Court Confirms Eligibility for Section 10B Tax Exemption; Dismisses Revenue's Appeal on Newly Established Undertaking Definition.

The HC dismissed the revenue's appeal, upholding the Tribunal's decision that the assessee was eligible for the section 10B exemption under the Income-tax Act, 1961. The court clarified that the "newly established undertaking" term is used to determine the start of the ten-year exemption period, not a requirement for each year of claiming. Since the assessee began operations in 1998-99 and claimed the exemption for 2001-02, it fell within the permissible ten-year period. The court found no substantial question of law in the revenue's appeal.

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Issues:
Interpretation of section 10B of the Income-tax Act, 1961 regarding eligibility for exemption for newly established export-oriented undertakings.

Analysis:
1. The appeal was filed by the revenue against the order of the Income-tax Appellate Tribunal regarding the eligibility of the assessee for exemption under section 10B of the Income-tax Act, 1961 for the assessment year 2001-02.
2. The assessee, engaged in the export of computer software, claimed exemption under section 10B as a 100% export-oriented undertaking. The Assessing Officer questioned the claim as the unit was not newly established in the relevant year.
3. The CIT(A) allowed the claim, stating that the assessee fulfilled all conditions for exemption under section 10B, available for ten years from the year of commencement of manufacturing.
4. The revenue appealed to the Tribunal, which upheld the CIT(A)'s decision.
5. The revenue further appealed, contending that since the unit started production in 1998-99, it could not be considered newly established in 2001-02 for section 10B benefits.
6. The Court analyzed section 10B, emphasizing that the exemption is available for ten consecutive years from the year of commencement of manufacturing for export-oriented undertakings fulfilling specified conditions.
7. It was clarified that the term "newly established undertaking" in section 10B is to identify the initial year for the ten-year exemption period, not a requirement for each claiming year.
8. The Court held that as the assessee started software development in 1998-99 and claimed exemption in 2001-02 within the ten-year period, it was eligible for section 10B benefits.
9. Consequently, the appeal was dismissed as no substantial question of law arose from the Tribunal's order.

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