DCIT CIRCLE 1(1)(1), VADODARA V. RAJSHRI SHAH LEGAL HEIR OF LATE TARUN VINODRAI SHAH, VADODARA

ITA 2048/AHD/2024

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The case involves an appeal by the Revenue against the order of the CIT(A) which restored the matter to the Assessing Officer for a fresh examination of the assessee's claim for deduction under section 10A. The assessee, engaged in exporting IT-enabled services, had initially claimed a deduction under section 10B, which was later rejected by the AO. The CIT(A) found that the AO had not complied with the Tribunal's earlier directive to examine the section 10A claim on merits and thus restored the matter to the AO. The Revenue's appeal contested this restoration, arguing that the CIT(A) erred in directing the AO to allow the deduction without appreciating the AO's findings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 789081 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 05-12-2024
• Other Referred Cases: ITA No. 925/Ahd/2014
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: AMRIN PATHAN
• Keywords: Set aside; Services rendered outside India
• Section: 143(3); 263; 10B

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘B’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ]BEFORE S/SHRI SANJAY GARG, JUDICIAL MEMBER AND MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.2048/Ahd/2024 Asstt.Year : 2009-10 ACIT, Cir.1(1)(1) Vadodara. Vs. Rajshri Shah, L/h. of Late Tarun Vinodrai Shah 203, B-Wng Alkapuri Arcade Vadodara. PAN : AJKPS 9542 A (Applicant) (Responent) Assessee by : Ms.Amrin Pathan, AR Revenue by : Shri Abhijit, Sr.DR सुनवाई क तारीख/Date of Hearing : 13/11/2025 घोषणा क तारीख /Date of Pronouncement: 25/11/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the Revenue arises from the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], dated 09.10.2024, passed under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] concerning the assessment completed by the Assessing Officer (AO) under section 143(3) read with section 254 vide order dated 16.03.2016 for A.Y. 2009-10. 2. Facts of the Case. 2.1 The assessee is engaged in export of information technology enabled services, mainly data processing for medical and pharmaceutical companies. The return of income was filed declaring Rs.10,38,260/- after claiming deduction under section 10B amounting to Rs.3,26,27,651/-. The AO originally completed assessment under section 143(3) on 17.11.2011, Printed from counselvise.com ITA No.2048/Ahd/2024 2 allowing the claim under section 10B. Subsequently, the Commissioner of Income Tax, Baroda, passed an order under section 263 on 21.02.2014, setting aside the assessment and directing the AO to re-examine the claim of deduction under section 10B and also examine the alternate claim under section 10A, as raised before him. Pursuant to these directions, the AO passed a fresh assessment order under section 143(3) read with section 263 on 04.03.2015, wherein the claim under section 10B was rejected on the ground that STPI approval is not equivalent to approval by the “Board” as defined in Explanation 2(iv) to section 10B. 2.2 The assessee then carried the matter before the Tribunal in ITA No. 925/Ahd/2014, and the Tribunal vide order dated 16.01.2015 held that while section 263 action was justified for limited purposes, the AO must examine the alternate claim under section 10A on merits. 2.3 In compliance, the AO issued a show-cause notice dated 09.10.2015 asking the assessee to substantiate the claim under section 10A. The assessee submitted detailed replies dated 24.11.2015, enclosing STPI approval, export documentation and Form 56F. However, in the final order dated 16.03.2016 passed under section 143(3) read with section 254, the AO rejected the claim under section 10A on two grounds: (a) Form 56F was not filed along with the return as required by section 10A(5). (b) The claim was not made in the original return. 2.4 The AO did not examine whether substantive conditions of section 10A (STPI registration, export of services, realisation of foreign exchange) were fulfilled. 2.5 The assessee preferred an appeal before CIT(A). The CIT(A) noted that the Tribunal in ITA No. 925/Ahd/2014 had categorically directed the AO to examine the alternate claim under section 10A on merits. The CIT(A) held that the AO failed to comply with this binding direction and instead rejected Printed from counselvise.com ITA No.2048/Ahd/2024 3 the claim only on procedural grounds without examining eligibility. Accordingly, the CIT(A) restored the matter to the AO to examine the assessee’s eligibility under section 10A afresh and to compute the deduction. 3. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us raising following grounds: On the facts and circumstances of the case, the Ld. CIT(A) erred in directing the AO to allow the deduction u/s 10A of the Act, without appreciating the findings of AO for not allowing the claim of the assessee? The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal. 4. The Departmental Representative submitted that an appeal has been filed by the Revenue u/s 260 of the Act before the Hon’ble jurisdictional High Court against the Tribunal’s order in ITA No. 925/Ahd/2014, and therefore the AO’s findings should be preferred. It was contended that CIT(A) erred in issuing a direction that effectively grants deduction under section 10A. 4.1 The Authorised Representative (AR) supported the order of the Commissioner of Income Tax (Appeals) and submitted that the assessee had fulfilled all the substantive conditions prescribed under section 10A of the Act. The AR further emphasised that the Tribunal, in its earlier order, had specifically directed the Assessing Officer to examine the alternate claim of deduction under section 10A on merits, and such direction was binding on the Assessing Officer in terms of section 254. It was submitted that the Commissioner of Income Tax (Appeals) merely followed the mandate of the Tribunal and restored the matter to the file of the Assessing Officer for a proper examination of the assessee’s eligibility in accordance with law. 5. We have given our thoughtful consideration to the rival submissions and perused the material available on record, including the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals), as well as the earlier order of the Tribunal in ITA No. 925/Ahd/2014 dated Printed from counselvise.com ITA No.2048/Ahd/2024 4 21.08.2017. The dispute pertains to the assessee’s alternative claim for deduction under section 10A of the Act. 5.1 The relevant portion of the earlier order of the Co-ordinate Bench in ITA No. 925/Ahd/2014, as placed before us, records that the Bench had set aside the matter to the file of the Assessing Officer with a specific mandate to consider the assessee’s alternate claim under section 10A on merits. The Bench noted that the assessee had placed STPI approval on record and had claimed realisation of export proceeds in convertible foreign exchange. The Bench directed the Assessing Officer to adjudicate the alternative claim afresh after verifying the factual prerequisites of section 10A. 5.2 During the hearing, the learned DR argued that, since a Tax Appeal has been filed before the Hon’ble jurisdictional High Court against the Tribunal’s earlier order, the Assessing Officer was justified in adhering to his original view and that the CIT(A) ought not to have restored the matter. We find, however, that mere pendency of an appeal does not dilute the binding force of the Tribunal’s directions, unless their operation is stayed by a competent court; no such stay has been shown to us. The learned AR, on the other hand, supported the order of the CIT(A), submitting that the assessee had fulfilled all substantive requirements of section 10A and that the CIT(A) had correctly acted in conformity with the Tribunal’s earlier binding direction to have the Assessing Officer examine the alternate claim under section 10A on merits. 5.3 On consideration of the matter, we find that the CIT(A) has only followed the binding directions of the Co-ordinate Bench in the assessee’s own case. The earlier order of the Bench mandated the Assessing Officer to examine the alternate claim under section 10A independently. The CIT(A) has merely carried out that mandate by directing the Assessing Officer to undertake a complete and factual verification of the statutory conditions prescribed in section 10A, including the existence of STPI registration and realisation of export proceeds. The assessment order does not reveal any Printed from counselvise.com ITA No.2048/Ahd/2024 5 such examination having been carried out. We therefore find no infirmity in the action of the CIT(A). 5.4 The remit ordered by the CIT(A) is neither prejudicial to the Revenue nor does it confer any undue benefit upon the assessee. It only ensures that the statutory conditions are examined in accordance with law and in conformity with the earlier binding order of the Co-ordinate Bench. No contrary legal authority has been cited by the learned Departmental Representative to demonstrate how the order of the CIT(A) suffers from any legal or factual infirmity. 5.5 In these circumstances, we see no reason to interfere with the order of the CIT(A). The restoration of the matter to the file of the Assessing Officer for a fresh examination of the alternate claim under section 10A is upheld. In the result, the appeal of the Revenue stands dismissed. Order pronounced in the Court on 25___November, 2025 at Ahmedabad. Sd/- Sd/- (SANJAY GARG) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 25/11/2025 vk* True Copy आदेश क\u0007 \bितिलिप अ\u000eेिषत आदेश क\u0007 \bितिलिप अ\u000eेिषत आदेश क\u0007 \bितिलिप अ\u000eेिषत आदेश क\u0007 \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0016 / The Appellant 2. \u0017\u0018यथ\u0016 / The Respondent. 3. संबंिधत आयकर आयु / Concerned CIT 4. आयकर आयु (अपील) / The CIT(A) 5. िवभागीय \u0017ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड# फाईल /Guard file. आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/BY ORDER, उप उप उप उप/सहायक सहायक सहायक सहायक पंजीकार पंजीकार पंजीकार पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद अहमदाबाद अहमदाबाद अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "