. The Tribunal, considering the legislative history and judicial precedents, concluded that Section 10A should be read without sub-section (9) for the assessment year 2003-04, thereby reversing the CIT(A)'s order and directing the Assessing Officer to allow the deduction under Section 10A. Conclusion: The Tribunal allowed the assessee's appeal, holding that the omission of Section 10A(9) should be applied retrospectively, thus granting the deduction under Section 10A for the assessment year 2003-04. The alternate claim under Section 80HHE was not further pursued as the primary claim under Section 10A was allowed. The decision was based on legislative intent, judicial precedents, and the absence of a saving clause in the omission of Section 10A(9). Order Pronouncement: The order was pronounced in the open court on 17/02/2016, allowing the assessee's appeal for the assessment year 2003-04.
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