THE COMMISSIONER OF INCOME TAX, COCHIN vs. M/S.MIDLAND LATEX PRODUCTS LTD., 64,

The appeal filed by the assessee before the Commissioner of Income Tax (Appeals) was allowed vide Annexure B, granting exemption under Section 10A. The Revenue challenged the order before the Tribunal, but vide Annexure C, the appeal was dismissed. Hence, the Revenue is in appeal before us raising the following substantial question of law, as modified by us: “Can the relief granted to the assessee, under Sec.10A be extended further, by an amended law, without giving retrospective effect to it, once the assessee has exhausted its quota spanning eight years beginning with the year of commencement of production?”

We heard the learned Senior Counsel, Government of India (Taxes) and the learned Counsel for the respondent. The only point that is urged by the learned Senior Counsel for the Revenue is that the assessee is entitled to exemption under Section 10A only upto 1997-98, ie., five years within a block of eight years from the assessment year 1990-91 and since the assessee has already availed the exemption for five years, amendment to Section 10A which came into effect on 01.04.1999 extending the period of five years to ten years, is not available to the assessee. The finding of the AO and the argument of the learned Senior Counsel for the Revenue is that the amendment has no retrospective effect and being prospective, the assessee in this case is not entitled to the benefit of the amendment.

The learned Counsel for the assessee on the other hand would argue that the intention of the Legislature in bringing forth the amendment in 1998 was to extend the benefit granted to the assessee's under Section 10A of the Act, and that instead of five years the period was extended to ten years and the words “falling within a period of eight years” and “specified by the assesee at his option” were omitted.

A Division Bench of the Karnataka High Court has in C.I.T. v. DSL Software Ltd., [2013] 351 ITR 385 considered the object behind the amendment extending the period of exemption under Section 10B, wherein also a similar amendment was brought in 1998 and the period of exemption was extended from five years out of eight yeas to a period of ten years with effect from 01.04.1999. The Karnataka High Court held that the object with which this amendment was introduced, was to extend the benefit for a period of ten consecutive years from the date of commencement of manufacture or production. Only if the assessee has already availed the benefit under the unamended provision and ten consecutive years would fall prior to 01.04.1999; when the amendment came into effect, would the assessee be disentitled to the said benefit. If the ten years from the date of production has not expired prior to the date on which the amendment came into effect, for the remaining unexpired period, he would be entitled to the benefit and he cannot be denied the benefit for the reason that he has availed the benefit of the unamended provision for a period of five years and that had expired before the amendment came into force. The Karnataka High Court was of the opinion that it would run counter to the intention with which the amended provision was brought into the Statute book and that it would negate the amended provision. The aforesaid Karnataka High Court decision was also followed by the Bombay High Court in C.I.T. v. Chowgule & Company Ltd., (2015) 93 CCH 212 Mum HC: MANU/MH/2025/2015. 7. We are in agreement with the views expressed in the aforecited decisions. We find no justifiable reason, whatsoever, to interfere with the concurrent finding of the appellate authorities on this point and the question of law is answered against the Revenue and in favour of the assessee. The appeal stands rejected. No costs. K.VINOD CHANDRAN JUDGE ASHOK MENON dkr JUDGE