Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 9384 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-01-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
17-01-2017
Assessment Year
2009-2010
Appeal Filed On
21-04-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1188/AHD/2014 WITH C.O. NO.228/AHD/2014 & IT A NO.1189/AHD/14 (ASSESSMENT YEAR:2009 -10) THE INCOME TAX OFFICER, WARD-4(2), AHMEDABAD APPELLANT VS. KJWW ENGINEERING INDIA PVT. LTD., HITECH HOUSE, B/H V MURTI COMPLEX, NR. GURUKUL TOWER, GURUKUL, AHMEDABAD 380009 RES PONDENT/CROSS OBJECTOR PAN: AADCK2950R /BY REVENUE : SHRI JAMES KURIAN, SR. D.R. /BY ASSESSEE : SHRI ANKIT M TALSANIA, ADV. /DATE OF HEARING : 17.01.2017 /DATE OF PRONOUNCEMENT : 25.01.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS BATCH OF THREE CASES PERTAINS TO ASSESSMENT YE AR 2009-10. THE REVENUES FORMER APPEAL AND ASSESSEES CROSS OBJECT ION THERETO ARISE AGAINST CIT(A)-VIII, AHMEDABADS ORDER DATED 30.01.2014 IN APPEAL NO. CIT(A)- VIII/ACIT/R.4/23/12-13, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITS LATTER APPEAL EMANAT ES FROM THE VERY CIT(A)S ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 2 - ORDER OF THE SAME DATE REVERSING ASSESSING OFFICER S ACTION IMPOSING PENALTY OF RS.24,93,500/- U/S.271(1)(C) OF THE ACT. 2. WE COME TO QUANTUM CASES FIRST. THE REVENUES F ORMER APPEAL CHALLENGES CORRECTNESS OF THE CIT(A)S ORDER INTER ALIA CONDONING DELAY OF 134 DAYS IN FILING OF ASSESSEES APPEAL, ADMITTING ITS ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES THERE BY PARTLY ALLOWING ITS SECTION 10B DEDUCTION CLAIM OF RS.80,69,579/- ON PR OPORTIONATE BASIS W.E.F. FROM THE DATE OF ITS STPI REGISTRATION FROM 18.02.2 009; RESPECTIVELY. THE ASSESSEES CROSS OBJECTION ON THE OTHER HAND PLEAD THAT THE LOWER APPELLATE AUTHORITY OUGHT TO HAVE HELD IT ENTITLED FOR THE AB OVE DEDUCTION CLAIM IN ENTIRETY. 3. WE ADVERT TO RELEVANT FACTS NOW. THE ASSESSEE C OMPANY IS IN KNOWLEDGE PROCESS OUTSOURCING BUSINESS. IT FILED R ETURN ON 29.09.2009 STATING INCOME OF RS.76,06,815/- FOLLOWED BY ITS RE VISED RETURN DATED 22.03.2011 DECLARING NIL INCOME. IT CLAIMED SECTIO N 10B DEDUCTION TO THE TUNE OF RS.80,69,579/- OF THE ACT. THE ASSESSING O FFICER SOUGHT FOR NECESSARY DETAILS FOR THE SAID PURPOSE. THE ASSESS EES AUTHORIZED REPRESENTATIVE APPEARS TO HAVE SUBMITTED ON ITS BEH ALF ON 14.12.2011 THAT THE ASSESSEE HAD NOT BEEN ACCORDED AN STPI UNIT CERTIFI CATION SO AS TO FULFILL THE ABOVE DEDUCTIONS NECESSARY CONDITIONS. THE ASSESS ING OFFICER THUS FRAMED THE REGULAR ASSESSMENT IN QUESTION DATED 15.12.2011 MAKING THE IMPUGNED DISALLOWANCE OF SECTION 10B DEDUCTION. HE FURTHER INITIATED SECTION 271(1)(C) PENALTY PROCEEDINGS AGAINST THE ASSESSEE. 4. THE ASSESSEE SEEMS TO HAVE FILED ITS APPEAL ON 1 1.06.2012 INSTEAD OF THE DUE DATE COMING ON 28.01.2012 RESULTING IN DELA Y OF 134 DAYS. IT PLEADED IN ITS CONDONATION PETITION THAT IT COULD NOT COMMU NICATE AND SEND THE NECESSARY RECORDS TO ITS AUTHORIZED REPRESENTATIVE AT AHMEDABAD BECAUSE OF ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 3 - OVER SIGHT MISTAKE AND INADVERTENCE. ITS CASE ACCO RDINGLY WAS THAT IT COULD ONLY DO THE NEEDFUL AFTER REALIZING ITS ABOVE MISTA KE. THE ASSESSEE STATED TO HAVE FORWARDED ALL NECESSARY DETAILS AND FILE ITS A PPEAL AFTER DELAY OF 134 DAYS. THE CIT(A) TREATED IT AS A CASE OF BONAFIDE MISTAKE TO ADMIT ASSESSEES APPEAL FOR ADJUDICATION ON MERITS. 