Exemption u/s. 10A – A. Y. 2000-01 – Relevance of date of notification of STPI – Assessee having been notified by STPI on 04/03/2000 is eligible for exemption u/s. 10A for entire A. Y. 2000-01 – AO was not justified in restricting the benefit for the period after 04/03/2000

CIT vs. Soffia Software Ltd.; 281 CTR 594 (Mad):

The assessee was notified by the STPI on 04/03/2000 as eligible for exemption u/s. 10A of the Income-tax Act, 1961. For the A. Y. 2000-01, the assessee claimed exemption u/s. 10A of the Act. The Assessing Officer restricted the exemption to the period after 04/03/2000/-. The Tribunal allowed the assessee’s claim.

On appeal by the Revenue, the Madras High Court upheld the decision of the Tribunal and held as under:

“i) The CIT(A) as well as the assessing authority fell into error by holding that registration as an STPI is a requirement for the assessee to claim the benefit u/s. 10A. Section 10A applies if an industrial undertaking has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year.

 ii) In this case, the date of STPI notification is 04/03/2000. Therefore the assessee has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year in the STPI unit and it will be entitled to deduction u/s. 10A in respect of profit attributed to export turnover. The Circular issued u/s. 10B cannot be made applicable to a case falling u/s. 10A.

iii) Furthermore, the circular which has been relied upon by the CIT(A) dated 06/01/2005, has no relevance to the A. Y. 2000-01. The assessee is eligible for exemption u/s. 10A for the entire A. Y. 2000-01.”