DCIT, Bangalore V. M/s Apotex Pharmachem India Pvt. Ltd., Bangalore

ITA 1227/BANG/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5968 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMER SINGH MEENA
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Depreciation; Retrospective amendment; Wrong claim; Revised return
• Section: 143(3); 10B; 144C; 143(2); 64; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No. 1227/Bang/2016 Assessment Year : 2010-11 The Deputy Commissioner of Income Tax, Circle – 1(1)(1), Bangalore. Vs. M/s. Apotex Pharmachem India Pvt. Ltd., Plot No. 1A, 4 th Phase, Bommasandra Industrial Estate, Bangalore – 560 099. PAN: AACCB1658E APPELLANT RESPONDENT Assessee by : Shri Padam Chand Khincha, CA Revenue by : Shri Sumer Singh Meena, CIT DR (OSD) Date of Hearing : 03-01-2022 Date of Pronouncement : 28-03-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal by revenue arises out of order dated 09.03.2016 passed by the Ld.CIT(A)-1, Bangalore for Assessment Year 2010-11 on following grounds of appeal: “1. The order of the Learned CIT (Appeal), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. The Learned CIT(A) erred in allowing the claim of the assessee company without appreciating the facts brought out by the A.O in the assessment order that the assessee company is also into R&D activity which does not tantamount to manufacture or production of an article as Page 2 of 16 ITA No. 1227/Bang/2016 envisaged u/s 10B and thus did not satisfy the requirement for claiming deduction under the said section. 3. The Ld. CIT(A) ought to have appreciated the fact that the DRP had confirmed the action of A.O in treating the R&D services as a distinct business segment which apparently fell outside the manufacturing activities carried on by the assessee while denying the claim of the assessee company for deduction u/s 10B in respect of previous A.Y.2009-10. 4. The Ld. CIT(A) ought to have appreciated the fact that CBDT instruction dtd. 9/3/2009 and subsequent corrigendum dtd. 8/5/2009 specifies that an approval granted by the Development Commissioner in the case of an 100% EOU will be considered valid once such an approval is ratified by the Board of Approval for EOU Scheme and in the instant case the ratification came only on 18/1/2011 i.e., after the F.Y under consideration, thereby the assessee company was not eligible for deduction u/s 10B for the said F.Y.2009-10. 5. The Ld. CIT(A) ought to have appreciated that the case law relied upon by the AO in the case of M/s Regency Creations Ltd. dtd. 17/9/2012 is squarely applicable to the instant case wherein the High Court of Delhi has held that the pre-conditions laid down u/s 10B have to be met for claiming deduction. 6. The Ld. CIT(A) erred in not appreciating the fact that in the Hon'ble High Court of Delhi order relied upon by the CIT(A), the Hon'ble Court has laid emphasis on CBDT circular clarifying deduction u/s 10B wherein it is mentioned that the approval granted by the Development Commissioner in the case of an 100% EOU will be considered valid, once such an approval is ratified by the BoA for EOU Scheme and in the instant case of the assessee company, since no such ratification was received during the F.Y under consideration, the assessee company was not eligible to claim deduction u/s 10B w.r.t. F.Y.2009-10. 7. The Ld. CIT(A) erred in allowing relief to the assessee company by holding that the moment the decision/approval of the Development Commissioner is ratified by the Board of Approval, it will relate back to the date on which the approval was granted by the Development Commissioner by relying on the Case of ECI Page 3 of 16 ITA No. 1227/Bang/2016 Technologies Pvt. Ltd., (Tax Appeal No.203 of 2015) wherein the assessee placed reliance on Circular No.68 dtd. 14/5/2009 issued by the Export Promotion Council for EOUs and SEZs regarding the CBDT instruction No.2/2009 dtd. 9/3/2009, because the CBDT in the said instruction pertaining to deduction u/s 10B has not mentioned about retrospective effect of validity of approval. 8. The Ld.CIT(A) erred in relying on the Hon'ble Delhi High Court judgment in the case of Enable Exports Pvt. Ltd. (ITA No.1072 of 2011) as the facts are distinguisha5WV-om the above case. 9. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of the Assessing Officer be restored. 10. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of appeal.” 