5. THE ASSESSEE THEREAFTER FILED ADDITIONAL SUBMISS IONS/EVIDENCE IN THE LOWER APPELLATE PROCEEDINGS PLEADING THEREIN THAT A LTHOUGH THE ASSESSMENT ORDER DATED 14.12.2011 HAD RECORDED ITS AUTHORIZED REPRESENTATIVES STATEMENT THAT IT HAD NOT BEEN ACCORDED STPI REGIST RATION CERTIFICATE, IT RUSHED TO THE ASSESSING OFFICER ALONG WITH STPI REGISTRATI ON CERTIFICATE AS WELL AS ITS AUDIT REPORT FORMING FOUNDATION OF ITS REVISED RETU RN CLAIMING SECTION 10B DEDUCTION. THE ASSESSEE ACCORDINGLY SUBMITTED THAT IT CAME TO KNOW ABOUT THE IMPUGNED ASSESSMENT ORDER ALREADY PASSED BY THE N ON 15.12.2011. IT THUS SOUGHT TO MAKE OUT A CASE OF ADMISSION OF ABOVE ADD ITIONAL EVIDENCE. THE CIT(A) SOUGHT FOR REMAND REPORT. THE SAME CAME ON 0 6.12.2013. THE ASSESSING OFFICER FIRST OF ALL STATED THAT HE HAD G RANTED ALL NECESSARY OPPORTUNITIES TO THE ASSESSEE IN ORDER TO PRODUCE T HE RELEVANT DETAILS OF SECTION 10B DEDUCTION CLAIM AND THEREFORE, THERE WA S NO VIOLATION OF NATURAL JUSTICE PRINCIPLES IN HIS ASSESSMENT ORDER. WE NOT ICE AS PAGE 14 OF THE ORDER THAT THE ASSESSING OFFICER HIMSELF DID NOT DISPUTE ON MERITS THAT THE ASSESSEE HAD BEEN ABLE TO PROCURE ITS STPI CERTIFICATION DAT ED 18.02.2009 AS WELL AS ITS RECTIFICATION COMMUNICATION FROM STPI, GANDHINAGAR DATED 09.07.2013 WHICH FOUND A NECESSARY CONDITION FOR THE IMPUGNED RELIEF AS PER BOARDS CIRCULAR DATED 18.10.2011. THE CIT(A) THEREAFTER H OLDS THE ASSESSEE ENTITLED FOR THE IMPUGNED SECTION 10B DEDUCTION CLAIM AS UND ER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE ISSUE IN BRIEF IS THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF KNOWLEDGE PROCESS OUTSOU RCING. IT FILED A RETURN CLAIMING THE DEDUCTION UNDER SECTION 10 B OF THE AC T. DURING THE COURSE OF SCRUTINY THE AR OF THE APPELLANT INFORMED THE AO THAT IT WAS NOT REGISTERED WITH STPI, WHICH WAS MANDATORY FOR CLAIMING THE DEDUCTION. ACC ORDINGLY THE AO DISALLOWED ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 4 - THE DEDUCTION CLAIMED BY THE APPELLANT. THE APPELLA NT LATER ON DISCOVERED THAT IT WAS REGISTERED WITH STPI WITH EFFECT FROM 18/02/200 9. IT ACCORDINGLY FILED AN APPEAL BRINGING THE CORRECT FACTS ON RECORD AND REI TERATED THE CLAIM OF DEDUCTION UNDER SECTION 10 B. THE WRITTEN SUBMISSION GIVEN BY THE APPELLANT WAS F ORWARDED TO THE AO AND HIS COMMENTS HAVE ALSO BEEN OBTAINED. IT HAS BE EN SUBMITTED BY THE AO THAT SINCE THIS INFORMATION WAS NOT FURNISHED EARLIER IT SHOULD NOT, BE ADMITTED NOW. HE HAS FURTHER SUBMITTED THAT EVEN IF THE CLAIM OF THE APPELLANT UNDER SECTION 10 B IS ADMITTED THE DEDUCTION SHOULD BE GIVEN ONLY FROM TH E DATE FROM WHICH IT HAS BEEN REGISTERED WITH STPI. I HAVE CAREFULLY CONSIDERED THE SUBMISSION GIVEN BY THE APPELLANT REGARDING THE NEW EVIDENCE AND ALSO THE REPORT OF T HE AO. IT IS NOTED THAT THE CERTIFICATE WAS THERE WITH THE APPELLANT SINCE FEBR UARY 2009 BUT DUE TO IGNORANCE OF THE CHARTERED ACCOUNTANT DURING THE COURSE OF AS SESSMENT PROCEEDINGS IT COULD NOT BE SUBMITTED BEFORE THE AO. THE EVIDENCE WHICH HAS NOW BEEN PRODUCED BY THE APPELLANT IS CONTEMPORARY AND THERE IS NO ATTEMPT T O BACK-DATE ANY INFORMATION OR FURNISH ANY FABRICATED EVIDENCE. IN VIEW OF THESE F ACTS THE EVIDENCES SUBMITTED ARE ADMITTED FOR CONSIDERATION AND DISPOSAL OF APPEAL. THE ISSUE NOW IS WHETHER THE APPELLANT IS ENTITLED FOR DEDUCTION UNDER SECTION 10 B. THE DETAILS ON RECORD TO SHOW THAT TH E APPELLANT IS REGISTERED WITH STPI. THE REGISTRATION CERTIFICATE ISSUED BY THE LO CAL AUTHORITY AT AHMEDABAD HAS ALSO BEEN ENDORSED BY INTER-MINISTERIAL STANDING CO MMITTEE CONSTITUTED BY DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION, MINI