ACIT, Cir.-1, Aurangabad V. Expert Net Cad Solutions P. Ltd., Aurangabad

ITA 1149/PUN/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1927 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: M V LONKAR
• Keywords: Opportunity of being heard; Wrong claim; Difference of opinion; Change of opinion
• Section: 143(3); 10AA; 133(6); 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 1 098 /PN/201 1 / ASSESSMENT YEAR : 20 08 - 09 EXPERT NET CAD SOLUTIONS PVT. LTD., 1 ST FLOOR, SARDA ARCADE, KONKANWADI, AURANGABAD 431005 . / APPELLANT PAN: AA ACE8345H 7 VS. THE ASST . COMMISSIONER OF INCO ME TAX, CIRCLE - 1 , AURANGABAD . / RESPONDENT . / . / ITA NO. 1149 /PN/201 1 / ASSESSMENT YEAR : 20 0 8 - 0 9 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1, AURANGABAD . / APPELLANT VS. EXPERT NET CAD SOL UTIONS PVT. LTD., 1 ST FLOOR, SARDA ARCADE, KONKANWADI, AURANGABAD 431005 . / RESPONDENT PAN: AAACE8345H ASSESSEE BY : SHRI M.V. LONKAR R EVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 0 5 . 0 4 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 4 .201 6 ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 2 / ORDER PER SUSHMA CHOWLA, JM: THE CROSS APPEAL S FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST ORDER OF CIT (A) , AURANGABAD, D ATED 30 . 0 6 .201 1 RELATING TO ASSESSMENT YEAR 200 8 - 0 9 AGAINST ORDER PASS ED U NDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT) . 2 . THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.1098/PN/2011 HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 01. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD ERRED 01. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD ERRED IN HOLDING THAT THE ASSESSEE COMPANY IS NOT ELIGIBLE FOR EXEMPTION OF RS.30,70,367/ - U/S 10B OF THE INCOME TAX ACT, 1961. HENCE CLAIM OF ASSESSEE AMOUNTING TO RS.30,70,367/ - MAY BE ALLOWED UNDER SECTION 10B OF THE INCOME TAX ACT, 1961. 4. THE REVENUE IN ITA NO.1149/PN/2011 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHETHER CIT( A) IS CORRECT IN ALLOWING THE DEDUCTION U/S 10B OF THE INCOME TAX ACT 1961 EVEN THOUGH THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10B? 2 ) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS CORRECT IN ALLOWING DEDUCTION UNDER SECT ION 10A OF THE ACT. EVEN THOUGH THE ASSESSEE HAS NOT CLAIMED THE SAME IN HIS RETURN OF INCOME? 3 ) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS RIGHT IN ALLOWING DEDUCTION UNDER SECTION 10A OF THE ACT IN SPITE OF THAT SECTION 80A(5) CATE GORICALLY STATE THAT THE ASSESSEE CAN CLAIM DEDUCTION UNDER SECTION 10A OR 10AA OR SECTION 10B AND SECTION 10BA THROUGH THE RETURN OF INCOME ONLY. 4 ) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 3 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN NOT ALLOWING DEDUCTION UNDER SECTION 10B OF THE ACT AT RS.30,70,367/ - . 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN ALLOWING DEDUCTION UNDER SECTION 10A OF THE ACT, WHERE NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOME. 7. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF EXPORT OF COMPUTER SOFTWARE. