ITO, New Delhi V. M/s JC Infosoft Technologies Ltd., New Delhi

ITA 1135/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77822 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Assessee Lawyers: C S AGGARWAL; R P MALL
• Keywords: Revised return
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. GEORGE GEORGE K., JM AND SH. B. C. MEENA , AM ITA NO. 1135/DEL/2011 : ASS TT. YEAR : 2007-08 INCOME TAX OFFIER, WARD 4(1), NEW DELHI VS M/S J C INFOSOFT TECHNOLOGIES LTD., 13/30, EAST PATEL NAGAR, NEW DELHI-110008 (APPELLANT) (RESPONDENT) PAN NO. AAACJ8986B ASSESSEE BY : SH. C. S. AGGARWAL, ADV. & R. P. MALL , ADV. REVENUE BY : SH. S. N. BHATIA, DR DATE OF HEARING : 22.7.2014 DATE OF PRONOUNCEMENT : 25.7.2014 ORDER PER GEORGE GEORGE K., JM: THIS APPEAL AT THE INSTANCE OF DEPARTMENT IS DIRECT ED AGAINST CIT(A) ORDER DATED 3.12.2010. THE RELEVANT ASSESSME NT YEAR IS 2007-08. 2. THE GROUNDS OF APPEAL RAISED READS AS FOLLOWS:- 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS & CONT RARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO ALLOW DEDU CTION U/S 10A OF THE I.T. ACT. 2.1 THE LD. CIT(A) IGNORED THE FINDING RECORDED BY THE A.O AND THE FACT THAT NO CLAIM FOR DEDUCTION CAN BE ALLOWED TO THE A SSESSEE UNLESS THE CLAIM IS MADE BY THE ASSESSEE, AND ALSO THE FACT TH AT THE ASSESSEE CLAIMED THE DEDUCTION U/S 10B OF THE I.T ACT. 3. THE ASSESSEE IS A COMPANY REGISTERED UNDER THE S OFTWARE TECHNOLOGY PARKS OF INDIA (STPI) FOR THE RELEVANT Y EAR. IN THE RETURN OF ITA NO. 1135/DEL/2011 J C INFOSOFT TEC HNOLOGIES LTD. 2 INCOME. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT AMOUNTING TO RS. 93,69,783/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT, DENIED THE BE NEFIT OF DEDUCTION U/S 10B OF THE ACT BY FOLLOWING THE ORDER OF THE HYDERA BAD BENCH OF THE TRIBUNAL IN THE CASE OF INFOTECH ENTERPRISES LTD. V S JOINT COMMISSIONER OF INCOME-TAX REPORTED IN 85 ITD 325. THE REASONING OF THE A.O TO DENY THE BENEFIT OF DEDUCTION U/S 10B OF THE ACT WAS THA T THE ASSESSEE WAS NOT REGISTERED AS STIPULATED IN CLAUSE (IV) OF EXPLANAT ION 2 BELOW SECTION 10B(8) OF THE ACT. 4. AGGRIEVED BY DISALLOWANCE OF DEDUCTION U/S 10B O F THE ACT THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) ALLOWED THE ALTERNATIVE CLAIM OF THE ASSESSE E THAT IT IS ENTITLED TO THE CLAIM OF DEDUCTION U/S 10A OF THE ACT. THE RELE VANT FINDING OF THE CIT(A) READS AS FOLLOWS:- 3.3 I HAVE CONSIDERED THE WRITTEN SUBMISSION ON BE HALF OF THE APPELLANT, THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER AS WELL AS IN THE REMAND REPORT. I HAVE ALSO GONE THROUGH THE MAT ERIAL AVAILABLE ON RECORD. I FIND THAT THE CASE OF THE ASSESSEE IS THA T IN THE PRESENT YEAR, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10A AND NOT U/S 10B AND BY MISTAKE, THE ASSESSEE CLAIMED DEDUCTION U/S 10B BUT INSTEAD OF THAT, THE ASSESSEE SHOULD BE ALLOWED U/S 10A OF THE ACT. IT WAS ALSO S UBMITTED THAT THE AMOUNT OF DEDUCTION TO BE ALLOWABLE TO THE ASSESSEE WILL REMAIN THE SAME EVEN U/S 10A. UNDER THESE FACTS, I AM OF THE CONSID ERED OPINION THAT MERELY BECAUSE THE CLAIM WAS MADE UNDER THE WRONG S ECTION, THE CLAIM OF THE ASSESSEE SHOULD NOT BE REJECTED