TaxTMI 
TaxTMI 
2013 (7) TMI 147
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....by way of training fees. The claim of the assessee was rejected by the Assessing Officer on the view that the relationship between the assessee and the trainees was not that of employer and employees. Training was not given to the employees of the assessee or on apprenticeship. On the other hand, training fee was charged by the assessee for carrying out training to outsiders and there was no contractual obligation on the part of the assessee company to absorb them. In the absence of any such relationship as employer and employees and the training being given to outsiders, the Assessing Officer viewed that the receipt was not exempt under Section 10B of the Income Tax Act. On appeal, the Commissioner of Income Tax (Appeals) viewed that the nature of business of the assessee, viz., development and sale of software was dependent on the availability of trained manpower. Thus, training being recognised as part of software development in the export oriented units, the receipt from the training programme was exempt under Section 10B of the Income Tax Act. Thus the Commissioner of Income Tax (Appeals) allowed the appeal. On further appeal before the Income Tax Appellate Tribunal by the Rev....
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.... yet another appeal relating to the same company but on different issues relating to the assessment year 2004-05. By a common order relating to the assessment years 1996-97 and 2004-2005, the Tribunal rejected the plea of the assessee and thereby allowed the appeal on the claim under Section 10B of the Income Tax Act. 6. The Tribunal held that the income derived from the undertaking could not be stated as export income of the assessee. The income falling under Section 10B was earned as fee received by the assessee for imparting training to outsiders by using some infrastructure which might be lying idle as the assessee had not exported any article or goods or software during the period relevant to the assessment year under consideration. We may point out herein the objection of the learned counsel appearing for the assessee that it was an incorrect statement of fact by the Tribunal that the assessee had not exported any article or goods during the relevant period. Learned counsel appearing for the assessee pointed out to the assessment order, wherein it had placed the required details as to the income derived from the cost of software. This incorrectness of fact, however, accord....
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.... 19 SOT 412 (Mumbai) (Sovika Infotek Ltd. Vs. Income Tax Officer), wherein, a similar claim was allowed and the Department had also accepted the order of the Tribunal. She further submitted that training of professionals being part of the business of development of software, the provisions have to be interpreted liberally to grant the relief. Being a provision to promote the infrastructure development in the country and the nature of business in the development of software being dependent on the availability of more professionals in the field, the Tribunal ought to have had a proper understanding on the scope of the provision and grant the relief. She also made particular objection to the view of the Tribunal about the infrastructure utilised for training, holding that it was only on account of the idle infrastructure that the assessee had used, to gain unmerited benefit. Considering the wrong view taken and that some of the students were also taken on employment, on facts, she submitted that in the event, this Court does not accept the plea for exemption, it is but necessary that the matter be remitted back for a de novo consideration of the claim for a pro-rata relief. 8. Lear....
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.... up, or the reconstruction, of a business already in existence:- Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation.--The provisions of Explanation 1 and Explanation 2 to sub-section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. (3) to (7) ... Explanation.--For the purposes of this section,-- (i) "hundred per cent. export-oriented undertaking" means an undertaking which has been approved as a hundred per cent. export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act; (ii) "relevan....
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....being one arising on account of manufacture or production of an article or thing, the benefit under Section 10B can have no relevance at all. The Section, as already extracted above, clearly points out what "manufacture" is. The said term includes any process or assembling or recording of programmes on any disc, tape, perforated media or other information storage device that are considered for the purpose of applicability of the Section. In other words, the activity other than what has been specified or enumerated in the Section would be of no relevance for the purpose of considering the exemption under Section 10B of the Income Tax Act. Even though the provision is an incentive provision, yet, when the words are unequivocal, the Section calls for a restrictive consideration - Refer [2003] 262 ITR 278 (Pandian Chemicals Ltd. v. Commissioner of Income-tax). As is well laid, taxation under the Act is the rule and exemption, the exception. Thus, unless the assessee shows that the receipts come clearly within the language of the Section, it is not possible for this Court to give an elastic interpretation to the clear words based on tax treatment under different enactments or the scheme....
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.... outside the STP unit for this purpose. 2. The matter has been examined be (sic) the Board. There is no doubt that as a policy any STP unit is permitted to utilise the imported equipment's for purpose of training within the unit itself. However, it is to be appreciated that such STP units are set up with the primary intention of exports and training. Accordingly, if such units set up for export purpose use the equipment also for training there can be no objection. It is clear that in such cases the declared intention at the time of import would be to fulfil the export obligation under the STP scheme and if this is so the customs may have no objection for import of the equipments under the respective notification. 3. In view of the aforesaid facts, I am directed to clarify that imports by STP Units should be permitted by the Customs authorities in terms of the relevant customs notification and if later the equipments are used for training purpose also we may have no objection. Sd/- S.M. Bhatnagar Under Secretary to the Government of India " 16. This is followed by yet another circular dated 07.07.1997 in Circular No.24/97- Cus., which once again pointed out to the ....
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.... settled principle of law that when the provisions of the tax enactment are clear and are beyond any contradiction, no words could be added to understand the scheme of the provisions of the Act. As already seen, a reading of the provision points out that the Act has made its intention very clear that the exemption is available in respect of profits and gains derived by an undertaking which is engaged in the manufacture or production of an article or thing. Since the training is given to the graduates/professionals who are not employees, who are not, in any way, associated with the business of the assessee in the matter of production and manufacture of an article or thing, and the receipts not being profits and gains derived by the undertaking in the manufacture or production of article or thing, we do not find any justifiable ground to confer benefit of the provision based on the policy decision taken either under the customs enactment, or for that matter, under the Software Technology Park Scheme. It is no doubt true that the objectives of the Software Technology Park Scheme seeks training of professionals as one of the objects; yet, the scheme is one thing and tax treatment is to....