CIT & Anr. v. DSL Software Ltd.

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2012 TaxPub(DT) 0702 (Karn-HC) : (2012) 044 (I) ITCL 0415 : (2013) 351 ITR 0385 : (2012) 246 CTR 0542 : (2012) 066 DTR 0097 INCOME TAX ACT, 1961 --Exemption under section 10B--Allowability of extended period of deductionApplicability of amended provisions of section 10B--Assessee, a 100 per cent EOU was engaged in business of software development and exports. It commenced its production in the assessment year 1993-94 and enjoyed the benefit of tax holiday under section 10B for period of 5 years starting from year of commencement of production, which ended in assessment year 1997-98. Assessee, subsequently, claimed the benefit from payment of tax for the years 1999-2000, 2000-01, and 2001-02 on the ground that it was entitled to benefit of tax holidays for 10 years as provided in amended provisions of section 10B which was came into force from 1-4-1999. AO denied the benefit of deduction for the year 2001-02 on the ground that assessee had already availed the benefit under unamended provision, hence it was not entitled to the benefit of amended provision. *Held:* The said denial of the benefit runs counter to the spirit of section 10B and it would negate the object with which the amended provision was brought in On the ground that assessee had the benefit of unamended provision and the 5 years period had expired on the day amended provision came into force, he couldnot be denied the benefit. and thus the assessee was entitled to the benefit of extension from 5 years to 10 years tax holiday as provided under the amended provision for 10 consecutive years from the date of commencement of production. Income Tax Act, 1961 Section 10B IN THE KARNATAKA HIGH COURT N. KUMAR & RAVI MALIMATH, JJ. CIT & Anr. v. DSL Software Ltd. ITA No. 462 of 2007 A.Y. 2001-02 12 October, 2011 Income Tax Act, 1961, section 10B In favour of: Assessee; Assessment year 2001-02 Appellant by : K.V. Aravind for M.V. Seshachala, Respondent by : A. Shankar & M. Lava, JUDGMENT *N. Kumar, J.* This is an appeal filed by the Revenue challenging the order passed by the Tribunal, Bangalore Bench-B, upholding the order passed by the Commissioner (Appeals) who held that the assessee is entitled to the benefit of the extended period of ten consecutive years under section 10B of the Act though prior to coming into force of the amended provision, he had the benefit of five years period of exemption from payment of income-tax as per the amended provision. 2. The assessee is engaged in the business of software development and exports. The assessee is recognized as a 100 per cent export-oriented undertaking. Therefore, the respondent/assessee is entitled to the benefit of the tax holiday under section 10B of the Income Tax Act (for short hereinafter referred to as the Act). Initially, section 10B conferred a tax holiday for a period of 5 years out of a band of 8 years. The band of 8 years was to commence from the date the eligible unit commenced software development. The respondent claimed the benefit of tax holiday in accordance with the unamended provision of section 10B for a period of B years. The said 5 years period ended in the assessment year 1997-98 as the production commenced from 1993-94. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0702 (Karn-HC) : (2012) 044 (I) ITCL 0415 : (2013) 351 ITR 0385 : (2012) 246 CTR 0542 : (2012) 066 DTR 0097

INCOME TAX ACT, 1961

--Exemption under section 10B--Allowability of extended period of deductionApplicability of amended provisions of section 10B--Assessee, a 100 per cent EOU was engaged in business of software development and exports. It commenced its production in the assessment year 1993-94 and enjoyed the benefit of tax holiday under section 10B for period of 5 years starting from year of commencement of production, which ended in assessment year 1997-98. Assessee, subsequently, claimed the benefit from payment of tax for the years 1999-2000, 2000-01, and 2001-02 on the ground that it was entitled to benefit of tax holidays for 10 years as provided in amended provisions of section 10B which was came into force from 1-4-1999. AO denied the benefit of deduction for the year 2001-02 on the ground that assessee had already availed the benefit under unamended provision, hence it was not entitled to the benefit of amended provision. Held: The said denial of the benefit runs counter to the spirit of section 10B and it would negate the object with which the amended provision was brought in On the ground that assessee had the benefit of unamended provision and the 5 years period had expired on the day amended provision came into force, he couldnot be denied the benefit. and thus the assessee was entitled to the benefit of extension from 5 years to 10 years tax holiday as provided under the amended provision for 10 consecutive years from the date of commencement of production.

Income Tax Act, 1961 Section 10B

IN THE KARNATAKA HIGH COURT

N. KUMAR & RAVI MALIMATH, JJ.

CIT & Anr. v. DSL Software Ltd.

ITA No. 462 of 2007

A.Y. 2001-02

12 October, 2011

Income Tax Act, 1961, section 10B

In favour of: Assessee; Assessment year 2001-02

Appellant by : K.V. Aravind for M.V. Seshachala,

Respondent by : A. Shankar & M. Lava,

JUDGMENT

N. Kumar, J.

This is an appeal filed by the Revenue challenging the order passed by the Tribunal, Bangalore Bench-B, upholding the order passed by the Commissioner (Appeals) who held that the assessee is entitled to the benefit of the extended period of ten consecutive years under section 10B of the Act though prior to coming into force of the amended provision, he had the benefit of five years period of exemption from payment of income-tax as per the amended provision.

2. The assessee is engaged in the business of software development and exports. The assessee is recognized as a 100 per cent export-oriented undertaking. Therefore, the respondent/assessee is entitled to the benefit of the tax holiday under section 10B of the Income Tax Act (for short hereinafter referred to as the Act). Initially, section 10B conferred a tax holiday for a period of 5 years out of a band of 8 years. The band of 8 years was to commence from the date the eligible unit commenced software development. The respondent claimed the benefit of tax holiday in accordance with the unamended provision of section 10B for a period of B years. The said 5 years period ended in the assessment year 1997-98 as the production commenced from 1993-94.