M/s.Hifx iT & Media services P. Ltd, Kochi V. The iTO, Kochi

CO 10/COCH/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4985 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Audit objection; Tax effect; Competent authority; Tax effect
• Section: 10B; 268A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George Mathan, JM & Shri M. Balaganesh, AM ITA No. 367/Coch/2020 (Assessment Year: 2007-08) The Income Tax Officer Corporate Ward 1(1) Kochi Vs. M/s. Hifx IT & Media Services Pvt. Ltd. 4th Floor, Adonai Towers S.A. Road, Kochi 682016 PAN – AABCH1160Q Appellant Respondent CO No. 10/Coch/2020 (Arising out of ITA No. 367/Coch/2020) (Assessment Year: 2007-08) M/s. Hifx IT & Media Services Pvt. Ltd. 4th Floor, Adonai Towers S.A. Road, Kochi 682016 Vs. The Income Tax Officer Corporate Ward 1(1) Kochi PAN – AABCH1160Q Cross Objector Appellant in Appeal Appellant by: None Respondent by: Smt. J.M. Jamuna Devi, Sr. D.R. Date of Hearing: 15.03.2022 Date of Pronouncement: 15.03.2022 O R D E R Per: Bench ITA No. 367/Coch/2020 is an appeal filed by Revenue against the order of the learned CIT(A)-1, Kochi in appeal No. ITA. No.15/R- I/E/CIT(A)-I/2013-14 dated 21.07.2013 for AY 2007-08. CO No. 10/Coch/2020 is cross objection filed by the assessee against the Revenue appeal in ITA No. 367/Coch/2020. 2. None appeared on behalf of the assessee. . Smt. J.M. Jamuna Devi, Sr. D.R. represented Revenue. ITA No. 367 & Co No. 10/Coch/2020 M/s. Hifx IT & Media Services Pvt. Ltd. 2 3. In the appeal Revenue has raised the following grounds: - “1. The order of the learned CIT(Appeals) I, Kochi is contrary to law, facts and circumstances of the case. 2. In the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals)-I, Kochi is not justified to hold that the assessee company is eligible to deduction u/s.10B on the basis of approval from inter Ministerial Standing Committee (IMSC) set up for granting licence under STPI. 3. The learned CIT(A) erred in holding the directors of STPI as competent authority for granting approval u/s 10B by relying on the Hon'ble Jurisdictional ITAT's Decision in the case of DCIT Vs. Charter BPO Solutions Pvt Ltd, whereas, the relied upon case, the Hon'ble Tribunal held that the assessee not being approved by the Board appointed by the Central Government in exercise of powers conferred u/s. 14 of the Industries (Development and Regulation) Act, 1951 is not eligible for exemption u/s. 10B of the IT Act. 4. The ld. CIT(A) erred in relying on the ITAT, Cochin Bench's Order in the case of Navigant BPM (India) Pvt Ltd Vs, ACIT in IT(TP)A No. 57/Coch/2016, whereas in this case also hon'ble Tribunal held that if exemption u/s. 10B is not available, assessee can make an alternate claim of 10A exemption during assessment or appellate procedure. In this case the assessee has neither filed Form-56G which was required to be furnished by the assessee as per subsection (5) of section 10A of the Act nor claimed the alternate claim of 10A before the AO or CIT(A). 5. Learned CIT (A) ought to have considered that approval of STPI has not been ratified by the Board of Approval for EOU scheme u/s 10B, as required and explained in the CBTD Instruction No. 2/2009 dated 91312009. 6. The ld. CIT(A) failed to appreciate that for claiming exemption u/s 10B approval under STP Scheme may be necessary but not sufficient pre- condition without any delegation of power from the Board of Approval for EOU scheme. 7. The decision of the learned Commissioner of Income Tax(Appeals) in this regard is in misapprehension of the Explanation to section 10B of the Act, which clearly laid down the approval by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) and the rules made under that Act. 8. The ld. CIT(A) failed to appreciate the decision of Hon'ble Delhi High Court that a unit which is not approved by the Board appointed by the Central Govt. in exercise of powers conferred under section 14 of the Industries (Development and Regulation) Act, 1951 is not entitled for exemption under section 10B of the Act?” ITA No. 367 & Co No. 10/Coch/2020 M/s. Hifx IT & Media Services Pvt. Ltd. 3 Assessee has raised the following grounds in the Cross Objection: - “1. The Appeal filed on 21/10/2020, is not maintainable in view of the circular issued invoking the power under S. 268A of the Income Tax Act, 1961. Invoking the power under S. 268A of the Income Tax Act, 1961, the Board has issued order fixing monetary limits for the purpose of regulating filing of appeal of application for reference by any income-tax authority. The monetary limits fixed earlier, for filing of appeals before the Appellate Tribunal in income-tax cases has been enhanced further to Rs.50,00,000/- as per Circular No. 17/2019 dated 08/08/2019 read with Circular No. 3/2008 dated 11.07.2018. The tax effect involved in the appeal of the Revenue is less than Rs.50,00,000/-. Further, in the instant case neither the Constitutional validity of any Act or Rule is under challenge or any of the Board’s order, notification, instruction or Circular has been held to be illegal or ultra vires or the Revenue Audit objection has been accepted by the Department or is there any addition relating to undisclosed foreign income/undisclosed foreign assets or is there any prosecution filed by the Department pending in any Court enabling contest on merits notwithstanding the monetary limit on tax effect. (Tax effect Rs.494496.00) 2. The Circular issued by the Board is binding on the Revenue. The Bombay High Court has dismissed the challenge made by the Revenue, solely on the ground of being below the mandatory monetary limit of tax effect, as per its judgment dated 26/11/2001 in “CITv. Camco Colour Co.”. This decision has been followed by the Bombay High Court in “C.I.T v. Zob Y. Topiwala” holding that the Circular is binding on the department and is applicable to old cases as well. The Income Tax Appellate Tribunal Bench : A:New Delhi has as per its order dated 17/12/2015 in ITA No:2758/Del/2014 and connected cases dismissed 16 appeals filed by the Revenue on the ground of monetary limit of tax effect being less than the amount prescribed under the Circular issued by the Board. 3. In these circumstances the Appeal has to be dismissed in limine. This counter affidavit is filed for the limited purpose of deciding the preliminary issue of maintainability of the appeal and the respondent reserves the right to file a detailed counter affidavit, in case of necessity. Total tax effect Rs.494496.00” 4. At the time of hearing it was noticed that the appeal filed by the Revenue is falling below the monetary limit prescribed by the CBDT in respect of filing of appeal before the Tribunal. Consequently on account of ITA No. 367 & Co No. 10/Coch/2020 M/s. Hifx IT & Media Services Pvt. Ltd. 4 Tax effect the appeal of the Revenue stands dismissed and the Cross Objection filed by the assessee, wherein the tax effect has been raised, stands allowed. Dictated and pronounced in the open Court on 15 th March, 2022. Sd/- Sd/- (M. Balaganesh) (George Mathan) Accountant Member Judicial Member Cochin, Dated: 15 th March, 2022 Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) -1, Kochi 4. The CIT - Kochi 5. The DR, ITAT, Cochin 6. Guard File By Order //True Copy// Assistant Registrar ITAT, Cochin n.p.