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT. THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO FURNISH THE DETAILS THAT IT HAD BEEN APPROVED AS 100% SOFTWARE EXPORT ORIENTED UNIT UNDER THE SOFTWARE T E CHN O LOGY PARK SCHEME OF GOVERNMENT OF INDIA. THE ASSESSING OFFICER IN ORDER TO VERIF Y WHETHER THE ASSESSEE WAS REGISTERED AS STP UNIT UNDER SOFTWARE TECHNOLOGY PARK SCHEME, ISSUE A LETTER UNDER SECTION 133(6) OF THE ACT CALLING FOR INFORMATION FROM STPI, AURANGABAD. IN RESPONSE, THE ASST. DIRECTOR OF STPI, AURANGABAD ATTENDED PERSONALLY AND FURNISHED THE DETAILS, WHICH ARE INCORPORATED AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER AND ALSO FURNISHED THE RELEVANT DOCUMENTS RELATED TO STPI SCHEME. HE FURTHER SUBMITTED THAT THE STPI GRANTED CERTIFICATE TO THE ASSESSEE UNDER STPI SCHEME AND THE A SSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT AS PER INSTRUCTION NO.1 OF CBDT CIRCULAR DATED 31.03.2006 AND NOT AS PER SECTION 10B OF THE ACT. THE REQUISITE CBDT CIRCULAR DATED 31.03.2006 IS REPRODUCED BY THE ASSESSING OFFICER AT PAGES 3 TO 6 OF THE ASSESSMENT ORDER. THEREAFTER, THE ASSESSING OFFICER CONSIDERED THE ISSUE WHETHER THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OR 10B OF THE ACT . AFTER REFERRING TO THE PROVISIONS OF THE ACT, THE ASSESSING OFFICER VIDE PARA 5 OBS ERVED THAT IN ORDER TO JUSTIFY THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT, IT WAS FOUND THAT THE ASSESSEE COMPANY WAS ENGAGED IN DEVELOPMENT OF SOFTWARE, WHICH HAD BEEN EXPORTED. FURTHER, ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 4 THE SAID COMPANY WAS 100% SOFTWARE EXPORT ORIENTED UNIT SI TUATED AT S OFTWARE TECHNOLOGY PARK , AURANGABAD AND REGISTERED UNDER S OFTWARE TECHNOLOGY PARK SCHEME APPROVED BY STPI, AURANGABAD. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE ASSESSEE WAS SO SITUATED IN S OFTWARE TECHNOLOGY PARK UNDER THE S OFTWARE TECHNOLOGY PARK SCHEME OF AURANGABAD, HE FULFILLED THE CONDITIONS OF SECTION 10A(2) OF THE ACT READ WITH EXPLANATION (2)(VII) OF SECTION 10A OF THE ACT . SINCE THE APPROVAL WAS GRANTED TO THE ASSESSEE UNDER SECTION 10A OF THE ACT AND NOT UNDER SECTION 10B OF THE ACT BY STPI, AURANGABAD, WHICH WAS AUTHORIZED AND CREATED UNDER THE PROVISIONS OF SECTION 10A OF THE ACT, THE ASSESSEE WAS HELD TO BE NOT ELIGIBLE FOR THE DEDUCTION UNDER SECTION 10B OF THE ACT. IN THIS REGARD, SHOW CAUSE NOTICE WAS ISSUED TO THE A SSESSEE VIS - - VIS WRONG CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. THE REPLY OF THE ASSESSEE IN THIS REGARD IS REPRODUCED BY THE ASSESSING OFFICER AT PAGES 8 AND 9 OF THE ASSESSMENT ORDER. THEREAFTER, THE ASSESSING OFFICER HELD THAT THE CLAIM OF AS SESSEE THAT HE WAS ELIGIBLE FOR CLAIMING DE DUCTION UNDER SECTION 10B CLAIM OF AS SESSEE THAT HE WAS ELIGIBLE FOR CLAIMING DE DUCTION UNDER SECTION 10B OF THE ACT WAS NOT CORRECT AND THE SECOND CLAIM MADE BY THE ASSESSEE THAT IN ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 DURING THE SCRUTINY ASSESSMENT, THE CLAIM OF DEDUCTION WAS ALLOWED BY THE ASSESSING OFFICER AND DURING THE CURRENT YEAR, THERE WAS ONLY CHANGE OF OPINION FOR NOT ALLOWING CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT, IT WAS PROPOSED THAT THE ASSESSEE WAS ENTITLED TO THE SAID CLAIM. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD PLACED RELIANCES ON VARIOUS JUDICIAL PRONOUNCEMENTS WHICH ARE REPRODUCED BY THE ASSESSING OFFICER IN ITS ASSESSMENT ORDER. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF ASSESSEE THAT IT WAS ENTITLED TO THE CLAIM OF DEDUC TION UNDER SECTION 10B OF THE ACT AND SUM OF RS. 30,70,367/ - WAS ADDED TO THE INCOME OF ASSESSEE. ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 5 8. THE CIT(A) CONSIDERED TWO ASPECTS OF THE ISSUE I.E. WHETHER THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OR 10A OF THE ACT. THE CIT(A) WAS OF THE VIEW THAT WHERE THE ASSESSEE WAS REGISTERED WITH STPI AND SUCH A CONCERN WAS NOT ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT SINCE THE ASSESSEE HAD FAILED TO FULFILL THE CONDITIONS LAID DOWN UNDER SECTION 10B OF THE ACT OF BEING APPRO VED AS 100% EXPORT ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT. THE CIT(A) ALSO DISMISSED THE PLEA OF ASSESSEE OF RES JUDICATA . FURTHER, IN RESPECT OF ALTERNATE CLAIM UNDER SECTION 10A OF THE ACT, THE CIT(A) WAS O F THE VIEW THAT THOUGH THE ASSESSEE HAD NOT CLAIMED THE SAID DEDUCTION IN THE RETURN OF INCOME, BUT ALL THE REQUISITE CONDITIONS WERE FULFILLED BY THE ASSESSEE, HENCE, IT WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT. 9. THE ASSESSEE IS IN APPEAL AGAINST THE DENIAL OF DEDUCTION UNDER SECTION 10B OF THE ACT. 10B OF THE ACT. 10. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT THOUGH NO SUCH CLAIM WAS MADE IN THE RETURN OF I NCOME. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. WESTERN OUTDOOR INTERACTIVE (P.) LTD. IN IT APPEAL NOS.1150, 1200 & 1269 OF 2010 , JUDGMENT DATED 14.08.2012 AND PUNE BENCH OF TRIBUNAL IN ITO VS. CAT LABS PVT. LTD. IN ITA NO.131/PN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 26.02.2014 . 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR TH E REVENUE ON THE OTHER HAND, POINTED OUT THAT THE ASSESSEE FIRST IS NOT ENTITLED TO THE CLAIM OF DEDUCTION ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 6 UNDER SECTION 10B OF THE ACT. FURTHER, HE POINTED OUT THAT NO DEDUCTION UNDER SECTION 10A OF THE ACT COULD BE ALLOWED TO THE ASSESSEE AS NO SUCH CLA IM WAS MADE IN THE RETURN OF INCOME. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE BEFORE US WAS ADMITTEDLY A STPI UNIT REGISTERED UNDER SOFTWARE TECHNOLOGY PARK SCHEME OF STPI, AURANGABAD. THIS FACTUAL ASPECT OF IT BEIN G STPI UNIT IS ADMITTED BY BOTH THE AUTHORITIES BELOW AND THERE IS NO DISPUTE IN THIS REGARD. THE ISSUE ARISING BEFORE US IS WHETHER THE PROFITS ARISING ON EXPORT OF COMPUTER SOFTWARE BY THE ASSESSEE UNIT WHICH IS REGISTERED UNDER SOFTWARE TECHNOLOGY PARK SCHEME IS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 10B OF THE ACT OR 10A OF THE ACT. THE CASE OF THE ASSESSING OFFICER WAS THAT SINCE IT IS REGISTERED AS STPI UNIT AND NOT REGISTERED BY THE BOARD AUTHORIZED BY THE GOVERNMENT OF INDIA, HENCE, IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. THE ALTERNATE CLAIM OF DEDUCTION UNDER SECTION 10A OF SECTION 10B OF THE ACT. THE ALTERNATE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT WAS NOT ALLOWED TO THE ASSESSEE, IN VIEW OF NO SUCH CLAIM BEING MADE IN THE RETURN OF INCOME. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN DENYING THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. HOWEVER, THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT WAS ALLOWED TO THE ASSESSEE. THE ASSESSEE IS IN APPEAL BEFORE US VIS - - VIS ITS CLAIM OF DEDUCTION UNDER SECT ION 10 B OF THE ACT AND THE REVENUE IS IN APPEAL FOR ALLOWING CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT BY THE CIT(A). THE FIRST ASPECT WHICH ARISES FOR ADJUDICATION IS WHETHER THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF T HE ACT. 14. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTION BY AN EOU APPROVED BY THE DIRECTOR, STPI, AROSE BEFORE THE TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN CLARION TECHNOLOGIES PVT. LTD. VS. DCIT IN ITA NO.2554/PN/2012, RELATING TO ASSESSMEN T YEAR 2009 - 10 AND VIDE ORDER DATED 30.10.2014 , IT WAS HELD IN VIEW ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 7 OF THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. REGENCY CREATIONS LTD., (2012) 27 TAXMANN.COM 322 (DEL) , THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECT ION 10B OF THE ACT. THE FINDING OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. REGENCY CREATIONS LTD., (SUPRA) WAS AS UNDER: - IN THE PRESENT CASE, THERE IS NO NOTIFICATION OR OFFICIAL DOCUMENT SUGGESTING THAT EITHER THE INTER - MINISTERIAL COMMITTE E, OR ANY OTHER OFFICER OR AGENCY WAS NOMINATED TO PERFORM THE DUTIES OF THE BOARD (CONSTITUTED UNDER SECTION 14 OF THE OR ACT), FOR PURPOSE S OF APPROVALS UNDER SECTION 10B. THOUGH THE CONSIDERATIONS WHICH APPLY FOR GRANTING APPROVAL UNDER SECTIONS 10A AN D 10B MAY TO AN EXTENT, OVERLAP, YET THE DELIBERATE SEGREGATION OF THESE TWO BENEFITS BY THE STATUTE REFLECTS PARLIAMENTARY INTENTION THAT TO QUALI F Y FOR BENEFIT UNDER EITHER, THE SPECIFIC PROCEDURE ENACTED FOR THAT PURPOSE HAS TO BE FOLLOWED. THERE IS NO THING IN ANY OF THE CIRCULARS OR INSTRUCTIONS RELIED ON BY THE TRIBUNAL IN ALL THE ORDERS, IMPLYING THAT APPROVAL FOR PURPOSES OF AN STP ALSO ENTITLED THE UNIT TO A BENEFIT UNDER SECTION 10B. THE ORDERS OF THE TRIBUNAL ARE CONSEQUENTLY, ERRONEOUS, AND IT S REASONING UNSUPPORTABLE. 15. THE TRIBUNAL AFTER TAK ING NOTE OF THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. REGENCY CREATIONS LTD., (SUPRA) OBSERVED THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT OBSERV ING AS UNDER: - 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE CASE SET - UP BY THE REVENUE IS THAT THE UNDERTAKING OF THE ASSESSEE HAS NOT BEEN APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONF ERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, WHICH IS AN EXPRESS REQUIREMENT FOR CLAIMING DEDUCTION U/S 10B OF THE ACT BECAUSE OF THE PRESENCE OF EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT. THE ASSESSEE HAS CANVASSED T HAT ITS 100% EOU IS APPROVED BY THE DIRECTOR, STPI AND THEREFORE IT SHOULD BE TAKEN AS A SUBSTANTIVE COMPLIANCE WITH THE PRESCRIPTION CONTAINED IN EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT. THERE IS NO DENYING THE FACT THAT IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA) AND IT IS ON THE