M/S.fca Engineering India Private Limited,(Formerly Known As Chrysler India Automotive Private Limited), Rmz Millennia Business Park v. Assistant Commissioner Of Income Tax, Corporate Circle 1(2), Room

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 02-08-2021 CORAM THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAMWP No.27102 of 2016AndWMP No.23283 of 2016 M/s.FCA Engineering India Private Limited,(Formerly known as Chrysler India Automotive Private Limited), RMZ Millennia Business Park-1,Campus 1-A, 5[th] Floor,143, Dr.MGR Road,Kandanchavadi,Perungudi,Chennai-600 096. ..Petitioner vs. 1. Assistant Commissioner of Income Tax, Corporate Circle 1(2), Room No.613, Wanaparthy Block, 121 Mahatma Gandhi Road, Chennai-600 034. 2. Principal Commissioner of Income Tax-1, 7[th] Floor, New Block, 121, Mahatma Gandhi Road, Chennai-600 034. ..Respondents Writ Petition is filed under Article 226 of theConstitution of India, praying for the issuance of a Writ ofCertiorari, calling for the records on the file of the firstrespondent and quash the impugned proceedings in AAGCA6907M/09-10 dated 18.07.2016 along with notice issued by the firstrespondent under Section 148 of the Income Tax Act, dated03.03.2016. For Petitioner : Mr.N.V.Balaji For Respondents : Mr.D.Prabhu Mukunth Arunkumar, Junior Standing Counsel for Income Tax. Junior Standing Counsel for Income Tax. O R D E R The order dated 18.07.2016, disposing of the objectionfiled by the Assessee for reopening of the assessment underSection 147 of the Income Tax Act, 1961, is under challenge inthe present writ petition. 2. The petitioner is a Private Limited Companyincorporated under the Companies Act, 1956 and is a wholly ownedsubsidiary of Chrysler Netherlands Distribution BV, a Companyincorporated in Netherlands. The name of the petitioner-Companywas changed to FCA Engineering India Private Limited fromChrysler India Automotive Private Limited with effect from23.02.2015. 3. The petitioner, being set up as a 100% ExportOriented Unit (EOU) under the Software Technology Park Scheme ofIndia (STPI), is engaged in the business of providingengineering and design services to its group companies and iseligible for deduction under Section 10A of the Income Tax Act. 4. The petitioner filed its return of income for theassessment year 2009-2010 on 30.09.2009. Notice under Section143(2) of the Income Tax Act, was initiated for scrutinyprocedures on 30.09.2010. A reference was made under Section92CA of the Income Tax Act, to the Transfer Pricing Officer(TPO) for determining arm's length price on 19.05.2011. TheTransfer Pricing Officer passed an order on 09.01.2013.Considering all the materials available on record, the AssessingOfficer passed final assessment order on 28.02.2013. 5. A notice under Section 148 of the Income Tax Act, wasissued for reopening of the assessment year 2009-2010. Thepetitioner confirmed the return of income already filed inresponse to the notice. Thereafter, the reasons for reopeningwas furnished to the Assessee in proceedings dated 21.04.2016.The petitioner submitted its detailed objections vide letterdated 17.05.2016 and the said objections were rejected by thefirst respondent in order dated 18.07.2016. 6. The learned counsel for the petitioner mainlycontended that the very initiation of reopening proceedings isbeyond the scope of jurisdiction and in respect of otherassessment years, the benefit of Section 10A of the Income Tax https://hcservices.ecourts.gov.in/hcservices/ Act, was extended in favour of the petitioner. 6. The learned counsel for the petitioner mainlycontended that the very initiation of reopening proceedings isbeyond the scope of jurisdiction and in respect of otherassessment years, the benefit of Section 10A of the Income Tax https://hcservices.ecourts.gov.in/hcservices/ Act, was extended in favour of the petitioner. 7. This apart, the reasons furnished are not inconsonance with the mandatory requirements as contemplated underSection 147 of the Income Tax Act, 1961. The reasons stated forreopening of assessment is nothing but change of opinion, as theissues raised were adjudicated in the original assessmentproceedings and considered by the Assessing Authority. Thereopening is made beyond the period of four years and within sixyears and therefore, the requirements as contemplated under theproviso clause to Section 147 of the Income Tax Act, are to becomplied with. Thus, the initiation itself is withoutjurisdiction. 8. The learned counsel for the petitioner tosubstantiate the said contention, drawn the attention of thisCourt with reference to the spirit of Section 10A of the IncomeTax Act. It is contended that as per Section 10A sub-section(2), the petitioner is entitled for the benefit of the saidprovision and it was rightly considered by the AssessingAuthority and therefore, the very same ground cannot be a reasonfor reopening of assessment under Section 147 of the Income TaxAct. 