In AY 1999-2000, before expiry of the original time limit of five consecutive assessment years for which deduction was available as per then applicable law, the amended law became applicable and the assessee was accordingly eligible for deduction for the extended period of 10 years, as against 5 years allowed under the preamended law.
If there is only one decision of a non-jurisdictional Hon’ble High Court on the issue, it is binding on the Special Bench in view of the settled principle of judicial proprietary. The department’s argument that the new units set up by the assessee was a mere “capacity extension” and not a separate industrial undertaking on the basis that the certificates granted by the EOU authorities was for enhanced capacity and not for setting up a new industrial undertaking is not acceptable because S. 10B does not stipulate the issue of a separate approval for each unit from the competent authority. The only requirement is that the undertaking should be approved.
INCOME TAX APPELLATE TRIBUNAL, SPECIAL BENCH, INDORE
(ITA Nos. 777 & 900 (Ind) of 2004 & 295 & 356 (Ind) of 2006)
(assessment years 2001-02 & 2002-03)
Maral Overseas Ltd. Appellant
versus
Additional Commissioner of Income-tax
ORDER
PER BENCH – This Special Bench is constituted by Hon’ble President under section 255(3) of the Income Tax Act, 1961 for deciding the following questions of law : –
1. “Whether, an undertaking claiming exemption u/s 10B of the Income-tax Act, 1961, as it existed prior to 1.4.1999 would be entitled for exemption/deduction u/s 10B for extended period of ten years as per the amended provisions of law brought on statute with effect from 01.04.1999 ?”
2. “Whether, in the facts and circumstances of the case, the undertaking is eligible for deduction on export incentive received by it in terms of provisions of Section 10B(1) read with Section 1 0B(4) of the Act ?”
2. Brief facts of the case are that the assessee is a company engaged in the manufacture and mainly export of cotton yarn, grey & finished knitted cotton fabrics & readymade garments. During the assessment year 2001-02, the assessee has claimed income exempt u/s 10B of I.T. Act for three units namely original unit which started production from A.Y. 1992-93, spinning unit no. III which started production from A.Y. 1996-97 and spinning unit no. IV which started production from A.Y. 1999-2000. This is given below in tabular form:-
