ITO, Ward-10(2), Hyderabad, Hyderabad V. Comm Lab India, Secunderabad, Secunderabad

ITA 121/HYD/2015

• Counselvise Citation: 12122514 RSA 2015
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-05-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Additional evidence; Revised return
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.121 & 122/HYD/2015 ASSESSMENT YEARS 2010-2011 & 2011-2012 THE INCOME TAX OFFICER WARD 10(2) HYDERABAD. VS. M/S. COM LAB INDIA SECUNDERABAD. PAN AADFC1212D (APPELLANT) (RESPONDENT) FOR REVENUE : MR. RAMAKRISHNA BANDI FOR ASSESSEE : MR. A.V. RAGHURAM DATE OF HEARING : 13.05.2015 DATE OF PRONOUNCEMENT : 27.05.2015 ORDER PER P.M. JAGTAP, A.M. THESE TWO APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-VI, HYDERABAD D ATED 30.10.2014 WHEREBY HE DIRECTED THE A.O. TO CONSIDER THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR DEDUCTION UND ER SECTION 10A OF THE I.T. ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSH IP FIRM WHICH IS ENGAGED IN THE BUSINESS OF SOFTWARE D EVELOPMENT AND E-LEARNING. THE RETURN OF INCOME FOR THE A.Y. 2 010-2011 WAS FILED BY IT ON 09.07.2010 DECLARING TOTAL INCOM E OF RS.6,53,510 AFTER CLAIMING DEDUCTION OF RS.34,95,0 30 UNDER SECTION 10B OF THE ACT AND FOR A.Y. 2011-2012 THE R ETURN OF INCOME WAS FILED ON 19.07.2011 DECLARING TOTAL INCO ME OF RS.6,79,147 AFTER CLAIM DEDUCTION OF RS.1,63,20,501 UNDER SECTION 10B OF THE ACT. DURING THE COURSE OF ASSESS MENT 2 ITA.NO.121 & 122/HYD/2015 M/S. COMM LAB INDIA, SECUNDERABAD. PROCEEDINGS THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10B WAS EXAMINED BY THE A.O. AND ON SUCH EXAMINATION, HE HELD THAT THE ASSESSEE WAS NOT ENTI TLED FOR DEDUCTION UNDER SECTION 10B FOR THE FOLLOWING REASO NS : 1. THE ASSESSEE HAS NOT BEEN RECOGNIZED AS 100% EXPORT ORIENTED UNDERTAKING (EOU) BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY THE SEC.14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 AND THE RULES MADE UNDER THE ACT . 2. AFTER CONSIDERING THE INFORMATION AVAILABLE AND ALSO THE FACTS OF THE CASE, IT IS HELD THAT THE DEDUCTION CLAIMED U/S.10B AT RS . 34,95,030/- IS NOT ALLOWABLE IN THE ASSESSEE'S CASE, AS THE ASSESSEE-FIRM IS NOT APPROVED AS A 100% EXPORT ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SEC.14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951) AND THE RULES MADE UNDER THAT ACT, IN TERMS OF CLAUSE (IV) OF EXPLANATION 2 TO SEC. 1OB OF THE I.T. ACT, 1961 . 3. THE ASSESSEE HAS STARTED AS 100% EOU UNDER THE STP SCHEME VIDE APPROVAL GRANTED BY STPH/IMSC/2003- 2004/1190/9607 DT. 31.12.2003. THIS DOES NOT AMOUNT TO RECOGNITION OF THE ASSESSEE AS 100% EXPORT OR I ENTED UNDERTAKING WITH THE MEANING OF THE PROVISIONS OF SEC.L0B. 100% EXPORT ORIENTED UNDERTAKING UNDER THE S T P SCHEME CANNOT BE EQUATED WITH THE 100% EOU APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SEC.14 OF INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 (65 OF 1951) AND THE RULES MADE UNDER THAT 3 ITA.NO.121 & 122/HYD/2015 M/S. COMM LAB INDIA, SECUNDERABAD. ACT. SUPPOSING THE PLEA OF THE ASSESSEE THAT AN STP UNIT BEING AN 100% EOU IS ELIGIBLE FOR EXEMPTION U/S.10B IS ACCEPTED, THE AMENDMENT BROUGHT OUT B Y THE FINANCE A C T , 19 93 EXTENDING THE BENEFIT U/S.10A TO THE STP UNIT IS OTHER WI S E ELIGIBLE FOR EXEMPTION U/S.10B ON THE GROUND OF ITS BEING 100 % EOU, THERE WAS POSSIBLY NO REASON FOR THE LEGISLATURE TO BRING ABOUT AN AMENDMENT EXTENDING THE BENEFITS OF SEC.10A TO THE UNITS UNDER STP SCHEME . RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HON'BLE JURISDICTIONAL TRIBUNAL IN TH E CAS E O F INFOTECH ENTERPRISES LTD (85 ITD 325). 4. REFERENCE IN THIS REGARD MAY BE MADE TO THE CBDT'S INSTRU C TION (NO.2 F.NO.178/ 19/2008-ITAT, DT . 09 . 03.2009 AND CORRIGENDUM DT.08.05.2009) WHICH CLARIFIED AS UNDER :- THE MATTER REGARDING VALIDITY OF APPROVALS GIVEN BY TH E DEVELOPMENT COMMISSIONER HAS BEEN EXAMINED IN THE BOARD . IT HAS BEEN DECIDED THAT AN APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN CASE OF AN 100% EOU UNIT WILL BE CONSIDERED VALID ONCE SUCH APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FO R EOU SCHEME. 5. IN THE LIGHT OF THE DISCUSSION MADE ABOVE , THE APPR O V A L ACCORDED BY STPI CANNOT BE EQUATED WITH THAT APPROVED/RATIFI E D BY THE BOARD APPOINTED IN THIS BEHALF BY THE CEN T R A L GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SEC.14 ' OF TH E INDUSTRIES (DEVELOPMENT AND REGULATION) ACT , 1951 (65 OF 195 1) . IN THIS VIEW OF THE MATTER , THE ASSESSEE IS NOT ENTITLED FOR C L AIM OF DEDUCTION U/S.10B OF THE I.T. ACT , 1961 AND THE SAM E IS ACCORDINGLY DENIED. 6. REFERENCE IN THIS REGARD MAY ALSO BE MADE TO TH E HIGH COU R T OF DELHI AT NEW DELHI PRONOUNCED ON 17 . 09 . 201 2 IN ITA 4 ITA.NO.121 & 122/HYD/2015 M/S. COMM LAB INDIA, SECUNDERABAD. NOS.69/2008, 783/2009, 1239/2011 OF CIT AND IT A NOS.2002/2010, 438/2012, 439/2012, 440/2012, 441/2012 OF REGENCY CREATION LTD CLARIFIED AS UNDER : THOUGH THE CONSIDERATIONS WHICH APPLY FOR GRANTING APPROVAL UNDER SECTIONS 10A AND 10B MAY TO AN EXTENT, OVERLAP, YET THE DELIBERATE SEGREGATION OF THESE TWO BENEFITS BY THE STATUTE REFLECTS PARLIAMENTARY INTENTION THAT TO QUALIFY FOR BENEFIT UNDER EITHER, THE SPECIFIC PROCEDURE ENACTED FOR THAT PURPOSE HAS TO BE FOLLOWED . THERE IS NOTHING 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 SECTI ON 10B. THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTI ON 10B ACCORDINGLY WAS DISALLOWED BY THE A.O. IN THE ASSES SMENT COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 30. 03.2013 AND 27.02.2014 FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 3. AGAINST THE ORDERS PASSED BY THE A.O. UNDER SECTION 143(3), APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A). DURING THE COURSE OF APPEAL PROCEED INGS BEFORE THE LD. CIT(A), ADDITIONAL GROUND WAS FILED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION RAISI NG AN ALTERNATIVE CLAIM THAT IT IS ENTITLED FOR DEDUCTION UNDER SECTION 10A. THE ADDITIONAL EVIDENCE IN THE FORM OF CERTIFI CATE IN THE PRESCRIBED FORM 56F WAS ALSO FILED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM FOR DEDUCTION UNDER SECTION 10A. KEEPI NG IN VIEW THIS NEW ALTERNATIVE CLAIM RAISED BY THE ASSESSEE F OR THE FIRST TIME BEFORE HIM AND THE ADDITIONAL EVIDENCE FILED I N SUPPORT THEREOF FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDE RATION, 5 ITA.NO.121 & 122/HYD/2015 M/S. COMM LAB INDIA, SECUNDERABAD. REMAND REPORT WAS SOUGHT BY THE LD. CIT(A) FROM THE A.O. IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(A), THE A.O. OBJECTED TO THE NEW ALTERNATIVE CLAIM RAISED BY THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A ON THE GROUND THAT THE SAME SHOULD HAVE BEEN MADE BY THE ASSESSEE BY FILING A R EVISED RETURN AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD., 284 ITR 323. THE LD. CIT(A) HOW EVER ADMITTED THE ADDITIONAL GROUND RAISED BY THE ASSESS EE RELATING TO ITS ALTERNATIVE CLAIM FOR DEDUCTION UNDER SECTIO N 10A FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION RELYI NG INTER ALIA ON THE DECISION OF THE TRIBUNAL IN THE CASE OF CHI CAGO PNEUMATIC INDIA LTD., VS. DCIT 15 SOT 252 (MUM.) WH EREIN IT WAS HELD THAT THE NEW CLAIM RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY COULD BE ENTERT AINED AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF GOETZE (INDIA) LTD., (SUPRA) LAYING DOWN THE PROPOS ITION THAT SUCH CLAIM COULD BE MADE BY THE ASSESSEE ONLY BY WA Y OF FILING A REVISED RETURN IS APPLICABLE ONLY FOR THE PROCEED INGS BEFORE THE A.O. ACCORDINGLY, THE LD. CIT(A) DIRECTED THE A .O. TO CONSIDER THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A FOR BOTH THE ASSESSMENT YEARS UND ER CONSIDERATION IN ACCORDANCE WITH LAW AFTER EXAMININ G OF ALL THE RELEVANT ASPECTS. AGGRIEVED BY THE ORDER OF THE LD . CIT(A), THE REVENUE HAS PREFERRED THE PRESENT APPEALS BEFORE TH E TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THA T THE ISSUE INVOLVED IN THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF M/S. VIVERA IT APPLICATIONS CONSULTING (P) LTD., HYDERABAD VS. ITO , WARD 3 (2), HYDERABAD VIDE ITS ORDER DATED 10.10.2014 PASS ED IN 6 ITA.NO.121 & 122/HYD/2015 M/S. COMM LAB INDIA, SECUNDERABAD. ITA.NO.129/HYD/2014. IN THE SAID CASE, A SIMILAR AL TERNATIVE CLAIM MADE BY THE ASSESSEE FOR DEDUCTION UNDER SECT ION 10A INSTEAD OF DEDUCTION UNDER SECTION 10B FOR THE FIRS T TIME BEFORE HIM WAS NOT ENTERTAINED BY THE LD. CIT(A) ON THE GR OUND THAT THE REQUIRED REPORT OF THE AUDITOR IN FORM 56F FOR CLAIMING DEDUCTION UNDER SECTION 10A HAD NOT BEEN SUBMITTED BY THE ASSESSEE. BEFORE THE TRIBUNAL, THE ASSESSEE HOWEVER SUBMITTED THE REPORT OF THE AUDITOR IN FORM 56F AND TAKING TH E SAME ON RECORD, THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO CONSIDER AND DECIDE THE ALTERNA TIVE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A RELYIN G ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CLOUD SOFTEK IN ITA.NO.483/HYD/2013 DATED 13.09.201 3 WHEREIN IT WAS HELD THAT IF THE ASSESSEE IS HELD TO BE NOT ENTITLED TO DEDUCTION UNDER SECTION 10B, HIS ALTERN ATIVE CLAIM FOR DEDUCTION UNDER SECTION 10A SHOULD BE CONSIDERE D. THE RATIO OF THESE DECISIONS OF THE TRIBUNAL, IN OUR OP INION, IS CLEARLY APPLICABLE IN THE PRESENT CASES AND RESPECT FULLY FOLLOWING THE SAME, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) DIRECTING THE A.O. TO CONSIDER THE ALTERNATI VE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A FOR BO TH THE YEARS UNDER CONSIDERATION IN ACCORDANCE WITH LAW ON MERIT. 5. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.05.2015. SD/- SD/- (ASHA VIJAYARAGHAVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH MAY, 2015 VBP/- 7 ITA.NO.121 & 122/HYD/2015 M/S. COMM LAB INDIA, SECUNDERABAD. COPY TO 1. THE INCOME TAX OFFICER, WARD 10(2), ROOM NO.514, BLOCK-A, 5 TH FLOOR, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. M/S. COMM LAB INDIA, PLOT NO.30, 2 ND FLOOR, SARVASUKHI CLY, NEHRU NAGAR, WEST MARREDPALLY, SECUNDERABAD. 3. CIT(A)-VI, HYDERABAD. 4. CIT-V, HYDERABAD. 5. D.R. I.T.A.T. A BENCH, HYDERABAD. 6. GUARD FILE