9. In view of the fact that the issue was consideredelaborately and the reopening is made beyond four years and thevery same reason is furnished for the purpose of reopening, itis to be construed that the proceedings are nothing but changeof opinion and not based on any tangible materials available onrecord. 10. The learned counsel for the petitioner relied on theinstruction No.1 of 2006 dated 31.03.2006 issued by the CentralBoard of Direct Taxes (CBDT), wherein the deduction underSection 10A of the Income Tax Act was clarified. As per the saidclarification, the petitioner-Company is entitled for thebenefit and it was rightly granted by the Assessing Authorityoriginally. While-so, the very reason for reopening is untenablebased on the instructions issued by the Central Board of DirectTaxes. Therefore, the present writ petition is to be allowed. 11. The learned Standing Counsel, appearing on behalf ofthe respondents, disputed the contentions raised on behalf ofthe petitioner by stating that the petitioner has not fully andtruly disclosed the informations as required under theprovisions of the Income Tax Act. Under Section 10A of theIncome Tax Act, the Company must be in any one of the declaredSpecial Economic Zone. 12. However, even in the details relating to the claim by the exporter for deduction Section 10A of the Income Tax Act,i.e., Form No.56-F, the Assessee has not stated about theirlocation of functioning and the said Form categoricallyindicates that the Assessee must mention the location andaddress of undertaking in the Form enclosed by the petitioneritself. In page No.33 of the typed set of papers filed alongwith the present writ petition, the petitioner-Company hasmentioned the address alone and the location has not been statedand this apart, the respondents have stated that the petitioner-Company is not functioning in any one of the Special EconomicZone and therefore, they are not entitled for the benefit ofSection 10A of the Income Tax Act. 12. However, even in the details relating to the claim by the exporter for deduction Section 10A of the Income Tax Act,i.e., Form No.56-F, the Assessee has not stated about theirlocation of functioning and the said Form categoricallyindicates that the Assessee must mention the location andaddress of undertaking in the Form enclosed by the petitioneritself. In page No.33 of the typed set of papers filed alongwith the present writ petition, the petitioner-Company hasmentioned the address alone and the location has not been statedand this apart, the respondents have stated that the petitioner-Company is not functioning in any one of the Special EconomicZone and therefore, they are not entitled for the benefit ofSection 10A of the Income Tax Act. 13. The learned Standing Counsel, appearing on behalf ofthe respondents, contended that even in such cases, it is forthe Assessee to submit all materials and evidences to establishhis case and such an adjudication need not be done in thepresent writ proceedings by the High Court. It is onlyinitiation of proceedings, which is under challenge andtherefore, the merits are to be adjudicated by the AssessingAuthority and the petitioner-Company is at liberty to avail theopportunities to be provided for the purpose of establishingtheir case. Thus, the writ petitioner-Company has notestablished any prima facie grounds for the purpose of assailingthe institution of proceedings under Section 147/148 of theIncome Tax Act and therefore, the present writ petition is to berejected. 14. Considering the arguments as advanced by therespective learned counsel appearing on behalf of the parties tothe lis, the issue mainly raised in this writ petition is,whether the petitioner-Assessee is eligible to claim the benefitunder Section 10A of the Income Tax Act. The point ofjurisdiction raised is relating to Section 10A of the Income TaxAct. The reasons for reopening is also connected with the saidprovision. Thus, the interpretation of the said provision isrequired for the purpose of deciding the issue raised in thiswrit petition. 15. Let us consider Section 10A of the Income Tax Act.Sub-section (1) enumerates that “subject to the provisions ofthis section, a deduction of such profits and gains as arederived by an undertaking from the export of articles or thingsor computer software for a period of ten consecutive assessmentyears beginning with the assessment year relevant to theprevious year in which the undertaking begins to manufacture orproduce such articles or things or computer software, as thecase may be, shall be allowed from the total income of theAssessee”. 