ACIT, CHENNAI V. M/s. Qmax Test Equipments Private Limited, CHENNAI

MA 212/CHNY/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9602 (ITAT-CHENNAI)
• Duration Of Justice: 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 23-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G SEETHARAMAN
• Section: 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER M.P. NO.212/MDS/2012 (IN ITA NO.586/MDS/2012) (ASSESSMEN T YEAR : 2004-05) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2) CHENNAI-600 034. VS. M/S. QMAX TEST EQUIPMENTS PVT.LTD. C/O. S.VENKATRAM & CO., C.AS 218, TTK ROAD, ALWARPET, CHENNAI-600 018. PAN: AAACP1647B (APPLICANT) (RESPONDENT) APPLICANT BY : MR. SHAJI P.JACOB, CIT DR RESPONDENT BY : MR. G.S EETHARAMAN DATE OF HEARING : 7 TH DECEMBER, 2012 DATE OF PRONOUNCEMENT : 7 TH DECEMBER, 2012 O R D E R PER VIKAS AWASTHY, JM : THE REVENUE HAS FILED PRESENT MISCELLANEOUS PETITIO N PRAYING FOR RECTIFICATION OF THE ORDER DATED 27 TH SEPTEMBER, 2012 PASSED BY THE TRIBUNAL. 2. THE TRIBUNAL VIDE ORDER DATED 27 TH SEPTEMBER, 2012 HAS ALLOWED THE APPEAL OF THE ASSESSEE IN ITA NO.586/MDS/2012 RELEVANT TO THE ASSESSMENT YEAR 20 04-05. MR. SHAJI P.JACOB APPEARING ON BEHALF OF THE REVENU E SUBMITTED THAT THE ASSESSEE COMPANY HAD STARTED M.P.NO. 212/MD S/2012 2 MANUFACTURING PROCESS IN MAY, 1993. THE ASSESSEE CL AIMED DEDUCTION UNDER SECTION 10B OF THE ACT AS WAS APPLI CABLE THEN. AS PER THE PROVISIONS OF SECTION 10B RELEVAN T TO THE ASSESSMENT YEAR 1994-95 THE ASSESSEE WAS ELIGIBLE F OR DEDUCTION FOR FIVE CONSECUTIVE ASSESSMENT YEARS FAL LING WITHIN A PERIOD OF EIGHT YEARS BEGINNING WITH ASSESSMENT Y EAR RELEVANT TO PREVIOUS YEAR IN WHICH THE UNDERTAKING HAD COMMENCED PRODUCTION. THE ASSESSEE OPTED TO CLAIM DEDUCTION UNDER SECTION 10B FROM THE ASSESSMENT YE AR 1995-96 TO 1999-2000. AS PER THE AMENDED PROVISIONS OF SECTION 10B OF THE INCOME TAX (SECOND AMENDMENT) AC T, 1998, THE TAX HOLIDAY PERIOD UNDER SECTION 10B WAS EXTENDED FROM FIVE YEARS TO TEN YEARS SUBJECT TO THE FULFILL MENT OF OTHER CONDITIONS. THE LEARNED DR SUBMITTED THAT THE PER IOD OF TEN YEARS LAPSED IN THE YEAR 2003-04. THE LEARNED DR C ONTENDED THAT THE PERIOD OF TEN YEARS HAS TO BE RECKONED FRO M THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE ASSESSEE BEGINS MANUFACTURING PROCESS AND IN THE PR ESENT CASE IT IS ASSESSMENT YEAR 1994-95. THEREFORE, THE ASSESSEE M.P.NO. 212/MD S/2012 3 WAS NOT ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 10B IN THE ASSESSMENT YEAR 2004-05. 3. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LEARNE D DR. THE RELEVANT EXTRACT OF THE PROVISIONS OF SECTI ON 10 PRIOR TO THE AMENDMENT OF 1998 ARE AS FOLLOWS:- SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKINGS. 10B(1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A NY PROFITS AND GAINS DERIVED BY AN ASSESSEE FROM A HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING (HEREINAFTER IN THIS SECTION REFERRED TO AS THE UNDERTAKING) TO WHICH THIS SECTION APPLIES SHALL NO T BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. (2) XXXX (3) THE PROFITS AND GAINS REFERRED TO IN SUB- SECTION (1) SHALL NOT BE INCLUDED IN THE TOTAL INCO ME OF THE ASSESSEE IN RESPECT OF ANY FIVE CONSECUTIVE ASSESSMENT YEARS, FALLING WITHIN A PERIOD OF EIGHT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGIN S TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, SPECIFIED BY THE ASSESSEE AT HIS OPTION: PROVIDED THAT NOTHING IN THIS SUB-SECTION SHALL BE CONSTRUED TO EXTEND THE AFORESAID FIVE ASSESSMENT YEARS TO COVER ANY PERIOD AFTER THE EXPIRY OF THE S AID PERIOD OF EIGHT YEARS. M.P.NO. 212/MD S/2012 4 4. THE PROVISIONS OF SECTION 10B WERE AMENDED BY TH E INCOME TAX (SECOND AMENDMENT) ACT,1998 WITH EFFECT FROM 1.4.1999. THE RELEVANT EXTRACT OF THE AMENDED PROVI SIONS OF SECTION 10B ARE REPRODUCED HEREIN BELOW:- 10B(1) SUBJECT TO THE PROVISIONS OF THIS SECTION, ANY PROFITS AND GAINS DERIVED BY AN ASSESSEE FROM A HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING (HEREINAFTER IN THIS SECTION REFERRED TO AS THE UNDERTAKING) TO WHICH THIS SECTION APPLIES SHALL NO T BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. (2) X X X X X (3) THE PROFITS AND GAINS REFERRED TO IN SUB-SECTIO N (1) SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF TH E ASSESSEE IN RESPECT OF ANY 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. 5. THE RELEVANT PROVISIONS OF SECTION 10B OF THE IN COME TAX ACT AS AMENDED BY THE FINANCE ACT, 2000 WITH EF FECT FROM 1.4.2001 AS THEY ARE APPLICABLE NOW ARE AS FOL LOWS:- SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKINGS. M.P.NO. 212/MD S/2012 5 10B. (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGIN S TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE : PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UNDERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITLE D TO THE DEDUCTION REFERRED TO IN THIS SUB-SECTION ON LY FOR THE UNEXPIRED PERIOD OF AFORESAID TEN CONSECUTIVE ASSESSMENT YEARS: 6. A PERUSAL OF SUB-SECTION (3) OF SECTION 10B PRIO R TO THE AMENDMENT OF INCOME TAX (SECOND AMENDMENT) ACT, 19 98 SHOWS THAT THE ASSESSEE COULD HAVE AVAILED THE BENE FIT OF SECTION 10B IN ANY OF THE FIVE CONSECUTIVE ASSESSME NT YEARS FALLING WITHIN A PERIOD OF EIGHT YEARS BEGINNING WI TH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICL ES OR THINGS. IT IS AN ADMITTED FACT THAT THE ASSESSEE ST ARTED MANUFACTURING IN MAY, 1993. THE ASSESSEE WAS ELIGIB LE FOR CLAIMING DEDUCTION UNDER SECTION 10B FOR THE PERIOD OF 10 M.P.NO. 212/MD S/2012 6 YEARS BEGINNING WITH THE ASSESSMENT YEAR 1994-95. ACCORDINGLY, THE ASSESSEE WAS ENTITLED FOR BENEFIT UPTO ASSESSMENT YEAR 2003-04. THE TRIBUNAL INADVERTENTLY CALCULATED THE PERIOD OF 10 YEARS STARTING FROM AS SESSMENT YEAR 1995-96 AND ENDING WITH ASSESSMENT YEAR 2004- 05. THIS IS A MISTAKE WHICH IN OUR OPINION HAS TO BE RE CTIFIED. THE LEARNED AR APPEARING ON BEHALF OF THE ASSESSEE FAIR LY CONCEDED TO THE FACTUAL ERROR IN CALCULATION OF PER IOD OF 10 YEARS. SINCE THE CHANGE OF THE YEAR GOES TO THE ROO T OF THE ORDER, WE DEEM IT FIT TO RECALL THE ORDER DATED 24. 7.2012. 7. ACCORDINGLY, ORDER DATED 24.7.2012 IS RECALLED A ND THE REGISTRY IS DIRECTED TO FIX THE HEARING OF APPEAL I N DUE COURSE AFTER INFORMING BOTH THE PARTIES. RESULTANTLY, THE MISCELLANEOUS PETITION FILED BY THE REVENUE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON FRIDAY, THE 7 TH DAY OF DECEMBER, 2012 AT CHENNAI. SD/- SD/- ( ABRAHAM P.GEORGE) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 7 TH DECEMBER, 2012. SOMU M.P.NO. 212/MD S/2012 7 COPY TO: (1) APPELLANT (4) CIT( A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.