The Supreme Court (SC) has finally cleared the air about the true effect of the
provisions of section 10A of the Income Tax Act, 1961. Earlier there was a lot of
confusion as to whether amended section 10A is a deduction section or an exemption
section.
The Apex Court in the case of CIT vs. M/s. Yokogawa India Ltd [dated 16th December
2016] has ruled that Section 10A is a deduction section. However, the stage of the
deduction would be while computing the gross total income of the eligible
undertaking under Chapter IV of the Act and not at the stage of computation of the
total income under Chapter VI.
While rendering the above verdict, the SC noted two conflicting circulars issued by
The CBDT i.e. Circular No. 7 dated 16.07.2013 and Circular No. 01/2013 (in the former
Circular Section 10A is referred to as providing for deductions whereas the later
Circular uses the expression “exemption”).
In this newsflash, above decision of the SC has been summarized.