STRY OF COMMERCE AND INDUSTRY OF SOFTWARE TECHNOLOGY PARK HELD ON 20/01/ 2010. THE APPELLANT HAS EARNED ALL ITS INCOME FROM EXPORT AND THE EXPORT PR OCEEDS HAVE BEEN RECEIVED IN FOREIGN EXCHANGE DURING THE PRESCRIBED TIME. IT IS ALSO SUBMITTED RELEVANT CERTIFICATE FROM A CHARTERED ACCOUNTANT IN FORM 56G , WHICH IS PRESCRIBED AS PER THE PROVISIONS OF SECTION 10 B. THEREFORE, THE APPE LLANT COMPANY SATISFIES AIL THE CONDITIONS RELATED TO GRANT OF DEDUCTION UNDER SECT ION 10 B AND ACCORDINGLY IT IS HELD THAT IT IS ENTITLED FOR DEDUCTION UNDER SECTIO N 10 B. NOW THE ISSUE WHICH IS TO BE FURTHER DECIDED IS THA T FROM WHAT DATE THE APPELLANT WOULD BE ENTITLED FOR DEDUCTION. THE APPE LLANT HAS BEEN DOING THIS BUSINESS FROM 23/01/2008. THE RECORDS SHOW THAT THE RE IS NO LOCAL SALE OR DOMESTIC BUSINESS. WHATEVER INCOME HAS BEEN EARNED BY THE AP PELLANT IS FROM THE EXPORT OF SOFTWARE HOWEVER THE APPELLANT DID NOT APPLY FOR RE GISTRATION WITH STPI, IT APPLIED FOR THE REGISTRATION ON 16/02/2009 AND WAS ACCORDED REGISTRATION ON 18/02/2009. THE BASIC CONDITION OF CLAIM OF DEDUCTION IS THE RE GISTRATION WITH STPI AND SINCE THE APPELLANT WAS REGISTERED BY STPI ON 18/02/2009 THE DEDUCTION WOULD BE AVAILABLE FROM THAT DATE, ACCORDINGLY IF IS HELD TH AT THE DEDUCTION UNDER SECTION 10 B WOULD BE AVAILABLE FROM THE DATE FROM WHICH IT HA S BEEN REGISTERED WITH THE STPI THAT IS 18/ 02/2009. THE AO IS ACCORDINGLY DIR ECTED TO WORK OUT THE PROPORTIONATE PROFIT ON THE BASIS OF RECEIPTS OF BU SINESS DONE AFTER 18/02/2009 AND WORK OUT THE PROFIT ENTITLED FOR DEDUCTION UNDER SE CTION 10 B. THE ANOTHER ISSUE WHICH IS ALSO REQUIRED TO BE ADJU DICATED IS THAT THE HAS APPARENTLY NOT FURNISHED FORM 56G WITH THE RETURN O F INCOME AS IT DID NOT HAVE THE ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 5 - REPORT AT THAT TIME. THE APPELLANT HAS SUBMITTED TH AT SINCE THE RETURNS ARE NOW BEING E-FILED THE REQUIREMENT OF FURNISHING THE REP ORT WITH THE RETURN HAS BEEN WAIVED BY RULE 12. IT HAS ALSO RELIED UPON CERTAIN JUDGEMENTS WHICH DEAL WITH SIMILAR ISSUES OF FURNISHING THE REPORT ALONG WITH THE RETURN FOR CLAIMING THE DEDUCTION. ON CONSIDERATION OF TOTALITY OF THE CIR CUMSTANCES AND THE ISSUE INVOLVED IT IS NOTED THAT THE APPELLANT HAS OTHERWISE FULFIL LED AIL THE REQUIREMENTS OF ALLOWANCE OF CLAIM UNDER SECTION 10 B. THE ONLY DIS QUALIFICATION FOR MAKING THE CLAIM IS THE NON FURNISHING OF FORM 56G WITH THE RE TURN. THE REPORT OF THE CHARTERED ACCOUNTANT FORM 56G, THAT HAS BEEN GIVEN BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS, IS APPARENTLY OBTA INED AFTER THE1 DUE DATE OF FILING OF RETURN AS IT DOES NOT CONTAIN THE DATE ON WHICH THE REPORT WAS ISSUED. ON EXAMINING THE JUDICIAL OPINION ABOUT THE ISSUE, ESP ECIALLY THE DECISIONS THAT HAVE BEEN MENTIONED BY THE APPELLANT, IF IS NOTED THAT T HE REQUIREMENT OF FILING THE REPORT IS A PROCEDURAL ONE AND NOT MANDATORY. IN CASE THE APPELLANT DOES NOT FILE IT WITH THE RETURN OF INCOME IT CAN BE FILED LATER. IN SOME OF THE CASES THE COURTS HAVE EVEN HELD THAT IF THE CLAIM IS CORRECT ON THE BASIS OF FIGURES AVAILABLE WITH THE APPELLANT THE REPORT OF THE CHARTERED ACCOUNTANT IS ONLY A TOOL TO VERIFY THE CORRECTNESS OF THE CLAIM. IN THE PRESENT CASE THE A PPELLANT HAS CORRECTLY MENTIONED THE FIGURES OF EXPORT AND ACCORDINGLY HAS CLAIMED T HE DEDUCTION. THE REPORT SUBMITTED BY THE CHARTERED ACCOUNTANT ALSO VERIFIES THE QUANTUM OF CLAIM MADE BY THE APPELLANT. IT WOULD ALSO BE USEFUL TO REFER TO THE GIST OF THE DECISIONS WHICH HAVE BEEN RELIED BY THE APPELLANT IN THE WRITTEN SU BMISSION. IN THE CASE OF CIT VS. HARDEODAS AGARWALLA TRUST 198 ITR 511 (CAL. ), THE RETURN OF INCOME WAS FURNISHED ON 16/12/1983 CLAIMI NG DEDUCTION U/S 11 OF THE ACT ALONGWITH BALANCE SHEET AND INCOME - EXPENDITURE AC COUNT, HOWEVER WITHOUT FURNISHING THE AUDITOR'S REPORT IN FORM NO.10B. IN THE SAID CASE, THE AUDIT REPORT IN FORM NO. 108 WAS SIGNED BY THE CA ON 20/02/1985, MUCH AFTER THE DATE OF FURNISHING RETURN OF INCOME. THE CALCUTTA HIGH COUR T, AFTER ANALYZING THE VARIOUS HIGH COURT DECISIONS AND THE INTENTION OF THE LEGIS LATURE, HELD THAT (A) THE CERTIFICATE / AUDIT REPORT ONLY AFFIRMS THE STATEME NT CONTAINED IN THE BALANCE-SHEET AND INCOME-EXPENDITURE ACCOUNT; THE ASSESSING OFFIC ER CAN RELY ON THE CERTIFICATE / AUDIT REPORT FOR ALLOWING THE BENEFIT OF EXEMPTION; THIS IS PROCEDURAL MATTER FOR THE PURPOSE OF ENABLING THE ASSESSING OFFICER TO COMPLE TE THE ASSESSMENT ON THE BASIS OF THE CERTIFICATE OF THE AUDITOR WITHOUT EVEN ASKI NG THE ASSESSES TO FURNISH SUPPORTING DOCUMENTS IN SUPPORT OF THE CLAIM, (B) I T CANNOT BE SAID THAT THE LEGISLATURE INTENDED THAT, EVEN WHERE THE ASSESSEE HAS GOT ITS ACCOUNTS AUDITED AND THE CERTIFICATE IS OBTAINED IN FORM NO.10B, MERELY BECAUSE SUCH REPORT COULD NOT BE FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDING S, IT WOULD DEPRIVE A TRUST OF GETTING THE EXEMPTION IF IT IS OTHERWISE ENTITLED T O IT IN LAW, (C) WHERE THE AUDIT REPORT COULD NOT HAVE BEEN FURNISHED BEFORE AO, THE APPEAL BEING A CONTINUATION OF THE ORIGINAL PROCEEDINGS, THE APPELLATE AUTHORIT Y HAS THE POWER TO ACCEPT THE AUDIT REPORT AND DIRECT THE AO TO REDO THE ASSESSME NT. IN THE CASE OF MONARCH FOODS (P.) LTD. VS. ACIT 86 TAXMAN 126 (AHD .), RETURN OF INCOME WAS FILED ON 29/12/89 DECLARING TO TAL INCOME AT NIL AFTER SETTING- OFF UNABSORBED LOSS OF EARLIER YEARS. HOWEVER, AS A RESULT OF ORDER PASSED FOR THE IMMEDIATE PRECEDING YEAR, THE LOSS WAS ABSORBED IN THAT IMMEDIATE PRECEDING YEAR ONLY. AS A RESULT OF WHICH, THE INCOME OF THE YEAR UNDER CONSIDERATION WAS ASSESSED AT POSITIVE FIGURE. THEREFORE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS ONLY, THE ASSESSEE CLAIMED DEDUCTION U/S 80HHC. THE ASSESSEE DID NOT FILE AUDIT ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 6 - REPORT U/S 80HHC IN FORM NO.10CCAC ALONGWITH THE RO I NOR CREATED ANY EXPORT RESERVE. THEREAFTER, THE ASSESSEE FILED REVISED RET URN OF INCOME CLAIMING DEDUCTION U/S 80HHC AND FURNISHING AUDIT REPORT IN FORM NO.10 CCAC. HOWEVER, THE ASSESSING OFFICER DENIED THE CLAIM ON TWO GROUNDS V IS-A-VIS (A) REVISED RETURN IS TIME BARRED AND (B) SINCE THE ASSESSEE HAD NOT FURN ISHED AUDIT REPORT IN FORM NO. 10CCAC ALONWITH RETURN OF INCOME, DEDUCTION U/S 80H HC CANNOT BE ALLOWED. THE HON'BLE TRIBUNAL, AFTER FOLLOWING THE DECISIONS OF VARIOUS HIGH COURT INCLUDING THE GUJARAT HIGH COURT DECISION IN THE CASE OF GUJARAT OIL & ALLIED INDUSTRIES AND CALCUTTA HIGH COURT IN THE CASE OF HARDEODAS AGARWA LLA TRUST HELD THAT THE REQUIREMENT OF FURNISHING OF AUDIT REPORT ALONGWITH THE RETURN OF INCOME CANNOT BE REGARDED AS MANDATORY REQUIREMENT AND THE FURNISHIN G OF AUDIT REPORT BEFORE THE AUTHORITY IS SUFFICIENT COMPLIANCE OF THE RELEVANT PROVISIONS OF LAW AND ACCORDINGLY DIRECTION WAS GIVEN TO THE AO TO DECIDE THE CLAIM O F THE ASSESSEE FOR GRANT OF DEDUCTION U/S 80HHC ON THE BASIS OF MERITS. IN THE CASE OF CIT VS. BERGER PAINTS (INDIA) LTD. 254 ITR 503 (CAL CUTTA), THE ASSESSEE HAD CLAIMED DEDUCTION U/S 32AB AND 80H HC OF THE ACT, HOWEVER, THE AUDIT REPORT IN FORM NO.3AA AND 10CCAC WAS NOT FURN ISHED ALONGWITH THE RETURN OF INCOME. THE CASE OF THE REVENUE WAS THAT SINCE THIS FORM FROM THE AUDITOR WAS TENDERED BY THE ASSESSEE AT A DATE MUCH LATER THAN THE FILING OF RETURN, THE ASSESSEE LOST ITS RIGHT OF CLAIMING THE BENEFIT . HON'BLE HIGH COURT FOLLOWED EARLIER DECISION IN THE CASE OF HARDEODAS AGARWALLA TRUST. THE LAW REITERATED THAT THE AUDIT REPORT CAN BE FURNISHED EVEN AFTER FILING OF RETURN OF INCOME AND IT WILL BE SUFFICIENT COMPLIANCE IF THE SAME IS FURNISHED BEFO RE THE AUTHORITY EXAMINING THE CLAIM. IN THE CASE OF CIT VS. VALLI COTTON TRADERS (P) LTD. 171 TAXMAN 27 9 (MAD.), THE RETURN OF INCOME WAS FILED DECLARING LOSS AND THE ORIGINAL ASSESSMENT CAME TO BE FRAMED U/S 143(3) OF THE ACT ACCEPTING T HE RETURNED ..THEREAFTER, REASSESSMENT WAS FRAMED U/S 147 OF THE ACT AFTER MA KING DISALLOWANCE WHICH RESULTED INTO POSITIVE ASSESSED INCOME. SINCE THE A SSESSEE HAD NOT FILED FORM NO.10CCAC, WHICH OUGHT TO HAVE BEEN FILED ALONG WIT H THE RETURN, TO CLAIM DEDUCTION U/S 80HHC, AS HE CLAIMED ONLY LOSS IN HIS ORIGINAL RETURN, THE ASSESSEE CLAIMED DEDUCTION U/S 80HHC BASED ON THE AUDIT REPO RT BY FILING FORM NO.10CCAC BEFORE THE CIT(A). HOWEVER, THE TRIBUNAL ALLOWED THE APPEAL AND DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFTER CONSIDERING THE AUDIT REPORT IN FORM NO.10CCAC, THE MADRAS HIGH COURT TAK ING INTO COGNIZANCE OF VARIOUS AUTHORITIES CONFIRMED THE FINDING OF THE TR IBUNAL AND IN SUBSTANCE HELD THAT MERELY ON ACCOUNT OF TECHNICAL REASON OF NON-F URNISHING OF AUDIT REPORT ALONG WITH R01, DEDUCTION CANNOT BE DENIED TO THE ASSESSE E. SIMILAR VIEW WAS EXPRESSED IN THE CASE OF WIPRO LTD. VS. DCIT 5 SOT 805 (BANG.) AND CIT VS. G UPTA FABS 274 ITR 620 (P&H). THEREFORE, CONSIDERING IHE PREPONDERANT JUDICIAL OP INION AND THE FACTS OF THE CASE OF THE APPELLANT ALL INGREDIENTS RELATED T O THE CLAIM OF DEDUCTION UNDER SECTION 10 B HAVE BEEN FULFILLED BY THE APPELLANT. IN VIEW OF THE ABOVE DISCUSSION, THE CLAIM OF DEDUC TION UNDER SECTION 10 B IS ALLOWED WITH EFFECT FROM THE DATE FROM WHICH THE APPELLANT COMPANY WAS REGISTERED WITH STPI AUTHORITY. THE AO IS DIRECTED ACCORDINGLY. ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 7 - THIS LEAVES BOTH THE PARTIES AGGRIEVED TO THE EXTE NT INDICATED IN THEIR RESPECTIVE PLEADINGS. THE REVENUES CASE SEEKS TO CHALLENGE THE LOWER APPELLATE ORDER CONDONING DELAY, ADMITTING ADDITION AL EVIDENCE ON ASSESSEES PRETEXT THEREBY HOLDING IT PARTLY ENTITLED FOR THE IMPUGNED DEDUCTION CLAIMED. THE ASSESSEES CROSS OBJECTION HOWEVER PLEADS THAT THE CIT(A) OUGHT TO HAVE GRANTED IT ENTIRE DEDUCTION RELIEF THEN THAT IN PAR T HEREINABOVE. 6. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUS ED. SHRI KURIAN STRONGLY REITERATES REVENUES PLEADINGS ON FIRST TW O TECHNICAL ASPECT ON CONDONATION OF DELAY OF 134 DAYS IN ASSESSEES FILI NG OF LOWER APPEAL AS WELL AS ADMISSION OF ADDITIONAL EVIDENCE. WE HAVE ALREA DY INDICATED THAT THE ASSESSEES CASE SEEKING CONDONATION OF DELAY OF 134 DAYS IN FILING OF ITS APPEAL WAS THAT IT COULD NOT SUPPLY THE RELEVANT RE CORD ALONGWITH ASSESSMENT ORDERS COPY TO ITS AUTHORIZED REPRESENTATIVE DUE T O OVER SIGHT AND INADVERTENCE. THERE IS NO MATERIAL BEFORE US TO DI SPUTE ALL THESE SOLEMN AVERMENTS. BE THAT AS IT MAY, THE ASSESSEE HAS SUF FICIENTLY PROVED ITS BONAFIDES THAT THE ABOVE STATED DELAY WAS NEITHER I NTENTIONAL NOR DELIBERATE. WE THUS CONCLUDE THE CIT(A) TO HAVE RIGHTLY CONDONE D THE ABOVE STATED DELAY IN ASSESSEES APPEAL. THE REVENUES FIRST SU BSTANTIVE ARGUMENT IS ACCORDINGLY REJECTED. 7. WE NOW DEAL WITH REVENUES SECOND ARGUMENT THAT THE CIT(A) HAS ERRED IN ADMITTING ASSESSEES ADDITIONAL EVIDENCE I N VIOLATION OF RULE 46A OF THE INCOME TAX RULES. THERE IS HARDLY ANY DISPUTE THAT THE ASSESSEE CLAIMED ITS 10B DEDUCTION RELIEF BY WAY OF FILING A REVISED RETURN. THE ASSESSING OFFICER HOWEVER RECORDED ITS AUDITORS STATEMENT ON 14.12.2011 THAT THE ASSESSEE HAD NOT BEEN ACCORDED STPI REGISTRATION TI LL THEN WHICH RESULTED IN THE IMPUGNED DISALLOWANCE BEING MADE IN ASSESSMENT ORDER DATED 15.12.2011. THIS ABOVE REGISTRATION FACT TURNED OU T TO BE FACTUALLY INCORRECT THE ASSESSEE DULY PROVED BY WAY OF ADDITIONAL EVIDE NCE THAT THE STPI ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 8 - CERTIFICATION STOOD GRANTED ON 18.02.2009 BY WAY OF A COMMUNICATION OF RATIFICATION FROM THE STPI, GANDHINAGAR VIDE LETTE R DATED 09.07.2013 I.E. DURING THE PENDENCY OF THE LOWER APPELLATE PROCEEDI NGS. THE REVENUE FAILS TO REBUT THIS CLINCHING FACTUAL POSITION. WE ACCOR DINGLY OBSERVE THAT THE LEARNED CIT(A) HAD RIGHTLY ADMITTED ASSESSEES ADDI TIONAL EVIDENCE. AND MORE SO WHEN THE ASSESSING OFFICER HIMSELF DID NOT DISPUTE ALL THESE FACTS IN HIS REMAND REPORT DATED 06.12.2013. THIS IS ACCORD INGLY ALSO NOT A CASE OF A FAILURE ON THE CIT(A)S PART IN NOT AFFORDING OPPOR TUNITY OF HEARING TO THE ASSESSING AUTHORITY. WE THUS FIND NO FAULT IN LOWE R APPELLATE AUTHORITIES ORDER ADMITTING ASSESSEES ADDITIONAL EVIDENCE. 8. WE NOW PROCEED TO DEAL WITH BOTH PARTIES COMMON GRIEVANCE THAT THE CIT(A) HAS ERRED IN NOT UPHOLDING ASSESSING OFFICER S ACTION MAKING COMPLETE DISALLOWANCE OF THE IMPUGNED SECTION 10B D EDUCTION CLAIM AND VISE VERSA. THE CASE FILE ALREADY INDICATES THAT T HE ASSESSEE HAS BEEN GRANTED AN STPI REGISTRATION ON 18.02.2009. LEARNED CIT(A) HAS THUS HELD IT ENTITLED FOR THE IMPUGNED DEDUCTION W.E.F. THE SAID DATE ON PROPORTIONATE BASIS. WE AFFORDED ADEQUATE OPPORTUNITY OF HEARING TO BOTH TH E PARTIES. THE REVENUE FAILS IN DISPUTING ASSESSEES ABOVE CERTIFICATION W .E.F. 18.02.2009 SO AS TO DENY IT SECTION 10B DEDUCTION RELIEF. THE LATTER PA RTY HAS ALSO NOT BEEN ABLE TO REPEL THE CIT(A)S CONCLUSION HOLDING IT ENTITLED FOR SECTION 10B DEDUCTION ONLY W.E.F. THE DATE OF CERTIFICATION I.E. 18.02.20 09 INSTEAD OF THE ENTIRE RELEVANT PREVIOUS YEAR. WE ACCORDINGLY FIND NO REA SON TO INTERFERE IN WELL REASONED CIT(A)S ORDER UNDER CHALLENGE IN REVENUE S APPEAL AND ASSESSEES CROSS OBJECTION ITA NO.1188 & C.O. NO.228/AHD/2014. THE SAME ARE ACCORDINGLY DECLINED. 9. THIS LEAVES US WITH REVENUES LATTER APPEAL ITA N O.1189/AHD/2014 SEEKING TO REVIVE SECTION 271(1)(C) PENALTY OF RS.2 4,93,500/- AS IMPOSED BY THE ASSESSING OFFICER VIDE ORDER DATED 22.06.2012 Q UA THE ABOVE QUANTUM ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 9 - DISALLOWANCE OF SECTION 10B DEDUCTION AS DEALT WITH IN PRECEDING PARAGRAPH. THE ASSESSING OFFICER LEVIED THE IMPUGNED PENALTY B Y TERMING ASSESSEES DEDUCTION CLAIM TO BE A FALSE ONE LACKING BONAFIDES . HE HEAVILY RELIED UPON QUANTUM DEVELOPMENTS TO IMPOSE THE PENALTY IN QUEST ION. 10. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION AS UNDER: THE REMAINING GROUNDS OF APPEAL ARE INTERLINKED AN D ARE IN RESPECT OF LEVY OF PENALTY OF RS. 24,93,500/- UNDER SECTION 27 1(1)(C) OF THE ACT. THE ISSUE IS DECIDED IN THE SUBSEQUENT PARAGRAPHS. THE FACTS, WHICH ARE RELEVANT FOR DECISION, ARE THA T THE APPELLANT IS ENGAGED IN THE BUSINESS OF KNOWLEDGE PROCESS OUTSOURCING, I T FILED A RETURN CLAIMING THE DEDUCTION UNDER SECTION 10 B OF THE ACT. DURING THE COURSE OF SCRUTINY THE AR OF THE APPELLANT INFORMED THE AO THAT IT WAS NOT REGIS TERED WITH STPI, WHICH WAS MANDATORY FOR CLAIMING THE DEDUCTION. ACCORDINGLY T HE AO DISALLOWED THE DEDUCTION CLAIMED BY THE APPELLANT. THE APPELLANT L ATER ON DISCOVERED THAT IT WAS REGISTERED WITH STPI WITH EFFECT FROM 18/02/2009. I F ACCORDINGLY FILED AN APPEAL AGAINST THE ASSESSMENT ORDER, BRINGING THE CORRECT FACTS ON RECORD AND REITERATED THE CLAIM OF DEDUCTION UNDER SECTION 10 B. IN THE M EANTIME THE AO PROCEEDED WITH THE PENALTY PROCEEDINGS AND IMPOSED THE PENALTY OF CONCEALMENT. IT WAS HELD BY THE AO THAT THE APPELLANT KNEW THAT IT WAS NOT ENTI TLED FOR THE DEDUCTION AND CLAIMED THE DEDUCTION DESPITE THAT. HE ACCORDINGLY HELD THAT THE CLAIM WAS FALSE. THE APPELLANT HAS SUBMITTED THAT IT WAS UNDER BONA FIDE BELIEF THAT IT COULD START CLAIMING DEDUCTION FOR A PERIOD OF 10 CONSECU TIVE ASSESSMENT YEAR BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH THE UNDERTAKING HAS BEGUN ITS OPERATIONS. IT SATISFIES ALL THE COND ITIONS RELATED TO THE CLAIM. IT IS FURTHER BEEN SUBMITTED BY THE APPELLANT THAT UNDER THE SCHEME OF THE ACT DEDUCTION FOR EXPORTS OF GOODS OR ARTICLES OR THINGS HAS BEEN PROVIDED UNDER VARIOUS PROVISIONS OF THE ACT SUCH AS 10 A/10 BA/80HHC, AND THE DEDUCTION IS ALLOWED FROM THE YEAR IN WHICH THE OPERATION OF EXPORT HAS BEEN STARTED. IT HAS ALSO PLACED RELIANCE ON CERTAIN JUDGEMENTS IN WHICH IT WAS HELD THAT THE DEDUCTION COULD BE ALLOWED FOR THE WHOLE YEAR IRRESPECTIVE OF THE DATE OF APPROVAL. AFTER CONSIDERING ALL THE FACTS IT IS OBSERVED THAT THE APPELLANT-HAD A CERTIFICATE OF REGISTRATION WITH STPI WITH IT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS ALSO. HOWEVER DUE TO THE IGNORANCE OF T HE CHARTERED ACCOUNTANT, APPEARING DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, A STATEMENT WAS GIVEN THAT THERE WAS NO CERTIFICATE AND THE UNIT WAS NOT REGISTERED. ACCORDINGLY THE CLAIM WAS DISALLOWED. THE FACT THAT IT HAD THE CERTIFICAT E, WHICH WAS ISSUED IN THE MONTH OF FEBRUARY 2009, HAS BEEN DULY ESTABLISHED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. THE APPELLANT HAS EARNED ALL ITS PROFIT FROM THE EXPORTS. THERE IS NO DOMESTIC SALE OR BUSINESS WHICH HAS BEE N DONE BY THE APPELLANT DURING THE YEAR. ALT THE PROCEEDS OF SALE HAVE ALSO BEEN R ECEIVED IN THE FOREIGN CURRENCY. THE APPELLANT HAD ALSO FURNISHED ALL THE RELEVANT C ERTIFICATES REGARDING RECEIPT OF EXPORT PROCEEDS DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. THE CONDITIONS FOR CLAIM OF DEDUCTION UNDER SECTION 10 B HAVE ALSO BEE N SATISFIED. IT HAS ALSO ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 10 - PRODUCED A CERTIFICATE SHOWING THAT THE APPROVAL WA S RECTIFIED BY THE INTER- MINISTERIAL COMMITTEE ALSO. THEREFORE, THE CLAIM UN DER SECTION 10 B MADE BY THE APPELLANT IN THE RETURN OF INCOME WAS BOND FIDE. THE ONLY ISSUE WHICH REQUIRES FURTHER CONSIDERATION , IS THAT THE APPELLANT MADE A CLAIM OF DEDUCTION IN RESPECT OF THE INCOME OF THE TOTAL YEAR, WHEREAS IT WAS ACCORDED REGISTRATION DURING THE MONTH- OF -FEB RUARY, THEREFORE, IF SHOULD HAVE MADE A CLAIM OF 10B IN RESPECT OF THE INCOME F OR TWO MONTHS ONLY. THE APPELLANT HAS SUBMITTED THAT IT WAS UNDER BONA FIDE BELIEF THAT THE DEDUCTION IS AVAILABLE FOR THE ENTIRE YEAR AS THE REGISTRATION W AS GRANTED DURING THE YEAR. IT IS NOTED FROM THE LANGUAGE OF SECTION 10B THAT THE DED UCTION IS AVAILABLE TO 100% EXPORT-ORIENTED UNDERTAKING FROM THE EXPORT OF ARTI CLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THING OR COMPUTE R SOFTWARE, AS THE CASE' MAY BE. IT IS NOTED THAT THE APPELLANT HAD BEGUN THE AC TIVITY FROM JANUARY 2008. IT MADE THE CLAIM OF DEDUCTION DURING THE YEAR AND IT WAS T HE FIRST YEAR OF CLAIM, THE APPELLANT HAS RIGHTLY PLACED RELIANCE ON THE JUDGEM ENT OF DELHI ITAT IN THE CASE OF ML OUTSOURCING SERVICES PVT LTD ITA NUMBER 01/02/20 04/DEL/2011. I HAVE ALSO DECIDED THE QUANTUM APPEAL IN THE CASE OF THE APPELLANT FOR THE SAME YEAR AND IT HAS BEEN HELD THAT THE APPEIIANT C AN ALSO SUBMIT THE REPORT IN FORM 56G LATER ON ALSO. IT WAS HELD BY ME THAT IT I S A PROCEDURAL REQUIREMENT AND NOT MANDATORY. ACCORDINGLY THE CLAIM OF DEDUCTION U NDER SECTION 10 B HAS BEEN ALLOWED FROM THE DATE OF REGISTRATION. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES IT IS SEEN THAT THE APPELLANT MADE TH E MISREPRESENTATION REGARDING CLAIM UNDER SECTION 10B AS THE CHARTERED ACCOUNTANT WHO WAS REPRESENTING THE CASE OF THE APPELLANT BEFORE THE AO MADE A WRONG ST ATEMENT THAT THERE WAS NO CERTIFICATE OF REGISTRATION WITH STPI. IT IS ALSO N OTED THAT THE APPELLANT HAS EARNED ALL ITS INCOME THROUGH SOFTWARE EXPORT AND THE PROC EEDS HAVE BEEN REALISED IN FOREIGN EXCHANGE AFTER FOLLOWING THE DUE PROCEDURE. ALL THE DETAILS REGARDING RECEIPT OF FOREIGN EXCHANGE WERE ALSO FURNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS. THERE IS NO FURNISHING OF INACCURATE P ARTICULARS REGARDING RECEIPT OF INCOME FROM EXPORTS. THEREFORE, IN MY CONSIDERED OP INION NO PENALTY OF CONCEALMENT IS EXIGIBLE ON THE APPELLANT IN THESE C IRCUMSTANCES. THE APPELLANT HAS COMMITTED THESE ERRORS DUE TO MISTAKES COMMITTED BY IT STARTED ACCOUNTANT. THE APPELLANT HAS EXPLAINED ITS BONA FIDE AND THE SAME HAVE BEEN FOUND TO BE IN ORDER. RELIANCE IS PLACED ON THE JUDGEMENT OF HONOURABLE S UPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PRIVATE LIMITED 322 ITR 158 . ACCORDINGLY, THE PENALTY IMPOSED BY AO UNDER SECTION 271 (1 )(C) IS DIRECTED TO BE DELETED. 11. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERU SED. THE REVENUES SOLE CONTENTION STRONGLY SUPPORTS ASSESSING OFFICER S ACTION IMPOSING THE IMPUGNED PENALTY ON THE GROUND THAT ASSESSEES SECT ION 10B DEDUCTION CLAIM RAISED IN ITS REVISED RETURN (SUPRA) WAS NOT FOUND TO BE A BONAFIDE ONE SINCE LACKING STPI CERTIFICATION. THERE IS HARDLY ANY DIS PUTE IN VIEW OF OUR FINDINGS ITA NO. 1188 & 1189/AHD/2014 & C.O. NO.228/AHD/2014 (KJWW ENGINEERING INDIA PVT. LTD.) A.Y. 2009-10 - 11 - ON QUANTUM ISSUE THAT THE ASSESSEES AUDITORS STAT EMENT ABOUT ITS NON STPI CERTIFICATION ALLEGEDLY MADE IN THE COURSE OF ASSES SMENT WAS FACTUALLY INCORRECT AS THE ASSESSEES CERTIFICATION STOOD PRO VED W.E.F. 18.02.2009 (SUPRA) AS CONCLUDED IN THE ABOVE QUANTUM PROCEEDIN GS. WE THUS OBSERVE THAT THE LEARNED CIT(A) HAS RIGHTLY QUOTED HONBLE APEX COURTS DECISION IN A RELIANCE PETROPRODUCTS CASE TO CONCLUDE THAT THE AS SESSEES BONAFIDES ARE VERY MUCH IN ORDER AND EACH AND EVERY DISALLOWANCE/ ADDITION MADE IN THE COURSE OF QUANTUM PROCEEDINGS DOES NOT NECESSARILY RESULTING IN SECTION 271(1)(C) PENALTY IN QUESTION. WE THUS REJECT REVE NUES LATTER APPEAL ITA NO.1189/AHD/2014 AS WELL. 12. THESE TWO REVENUES APPEALS AND ASSESSEES CROS S OBJECTION ARE DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 25 TH DAY OF JANUARY, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 25/01/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0