BASIS OF THE SAID JUDGEMENT, THE LOWER AUTHORITIES HAVE DENIED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT. ADMITTEDLY, THE 100% EOU OF THE ASSESSEE DOES NOT ENJOY ANY SPECIFIC APPROVAL FROM THE AUTHORITY REFERRED TO IN EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT. IN - FACT, THE PLEA OF THE ASSESSEE THAT THE APPROVAL BY DIRECTOR, STPI BE TAKEN AS EQUIVALENT TO OBTAINING OF APPROV AL FROM THE ENTITY PRESCRIBED IN EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT HAS BEEN SPECIFICALLY NEGATED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA). THE OTHER ASPECT RAISED BY THE LEARNED REPRESENTATIVE FOR THE ASSE SSEE TO THE EFFECT THAT A CONJOINT READING OF THE EXIM POLICY/FOREIGN TRADE POLICY ENTITLES THE ASSESSEE TO THE BENEFITS OF SECTION 10B OF THE ACT, ONCE THE UNIT IS APPROVED AS PER THE EXIM POLICY. NO DOUBT, SUCH A PLEA IS NOT FOUND TO HAVE BEEN URGED BEF ORE THE HONBLE DELHI HIGH COURT, SO HOWEVER, HAVING REGARD TO THE JUDICIAL DISCIPLINE, THE TRIBUNAL BEING INFERIOR TO THE HIGH COURT, CANNOT DISREGARD THE JUDGEMENT OF THE HIGH COURT IN THE MANNER SOUGHT TO BE CANVASSED BEFORE US. THE JUDGEMENT OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA) IS A SOLITARY DECISION OF A ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 8 HIGH COURT ON THIS ISSUE AND SQUARELY COVERS THE CONTROVERSY BEFORE US. THEREFORE, WE ARE UNABLE TO FIND ANY FAULT IN THE ACTION OF THE LOWER AUTHORITIES IN D ENYING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT, BASED ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA). 16. FURTHER, THE ALTERNATE CLAIM OF THE ASSESSEE TO ALLOW DEDUCTION UNDER SECTION 10A OF THE ACT WAS ALSO DELIBERATED BY THE TRIBUNAL AND IT WAS HELD AS UNDER: - 11. BEFORE PARTING, WE MAY ALSO REFER TO THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE TECHNOVATE E SOLUTIONS P. LTD. (SUPRA) RELIED UPON BY THE ASSESSEE BEFORE US. I N THE CASE BEFORE THE HONBLE DELHI HIGH COURT, THE ISSUE RELATED TO A CLAIM OF DEDUCTION U/S 10A OF THE ACT. THE CONTROVERSY WAS AS TO WHETHER THE APPROVAL GRANTED BY THE DIRECTOR OF STPI WAS A SUFFICIENT APPROVAL SO AS TO SPECIFY THE CONDITION STIPULATE D IN SECTION 10A(2)(I)(B) OF THE ACT. THE HONBLE HIGH COURT REFERRED TO THE INSTRUCTION AND COMMUNICATION OF THE CBDT AND HELD THAT THE APPROVAL GRANTED BY THE DIRECTOR OF STPI WOULD BE DEEMED VALID FOR THE PURPOSES OF COMPLIANCE WITH THE CONDITIONS STIP ULATED U/S 10A(2) OF THE ACT. THE AFORESAID JUDGEMENT OF THE HONBLE DELHI HIGH COURT DEALS WITH THE PROVISIONS OF SECTION 10A OF THE ACT AND NOT WITH SECTION 10B OF THE ACT, WHICH IS THE SUBJECT - MATTER OF CONTROVERSY BEFORE US. THEREFORE, THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF TECHNOVATE E SOLUTIONS P. LTD. (SUPRA) DOES NOT HELP THE ASSESSEE IN THE PRESENT CASE. THEREFORE, IN SO FAR AS THE ACTION OF THE LOWER AUTHORITIES IN HOLDING THAT THE 100% EOU OF THE ASSESSEE WAS NOT ENTITLED FOR THE BENEFIT OF SECTION 10B OF THE ACT IS CONCERNED, THE SAME IS HEREBY AFFIRMED. 