2. Brief facts of the case are as under: Assessee is engaged into manufacturing of active pharmaceutical ingredients and R&D of pharmaceutical products. Assessee is 100% Export Oriented Unit (“EOU”) since 16.04.2004 which was subsequently ratified by the Board of Approval vide letter dated 18.01.2011. It is submitted that the profits of business of EOU is eligible for deduction u/s. 10B of the Act. For year under consideration, the assessee filed return of income declaring a total income of Rs. 12,45,16,969 after claiming a deduction of Rs. 5,03,24,625 u/s. 10B of the Act. The deduction u/s. 10B was claimed as per the following details. Page 4 of 16 ITA No. 1227/Bang/2016 It is submitted that the deduction u/s. 10B was claimed for both the R&D and manufacturing activities. However due to inadvertence, the profit of both the activities were not taken together whereas the turnover of both the activities was taken together separately while applying the formula in respect of R&D and Manufacturing. In view of such, assessee filed revised return declaring total income of Rs.6,43,02,812/- after claiming deduction of Rs. 8,36,86,236/- u/s. 10B of the Act. The deduction u/s. 10B was calculated as under: The case was selected for scrutiny assessment wherein the Ld.AO disallowed the entire deduction claimed by assessee u/s. 10B of the Act for the following reasons: a) The Company is engaged in R&D activity which does not tantamount to manufacture or production of an article as envisaged in section 10B of the Act. Page 5 of 16 ITA No. 1227/Bang/2016 b) APIPL was granted status of EOU by the Board of Approval only in FY 2010-11 relevant to AY 2011-12 and hence assessee will be eligible to claim deduction under section 10B prospectively and not retrospectively despite the fact that Development Commissioner granted approval on 16 April 2004. Aggrieved by the assessment order, assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) deleted the disallowance made by the Ld.AO by observing as under:- “Relying on the decisions of the Delhi High court in the case of Enable Exports Pvt Ltd (ITA No. 1072 of 2011), the Gujarat High court in the case of ECI Technologies Pvt Ltd (ITA 203 of 2015) and circular no. 68 dated 14th May 2009 issued by the Export Promotion council for EOU's and SEZ, it was held that once the approval .of the development commissioner is ratified by the Board of Approval, the same shall relate back to the date on which the approval was granted by the development commissioner.” The Ld.CIT(A) did not adjudicate on the issue as to whether R&D activities constitute manufacture for the claim of deduction u/s. 10B of the Act. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before this Tribunal. Ground Nos. 2 and 3 relating to grant of deduction u/s. 10B with respect to the R&D activities which does not tantamount to manufacture or production of an article or thing as envisaged in section 10B of the Act. It is submitted that assessee is also engaged in contract R&D activity with respect to pharmaceutical products for which it had entered into an agreement with its AE. The Ld.AR submitted that Page 6 of 16 ITA No. 1227/Bang/2016 the R&D activities were performed by assessee on contract basis. Referring to the orders passed by Coordinate Bench of this Tribunal for AYs. 2009-10 and 2011-12 (supra), read with order passed for AYs. 2009-10 dated 17.01.2020, the Ld.AR submitted that 10B deduction was allowable to assessee only in respect of income earned from manufacturing segment as held in para 5.2 reproduced hereunder. “5.2. We upheld 10B deduction for A.Y 2009-10 in assessee's appeal, based upon view expressed by Tribunal in original order dated 08/02/2019(paragraph 29 reproduced hereinabove), assessee is eligible for deduction u/s.10B, for year under consideration, only in respect of income earned from manufacturing segment, which cannot be interfered with at this stage. Thus, in the present appeal filed by revenue, Ld.AO shall call for necessary details regarding bifurcation of total claim attributable to manufacturing and R&D segment. Since this Tribunal has upheld contention of assessee regarding ratification of approval relating back to the date of original approval, assessee shall be granted claim u/s.10B, pertaining to income earned from manufacturing segment. Accordingly the view expressed by Ld. CIT (A) is reversed in part.” Based on the above observation, the Ld.AR submitted that sub- section (4) of section 10B deals with quantum of deduction to be accorded for the purpose of section 10B(1). He submitted that as per the formula, the entire business profits of an undertaking is eligible for deduction u/s. 10B and thereby the export turnover of assessee that comprises profits from manufacturing activity as well as R&D activity is eligible for deduction u/s. 10B of the Act. In support of this submission, he placed reliance on the full bench decision of the Hon’ble Karnataka High Court in case of Hewlett Packard Global Soft Ltd. reported in [2017] 87 taxmann.com 182 (Karnataka) (FB). Page 7 of 16 ITA No. 1227/Bang/2016 On the contrary, the Ld.CIT.DR relied on the view taken by the Coordinate Bench of this Tribunal in the consolidated order passed for A.Ys. 2009-10 and 2011-12 dated 08.02.2019 wherein they observed as under: “44. The ratio laid down by the coordinate bench in the matter of Syngene International Ltd (supra) is not applicable to the activities of the assessee as the assessee is doing two activities and two activities are not permissible. In view of the above, this issue on Section 10B, raised by the assessee is required to be dismissed. We do so. Hence, ground nos.5.1 to 5.4 raised by the assessee are dismissed.” We have perused the submissions advanced by both sides in the light of records placed before us. The emphasis by the Ld.AR on the following observations by Hon’ble Karnataka High Court in case of Hewlett Packard Global Soft Ltd. (supra) is worth noting at this stage. We also noted that Coordinate Bench of this Tribunal in case of IBM India (P.) Ltd. vs. ACIT reported in [2020] 120 taxmann.com 424 (Bangalore Trib.) has held that in the absence of any adverse action by SEZ authorities, no presumption could be drawn that assessee violated any requirements under the scheme. Reliance was placed on the Ahmedabad Tribunal decision is case of ITO vs. E-Infotech Ltd. reported in [2000] 124 TTJ 176 wherein the Tribunal held as follows: “As regards violation of norms of STPI, we are of the view that unless violation of conditions of approval impinge on conditions for grant of deduction under the relevant provisions of the Act, there is no ground for denial of deduction. In this case, the status of tax bear as hundred percent EOU and under STPI scheme continues. For the default, penalty has been imposed by concerned authorities.” Page 8 of 16 ITA No. 1227/Bang/2016 Reliance is also placed on the jurisdictional High Court decision in case of Quintiles Research (India) (P.) Ltd. reported in [2020] 121 taxmann.com 241 wherein it was held that if a prescribed authority grants approval to assessee company as a research and development company, AO could not disallow deduction u/s. 80- IB(8A). Relevant extracts are as follows; “The statutory scheme of the rules mandates the prescribed authority to be a body, which can minutely examine the highly technical and scientific requirements in case of a company. Therefore, once the prescribed authority grants approval and such approval holds the field, it would not be open to the assessing officer or any other revenue authority to sit in appeal over such approval certificate and re-examine the same.” Admittedly, assessee has been granted 100% EOU certification and accordingly deduction was claimed by assessee for the income earned from export of services rendered by such unit. Going by the principles laid down in the decisions referred to hereinabove, it needs to be considered whether the export income earned by assessee qua the unit would be eligible for deduction u/s. 10B. Before this Tribunal, the assessee has made an application under Rule 29 adducing additional evidence vide application dated 26.11.2020. The Ld.AR submitted that the additional evidence contains detailed technical report / opinion issued by experts / consultant in pharma industry with regard to R&D activities carried out by assessee. We accordingly, remit this issue back to the Ld.AO by admitting the additional evidence filed. The Ld.AO is directed to consider the claim of assessee. In the event it is found that the R&D carried out by assessee is inseparable with the manufacturing Page 9 of 16 ITA No. 1227/Bang/2016 activity, in our considered opinion, the exemption claimed by assessee on the total export income earned cannot be denied based on the principles referred to hereinabove laid down by the Hon’ble Karnataka High Court as well as Coordinate Bench of this Tribunal. The Ld.AO is directed to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, ground nos. 2 & 3 raised by revenue stands allowed for statistical purposes. Ground Nos. 4 to 8 relating to grant of deduction u/s. 10B though the assessee had received the ratification of the approval granted by Development Commissioner only in FY 2010-11. It is submitted that Coordinate Bench of this Tribunal in assessee’s own case for Assessment Years 2009-10 and 2011-12 has decided identical issues in IT(TP)A Nos. 156/Bang/2014 & 2200/Bang/2016 by order dated 08.02.2019. “22. The assessee filed its return of income declaring net income from business and profession of Rs.547.46 lacs after claiming deduction u/s.10B of the Act amounting to Rs.103.13 lacs in respect of its manufacturing activities. Further the assessee also recorded income from other sources (consisting of interest on deposits) amounting to INR 19.31 lacs. The net taxable income of the Company was arrived at INR 17.93 lacs after set-off of brought forward losses. Subsequently, the Appellant revised its return of income for FY 2008-09 on September 27, 2010. In the return of income filed, the Appellant declared a net income from business and profession of INR 526.33 lacs after claiming deduction under section 10B of the Act amounting