16. Sub-section (2) is relatable to the facts andcircumstances of the case on hand. Sub-section (2) of Section10A of the Income Tax Act, reads as under:-“This section applies to any undertakingwhich fulfils all the following conditions,namely :—(i) it has begun or begins to manufactureor produce articles or things or computersoftware during the previous year relevant tothe assessment year— (a) commencing on or after the 1st day ofApril, 1981, in any free trade zone; or(b) commencing on or after the 1st day ofApril, 1994, in any electronic hardwaretechnology park, or, as the case may be,software technology park; (c) commencing on or after the 1st day ofApril, 2001 in any special economic zone;(ii) it is not formed by the splitting up, orthe reconstruction, of a business already inexistence : (a) commencing on or after the 1st day ofApril, 1981, in any free trade zone; or(b) commencing on or after the 1st day ofApril, 1994, in any electronic hardwaretechnology park, or, as the case may be,software technology park; (c) commencing on or after the 1st day ofApril, 2001 in any special economic zone;(ii) it is not formed by the splitting up, orthe reconstruction, of a business already inexistence : Provided that this condition shall not applyin respect of any undertaking which is formedas a result of the re-establishment,reconstruction or revival by the assessee ofthe business of any such undertakings as isreferredtoin section 33B, inthecircumstances and within the period specifiedin that section;(iii) it is not formed by the transfer to anew business of machinery or plant previouslyused for any purpose.Explanation.—The provisions of Explanation1 and Explanation2 tosub-section(2)of section 80-I shall apply for the purposes ofclause (iii) of this sub-section as they applyfor the purposes of clause (ii) of that sub-section”. 17. Sub-section (2) begins by contemplating that thesaid Section would apply to any undertaking which fulfils allthe conditions stipulated in sub-section (2) to sub-clause (i).Sub-clause (i)(a) to (c). Sub-clause (i) (a) to sub-section (2)unambiguously enumerates that it has begun or begins tomanufacture or produce articles or things or computer softwareduring the previous year relevant to the assessment year,commencing on or after the first day of April, 1981, in any freetrade zone. Therefore, if the commencement of manufacture or produce articles or things or computer software, on or after the1st day of April, 1981 in any free trade zone. Sub-clause (i) (a)contemplates that the manufacture must be in any free tradezone. Secondly sub-clause (i)(b) to sub-section (2) stipulatesthat commencing on or after the first day of April, 1994, in anyelectronic hardware technology park, or, as the case may be,software technology park. Thus, if the commencement ofmanufacture or produce articles or things or computer software,on or after the first day of April, 1981, in any electronichardware technology park or as the case may be, softwaretechnology park. 18. Therefore, the case of the petitioner falls undersub-clause (i)(b) of Section 10A of the Income Tax Act. They aremanufacturing in the software technology. The said factum is notdisputed by the Revenue also. Therefore, they claim commencingon or after the 1st day of April 1994. If commencement ofmanufacture is in software technology park, then the benefitunder Section 10A of the Act is to be extended is also thearguments advanced. 19. Sub-clause (i)(c) denotes commencement ofmanufacture on or after the first day of April, 2001 in anyspecial economic zone. Therefore, if any manufacture begins onor after the first day of April, 2001, it must be in any SpecialEconomic Zone. 18. Therefore, the case of the petitioner falls undersub-clause (i)(b) of Section 10A of the Income Tax Act. They aremanufacturing in the software technology. The said factum is notdisputed by the Revenue also. Therefore, they claim commencingon or after the 1st day of April 1994. If commencement ofmanufacture is in software technology park, then the benefitunder Section 10A of the Act is to be extended is also thearguments advanced. 19. Sub-clause (i)(c) denotes commencement ofmanufacture on or after the first day of April, 2001 in anyspecial economic zone. Therefore, if any manufacture begins onor after the first day of April, 2001, it must be in any SpecialEconomic Zone. 20. To make the interpretation more clear, commencementof manufacturing after 01.04.1981 in any free trade zone orcommencement of manufacture on or after 01.04.1994 in anyelectronic hardware technology park or in between sub-clauses(i)(b) and (i)(c), the word 'or' is not contemplated. Therefore,clause(c) is independent and clauses (a) and (b) are connectedto each other. Clauses (a) and (b) are to be read together forthe purpose of determining the eligibility and clause (c) is tobe interpreted independently for the purpose of consideringeligibility to grant the benefit of Section 10A of the Income TxAct. Because clause (a) ends with the option or in betweenclauses (b) and (c), there is no such option is provided. Thus,the commencement of manufacturing on or after 01.04.2001 must bein any Special Economic Zone. Moreover, the same is also notcontemplated. Therefore, sub-clause (i)(c) must be interpretedthat commencement of manufacture on or after the first day ofApril, 2001 must be in any Special Economic Zone. 21. Beyond the scope of interpretation, yet anotheraspect is to be considered with reference to these threeclauses. Sub-section (2) of Section 10A of the Income Tax Act,unambiguously stipulates that this section applies to anyundertaking which fulfils all the following conditions. Therefore, all the three three conditions stipulated in sub-section (2) of Section 10A of the Act, is to be fulfilled. 