12. IN THE PROCEEDINGS BEFORE THE CIT(A), ASSESSEE RAISED AN ALTERNATE PLEA THAT IT BE ALLOWED DEDUCTION U/A 10A OF THE ACT IN PLACE OF SECTION 10B OF THE ACT AS THE UN DERTAKING OF THE ASSESSEE IS APPROVED BY THE DIRECTOR, STPI. THE CIT(A) DENIED THE ALTERNATE PLEA OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT ALSO. IN TERMS OF HIS DISCUSSION IN PARA 3.10.1 OF THE IMPUGNED ORDER, THE CIT(A) HELD THAT ASSESSEE HAS NO T DEMONSTRATED THAT ALL THE REQUIREMENTS FOR AVAILING THE DEDUCTION U/S 10A OF THE ACT, INCLUDING FURNISHING OF THE SPECIFIED AUDIT REPORT IN FORM NO.56F HAVE BEEN COMPLIED WITH BY THE ASSESSEE. AGAINST SUCH A DECISION OF THE CIT(A), ASSESSEE IS IN FURTHE R APPEAL BEFORE US. 13. BEFORE US, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE CIT(A) HAS UNJUSTLY DENIED THE CLAIM OF DEDUCTION U/S 10A OF THE ACT. THE LEARNED COUNSEL POINTED OUT THAT THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS MADE IN THE RETURN OF INCOME AS IT WAS ALLOWED IN THE PAST YEARS AND ASSESSEE COULD NOT HAVE ENVISAGED ITS DISALLOWANCE IN THE SUBSEQUENT ASSESSMENT PROCEEDINGS; AND, THEREFORE THE ALTERNATE CLAIM OF DEDUCTION U/S 10A OF THE ACT WAS RAISED BEFORE THE CIT(A) AFTER THE ASSESSING OFFICER DISALLOWED IT DURING ASSESSMENT PROCEEDINGS. IN THIS CONTEXT, IT IS POINTED OUT THAT ASSESSEE FULFILLS ALL THE CONDITIONS LAID DOWN IN SECTION 10A OF THE ACT AND HENCE IT IS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 10 A OF THE ACT. THE LEARNED COUNSEL ALSO RELIED UPON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALIANT COMMUNICATION LTD. IN ITA NOS.440 441/2012 DATED 04.01.2013 IN SUPPORT THAT ALTERNATE CLAIM FOR DEDUCTION U/S 10A OF THE ACT IS REQUIRED TO BE EXAMINED IF ASSESSEE WAS NOT HELD ENTITLED TO THE BENEFITS OF SECTION 10B OF THE ACT. IN THIS CONTEXT, RELIANCE HAS ALSO BEEN PLACED ON THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE M/S HEARTLAND KG INFORMATION LIMITED VS. C IT, (2013) 39 TAXMANN.COM 132 (MADRAS). RELIANCE HAS ALSO BEEN PLACED ON THE FOLLOWING DECISIONS OF THE TRIBUNAL IN THE CASE OF CLOUD SOFTECH INDIA PVT. LTD. VS. ITO VIDE ITA NO.483/HYD/2013 AND ACIT VS. YASHWANT KANETKAR VIDE ITA NO.150/NAG/2012, WHEREIN IN SIMILAR SITUATIONS IT ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 9 HAS BEEN HELD THAT AFTER REJECTION OF CLAIM U/S 10B OF THE ACT, AN ASSESSEE IS ENTITLED TO RAISE THE ALTERNATE CLAIM FOR DEDUCTION U/S 10A OF THE ACT, AND, THE INCOME - TAX AUTHORITIES ARE REQUIRED TO EXAMINE THE SAME AS PER LAW. 1 4. THE LEARNED COUNSEL POINTED OUT THAT BEFORE THE CIT(A), WHILE ASSESSEE RAISED THE ALTERNATE CLAIM FOR DEDUCTION US10A OF THE ACT ASSESSEE ALSO FURNISHED THE PRESCRIBED AUDIT REPORT IN FORM NO.56F FOR THE CLAIM OF DEDUCTION U/S 10A OF THE ACT. IT HAS BE EN SUBMITTED THAT THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER ALSO, SO HOWEVER, THE ASSESSING OFFICER DECLINED TO EXAMINE THE SAME ON THE GROUND THAT THE PRESCRIBED AUDIT REPORT IS REQUIRED TO BE FURNISHED ALONG WITH THE RETURN OF INCO ME IN ORDER TO CLAIM THE DEDUCTION U/S 10A OF THE ACT. THE LEARNED COUNSEL SUBMITTED THAT HAVING REGARD TO THE FACTUAL MATRIX THE CLAIM OF THE ASSESSEE U/S 10A OF THE ACT HAS BEEN UNJUSTLY SHUTOUT. 