to INR 119.45 lacs for both the manufacturing activities and the R&D activities. Further, the Appellant also recorded income f am other sources (consisting of interest on deposits) amounting to INR 19.31 lacs. The net taxable income of the Appellant was arrived at INR 38.58 lacs after set-off of brought forward losses. In the revised Page 10 of 16 ITA No. 1227/Bang/2016 return filed by the Appellant, the deduction under 10B of the Act was calculated by taking 'manufacturing' and 'R&D' activities as separate business undertakings. The deduction was calculated by applying the formula of profits to export turnover and total turnover of the individual segment. The case was picked up for scrutiny assessment proceedings. Notices were issued by the Deputy Commissioner of Income-Tax, Circle - II(i) ('the AO'), under section 143(2) & 142 (i) of the Act. During the course of assessment proceedings, the Appellant submitted a revised computation of income to the AO vide submission dated March 11, 2013, filed on March 12, 2013. As per the revised computation of income submitted to the Learned AO, the Company claimed a deduction of INR 407.27 lacs under section 10B of the Act. Post such deduction, the Company had computed the Profits and gains from business & profession at NIL, after setting off the brought forward losses and unabsorbed depreciation of earlier years. Further, the Company reported a net taxable income of INR 19.28 lacs including therein the interest income from deposits. In such revised computation, the Appellant had revised the amount of deduction eligible to be claimed under section 10B of the Act, by applying the correct formula to calculate such deduction by taking the deduction for both the segments as one undertaking. Thereby, the entire profit of the business was taken as eligible and deduction was calculated taking into account the total turnover and total export turnover of the entire business. Post the completion of assessment proceedings, the AO passed a draft assessment order ('draft order') dated March 15, 2013, as per the terms of section 144C read with section 143(3) of the Act. In the said draft order, the Learned AO, inter alia, denied the claim of deduction under section 10B of the Act on the below mentioned reasoning/assumptions: a) Since the board approval (i.e. ratification) to the permission granted by Development Commissioner was given only on January 18, 2011 (inadvertently mentioned as March 25, 2011) and hence, the same would be effective only from the FY 2011-12 (i.e. AY 2012-13) and accordingly, the AO denied deduction u/s. ioB with respect to both manufacturing and research activities. b) Further, the AO denied the deduction u/s. section 10B of the Act with respect to Research & Development services on the ground that: i) The same does not amount to manufacturing or producing articles or things; Page 11 of 16 ITA No. 1227/Bang/2016 ii.The approval was not granted by Development Commissioner w.r.t. R&D activities; 23. The AO in the draft assessment order had denied the benefit of 10B and the reason recorded by the AO were mentioned in para 5.7 to 5.9 of the order, which is as under : 5.7 It is explicit from the provisions that such a deduction is only for the newly, export-oriented undertakings that manufactures or produces any items / computer software. By no stretch of imagination can R&1) services tantamount to manufacture or production of an article. But in zeal to claim the maximum possible deduction the assessee has made a false claim. It has been attempted by bringing the non-eligible business profits into the fold of eligible profits. The assessee has gone to such an extent that even though the F.56G does not support this illegal claim, the assessee has revised the return seeking the extra, undue claim. 5.8 The Board's Approval submitted by the assesee was closely scrutinized. It is seen that the date of issue of the Approval was 25/03/2011. To put things in perspective, effectively only from the FY 2011-12 (AY 2012-13) the assessee would be eligible for the claim of deduction. However the assessee has made the claim in the AY 2009- 10. Although in the approval the date 16.04.2004 is mentioned, it cannot be construed that it is the date of approval by the Board. It is important to note that for the claim u/s lOB, the approval by the Board is required. The Board has to be constituted under the Industries Development and Regulation Act, 1951(IDRA). The Certificate by the authorities of the SEZ does not amount to Approval by the Board. A separate ratification is needed in such cases. It is also observed that the approval has been granted only for the products manufactured. It has not been given for the R & D Services. Even going by this it can be seen that the assessee has made an undue claim of deduction. Reliance is placed on a recent judgement of the Delhi High Court on the case of CIT vs Regancy Creations Ltd. (17/09/12). 5.9 Based on all the above the claim u/s.10B is hereby disallowed. It is further ordered that the benefit of brought forward losses shall be given to the assessee only after reassessing the incomes of the earlier years. It is also observed that the assessee has claimed the deduction before setting off the brought forward losses. This is incorrect as per the judgments in the cases of Sword Global (I) Pvt Ltd. Vs. ITO (ITAT, Chennai) 306 ITR (AT) 286, ACIT Vs. Jewellery Solutions International (P) Ltd. (ITAT, Mumbai) 28 SOT 405, inteilinet Technologies India P Page 12 of 16 ITA No. 1227/Bang/2016 Ltd. Vs. ITO (ITAT, Bang) 5 ITR (Trib) 96, WIPRO Ltd. Vs. DCIT (ITAT, Bang) 34 DTR 493 and Global Vantedge P Ltd. Vs. ACIT (ITAT, Del) 1 ITR (Trib) 326 etc. Feeling aggrieved by the draft assessment order, the assessee filed appeal before the DRP. 24. The DRP at page 64 of the order had considered the submissions made by the assessee and in para 23 has recorded the reasons as under: 23.We have duly considered the facts of the case, submissions of the assessee and the draft assessment order. We observe that the assessee was a 100% EOU, engaged in the manufacturing of Active Pharmaceutical Ingredients (APIs) and Intermediates for Apotex Group. Apart from this, the assessee was also providing (lie Apotex Group certain contract R&D services which apparently fell outside the manufacturing activities carried on by the assessee and they, rather, constituted contract services having no nexus with the manufacturing of APIs. Though its submissions, the assessee sought to emphasize that the R&D services would he covered by Explanation 2 to section 1013, precisely by clause (b) of the said Explanation 2 i.e., any customized electronic data or any product or service of similar nature as may be notified by the Board. On a careful perusal of the provisions of section 10B and CBDT's Notification No. SO 890(E) dated 26.09.2000, we are of the view that what was sought to be covered by clause (b) of Explanation 2 to section 1011 is in the context of 'computer software" and in view of the nile of ejusdein generis, they cannot mean anything else than "computer software". Hence, the assessee's reliance upon clause (h) of Explanation 2 to section 10B is Far-fetched and cannot be accepted. Further, the activities carried on the assessee clearly fell within two distinct business segments - one is Manufacturing of APIs and the other is contract R&D services. Just because the APIs were manufactured for the Apotex Group and also at the same time the R&D services were provided to this group on contract basis, the two segments cannot be considered together as to have constituted a coherent or integral whole so as to qualify for deduction of profits and gains of both the segments under section 1OB of the Act. We find sufficient force in the findings recorded by the AO in denying (he claim for deduction tinder section 10B of the Act. In the result, we confirm the action of the AU and the assessee's grounds of objections (a) to (g) are, therefore, rejected. On the basis of the above, the DRP denied the benefit of deduction u/s.10B to the assessee : Page 13 of 16 ITA No. 1227/Bang/2016 25. Following the direction of the DRP, the AO has passed the order denying the benefit u/s.10B of the Act, against which the assessee is in appeal before us. 26. In the written submissions, the Ld. AR at para 2.1 to 2.1.7 had mentioned as under : 2.1 Denial of deduction u/s. 10B of the Act (w.r.t. manufacturing and R&D activities) on the ground of delayed ratification by board w.r.t. the permission granted by Development Commissioner ("DC") 2.1.1 In this regard, the Appellant submits that the initial EOU approval was granted on April 16, 2004 vide LOP No. 1/19/2004 by the Development Commissioner (Please refer 513- 516 of the Paper Book ("PB"). The Appellant received green card on August 31, 2004 (Page 523 of the PB). Post that the Appellant has duly undertaken all necessary approvals/activities/intimations to satisfy a 100% EOU criteria. Subsequently, the Board has ratified the permission granted by Development Commissioner on January 18, 2011. 2.1.2 The AO denied the deduction u/s. 10B of the Act on the ground that the same would be effective only from the FY 11- 12 (i.e. AY 2012-13) i.e. after the ratification by the board. 