22. As far as sub-clauses (i)(a), (i)(b) and (i)(c) tosub-section (2) are concerned, it is to be understood thatdifferent spells are contemplated in order to determine theeligibility. The three spells indicate that commencement ofmanufacture from 01.04.1981, which would impliedly end on31.03.1994 and commencement of manufacture on or after01.04.1994 and impliedly ends on 31.03.2001. Thereafter, sub-clause (i)(c) states that the manufacture commencing on or after01.04.2001. 23. This apart, all three sub-clauses (a), (b) and (c)contemplate different Zones. If a case is falling under sub-clause (a), it must be in any free trade zone. If it is fallingunder clause (b), it must be in any electronic hardwaretechnology park, or, as the case may be, software technologyPark. If any Company falls under sub-clause (c), then it must bein any Special Economic Zone. 24. The case of the petitioner, admittedly, that themanufacture was commenced in the year 2008. When the manufactureor produce articles or things or computer software commences inthe year 2008, then the case of the petitioner squarely fallsunder sub-clause (i)(c) to sub-section (2) of Section 10A of theIncome Tax Act. Therefore, the petitioner must manufacture inany Special Economic Zone as the manufacture, admittedly,commenced in the year 2008. The petitioner is not entitled toclaim the benefit under sub-clause (i)(b) software notmanufacturing prior to 2001, so as to claim the benefit ofSection 10A of the Income Tax Act on the ground that they aremanufacturing any software technology park. 24. The case of the petitioner, admittedly, that themanufacture was commenced in the year 2008. When the manufactureor produce articles or things or computer software commences inthe year 2008, then the case of the petitioner squarely fallsunder sub-clause (i)(c) to sub-section (2) of Section 10A of theIncome Tax Act. Therefore, the petitioner must manufacture inany Special Economic Zone as the manufacture, admittedly,commenced in the year 2008. The petitioner is not entitled toclaim the benefit under sub-clause (i)(b) software notmanufacturing prior to 2001, so as to claim the benefit ofSection 10A of the Income Tax Act on the ground that they aremanufacturing any software technology park. 25. The scope of above provisions would unambiguouslyportrays that the case of the petitioner is falling underSection 10A of sub-section (2) to sub-clause (i)(c) of theIncome Tax Act, and therefore, if the petitioner ismanufacturing or producing articles or things of computersoftware, it must be in any Special Economic Zone. The Form 56-Fsubmitted by the petitioner would reveal that they are notmentioned about their location of functioning. However, theyhave furnished their address and the respondents have filedcounter stating that the Unit is not located in Special EconomicZone. 26. This being the factum established, the petitioner-Company is not entitled to avail the benefit of Section 10A ofthe Income Tax Act and if at all any contra materials areavailable with the petitioner, it is for them to place it before the Assessing Authority for the purpose of availing the benefitfor which they are entitled under the provisions of the IncomeTax Act. However, the adjudication in this writ petition is donewith reference to the interpretations to be considered for thepurpose of availing the benefit of Section 10A of the Income TaxAct and regarding all other factual disputes, it is for theAssessee to pursue the same before the Assessing Authority forthe purpose of completion of reassessment proceedings. If at allthe writ petitioner-Company has already claimed the benefit andin order to establish the said claim, the writ petitioner is atliberty to submit the documents and materials at the time ofparticipating in the reassessment proceedings. 27. With the above observations, the writ petitionstands dismissed. However, there shall be no order as to costs.Consequently, connected miscellaneous petition is also dismissed. Sd/-Assistant Registrar(CS-III)// True Copy// Sub Assistant Registrar SvnTo1. Assistant Commissioner of Income Tax, Corporate Circle 1(2), Room No.613, Wanaparthy Block, 121 Mahatma Gandhi Road, Chennai-600 034.2. Principal Commissioner of Income Tax-1, 7[th] Floor, New Block, 121, Mahatma Gandhi Road, Chennai-600 034.+1cc to Mr.N.V.Balaji, Advocate, S.R.No.38122 WP 27102 of 2016 SR(CO)SU(25/08/2021) https://hcservices.ecourts.gov.in/hcservices/