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2021 (6) TMI 770 - HC - Income TaxEntitlement u/s 10B - Valid approval from eligible authority granted or not - HELD THAT - This Court is of the considered opinion that admittedly, the petitioner obtained an approval from the Software Technology Parks of India and it is an autonomous society under Government of India, Ministry of Communications Information Technology, Department of Information Technology. The petitioner has obtained the said approval in proceedings dated 17.04.2008. The approval states that the application submitted by the petitioner for setting up of 100% Export Oriented Unit under the Electronic Hardware Technology Park scheme of Government of India has been approved by this office under the delegated powers to the Directors of STPI by IMSC vide MIT letter No.5(100)/93-Export dated 24.06.1993. The approval granted further clarified that the petitioner has to maintain a separate bank account for EHTP operations. Separate annual balance sheet will have to be made for the unit. A legal agreement by Demand Draft in favour of the Director, Software Technology Parks of India, Chennai, is to be furnished and other terms and conditions are also stated in the order of approval itself. As contended in the approval order that the petitioner has to submit a list of capital goods to be imported for attestation, which is required to obtain the bonded warehouse license from Custom's authorities. It was intimated that separate proforma invoice from the supplier has to be submitted to the office of the Software Technology Parks of India for attestation as and when the petitioner intend to import duty free capital goods. The list of capital goods to be imported for attestation, which is required to obtain the bonded warehouse license from Custom's authorities. Separate proforma invoice from the supplier has to be submitted for attestation as and when the petitioner intend to import duty free capital goods. Perusal of the approval order issued in favour of the writ petitioner in proceedings dated 17.04.2008 reveals that the approval has been granted for setting up of 100% Export Oriented Unit under the Electronic Hardware Technology Park Scheme of Government of India has been approved by the fifth respondent under the delegated powers to the Directors of STPI by IMSC. Thus, such an approval cannot be validated for the purpose of claiming exemption under Section 10-B. Entitlement and to verify the other transactions, such a ratification is contemplated by the Ministry of Finance through the impugned clarification letter and therefore, this Court is of an opinion that there is no infirmity or perversity as such and further, there is no inconsistency as such contended by the petitioner. Thus, the petitioner has to get an approval from the competent Board as contemplated for claiming exemption under Section 10-B of the Income Tax Act. Even in case, there is a change of authorities / Board by the Ministry, it is for the petitioner to approach the Ministry or the Department concerned for the purpose of the procedures, which all are in force for claiming exemption under Section 10-B of the Income Tax Act. This Court is of an opinion that the petitioner has not established any acceptable ground for the purpose of granting the relief as such sought for in the present writ petition and thus, the writ petition stands dismissed.
Issues involved:
1. Validity of CBDT Instruction No.2/2009 dated 9.3.2009 r/w Corrigendum dated 8.5.2009. 2. Entitlement of the petitioner to Section 10-B exemption under the Income Tax Act, 1961. 3. Requirement of ratification from the Board of Approval for 100% Export Oriented Units (EOUs) under the STP/EHTP scheme. Issue-wise detailed analysis: 1. Validity of CBDT Instruction No.2/2009 dated 9.3.2009 r/w Corrigendum dated 8.5.2009: The petitioner challenged the CBDT Instruction No.2/2009 and its corrigendum, arguing that these instructions were in violation of Section 10-B r/w Section 14 of the Industries (Development and Regulation) Act, 1951. The petitioner claimed that the approval granted by the Development Commissioner (Director of Software Technology Parks of India) should be deemed as approval by the Board of Approval, thus not requiring further ratification. 2. Entitlement of the petitioner to Section 10-B exemption under the Income Tax Act, 1961: The petitioner contended that their approval as a 100% EOU under the EHTP scheme should automatically qualify them for the Section 10-B exemption. They argued that the approval granted by the Development Commissioner was sufficient and no further ratification was required. However, the respondents argued that the approval by the Software Technology Parks of India was valid only for setting up the unit, not for claiming tax exemptions under Section 10-B, which required ratification by the Board of Approval. 3. Requirement of ratification from the Board of Approval for 100% EOUs under the STP/EHTP scheme: The court examined whether the approval by the Development Commissioner under the STP/EHTP scheme could be deemed as approval under Section 10-B of the Income Tax Act. The respondents relied on the Delhi High Court judgment in Commissioner of Income Tax Vs. Regency Creations Limited, which clarified that the approval by the Inter-Ministerial Standing Committee under the STP scheme does not replace the need for ratification by the Board of Approval for the purposes of Section 10-B exemption. The court agreed with this interpretation, stating that the approval granted by the Software Technology Parks of India was for setting up the unit and not for tax exemption purposes. The court concluded that the approval for setting up a 100% EOU under the EHTP scheme by the Software Technology Parks of India did not automatically qualify the petitioner for the Section 10-B exemption. The petitioner needed to obtain further ratification from the Board of Approval, as mandated by the Income Tax Act. The court found no inconsistency in the requirement for such ratification and dismissed the writ petition, upholding the validity of the CBDT instructions and the need for compliance with the statutory provisions for claiming tax exemptions. Conclusion: The court dismissed the writ petition, affirming that the petitioner must obtain ratification from the Board of Approval to claim the Section 10-B exemption under the Income Tax Act. The CBDT Instruction No.2/2009 and its corrigendum were upheld as valid, and the petitioner's approval from the Software Technology Parks of India was deemed insufficient for tax exemption purposes without further ratification.
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