IF IT IS FOUND THAT OTHERWISE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10A OF THE A CT. THE ASSESSING OFFICER HAS PRIMARILY RELIED ON THE ORDER OF HYDERABAD BENC H OF THE ITAT IN THE CASE INFOTECH ENTERPRISES LTD. VS JOINT CIT (2003) 85 ITD 325. IN THAT CASE, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECT ION 10A IN RESPECT OF ITA NO. 1135/DEL/2011 J C INFOSOFT TEC HNOLOGIES LTD. 3 PROFITS OF ITS STP UNIT. THE SAME WAS DENIED INTER ALIA ON THE GROUND THAT IT WAS NOT A NEW UNIT BUT WAS AN EXTENSION OF ORIGI NAL UNIT STARTED BY THE ASSESSEE IN THE YEAR 1991. IT WAS HELD THAT FOR CLA IMING THE DEDUCTION, A NEW UNIT HAD TO BE SET UP UNDER THE STP SCHEME IN T HE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1994-95 OR THEREAFTER. THIS CONDITION WAS NOT RELAXED BY THE BOARD CIRCULAR DATED 23.11.1994. SIN CE THE ASSESSEE DID NOT SET UP THE UNIT IN THE PREVIOUS YEAR RELEVANT TO AS SESSMENT YEAR 1994-95 OR THEREAFTER, THE PROFITS WERE NOT DEDUCTIBLE UNDER S ECTION 10A FROM THE TOTAL INCOME EVEN THOUGH IT WAS ADMITTEDLY A STP UNIT. IN THE BACKGROUND OF THE FACTS STATED ABOVE, IT WAS HELD BY HYDERABAD BENCH OF THE ITAT THAT EVEN IF THE UNIT WAS A SOFTWARE TECHNOLOGY PART UNIT, TH E BENEFIT OF SECTION 10A COULD BE GRANTED ONLY WHEN ALL THE CONDITIONS OF SE CTION 10A WERE FULFILLED. THE FACTS & CIRCUMSTANCES OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THOSE OF INFOTECH ENTERPRISES LTD. (SUPRA). IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE CONDITIONS FOR BECOMING ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT HAVE NOT BEEN FULFILLED BY THE A SSESSEE. IN THE INSTANT CASE, AS THE ASSESSEE SATISFIES ALL THE CONDITIONS OF ALLOWING THE EXEMPTION UNDER SECTION 10A, THE SAME IS TO BE ALLOWED TO THE ASSESSEE IRRESPECTIVE OF THE FACT THE ASSESSEE CLAIMED DEDUCTION U/S 10B INS TEAD OF UNDER SECTION 10A OF THE ACT. 3.4 IT IS ALSO OBSERVED THAT THE ASSESSEE IN THE EA RLIER YEARS CLAIMED THE DEDUCTION UNDER SECTION 10B OF THE ACT WHICH HAS BE EN ACCEPTED BY THE DEPARTMENT. IN ASSESSMENT YEAR(S) 2005-06 AND 2006- 07, THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT ON 19.12.2007 AND 23.12.2008 RESPECTIVELY WHEREIN THE DEDUCTION UNDER SECTION 10B OF THE ACT WAS ALLOWED TO THE ASSESSEE. THESE ASSESSMENTS HAVE BECOME FINAL AND THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT HAS BEEN ACCEPTED BY THE DEPARTMENT. THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE IDENTICAL CLAIM IN THE YEAR UNDER CONSIDERATION IS NOT TENABLE ON THE PRINCIPLES OF CONSISTENCY ALSO. IT IS SETTLED LAW T HAT IN THE ABSENCE OF ANY CHANGE EITHER IN FACTS OR IN LAW, PRINCIPLES OF CON SISTENCY ITSELF CAN BE MADE A BASIS TO UPHOLD THE CLAIM OF THE APPELLANT C OMPANY. RELIANCE IS PLACED ON THE JUDGMENTS OF THE HONBLE DELHI HIGH C OURT IN THE CASES OF COMMISSIONER OF INCOME-TAX VS NEO POLY PACK(P.) LTD . (2000) 245 ITR 492 (DEL) AND CIT VS RAJEEV GRINDING MILLS (2005) 2 79 ITR 86 (DELHI) WHEREIN THE JUDGMENT OF THE HONBLE APEX COURT IN T HE CASE OF RADHASOAMI SATSANG VS CIT (1992) 193 ITR 321 (SUPRE ME COURT) WAS FOLLOWED. ITA NO. 1135/DEL/2011 J C INFOSOFT TEC HNOLOGIES LTD. 4 3.5 IN THE REMAND REPORT, THE ASSESSING OFFICER POI NTED OUT THAT THE ASSESSEE DID NOT FILE REVISED RETURN BEFORE THE ASS ESSING OFFICER WHEREIN THE CLAIM FOR DEDUCTION U/S 10A OF THE ACT WAS NOT REVISED, HENCE, THE ASSESSEE MISSED THE OPPORTUNITY AS PROVIDED IN THE LAW AND FOR ITS FAULT HE COULD NOT GET THE BENEFITS WHICH WERE AGAINST THE P ROVISIONS OF LAW IN THE LIGHT OF THE DECISION OF HONBLE SUPREME COURT IN T HE CASE OF GOETZE (INDIA) LTD. VS CIT (2006) 284 ITR 323 (SUPREME COU RT) WHICH CLEARLY STATES THAT NO CLAIM FOR DEDUCTION CAN BE ALLOWED T O THE ASSESSEE UNLESS THE CLAIM IS MADE BY THE ASSESSEE N ITS RETURN OF I NCOME. THEREFORE, THE ASSESSEE COULD HAVE CLAIMED DEDUCTION ONLY BY FILIN G A REVISED RETURN. PRIMA FACIE, THE RATIO OF THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS SQUARELY APP LICABLE TO THE FACTS OF THE CASE BECAUSE AS PER THE LAW, THE ONUS LIES ON T HE ASSESSEE TO MAKE RIGHT CLAIM AND SUCH CLAIM MUST BE MADE WITHIN THE FRAMEWORK OF PROVISIONS OF ACT. AS FAR AS THE DECISION OF THE HO NBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS CONCERNED, T HERE IS NO DISPUTE THAT THE SAME IS BINDING ON EVERYBODY CONCERNED. IN THE SAID DECISION, THE HONBLE APEX COURT HAS ALSO RULED THAT APPELLATE TR IBUNAL MY ADJUDICATE THE ISSUE IF A CLAIM IS MADE BY ANY PARTY SUBJECT T O SATISFACTION OF PRESCRIBED RULES, HENCE, EVEN THE HONBLE APEX COUR T HAS NOT BARRED THE ASSESSEE TO RAISE ITS LEGAL CLAIM BEFORE APPELLATE AUTHORITIES. THE HONBLE APEX COURT, ON NUMEROUS OCCASIONS HAS LAID THE PROP OSITION THAT THE ASSESSING AUTHORITIES ARE BOUND TO COMPUTE THE CORR ECT INCOME ONLY AND COLLECT ONLY LEGITIMATE TAX, HENCE, MERELY FOR A PR OCEDURAL LAPSE OR TECHNICALITIES, THE ASSESSEE SHOULD NOT BE COMPELLE D TO PAY MORE TAX THAN WHAT IS DUE FROM HIM. IN THIS VIEW OF THE MATTER, T HE ASSESSING OFFICER IS DIRECTED TO CONSIDER AND ALLOW THE CLAIM OF THE ASS ESSEE FOR DEDUCTION U/S 10A OF THE ACT. 5. THE REVENUE BEING AGGRIEVED IS AN APPEAL BEFORE US. 6. THE LD. DR SUPPORTED THE FINDINGS OF THE ASSESSI NG OFFICER AND RELIED ON THE GROUNDS RAISED BY THE REVENUE. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE INCOME-TAX AUTHORITIES. ITA NO. 1135/DEL/2011 J C INFOSOFT TEC HNOLOGIES LTD. 5 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE IS REGISTERED WITH THE SOFTWARE TECHNOLOGY PARKS OF INDIA, NOIDA AS 100% E OU UNDER THE STP SCHEME FOR THE DEVELOPMENT AND MANUFACTURE OF S OFTWARE AND IT ENABLED SERVICES. IT WAS CLAIMING DEDUCTION UNDER S ECTION 10B OF THE ACT, AND SAME WAS ACCEPTED BY THE REVENUE TILL THIS ASSESSMENT YEAR, AS IS EVIDENT FROM THE FOLLOWING TABLE: ASSESSMENT YEAR CLAIM OF DEDUCTION U/S 10B TREATMENT BY THE REVENUE 2001-02 SINCE INCOME WAS RETURNED AT LOSS AS SUCH NO CLAIM U/S 10B WAS MADE. 2002-03 RS. 5,95,801/- NA 2003-04 RS. 17,00,224/- NA 2004-05 RS. 25,91,249/- NA 2005-06 RS. 1,20,37,988/- ALLOWED VIDE AN ORDER OF ASSESSMENT U/S 143(3) DATED 9.12.2007 2006-07 RS. 1,19,28,481/- ALLOWED VIDE AN ORDER OF ASSESSMENT U/S 143(3) DATED 23.12.2008 2007-08 RS. 93,69,782/- DISALLOWED. 