TaxTMI 
TaxTMI 
2017 (12) TMI 350
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.... 3516/Del/2013 on two grounds, which has been partly allowed and pronounced in the open court. On the issue whether the section 10B of the Income Tax Act, 1961 (in short "the Act") is an exemption provision or a deduction provision, the Tribunal recalled its order dated 21/10/2016 on ground No. 3. of the appeal and also heard arguments of both parties on the issue in dispute after recalling the order. The ground No. 3 of the appeal reads as under: "3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that provisions of Section 14A are not applicable to investment made to EOU covered under the provisions of Section 10B of the Act." 2. Before us, th....
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.... of Hindustan Uniliver Ltd and held that section 10A is a provision exempting particular kind of income even after the amendments by the finance Act, 2000 w.e.f. 01/04/2001. The relevant finding of the Hon'ble Delhi High Court is reproduced as under: "In interpreting sub-section (1) of Section 10A after the amendment made by the Finance Act, 2000 w. e. f. 01.04.2001, one cannot deny that there is ambiguity or doubt, because of the language used, as to whether the sub-section provides for an exemption or a deduction. We have earlier referred to the difficulty caused by the language which says that the deduction shall be made from the total income, when the Act contains no provision to allow any deductions from the total income. The sectio....
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....mind we are inclined to hold that Section 10A is a provision exempting a particular kind of income even in its present form, that is to say, even after being amended by the Finance Act, 2000 w.e.f. 01.04.2001. We are inclined, with respect, to agree with the view taken by the Karnataka High Court in the case of CIT v. Yokogava (supra). As noticed, the Bombay High Court reached in the case of CIT v. Yokogava (supra), in its judgments in Hindustan Unilever Ltd. (supra) and CIT v. Black & Veatch Consulting Pvt. Ltd. (supra), despite taking the view that the Section provides for a deduction and not an exemption. We have already seen that Section 10A, as it presently stands, though worded as deduction provision, is essentially and in substanc....
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.... High Court, we uphold the finding of learned Commissioner of Income Tax (Appeals) on the issue in dispute. The ground No. 3 of the appeal of the assessee is accordingly, dismissed." 6. We find that the Hon'ble Supreme Court in CIT versus TEI Technologies Private Limited (Civil Appeal No. 8923-8924 of 2013 decided on 16/12/2016) reported as CIT & Another versus M/s Yokogava India Ltd (2016) 391 ITR 274 (Civil Appeal No. 8498 dated 16/12/2016) has held that section 10A is a provision for deduction and not exemption. The relevant finding of the Hon'ble Supreme Court is reproduced as under: "13. The retention of Section 10A in Chapter III of the Act after the amendment made by the Finance Act, 2000 would be merely suggestive and not determi....
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.... amendment. Profits of an eligible unit pertaining to domestic sales would have to enter into the computation under the head "profits and gains from business" in Chapter IV and denied the benefit of deduction. The provisions of Sub-section 6 of Section 10A, as amended by the Finance Act of 2003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001-02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any reference to deduction under Section 10A in Chapter VI of the Act can be understand by acknowledging that any such reference or mention wou....
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....dertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision. " 17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, ....