Has In C.i.t v. Dsl Software Ltd., [2013] 351 Itr 385

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 29TH DAY OF JANUARY 2019 / 9TH MAGHA, 1940 ITA.No. 10 of 2011 AGAINST THE ORDER/JUDGMENT IN ITA 1835/2003 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 26-04-2010 APPELLANT/S: THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.MIDLAND LATEX PRODUCTS LTD., 64, (OLD NO.20), RUKMANI LAKSHMIPATHI SALAI, (MARSHALLS ROAD), EGMORE, CHENNAI-8.BY ADVS.SRI.P.GOPINATH (SR.)SRI.JOSON MANAVALANSRI.K.JOHN MATHAISRI.KURYAN THOMASSRI.M.GOPIKRISHNAN NAMBIARSRI.PAULOSE C. ABRAHAM OTHER PRESENT: THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON29.01.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Ashok Menon, J. Appeal by the Revenue aggrieved with the concurrentfinding of the Commissioner of Income Tax (Appeals),and the Income Tax Appellate Tribunal, Cochin Benchfavouring the assessee-company regarding its claimunder Section 10A of the Income Tax Act, 1961 (forbrevity “the Act”) for the assessment year 1999-2000. 2.The assessee-company is involved in the business of manufacturing and export of rubber gloves.On 10.11.1999 the assessee filed returns for theassessment year 1999-2000 claiming exemption underSection 10A of the Act for the entire business incomeof Rs.50,64,763/-. After processing the returns underSection 143(1) on 19.09.2000, the assessment wasreopened under Section 147 and notice was issued to theassessee under Section 148 on 31.01.2002 and inresponse to that, the assessee filed returns on20.04.2002 maintaining the claim for exemption under Section 10A, but also claimed deduction under Section 80HHC for an amount of Rs.14,18,953/-. The Assessing Officer (for brevity “AO”) disallowed the claim of theassessee under Section 10A and granted deduction ofRs.13,67,801/- under Section 80HHC and calculated thetaxable income at Rs.36,96,962/- vide Annexure A. 3.The appeal filed by the assessee before theCommissioner of Income Tax (Appeals) was allowed vide Annexure B, granting exemption under Section 10A. The Revenue challenged the order before the Tribunal, butvide Annexure C, the appeal was dismissed. Hence, theRevenue is in appeal before us raising the following substantial question of law, as modified by us: “Can the relief granted to the assessee,under Sec.10A be extended further, by anamended law, without giving retrospectiveeffect to it, once the assessee has exhaustedits quota spanning eight years beginningwith the year of commencement of production?” 4.We heard the learned Senior Counsel, Government of India (Taxes) and the learned Counsel for the respondent. The only point that is urged by the learned Senior Counsel for the Revenue is that the assessee is entitled to exemption under Section 10Aonly upto 1997-98, ie., five years within a block of eight years from the assessment year 1990-91 and since the assessee has already availed the exemption for fiveyears, amendment to Section 10A which came into effecton 01.04.1999 extending the period of five years to tenyears, is not available to the assessee. The findingof the AO and the argument of the learned SeniorCounsel for the Revenue is that the amendment has noretrospective effect and being prospective, the assessee in this case is not entitled to the benefit ofthe amendment. of India (Taxes) and the learned Counsel for the respondent. The only point that is urged by the learned Senior Counsel for the Revenue is that the assessee is entitled to exemption under Section 10Aonly upto 1997-98, ie., five years within a block of eight years from the assessment year 1990-91 and since the assessee has already availed the exemption for fiveyears, amendment to Section 10A which came into effecton 01.04.1999 extending the period of five years to tenyears, is not available to the assessee. The findingof the AO and the argument of the learned SeniorCounsel for the Revenue is that the amendment has noretrospective effect and being prospective, the assessee in this case is not entitled to the benefit ofthe amendment. 5.The learned Counsel for the assessee on theother hand would argue that the intention of theLegislature in bringing forth the amendment in 1998 wasto extend the benefit granted to the assessee's underSection 10A of the Act, and that instead of five yearsthe period was extended to ten years and the words“falling within a period of eight years” and “specifiedby the assesee at his option” were omitted. 6.A Division Bench of the Karnataka High Court has in C.I.T. v. DSL Software Ltd., [2013] 351 ITR 385 considered the object behind the amendment extending the period of exemption under Section 10B, wherein alsoa similar amendment was brought in 1998 and the periodof exemption was extended from five years out of eightyeas to a period of ten years with effect from01.04.1999. The Karnataka High Court held that theobject with which this amendment was introduced, was toextend the benefit for a period of ten consecutiveyears from the date of commencement of manufacture orproduction. Only if the assessee has already availedthe benefit under the unamended provision and tenconsecutive years would fall prior to 01.04.1999; whenthe amendment came into effect, would the assessee bedisentitled to the said benefit. If the ten years fromthe date of production has not expired prior to thedate on which the amendment came into effect, for theremaining unexpired period, he would be entitled to thebenefit and he cannot be denied the benefit for thereason that he has availed the benefit of the unamended provision for a period of five years and that hadexpired before the amendment came into force. TheKarnataka High Court was of the opinion that it would run counter to the intention with which the amendedprovision was brought into the Statute book and that itwould negate the amended provision. The aforesaidKarnataka High Court decision was also followed by theBombay High Court in C.I.T. v. Chowgule & Company Ltd., (2015) 93 CCH 212 Mum HC: MANU/MH/2025/2015. 7.We are in agreement with the views expressed inthe aforecited decisions. We find no justifiablereason, whatsoever, to interfere with the concurrentfinding of the appellate authorities on this point andthe question of law is answered against the Revenue andin favour of the assessee. The appeal stands rejected.No costs. Sd/-K.VINOD CHANDRANJUDGE dkr Sd/- ASHOK MENONJUDGE APPENDIX APPELLANT'S/S ANNEXURES: