TaxTMI 
TaxTMI 
2010 (7) TMI 837
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....er Software Technology Parks (STP) Scheme, notified vide Notification No. S.O. 243(E), dated March 22, 1994 issued by the Ministry of Commerce, Government of India (refer [1994] 209 ITR (St.) 48), The assessee's case is that being having thus registered with the Government of India as a 100 percent export oriented undertaking (EOU), it is entitled to special tax holiday, even as specified in the said scheme per 2.8.1 thereof. The Revenue's case, on the other hand, is that the said exemption from income-tax could only be allowed under and in terms of the provisions of the Income tax Act, 1961 ("the Act" hereinafter) and, thus, stands to be allowed under section 10A of the Act. Accordingly, interest on bank deposits, which is assessable under section 56 of the Act, would not be subject to exemption under section 10A. Similarly, the export turnover of the business would stand to be computed by excluding the unrealised export turnover, i.e., as is not received in (or brought into) India by the assessee in convertible foreign exchange within a period of six months from the end of the relevant previous year or within such further period as the competent authority may allow on this behalf....
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....rest for that matter, would stand to be excluded from the blanket tax holiday that stands extended to the STP Units. As such, irrespective of the source or the head of the income, the entire income of the eligible unit would stand to be covered by the said notification for a block of five years in the first eight years of its operation. Before us, like submissions stood raised by both parties ; each relying on the order of the authorities below as favourable to it. Apart from the two examples of the provisions under a different legislations impacting the tax liability under the Act, as cited before and by the learned Commissioner of Income-tax (Appeals), the learned authorised representative also relied on the Small and Medium Enterprises Development Act, 2006, which bears a provision similar to section 9 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. We have heard the parties, and perused the material on record. The assessee claims that its entire income, being from a STP Unit and, thus, covered under a specific scheme promulgated by the Government of India under the powers conferred thereon by sub-section (1) of....
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....such, no ambiguity in the position of law, or conflict or inconsistency between the said provisions and of the Act, and the exclusion of the stated/ excepted incomes from the purview of the provisions of the Act, legally firm. The reliance by the assessee on the said Acts in canvassing its case is, thus, grossly misplaced, and of no assistance. Coming to the merits of the case, there is no corresponding provision in the Foreign Trade (Development and Regulation) Act, 1992. Vide section 3 of the said Act, the Government of India is empowered to formulate a scheme in consistence with the objectives of the said Act, which, as apparent, is for the development and regulation of foreign trade. The Software Technology Parks (STP) Scheme is a 100 percent export-oriented scheme for undertaking of software development for export using data communication link or in the form of physical exports including export of professional services. The scheme is to be administered by it through the department of electronics, acting through the directors of the respective Software Technology Parks, which are to be set up by the Government of India. The units covered under the said scheme would be, subje....
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....nits, so that no benefit could be extended thereto in its absence (or a like provision in the Act), i.e., if such a provision were not on the statute, or if the unit did not satisfy the conditions listed in the said section. The assessee, as noted earlier, does not make reference to any provision of the said Act (Foreign Trade (Development and Regulation) Act, 1992) in pressing its claim. In fact, even a provision in that law inconsistent with the provisions of the Act, would, in the absence of a validating provision providing for the overriding effect of the relevant provision, (and as found in each of the cited enactments), would at best give rise to a legal debate, i.e., as to which of the two conflicting enactments would prevail. The Tribunal is not empowered to read down a provision of law, and thus, its competence to address such a legal debate, which though does not obtain in the present case, is itself doubtful. Continuing further, in fact, the assessee, claiming an exempt status qua its STP unit, independent of the Act, and having, thus, not made any claim for exemption or deduction under section 10A per its return of income, could not have been allowed relief under the....
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.... arise. The first issue is the exclusion of the unrealised export proceeds from the "export turnover" but not the "total turnover" by the Assessing Officer, in calculating the relief exigible under section 10A in the assessment for the assessment year 2002-03. The learned Commissioner of Income-tax (Appeals) allowed the same, the following the decisions in the case of CIT v. Abad Fisheries [2002] 258 ITR 641 (Ker) and Seema Silks and Sarees v. Asst. CIT [2006] 103 TTJ (Mumbai) 704. We have heard the parties, and perused the material on record. For the reasons that follow, we are unable to be in agreement with the learned Commissioner of Income-tax (Appeals). The deduction under section 10A(1) is only in respect of profits and gains derived by the undertaking (from the export of articles or things or computer software), subject to the provisions of the section, including those relating to the conditions that are required to be satisfied. Sub-section (3) states that the section (section 10A) applies to the undertaking if the sale proceeds of article or things or computer software exported out of India and received in, or brought into, India in convertible foreign exchange withi....
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....ould be entitled to allocation, and only on the basis of the ratio of the export turnover (as defined) to the total turnover without any exclusion of such export. The same follows the simple principle of apportionment ; the numerator (i.e., the profits which stands to be allocated) being inclusive of that on the export of Rs. 90.79 lakhs, the base or the denominator would necessarily have to be the total turnover, i.e., inclusive of the said sum of Rs. 90.79 lakhs. In the case of Abad Fisheries [2002] 258 ITR 641 (Ker), the hon'ble court agreed with the Tribunal as the amount in reference did not form part of the profit, so that it would not form part of the total turnover ; its relevant observations being as (refer page 645) : "Regarding this contention, the Tribunal held that since this does not form part of the profit, it cannot form part of the turnover also." Since the amount to be proportioned did not include the profit on the excluded turnover, the same would also be included in the total turnover. There could hardly be any dispute with the same. The said decision, thus, is not applicable in this case. With regard to the decision in the case of Seema Silk....
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.... its profit and loss account, in the sum of Rs. 75.24 lakhs, in respect of the employer's share to a welfare fund maintained for its employees under a loyalty bonus scheme. The employees' share, amounting to Rs. 58.94 lakhs, stood reflected as current liability in its balancesheet as at the year-end, under the account head "Loyalty bonus payable". The same was explained as being the employee's contribution, deducted from the salary due and payable to them, calculated at the rate of 20 percent of the salary of each employee covered under the scheme, in terms of its provisions. The same, however, was not bonus. The Assessing Officer, however, added the same in view of section 43B of the Act. He was of the view that the said amount bears the character of a receipt/income in the hands of the assessee, as held by the hon'ble apex court in the case of Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC)in the context of sales-tax. In the first appeal, the learned Commissioner of Incometax (Appeals) allowed the assessee's claim, by allowing its other issue, holding its entire income as exempt from income-tax for a period of five consecutive years in the eight years commencing th....