2.1.3 In this regards, the Appellant submits that the moment the decision / approval of the Development Commissioner is ratified by the Board of Approval, it will relate back to the date on which the approval was granted by the Development Commissioner and, therefore, the deduction u/s. ioB of the Act ought to have been allowed by the AO. 2.1.4 In this regards, the Appellant relies on the decision of the Hon'ble Gujarat High Court in the case of ECI Technologies Pvt. Ltd. (Tax Appeal No 203 of 2015) wherein the Hon'ble High Court after relying on CBDT notification no. 178/19/2008-ITA dated 9 March 2009 has held as follows: "it is not in dispute that vide Circular /instruction of the CBDT dated 09/03/2009 it was clarified that the approval granted by the Development Commissioner in the case of Export Oriented Unit set up in an Export Processing Zone will be considered valid, once such an approval is ratified by the Board of Approval for EOU Scheme. In the present case, it is not in dispute that the permission / approval granted by the Development Commissioner has been ratified by the Board of Approval, may be subsequently. The moment the decision / approval of the Development Commissioner is ratified by the Board of Approval it will relate back to the date on which the approval was granted Page 14 of 16 ITA No. 1227/Bang/2016 by the Development Commissioner." (emphasis supplied) 2.1.5 Further, the Hon'ble Delhi High Court in the case of Enable Exports Private Limited (ITA No. 1072 of 2011), held that the approval granted by the SEZ Development Commissioner which was subsequently ratified by the board was valid for the purpose of claiming deduction under Section 10B of the Act. 2.1.6 Further, in subsequent assessment year (i.e. AY 2010- 11, 2011-12), the Commissioner of Income Tax (Appeals), after relying on the above judicial precedents has allowed deduction u/s.10B of the Act. 2.1.7 Considering the above judicial precedents, the Appellant submits that the denial of deduction u/s. ioB (w.r.t. Manufacturing and R&D activities) on the ground of delayed ratification by the hoard is unjustified. It is the case of the assessee before us that initially the EOU approval was granted to the assessee on 16.04.2004 vide LOP- 1/19/2004, by the Development Commissioner (DC for short) of the written submissions 27. Thereafter the assessee vide application dt.16.08.2004 has sought to amend the approval granted on 16.04.2004 and sought to include the R & D Centre with Associate Production facilities into the LOP. Vide letter dt.31.08.2004, the DC had granted such permission thereby including the R & D Centre : FOR : ITEM OF MANUFACTURE : Chloro Benzene and other chemicals . READ : ITEM OF MANUFACTURE : Research & Development Centre with an associated production facility of Chloro Benzene and other chemicals. Subsequently the Board ratified the permission granted by the DC on 18.01.2011. 28. Before us it was contended as mentioned hereinabove that the ratification done by the Board would come id, wherein the into effect from the date of initial grant by the DC w.e.f 31.08.2004. This view was also canvassed by the Ld. AR relying upon the judgment of the Hon'ble Gujarat High Court in the matter of ECI Technologies P. Ltd, (Tax Appeal No.203 of 2015) wherein the court held as under : "it is not in dispute that vide Circular /instruction of the CBDT dated 09/03/2009 it was clarified that the approval granted by the Development Commissioner in the case of Export Oriented Unit set up in an Export Processing Zone will be considered valid, once such an approval is ratified by the Board of Approval for EOU Scheme. In the present case, it is not in dispute that the permission / approval granted by the Development Commissioner has been ratified by the Board of Approval, may be subsequently. Page 15 of 16 ITA No. 1227/Bang/2016 The moment the decision / approval of the Development Commissioner is ratified by the Board of Approval it will relate back to the date on which the approval was granted by the Development Commissioner." 29. With respect to the ratification by the Board giving effect from 31.08.2004, in our view, there should not be any quarrel as the issue stands covered in favour of the assessee by the authoritative pronouncement by the Board. In our view, initial permission is required to be granted by the DC in accordance with the Rules framed for the purpose of Section 2. Once the said permission has been granted then the ratification by the Board is merely a formality and therefore would relate back to the date of actual grant, as the assessee cannot be permitted to wait till eternity, if there is a delay / latch on the part of the Board for not ratifying within the time sanctioned by the DC.” Respectfully following the above view, we hold that the assessee cannot be denied benefit u/s. 10B of the Act for the year under consideration. We therefore do not find any infirmity in the view taken by the Ld.CIT(A). Accordingly, ground nos. 4 to 8 raised by revenue stands dismissed. In the result, the appeal filed by revenue stands partly allowed for statistical purposes as indicated hereinabove. Order pronounced in the open court on 28 th March, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 28 th March, 2022. /MS / Page 16 of 16 ITA No. 1227/Bang/2016 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore