Karnataka High Court
The Commissioner Of Income Tax vs M/S Dsl Software Ltd on 12 October, 2011
Bench: N.Kumar, Ravi Malimath
{BY SRE A.SHfix§\lKAR 8: SR1 M.LAVA, ADVQCATES}
>§<>t<>i<>K=§< v«
This ETA fiied under section 260-A ef I.T.;'»'act_,.w..1;*3*..6i-._
arising eat of order dated 28,€}9.2§O6 passed
ITA.i\£o.602/Bang/2005, for the Assessment year _
praying to formulate the substantiai questioes few'
Stated therein, aildw the appeai andms_et a._s'Ed'7e"'--t5:l'fvf~3* "order
passed by the ITAT, Bangamre in JITA.Na1_6O2/'€£ahg;'2VG'OS
dated 28.09.2006 confirming the drde-:'r'eetf th.e"~£\'ppe!,:i'e.te~:::_'
Cemmissiener 8: confirm the orcie:"".V_passeVdtA'i3y~ the,'
AssE.Cemm§ssiener of Entering Ta:-e:,V s'SZv_Erc.!ie«v+-.11V{2),
Bangalore.
This ITA C<::ming"~..V_on .="f"Cf'i.:edV%%:.i.ssior§'"f:h'E'§} day,
KUMAR J., delivered the i'o!.§'owE'ng;:j_g .V » v
J.tt4t.::j:3__:\zE_t:_i:J3jt d L
This is .a.r{'--..ap§:§:ea_I fiidedibgf chaiienging the
Qrder pa'S§'edeA.:.}§3y Appeflate Tribunal,
Bangaiofe the erder passed by the
Coma"nis_siQr:é'r~ {if :;;<:o§::¢'téx wppeais) who heid that the
~3;ssev-ét_j$";'ee»_'..§;§ e.etitie'd'te--'the benefit ef the extended eeréed cf
fee': de@ds'eet:t,fiee'§'ear3 zmder Section 108 sf tee eat though
m~:¢:'m eeeééiegf EEFEQ feree 0? the amended preazieiee; he
theeeeefit 5:? five years eetéee ef exemetéee free:
"«d§ie%geée.e% dz? §§"§€€§%":"'§€ 'tax ee yer tee amended erevieéeeg
2. The assessee is engaged ie the business__ of
seftware eeveiepment and exports. The asses_See"~«._.»§Ts~..V
recegraizee as a 130% export eriented ee.aVertakii'§'1--g:'.
Therefore, the respondent/assessee,H,Vis er_:'t'itt'e'af'_':Vt'e"': the '4
benefit ef the tax hofiday' under Se<::tA§en::'_:¥.(é).Eé';'s Tax Act (for short hereinafte{"':eferVz:e"d :to Initialiy, Section 108 cenferred period of 5 years out of a band of sA.A§'eta£é. ._0f 8 years was to commence from the :datef:the'- commenced software claimed the benefit the un--amended provisiorévv'of1'{§B' 'fQs<._a"pe':=te'd...;3f 5 years. The saié 5 years period entjed -En' 't-he"".VAass"es'sr;nent year 199?-98 as the _ p:"od;J5<._§tEee.eemrtzeatfieé tram 1993-§4, 'fee Ieeeeee Tax (Seeoee emenément} Act "atefi'e:§é§.ee,::Séeeiéee 13% and 3%, The aeeenemeet exteeeee t%7'e7:ja§< eeiifiey eeréee te 3% "years. Tee eeréee ef 'years is ee reeiaeeee fteze tee date; see efigéeée "tfa'éf':%.;t:%"?s%fatted seftware eeveieeteent. Therefere; the i '""W"set:ee;.e '"'s:eeeemest etosiséeo has {ES f_;1ss§.§ee;;ee egg the sets oteet, the essessee ereferres en assesses daimed the benefit from payment of tax for _the years 1999-2000, 2806-01 and 2801432 as the provision came into force from 0134,1999. assessment year 2801-02 is <:oncer_r_1e.C1,_the_-'es'se:s.$ee"w'as denied the exemption under SeCtio:'§'A:.1O:§i§'he:§* the' Aet ground that the assessee had":ai:-ezady"AexhhaustetiXE.tsv..cV§a.%m % under Section 108 prior to the agt::eAeed1r'h_ent.."Fhenfefote, the question of aiiowing thevtttomo for fiart of the 10 years period orthe1.ext.ekf'::siVo~;1A.::.sg'f'.é.thefltiieiIn does not appiy. Authority, the assesseefs__Vv:<:gg5é. the ciause 'The underta/§f{ng._ the deduction referred to in the sub-section oriiy .-the unexpired period of aforesaid _ ten flgattésectztia/es.._V_}?ears:'. The understaeoteg of the v"v.V_;isse;s'sEn§ :Ag;.::t't:.ottty és that in the essessees case, there e%'es"'%3e '::r§'ev:<_§pé~%ffe't§' setées ieft eeeaose the eteées has got V V _exhaitsteti:.i:':""'the assessment year 349$?-98 Etseif, The eeeéicettoe, gs /'/> €11} . t'E'i.e1:*1e"é2xe:ii:§% have been e seeciféc meetiee ef the senses Eh apnea: to the Commissioner of Income Tax U-Xppeais}. The Appetlate Commissioner held that there is nothing Act to provide that the units which have fuiiy . benefit of exemgstion tinder Section 1JQB_ii3 accdrdt7§'nce'i:w'ith '4 the provisions of Section 108(7) astt st'oe.ci e'i<¥._gtneii\}"$:i:aiE*::;_it not get the benefit of amendeti---._pr0\}is§er;Vitityftééilfitetj siayyh income Tax (Second Anjendti'ie_;f}4_t'j:-..A'ct£_» l"§§8i_: §The%refere, he hetd that the assessee..V:Es_Aeh-ntEtE'eti"'fc}t.:ex»emptEon under Section 108 in respect :O'i":JUnitS for the assessment _\,;_eetj by the said ordVezj, an appeai to the Tf§'i)UIiE3i:{ The »;§"fte§..._1;a-E<i-'iag note off the object with which the'ii-en1etici--n"13eIi't.-'introduced as weit as the amehgiiedei.prov&'s%ie_hs' held that the pmvisiehs at Section ,i§ivAe--cve the me and new EOE} units en a éifferent teetihegh,:°t'§i.,V__it~V.t':;were 30, there weutd have been seecific V . mehtéente seée effect. if the tegiséatiire hae ietehéee K tn.55<e"1e.ei:st%nctéen between the eéé and new fiectieh :08 3/, - ' the absehee of such a sgeciféc regimentation, at: the 188 units weuid have to be simileriy treated. Furthere'.._i4t'h.xgvas heid that the asseasment for any year wouid __cj'é'petrd._: _ the law in force on the first day of the relev-a.ht'.y'ea:f.4.AThL:at-«.. the assessee claimed the berzefitfigmderhE3e£:ti'Lj;§'*1C'B"vr}h' basis of the law as in fercev.e¥34__theA'f§.rVet dayetcfif year. Section 108 was amei:.t:_te3_VVwhVi2C%: 'é_Vt:aVh1e':'f§nto force from 01.04.2001, prc;;;A'é_tsVed shailytfltbex eiigibte to the tax hoIic£ay uhdef'VVt§§e,Vne§}'% the unexpired period of IQ" assessment year relevant ts'? the said undertaking beginia to .?'eferea'ac:e in the proviso is to the ur2e$<';:1i:_'redVV';3"eér:iE3ei' Steers witheat any quaiificatierat it »fc§.go'e"se.;'%at :*e'fe_V;7t'e the anexpiree eerieé ef the tax hefieay &aVtati_et§,. A""i§%2e substituted section; being wétheut any .;qt;2'a§§tf%'£et;.ea'AV.t'§'s""the:'efete to ae heie aa aapiéeabie to the V. We 2~ei;'enee, Aggsieéseai' by the said ewes; the reaeeue fie "'._§§é"a*aaea%.
as§;easee,~v'jgfherefere, it dismieseé the aeeeaé eeefesaed by a gg _. ' ?§>_;_, ,..*;:,,.
4. The ieateee Counsei fer the revenue assailirig the impugned erdet contends that prior to the ameeement the benefit of tax exemption was granted fer a per%e.ti~«.t>"f,V'S years from the date ef production.
instant case, the aesessee cemreernzred p'red"uetioii" ingttae V' assessment year 1993-94 and t;here_fe':"'e; *:.e:"
the benefit: ef 5 years eensei;:u't.i§:eiyA't"rea*e_ti§».et"tl'e=¢,. whicn"»t' ended in 199798. The ameri.d.efdveregzjisien"eenaeninto force oniy in 1999 after 3w/ei§V:_r'et'V:p»e:fiod. Therefere, as the as5es$ee"h__ad aitieaialy :'»'benefit under the unarriende.d--' to the benefit of the -- I Therefore, the Assessing Authority.teasi§'eetti'tiee'::'ieMidienying the said benefit, which §":e's;_;"ee.er": ziireirigjiyviinterfeted with by the Aepeiiete we-.tt§ti:e_r'it§ee,A'mend therefore, he eeernitss that a Case for 3r*i't.eVrfe':"ei_i.§eiéieinnede out Keeeeeeee eueeertee trie irneegrzee ereera. ;9er eentre; the teeteee Qeerzeei fer' the "v._"}eeseseee:
6. It is not in dispute that Sectien 1GB prier to amendment granted a tax heiéday §o:' a peréod of 5 yé'ars from the date of commencement of producti0ne...e.:s'i;
band of 8 years. The section was amer:eed__»f;y. i:f§€;oL'n2e' Tax (Second Amendment) Act, effect from 01.041999. The Damenfiied"provisieaii. under:~ oj 0-B. . . in reépect of newly established Veef7f._export~ oriented u:f:dertal§if:gs'.::'¥-§ '(j'}_ 5;V:;1tg§Aé:ff in the provisizgne :_4a:».V;f'e':?{:'cfion of such profité a hundred per Cent unefertaking from the ekpoft. es'? : things or computer softeiace .fdr._ "period of ten consecutive __§1"a$sAessmem§_V V years beginning with the V. aeéesément reievanf re the previous year " she undertekfng: begins to .""e'meeé§;'"--"eeE'ere er ereeasce artéeiee er {hinge er ea-iifieaéer seféwere, as the ease may fie, efvaff :'e§{ewe::f {rem gee zfeéai Eneeme ef' the .._ 9 ....
Previded that where in computing the total income of the undertaking for any aseessment year, its prefits and gains had ncitw been included by application of the provisienej of this section as it stood immecliateiy its substitution by the Act 1_{)e"ef 2000; e undertaking shali be entitled Life tf'?.e referred to in this sub~Tsectio}:.. the" V' . unexpired period of afe}eeai~:j tee" c:e:e2se1c*.y£}'={fe""
assessment years: '_ » ' 7'. As it is dear from Ujer éezforesam» provisien, the tax bene"f'EtW7o'r'aA :3m$g!'Vé§{tended for a period of ten conjeecutixxe.'efs-:§e%ses;vfhe_%ét years beginning with the assessn*;er'éi:..year reie"v.'a':':.?c.7I:e_ fihe previees year is": which the said um-:§ertaE<E':"égV be§iné'-eaimaeefactere er produce artieées *=._§s' tEi:f§'r3:e.gs5__Le:*'gee:e'wcve_:._.evofmrare, as the ease may ee. The e_e§:%;s-e,i'e~:_%s amendment; zahiatf': is extracted m the Ae~r{ee:f eff'v€Vi"§'eVv'§iaa'.:se:§'Ea'ae Trébeaaé reaee ae ee<:§er:» . *{:.;'aeee .3' eeefize fie azeeee eeeeee zaa ef ":f;ei'A«:_§eeee?e "E'ex séeee é,?ee**er we eeésiéeg ':5 /=/ ..]_g.., provisions, tax hofiday is available to newiy estabiished industriai undertaking set up in _ free trade zones end to units set tip in software V technefogy parks for five years out of the of initial eight years, subject to fuifi/Inftetitt certain conditions. The propes'ed-amendt}ie't34t 4' seeks to extend the Deriod of;'f?3X:'_?':ej}'idé%*>f' f/':§in"'V:"'e-~.. 'A five years to ten years in -;}rdef'st§§"'give thrust to experts. CiaL:se'#e:"seeks 'ta ' extend the five yfeat tax.t;"1'r:£}§ia§)"-»g:,jerfoe' 'ire. years to the exbett. 'etiei1te'dV;':temits under section 10891' the Almtieme tfaix rice;
8. abject behind the amendfn_en.t,~ Vite~"is.~.._v£:§epa'a=t._Tt'§<1a'e the period of 5 years is extended' "e:)4_' "years te give added thrust to expQ.;§:§s'§ it is" eeteause the Parfiiament feit that the tax §9se~E.i.;3'e=gj'a;Af. Swxiears is not having the eeséted tesuit arse t'%§?:e'é9ef:eé*e;"_*;.%}e~§§"exterzeed the benefit 0% tax eeéédev tree; 5 . s,reeE:: te..':i{'.M;?earst if it is a case 0? extenséee §?<f}E"E"'; 3 years géeete, tee emit? ezhéee hae tee eeeefé: ef 5 'gears .' §'ag§:ie%ri?:at§ee%%3r; stzeeéfi get '£E"%E eeeetit ef §;§ greets if ettses .....}_1.._ ccmditéons are faifiéied. The ether conditien to be faifiiied is ten ceasecutive assessment years beginning with .fz"i*:e assessment year relevant to the previous year in undertaking begins te manufacture. Therefofefv'''é'Z:?t1::.€tflfijeieti' -- with which this amendment was the benefit of tax heiiday for »a.;3erAi:edA»:'efz'1{} 'fears frern the date of commen'ee:e'1.eet tho?' 'er production. Befere an the"'be'nefit of tax hoiéday, the said {aw sheutd be in force on Then Qniy he weuid bet'eni;§'tV§_e't3':'t.:3. tieenefiit. Ora 01.04.1999 when the araenaed'i.._;§'i"ojJ'i's_§:&Je_ came into ferce by virtue of said provisien the 'assess.e:e'*-aéexaid be entitiee to the benefit of ta'x_ih"e%a§.day Ceesecutéxse years from the date of .:§;':'*-'..Vt§'*:e assessee eireaey awaited the benefit a"nd"e.€_«t%i'e«'V"e.naa**:'enaee erexséséen and the 1% eenseeaiive V . years" wevuiefaii mice to Q§.t§4,i9§§; then the assessee eat be eaatiee ie the sate eesieféi. if the said :8 _1~__ce.as'eeei:i2ze years free": ehe date at' ereaeeiiee has eat '2 %§1/ w&Ml2H--' expired, erior to 01.04.1999, for the remaining ur2e;>:;;é_§red period, he woefd be entitled to the benefit. Or: 2 that he had the benefit of enamended previsEee"a;";d.:tne years period has expired on theV-day"?~2mea'zd_.edt"e;'dVv'E'Sé«on"'. came into force, he cannot be denied done, it weuid run counter tie -tfie._+iete'e'tion Vefnivthttthe V amended provision was..brougtnt 'thee etaétute beck. It wcseid negate the amendedeg:sreyé.e§en._"X, t
9. In the asseseee has commenced_fi:d'da}1et_iQe--».é}*;».the 'yee.r"§1993-94. He enjoyed the bed:efft«_'1'993~94 to 1997-98. The amended Apirtevisviotd force on 01.04.1999. He is _ eetitiefdute t¥'2eV'%e.><fl§7ei§day under the amended ereviséoe :"A§99:3'----§f_4 fie 280283, He claimed benefit frem :"e.91eI~eet;e";'e~»V.zeeetlez and 2ee:--e2t it is fer the eeried _Z98J;":£E2:v~..':§h'e"'V'eeeeféi is deeéed. Tee seié deeiaé ef the eeflee eeeete: te we eeirit 9? Seeeee Z538 eed it '_'_ee:e.e§'e?"eegete the eejeet ezéte eshéctz {he emeedee ereeiséee E Thbu'h_%A§§"eond l:h:uis,~--..wVe_fs:i.hg the V' andV.vv'ast;lhg V V' fie pro'§.ect--ft§he'éhtesests of the revehee, whl ee'£%ée*;"§*é§es letereret ehe seé ".13".
was brought: le. The assessee is entitled to the ber;'el£t of extension from 5 years to 10 years tax holiday under the amended provision for 10 cohseC.a._;vtix,*ie'V.gkealrs-«T from the date of commencement;
csr 'p4:oAdQctl;ohV;"' 'thetwie View of the matter, the order thev_'v_Tfi'bun'Va=ldash' well as the First Appellate:";§:;tho.rlty.' in accordance with law ago do..l"ho:f:_:"sLlffer free! any legal infirmity; which calls fet'_s_'é'hlie.:"§e;l"ehétief_@'€40 substantial ';fo_zj} mfthls appeal.
question of law arises fdf eoh's:idefal:
10... "t%>>e"'§fore the way in which the Income". 'l'a>§ without a proper application of mind, é":*edlfillhV'g.'4ée;)peei~5's against the orders of the preeéous time of this Court ' so the-,t_ax payefls money, Even if the Assessing el;:§he_;'lfy"'€&§;e.,'»V;§.re'{:f"of exeeréeeee er has everzeeéoesly tried Ch runs eouhter ..i§'3$ express erevlséee eed eseee the Ewe éeeeéieie d ereviséed. eeéht dig: the lee:
% E 2/"
I/ /:
......}_4....
declared by various forums and grant relief tjd-,Tthe assessee, we fan'! ta understand hew the deea_rtnf1e,rétr-4ééa'£:._ taken a decision to prefer an appeai in this"":ese;_»x»ét*.ere..tK there as ahsolutehz no error in Jfxppeiiate Authorities. It only of mind and it is our experEe:7..e'e~~..thathxitpis' é:%s d:§5:$tea case. It seems that the.depaArrtn"te_nt tftsafjfingdttheseygappeals rhechanicaiiy either for er te save their skins withdfqt the process, a person has not onfy been denied ,.'th.€. rh'ad~e.v"§hém to contest the proceedings :1?' the object of extending these benéfittst .Esx"to'u'give:_".."'added thrust td exports; the V asses1.e'_§eie r.ss médeéVte_:shnecessarEiy waste hés time in tisgéstgvhg -ftispttte éh éifferent forums, The ohfy way {:9 b%'r§.r_:gf'___rea'sti";*2V.._t<:£;the d€@§E"Ef"%'}€f1'E§ is he éezpesfing casts; st; that Verzereeréaftte eetéen may be taker: against the §8E"$G%"% "'.v."'"--'=-s§'E"*.«:7':,s§f;'as Vtakeh 5 decéséeré te meter en eeeeeé eed reeeaser rthesenée efter eneeéry. Hevéeg regard t9 the facts at the § ..- " '-
......15...,.
case, the Parliamentary intention and the abject sozxérzi: to be achieved and the way the twc Appeffate have pointed out the express provision, th§"Aa,f:§@§%}L'."O% t!ie~[ department is cantrary ta law, u:a'ééista«%§:a4ble'a§fd~_c;§h'fiVgti' be Courttenanceé. Hence, we aré'.__o§V_the V!i€.WA 'thE3t':"t.h'€ 'd afifieiiants are Iiabie to 5? for making the assessee tvcs----.c_.<)nte.s't"1;;hv%g=.é; héisgs :}§'t§:'ree' forums and wasting the tax open to the authorities tea r¢c§ve_r thé' VFQQFSQH who has taken a de<;is'ié'h__ "f4riir{>E<>.;_Js appeai. Ordered accordingm "