15. ON THE OTHER HAND, THE LEARNED CIT - DR HAS PRIMARILY REITERATED THE STAND OF THE CIT(A) IN NOT ENTERTAINING THE CLAIM OF DEDUCTION U/S 10A OF THE ACT, WHICH HAS BEEN NOTED BY US IN THE EARLIER PARAGRAPHS AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THE PRESENT CASE, IN THE PAST YEARS ASSESSEE HAS BEEN ALLOWED THE CLAIM OF DEDUCTION U/S 10B OF THE ACT. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2010 - 11 ALSO ASSESSEE CLAIMED DEDUCTION U/S 10B OF THE ACT IN RELATION TO THE PROFITS DERIVED FROM ITS STPI UNIT. THIS CLAIM OF DEDUCTION CAME TO BE DENIED ON THE GROUND THAT THE APPROVAL FROM DIRECTOR, STPI WAS INSUFFICIENT AND THAT THE ASSESSEE WAS REQUIRED TO TAKE APPROVAL FROM THE BOARD APPOINTED FOR THI S PURPOSE BY THE CENTRAL GOVERNMENT, FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA). IN THE AFORESAID SITUATION, AT THE TIME OF FILING OF RETURN OF INCOME FOR THE INSTANT ASSESSMENT YEAR, ASSESSEE COU LD NOT HAVE ENVISAGED THE DENIAL OF ITS CLAIM OF ASSESSMENT YEAR, ASSESSEE COU LD NOT HAVE ENVISAGED THE DENIAL OF ITS CLAIM OF DEDUCTION U/S 10B OF THE ACT, WHICH WAS BEING ALLOWED IN THE PAST. THE AFORESAID CIRCUMSTANCE CLEARLY ESTABLISHES THE BONAFIDES OF THE REASONS PREVAILING WITH THE ASSESSEE FOR NOT HAVING MADE A CLAIM FOR DED UCTION U/S 10A OF THE ACT IN THE RETURN OF INCOME. HAVING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, IN OUR VIEW, THE STAND OF THE REVENUE THAT ASSESSEE CANNOT BE ALLOWED THE BENEFITS OF SECTION 10A OF THE ACT MERELY BECAUSE THE P RESCRIBED AUDIT REPORT IN FORM NO.56F WAS NOT FILED IN THE RETURN OF INCOME, IS QUITE ERRONEOUS. PERTINENTLY, AFTER DENIAL OF DEDUCTION U/S 10B OF THE ACT IN THE ASSESSMENT ORDER, THE EARLIEST OPPORTUNITY FOR THE ASSESSEE TO STAKE CLAIM FOR DEDUCTION U/S 10A OF THE ACT WAS BEFORE THE CIT(A); AND, THE ASSESSEE MADE THE CLAIM BEFORE THE CIT(A) ALONG WITH THE PRESCRIBED AUDIT REPORT IN FORM NO.56F. THE HONBLE DELHI HIGH COURT IN THE CASE OF VALIANT COMMUNICATIONS (SUPRA) IN SIMILAR CIRCUMSTANCES HELD THAT T HE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT IS REQUIRED TO BE EXAMINED IN ACCORDANCE WITH LAW. PERTINENTLY, EVEN IN THAT CASE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT IN THE RETURN OF INCOME, WHICH WAS NOT ALLOWED ULTIMATELY IN THE ABSENCE OF THE UNIT BEING APPROVED BY THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT, WHEREAS THE UNIT WAS ONLY REGISTERED WITH THE STPI. THE HONBLE DELHI HIGH COURT DIRECTED THE LOWER AUTHORITIES TO CONSIDER THE CLAIM OF DEDUCTION U/S 10A OF THE ACT IN A CCORDANCE WITH LAW. IN THE PRESENT CASE ALSO, WE FIND NO REASON TO DENY THE ASSESSEE AN OPPORTUNITY TO PUT - FORTH ITS CLAIM FOR DEDUCTION U/S 10A OF THE ACT WITH REGARD THE PROFITS OF ITS STPI UNIT, SUBJECT OF - COURSE TO THE FULFILLMENT OF THE PRESCRIBED CO NDITIONS. 17. SECTION 10A OF THE ACT PROVIDES A DEDUCTION OF SUCH PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT. THE ASSESSEE CLAIMED THAT IT HAS UNDERTAKEN EXPORT OF CO MPUTER SOFTWARE MANUFACTURED BY IT AND ITS UNIT IS REGISTERED WITH DIRECTOR, STPI. THE APPROVAL GRANTED BY DIRECTOR, STPI HAS BEEN HELD TO BE A SUFFICIENT COMPLIANCE WITH REQUIREMENTS OF SECTION 10A(2)(I)(B) OF THE ACT EVEN ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 10 AS PER THE CBDT VIDE INSTRUCTIO N NO.1 OF 2006 