Back
2021 Supreme(Mad) 1202
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. Subramaniam, J.
Indus Teqsite Private Limited - Petitioner
Versus
Ministry of Finance, Represented by Secretary, Department of Revenue, North Block, New Delhi and ors. – Respondents
W.P.No.6542 of 2014 and M.P.Nos.1 & 2 of 2014
Decided On : 16-06-2021
Advocate Appeared:
For the Petitioner: Mr.Vaibhav R Venkatesh
For the Respondent: Mr.Prabhu Mukunth Arunkumar Standing counsel(Income Tax)
Headnote:
Constitution of India - Deputy Commissioner of Income Tax, Chennai has re-opened the assessment of the petitioner company (Assessee), that for the relevant Assessment Year, the petitioner company is not entitled to Section 10-B of the Income Tax Act, 1961 exemption as an 100% EOU - the validity of the clarification impugned is questioned mainly on the ground that it is violative of the provisions of the Income Tax Act and no such ratification is contemplated under the provisions of the Income Tax Act - Direct Taxes disputed the said contentions by stating that the petitioner has misconstrued the issues by erroneously interpreting the provisions of the Act- Held, There is no reason for Parliament to amend the law, and extend benefits of Section 10A to units under STP scheme and, restrict the benefits to those commencing their operations, if a STP unit is otherwise eligible for exemption under Section 10B of the Act on the ground of its being 100 per cent EOU- Though the considerations which apply for granting approval under Sections 10-A and 10-B may to an extent, the deliberate segregation of these two benefits by the statute reflects Parliamentary intention that to qualify for benefit under either, the specific procedure enacted for that purpose has to be followed- the petitioner has to get an approval from the competent Board as contemplated for claiming exemption under Section 10-B of the Income Tax Act. Even in case, there is a change of authorities / Board by the Ministry, it is for the petitioner to approach the Ministry or the Department concerned for the purpose of the procedures, which all are in force for claiming exemption under Section 10-B of the Income Tax Act- such an approval cannot be validated for the purpose of claiming exemption under Section 10-B of the Income Tax Act- Writ petition dismissed.
ORDER :
The writ on hand is filed, challenging the CBDT Instruction No.2/2009 dated 9.3.2009 r/w Corrigendum to the said Instruction No.2/2009 dated 8.5.2009 (F.No.178/19/2008-ITA-1) issued by the second respondent and further, to quash the CBDT Instruction No.2/2009 dated 9.3.2009 r/w Corrigendum to the said Instruction No.2/2009 dated 8.5.2009 (F.No.178/19/2008-ITA-1) issued by the second respondent insofar as 100% Export Oriented undertakings (EOUs) under the Software Technology Parks (STP) scheme/Electronic Hardware Technology Parks (EHTP) scheme are concerned.
2. The petitioner / Indus Teqsite Private Limited was incorporated in the year 1998, has proven expertise and experience in manufacture of highly reliable electronic products and systems. The petitioner company is a Government of India approved “100% Export Oriented Undertaking” [in short 'EOU'] under the “Electronic Hardware Technology Park” [in short, 'EHTP'] Scheme, and has been duly granted such an approval by the “Software Technology Parks of India” [in short 'STPI'] through the powers delegated to it by the Department of Electronics, Government of India.
3. The issue raised in this writ petition is that the Deputy Commissioner of Income Tax, Chennai, who is the Assessing Officer of the Income Tax Department under respondents 2 and 1 Ministry has re-opened the assessment of the petitioner company (Assessee) for the Assessment Year 2006-2007 for the reasons noted in the files, that for the relevant Assessment Year, the petitioner company is not entitled to Section 10-B of the Income Tax Act, 1961 exemption as an 100% EOU.
4. The re-opening of the assessment has been initiated by the Revenue Department on the sole ground that as per Central Board of Direct Taxes [in short 'CBDT'] Instruction No.2/2009 dated 09.03.2009, approvals granted to 100% EOUs by Development Commissioners will be considered valid, once such an approval is ratified by the Board of Approval for the EOU Scheme.
5. The learned counsel for the petitioner contended that it is an erroneous decision taken by the respondents because in the case of approvals for 100% EOUs under Software Technology Parks / Electronic Hardware Technology Parks [in short 'STP/EHTP'] scheme, the concerned Ministry of the Government of India has delegated the powers of Board of Approval i.e., the Inter-Ministerial Standing Committee to the Development Commissioners i.e., the Director of Software Technology Parks of India and therefore, the approval granted by the Development Commissioner i.e., the Director of Software Technology Parks of India is deemed to have been granted by the Board of Approval i.e., the Inter-Ministerial Standing Committee. Thus, a post-approval ratification from the alleged Board of Approval is not mandated anywhere under the law in the case of 100% EOUs under STP/EHTP Scheme.
6. In view of the said position, the learned counsel for the petitioner reiterated that the approval granted in favour of the petitioner for all purposes is deemed to have been granted by the Board of Approval i.e., the Inter-Ministerial Standing Committee and therefore, no further ratification is contemplated and thus, the circulars impugned issued in this regard are in violation of Section 10-B r/w Section 14 of the Industries (Development and Regulation Act) 1951. In other words, the validity of the clarification impugned is questioned mainly on the ground that it is violative of the provisions of the Income Tax Act and no such ratification is contemplated under the provisions of the Income Tax Act. The approval contemplated under Section 10-B of the Income Tax Act has already been granted in favour of the petitioner by the competent authority by virtue of exercise of powers of delegation. Thus, the said approval is deemed to be a valid approval for all purposes and there is no further ratification needs to be granted under the provisions of the Income Tax Act.
7. The learned Standing counsel appearing on behalf of the second resp
