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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the assessee was entitled to deduction under section 10AA of the Income-tax Act, 1961 for the assessment year 2014-15 after its unit had earlier availed deduction under section 10A and was converted from an export processing zone to a special economic zone.
Analysis: The assessee's unit had commenced production in an export processing zone and was later converted into a special economic zone. The dispute turned on the interaction between section 10A, as amended from time to time, and section 10AA inserted by the Special Economic Zones Act, 2005. The decisive consideration was that the second proviso to section 10AA preserved the benefit for units initially located in an export processing zone or free trade zone and later converted into a special economic zone, by reckoning the ten-year period from the year in which manufacture or production first began in the original zone. The Tribunal followed its earlier decision in the assessee's own case and held that section 10AA applied to the unexpired period of deduction, and the assessee could not be denied the claim merely because the unit had earlier enjoyed deduction under section 10A.
Conclusion: The assessee was entitled to deduction under section 10AA for the assessment year under consideration, and the disallowance was set aside.
Ratio Decidendi: Where a unit initially established in an export processing zone is later converted into a special economic zone, the deduction period is reckoned from the year of first manufacture or production in the original zone, and the successor deduction under section 10AA is available for the unexpired eligible period.
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