Income Tax Act, 1961

Section 10B

Deduction under section 10B - 100 per cent export-oriented undertaking - Conversion of DTA unit into EOU -

Assessee was engaged in the business of manufacturing of auto parts and it has four units. One of the units was registered as Domestic Tariff Area Unit with the Central Excise Authorities. Subsequently, an application was submitted by assessee therein before Madras Export Processing Zone (MEPZ) to treat the DTA unit as 100% EOU. Permission was granted and the Unit came into existence as an EOU. Assessee showed net profit and claimed exemption under section 10B, in respect of the 100% EOU. However, AO rejected the claim of assessee. Held: The status granted to a DTA unit as a 100 per cent EOU unit did not result in a transfer or splitting up or reconstruction of a business already in existence so as to fall under section 10(2)(iii). Board itself has clarified the position in circular issued by it in Circular No. 1 of 2005. Therefore, assessee-DTA unit on conversion into 100 per cent EOU unit was eligible for exemption under section 10B.

Followed:Super Auto Forge Ltd. v. Addl. CIT (2014) 365 ITR 318 (Mad-HC) : 2014 TaxPub(DT) 2722 (Mad-HC)

REFERRED : Textile Machinery Corporation Ltd. v. CIT (1977) 107 ITR 195 (SC) : 1977 TaxPub(DT) 805 (SC) CIT v. Heartland KG Information Ltd. (2013) (2013) 359 ITR 1 (Mad-HC) : 2014 TaxPub(DT) 193 (Mad-HC) CIT (Pr.) v. Nagaraja (H.) (2018) 406 ITR 242 (Karn-HC) : 2018 TaxPub(DT) 3093 (Karn-HC)

FAVOUR : In assessee's favour

A.Y. :

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