Deduction under Section 10A – STPI units – CBDT calrifies
Section 10A of the Income-tax Act, 1961 provides for 100% deduction of profits and gains derived by an undertaking from export of articles or things or computer software manufactured or produced by it. The deduction is available for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software.
It has come to the notice of the Board that a large number of units registered/approved by the Director of the STPI are claiming deduction u/s. 10A whereas the STP scheme requires approval by the Inter-Ministerial Standing Committee of the Department of Electronics. Accordingly, the cases of such claimants have been reopened by the field authorities. In view of the ambiguity in the legal status of the approval by Director of STPs, the Inter-Ministerial Standing Committee will meet to consider the approvals by Director of STPs issued in the past.
Therefore, with a view to avoid infructuous demand raised in assessment and reassessment of assessees claiming deduction u/s. 10A, it has been decided that the claim of deduction u/s. 10A of the Income-tax Act, shall not be denied to STP units only on the ground that the approval/registration to such units has been granted by the Directors of Software Technology Parks. In cases where assessments/reassessments have already been completed, and the claim u/s. 10A has been disallowed only on the ground that the approval to the STP has not been granted by the Inter-Ministerial Standing Committee in accordance with the Scheme, the demand so arising should be kept in abeyance until further orders.
F.No. -ITA-I Dated : March 31, 2006