DATED 31.03.2006. THEREFORE, PRIMA - FACIE THE 100% EOU OF THE ASSESSEE, BEING REGISTERED WITH STPI, IS ELIGIBLE TO STAKE CLAIM FOR DEDUCTION U/S 10A OF THE ACT, PROVIDED THE OTHER CONDITIONS LAID DOWN IN SECTION 10A OF THE ACT ARE SATISFIED. THEREFORE, IN CONFORMITY WITH THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF VALIANT COMMUNICATIONS (SUPRA), WE DEEM IT FIT AND PROPER TO REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING THE CLAIM OF THE ASSESSEE FO R DEDUCTION U/S 10A OF THE ACT AS PER LAW. THE ASSESSING OFFICER SHALL CONSIDER THE FORM NO.56F FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) AND SUCH OTHER MATERIAL AND SUBMISSIONS THAT THE ASSESSEE MAY PUT - FORTH IN ORDER TO JUSTIFY ITS CLAIM OF DEDUCTION U/S 10A OF THE ACT. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE ADJUDICATING ON THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT IN ACCORDANCE WITH LAW. THUS, ON THE ALTERNAT E PLEA ASSESSEE SUCCEEDS. 17. IN THE FACTS OF THE CASE BEFORE US, THE ASSESSEE IS ADMITTEDLY, RECOGNIZED BY THE DIRECTOR OF STPI AND IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. REGENCY CREATIONS LTD. (SUPRA) , WE HOLD THAT TH E ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. ON THE OTHER HAND, THE ASSESSEE ONCE SATISFIED THE CONDITIONS LAID DOWN IN SECTION 10A OF THE ACT, IS ENTITLED TO THE SAID CLAIM OF DEDUCTION IRRESPECTIVE OF THE FACT THAT THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME HAD NOT MADE SUCH CLAIM UNDER SECTION 10A OF THE ACT, BUT HAD MADE A CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT. FOLLOWING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF CIT(A) IN ALLOWING THE CLAI M OF ASSESSEE UNDER SECTION 10A OF THE ACT. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ALLOWING THE SAID DEDUCTION UNDER SECTION 10B OF THE ACT ARE DISMISSED. SIMILARLY, THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT IS ALSO DISMISSED. 18. BEFORE PARTING , WE ALSO REFER TO THE RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE DECISION OF HONB LE BOMBAY HIGH COURT IN CIT VS. WESTERN OUTDOOR INTERACTIVE (P.) LTD. (SUPRA), WHERE IT HAS BEEN HELD THAT ONCE THE BENEFIT OF DEDUCTION WAS AVAILABLE FOR A PARTICULAR NUMBER OF YEARS, UNLESS IS WITHDRAWN IN THE FIRST YEAR, IT CANNOT BE WITHDRAWN FOR SUBSEQUENT YEARS PARTICULARLY WHEN T HERE IS NO CHANGE IN THE FACTS. IN VIEW OF ITA NO. 1098 /PN/201 1 ITA NO. 1149 /PN/201 1 EXPERT NET CAD SOLUTIONS PVT. LTD . 11 EARLIER DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. PAUL BROS. (1995) 216 ITR 548 (BO M) AND DIRECT INFORMATION (P.) LTD. VS. ITO (2011) 203 TAXMAN 70 (BOM) , WE AGREE WITH THE PROPOSITION LAID DOWN BY THE HONBLE BOMBAY HIGH COURT. HOWEVER, IN VIEW OF THE FACTS AS POINTED ABOVE , WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT. 1 9 . IN THE RESULT, BOTH THE APPEAL S O F ASSESSEE AND THE REVENUE ARE DISMISSED . ORDER P RONOUNCED ON THIS 29 TH DAY OF APRIL , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 29 TH APRIL , 201 6 . GCVSR GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A), AURANGABAD ; 4. / THE CIT , AURANGABAD ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE