Karnataka High Court
The Commissioner Of Income Tax vs M/S Itti Pvt Ltd on 20 March, 2012
Bench: N.Kumar, Ravi Malimath
on oun? OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COUR "a 1 ITA 7 72/2007 IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 20 DAY OF MARCH 2012. PRESENT: THE HON'BLE MR.JUSTICE N. KU MAR THE HON'BLE un rwanda Bay = ITA No.7 7212097 z - BETWEEN: 1. The Comiaeioner of Income- tax, Central Circle, CLR. Building, Queens Road, Bangalore. 2. The Assistant Cominianioner of Income-Tax, Circle ~ 11(3), C.R.Butiding, Queens Road, Bangalore. ae . Appellants (SK. VAravind, Adv, ~ AND: | _ Mi s.ITTY Private Limited, S, Santhosh Complex, a aa gann Circle, Basavanagudi, ~ Bangalore ~ 560 004. .. Respondent 2 ITA 7 72/2007 This ITA is filed under Section 260-A of! ™ Act, 7 1961 arising out of order dated 31.05.2007 paseed in LTA No.432/BANG/2006, for the. assessment year» | a 2000-2001, praying that this Hon'ble Court may he pleased to formulate the substantia! questions of law | | stated therein, etc. : ne Thies ITA coming on for "hearing, thia day, N.KUMAR, J, delivered the following: ce The Revenue has preforred this appeal against the order passed by the Tribunal that the beneficial "Clause of 10 years brought it in by way of amendient to: Section 10A is applicable to the case of assesnee also. The substantial question of law _ involved in this appeal was the subject matter of ITA - Me _No.462/2007 in the case of Commisstorner af Income Tax OURT OF KARNATAKAHIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT ~ -
Ve ¥ OF KARNATAKA HIGH COURT. OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COUT ar ward 3 ITA 7772/2007 and another -ve M/D&L Software Limited decided on 12.10.2011 by this Court where it was held as under: 7 '6. It is not in dispute that Section 108 - . prior to amendment granted a tax holiday for a oo period of 5S years jrom the date of --
commencement of production out of a. band of 8 :
years. The section was. amended by Income Tax {Second Amendment} Act 1998, which came into effect j fom Ol 04. 1999, The amended provision reads as uncer "
oR. Abas pee in respect of newly established hundred per cert export- ortented undertakings. '~ (1) Subject to the provisions of this section, a deduction of such wh profits and gains are derived by a hundred oper cent export-oriented undertaking from the _ export of articles or things or computer software jor a pertod of ten consecutive assessment years beginning with the assessment year relevant to the previous year "in which the undertaking begins to | manufacture or produce articles or things or computer software, as the case may be, shall Va COURT OF KARNATAKAHIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT 4 ITA 7 72/2007 be allowed from the total twome of the QSSCS55CE.
Provided that where tn computing the total income of the undertaking for any Yo assessment year, its profits and gains had oo not been included by applicatim of the provisions of this section as. it. stood me immediately before its substitution hy the Act 10 of 2000, the undertaking shell be entitled"
to the deduction referred in in this sub-section only Jor the unexpired period of aforesaid ten consecutive assessment years:
weet | | a7 As it is 5 ddeor from the aforesaid provision, the tax benefit or tax holiday is now extended for a period of ten consecutive | assessment -- years beginning with the
- - angessment year relevant to the previous year : cin which the said undertaking begins to
- manufacture or produce articles or things or computer software, as the case may be. The object behind this amendment, which is "extracted in the order of the Appellate Tribunal reads as under:- \~ uiukT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COU! be 5 ITA 7742/2007 "Clause 3 seeks to amend section 0A of the Income Tex Act. Under the existing --_ provisions, tax holiday is available to newly established industrial undertaking set up in free trade ones and to wits set uo i software technology parks for five years out af the block of indtial eight years, subject to fulfillment of certain conditions. The proposed amendment seeks to extend the period of tax. holiday from five years to ten years in order to give added thrust to exports. _Clause-4 SeeKS to shvilarty extend the five 'year tax holiday period to ten gears, ta the export orented: unis. under sectton I0B of the Income Tax Act." _ | a From m the ajoresald ohject behind the amendment, it ts clear that the period of 5 years is extended to 10 years tn order to give added thrust fo exports. is because the Parliament felt that "the tax holiday of 5 years is not having the desired "result ond therefore, they extended the benefit of tax holiday from § years to 10 years. If it is a case of extension from S years to 10 years, the urtt, ~"qwhich had the benefit of 5 years automatically, Should get the benefit of 10 years tf other Le COURT OF KARNATAKAHIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT 6 ITA 772/2007 conditions are fulfilled The other condition to be beginning with the assessment year relevant to the oo previous year in which the undertaking begins ta manufacture. Therefore, the object with which this oe amendment was introduced ts to extend the benefit.
of tax holiday for a period of 10 consecutive years | from the date of commencement of marcufacture or :
production. Before an AS82528 can claim the benefit of tax holiday, the said ine governing the tax holiday should be in force on the first day of the relevardt wear. Then only: re would: he entitled to the sad benestt. On 01.04. 1935 when the amended provislon came into force by virtue of said. provision the assessee would be entitled to the bennfit of fax holiday for 10 consecutive years from the date of produstion. If the assessee already izvaited | the benefit under the unamended proviston and the 10 consecutive years would fall " prlor to G1.04,1999, then the assessee would nat (be entitled te the satd benefit. If the sald 10 consecutive years from the date of production has not expired, prior to 01.04.1999, for the remaining unexpired period, he would be entitled to the
- __ benefit. On the ground that he had the benefit of unamended provision and the 5 years period has expired on the day amended provision came into .Y OF KARNATAKA HIGH COURT.OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COUR a g Shake Saar an eat ri ITA 7772/2007 force, he cannot be denied the benefit, If thatis ._ done, it would run counter to the intention with.
which the amended provision was brought on. ihe i statute book. it would negate the amended provision. _
9. In the instant case, the assessee has commenced production in the year 1993-94. 'He enjoyed the benefit of 5 years jrom 1993-94 to 1997-38. The amended provision came into force on 61.04, 1999. He ts entitied to the tax holiday under the amended provision Le. Jrom. 1993-94 to 2002-033. He: claimed benefit from" (1999-2000, 2000-01 and 2001. 02: £ is for the period 2001-02, the benefit is denied. The sail denial of the bene fit runs counter P28 the spirit af Section 10B and it would negate the object with which the amended provision was brought in. The assessee is entitled to the benefit of exteraton from 5 years to 10 years
- m tax heliday as provided under the amended : _provicton yor 10 consecutive years from the date of commencement of production. In that view of the matier, the order passed by the Tribunal as well as the First Appellate Authority is strictly in : _ axcordance with taw and do not suffer from any legal infirmity, which calls for interference. No f
--ITA 7772/2007
In view of the judgment referred supra, this a 8 substantial question of law arises for consideration os appeal ie also dismissed.
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