2008-09 RS. 38,37,949/- DEDUCTION WAS ALLOWED U/S 10A OF THE ACT VIDE AN ORDER OF ASSESSMENT DATED 28.12.2010 7.1 IT IS EVIDENT FROM THE ABOVE TABLE THAT ADMITTE DLY ASSESSEE WAS CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT SIN CE A.Y 2002-03, AND ITA NO. 1135/DEL/2011 J C INFOSOFT TEC HNOLOGIES LTD. 6 TILL THE CURRENT ASSESSMENT YEAR, NO DISALLOWANCE W AS MADE BY THE REVENUE. FURTHER EVEN IN THE SCRUTINY ASSESSMENT FO R THE A.Y 2005-06 AND 2006-07 CLAIM OF DEDUCTION MADE UNDER SECTION 1 0B OF THE ACT WAS ACCEPTED. THE DEDUCTION U/S 10A OF THE ACT WAS ALSO ALLOWED IN THE SUBSEQUENT ASSESSMENT YEAR 2008-09 U/S 10A OF THE A CT BY THE ASSESSING OFFICER. A COPY OF THE ORDER OF ASSESSMEN T IS PLACED AT PAGE 196-198 OF PAPER BOOK FILED BY THE ASSESSEE. 7.2 THE DISPUTED ISSUE ACCORDING TO US IS NO MORE R ES-INTEGRA AND IS COVERED BY THE JUDGMENT OF THE HIGH COURT OF DELHI IN THE CASE OF CIT VS VALIANT COMMUNICATIONS LTD. (ITA NO. 438/2012, 4 39/2012, 440/2012 & 441/2012 DATED 4.1.2013). IN THAT CASE, WHEN THE TRIBUNAL HAD ALLOWED THE CLAIM UNDER SECTION 10B OF THE ACT, THE HONBLE HIGH COURT VIDE ITS JUDGMENT DATED 17.9.2012 HELD THAT T HE DEDUCTION WAS NOT ALLOWABLE UNDER SECTION 10B OF THE ACT, HOWEVER ON A REVIEW PETITION, VIDE ITS ORDER DATED 4.1.2013 DIRECTED THE CLAIM MA DE BE EXAMINED UNDER SECTION 10A OF THE ACT, IF THE SAME IS ALLOWABLE, P ROVIDED CONDITIONS OF SECTION 10A OF THE ACT ARE SATISFIED. 7.3 IN THE CASE OF CIT VS REGENCY CREATION IN ITA N O. 69/2008 VIDE ORDER DATED 30.11.2012, IT HAS BEEN HELD AS UNDER: THE APPLICANT HAD CLAIMED THE BENEFIT OF SECTION 1 0B OF THE INCOME TAX ACT, 1961 (ACT FOR SHORT). BEFORE THE A.O, IT HAD RELIED UPON THE CERTIFICATE AND OTHER SUPPORTING MATERIALS ISSUED B Y THE STP IN RESPECT OF THE APPROVAL UNDER SECTION 10A AND CLAIMED THAT AS LONG AS THESE ITA NO. 1135/DEL/2011 J C INFOSOFT TEC HNOLOGIES LTD. 7 CONDITIONS WERE SATISFIED, THE STATUTORY MANDATE OF SECTION 10B TOO WAS ALSO AUTOMATICALLY SATISFIED. IN THE JUDGMENT OF TH IS COURT, THE ASSESSEES CLAIM FOR GRANT OF BENEFIT UNDER SECTION 10B HAD BEEN TURNED DOWN. IT IS URGED BY THE ASSESSEE/APPLICANT THAT UP ON REMAND AFTER THE JUDGMENT, THE A.O IS SEEKING TO DENY EVEN THE BENEF IT OF SECTION 10A. WE HAVE CAREFULLY CONSIDERED THE RECORDS AND SUBMIS SION. IT APPEARS THAT THE ASSESSEE HAD CLAIMED THE BENEFIT OF SECTIO N 10B ON THE BASIS OF THE PROVISIONS WHICH PERTAINS TO SECTION 10A. THERE FORE, A.O MUST IN FAIRNESS CONSIDER THE DOCUMENTS ON THE BASIS OF THE CLAIM AND ASCERTAIN WHETHER THEY ARE PROPER AND AFTER VERIFYING THEM, P ASS APPROPRIATE ORDER AS TO WHETHER THE BENEFIT OF SECTION 10A CAN BE GRANTED. 7.4. ADMITTEDLY, IN THIS CASE REVENUE HAS NOT RAISE D THE CONTENTION THAT ASSESSEE HAS NOT SATISFIED THE CONDITIONS THAT ARE REQUIRED FOR CLAIMING DEDUCTION U/S 10A OF THE ACT NOR HAS THE REVENUE CO NTROVERTED THE FINDINGS OF THE CIT(A) THAT ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 10A OF THE ACT. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) ORDER GRANTING DEDUCTION U/S 10A OF THE ACT IS JUSTIFIED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/7/2014 SD/- SD/- (B. C. MEENA) (G EORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 25/7/2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR