Question of Violation of Section 10AA(4)(ii) should be raised in First Year of Operation / Exemption
Case Law Details
CIT Vs Macquarie Global Services Pvt Ltd (Delhi High Court)
It is an accepted and admitted position that the unit in the SEZ had commenced business in the period relating to the Assessment Year 2011-12. The assessee had claimed and was allowed deduction under Section 10AA in the Assessment Years 2011-12 and 2012-13. The Assessing Officer did not disallow exemption claim under Section 10AA in the assessment orders passed after scrutiny under Section 143(3) of the Act.
Impugned order has referred to the decision of the Delhi High Court in Commissioner of Income Tax vs. Heartland Delhi Transcription Services Pvt. Ltd. (2014) 366 ITR 523 (Delhi) wherein interpreting an identical provision in Section 10B of the Act, it was observed that the objection under Clause (ii) should be taken in the first year when the new unit was set up and when exemption is for the first time claimed under Section 10B of the Act.
An earlier decision of the Delhi High Court in Commissioner of Income Tax vs. Tata Communications Internet Services Ltd. (2012) 251 CTR 290 had interpreted sub-section (3) to Section 80IA of the Act, which bears similar language and negative stipulation to hold that the question of violation of sub-section (3) to Section 80IA is to be raised and considered in the first year of the claim for deduction. If the assessee was using new plant and machinery that had not been previously used for any purpose and the new undertaking was not formed by ‘splitting up’ or ‘reconstruction’ of the business already in existence, the entitlement in deduction under Section 80IA cannot be denied in the subsequent year.
It is an accepted and admitted position that the unit in the SEZ had commenced business in the period relating to the Assessment Year 2011-12. The assessee had claimed and was allowed deduction under Section 10AA in the Assessment Years 2011-12 and 2012-13. The Assessing Officer did not disallow exemption claim under Section 10AA in the assessment orders passed after scrutiny under Section 143(3) of the Act.
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