M/S. Vivera IT Applications Consulting (P) Ltd., Hyderabad V. The Income Tax Officer, Ward 3(2), Hyderabad

ITA 129/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82461 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Opportunity of being heard; Revised return
• Section: 10B; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 129/HYD/2014 ASSESSMENT YEAR : 2009-10 M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD., HYDERABAD. PAN AACCV1656L THE INCOME TAX OFFICER, WARD 3(2), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI A.V. RAGHU RAM REVENUE BY SHRI RAJEEV BENJWAL DATE OF HEARING 18-09-2014 DATE OF PRONOUNCEMENT 10-10-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER DAT ED 13/12/13 OF THE CIT(A), HYDERABAD PERTAINING TO AY 2009-10. ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: 2. THE LEARNED CIT(A) ERRED IN NOT ADMITTING ADDITI ONAL GROUND TO CONSIDER THE CLAIM U/S 10A BY RELYING ON THE DECISION OF SUPREME COURT IN THE CASE OF GOETZ THOUGH THE SA ME IS HELD NOT APPLICABLE FOR CLAIMS BEFORE THE APPELLATE AUTH ORITIES. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) ERRED IN HOLDING THAT THE APPELLANT IS NOT ELIGIBLE FOR DEDU CTION U/S 10B ON THE GROUND THAT THERE IS NO APPROVAL BY THE BOAR D WITHOUT APPRECIATING THE FACT THAT NOW NO SUCH PROCEDURE AN D THAT THE DEVELOPMENT COMMISSIONER IS DELEGATED WITH SUCH POW ERS AND THEREBY ERRED IN HOLDING THAT THE ASSESSEE IS NOT E LIGIBLE FOR DEDUCTION RELYING ON DECISION OF CIT VS. REGENCY CR EATIONS OF DELHI HIGH COURT IGNORING THE VERY SAME COURT IN TH E CASE OF 2 ITA NO. 129/HYD/2014 M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD. TECHNOATE E SOLUTIONS REPORTED IN 354 ITR 110 AFTER CONSIDERING THE DELEGATED POWERS HELD DEDUCTION U/S 10A IS ALLOWABLE THOUGH THERE IS NO APPROVAL BY BOARD. 2. BRIEFLY THE FACTS ARE, ASSESSEE A COMPANY IS ENG AGED IN THE BUSINESS OF SOFTWARE SERVICES. FOR THE IMPUGNED ASS ESSMENT YEAR, ASSESSEE FILED ITS RETURN OF INCOME ON 11/09/09 DEC LARING INCOME OF RS. 4,27,227 AFTER CLAIMING EXEMPTION U/S 10B OF TH E ACT FOR AN AMOUNT OF RS. 57,15,210. DURING THE ASSESSMENT PROC EEDING, AO NOTICED THAT THOUGH ASSESSEE IS REGISTERED AS 100% EOU WITH STPI, HYDERABAD AND IS ENGAGED IN THE BUSINESS OF EXPORT OF SOFTWARE SERVICES TO CLIENTS IN USA, BUT, IT IS NOT APPROVED BY THE INTER- MINISTERIAL STANDING COMMITTEE APPOINTED BY THE MIN ISTRY OF INDUSTRY AS PER THE REQUIREMENTS OF EXPLANATION II(IV) OF SECTION 10B. FURTHER, AO NOTED THAT ASSESSEE HAS SUBMITTED AN AP PROVAL FROM THE DIRECTOR, STPI, HYDERABAD VIDE LETTER DATED 30/06/0 8. AS SUCH APPROVAL IS NOT IN ACCORDANCE WITH EXPLANATION II (IV) OF SECTION 10B, AO COMPLETED THE ASSESSMENT BY REJECTING ASSESSEES CLAIM OF EXEMPTION U/S 10B. BEING AGGRIEVED OF THE ASSESSMEN T ORDER, SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) . 3. BEFORE CIT(A) ASSESSEE APART FROM CONTESTING AO S DECISION OF NOT ALLOWING ASSESSEES CLAIM OF EXEMPTION U/S 10B, ALSO RAISED AN ADDITIONAL GROUND FOR CLAIMING EXEMPTION U/S 10A. C IT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE CONFIRMED T HE VIEW OF THE AO IN SO FAR AS THE ALLOWABILITY OF EXEMPTION U/S 1 0B. AS FAR AS THE ADDITIONAL GROUND RELATING TO CLAIM OF EXEMPTION U/ S 10A IS CONCERNED, CIT(A) FOLLOWING THE DECISION OF THE HONBLE SUPREM E COURT IN CASE OF GOETZ INDIA LTD., 284 ITR 323(SC) AND THE DECISION OF THE HONBLE ORISSA HIGH COURT IN CASE OF ORISSA RURAL HOUSING D EVELOPMENT CORPORATION LTD., 343 ITR 316 HELD THAT AS ASSESSEE HAS NOT FILED ANY REVISED RETURN CLAIMING EXEMPTION U/S 10A, CLAIM OF ASSESSEE CANNOT BE ENTERTAINED, SUBSEQUENTLY, IN COURSE OF APPEAL P ROCEEDING ON THE BASIS OF A MERE REQUEST. WHILE DOING SO, CIT(A) OBS ERVED THAT EVEN IN 3 ITA NO. 129/HYD/2014 M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD. RESPECT OF EXEMPTION U/S 10A ALSO, ASSESSEE DID NOT FILE THE CERTIFICATE FROM THE AUDITOR IN FORM NO. 56F AS PER THE STATUTORY REQUIREMENT. ACCORDINGLY, CIT(A) DISMISSED THE GROU ND RAISED BY ASSESSEE. 4. LEARNED AR SUBMITTED BEFORE US THAT EVEN THOUGH ASSESSEE MAY NOT BE ELIGIBLE FOR EXEMPTION U/S 10B OF THE AC T IN ABSENCE OF APPROVAL FROM THE PRESCRIBED AUTHORITY, BUT, ASSESS EE WOULD STILL BE ELIGIBLE FOR DEDUCTION U/S 10A AS THERE IS NO DISPU TE TO THE FACT THAT ASSESSEE HAS EXPORTED SOFTWARE SERVICES TO CLIENTS OUTSIDE INDIA. LEARNED AR SUBMITTED THAT ASSESSEE HAVING FULFILLED THE CONDITIONS OF SECTION 10A, IT IS ELIGIBLE FOR CLAIMING EXEMPTION UNDER THAT SECTION. IN RESPECT OF ALLEGATION OF CIT(A) THAT ASSESSEE HAS N OT FURNISHED FORM NO. 56F, LEARNED AR SUBMITTED THAT, EVEN THOUGH, AS SESSEE HAD OBTAINED CERTIFICATE FROM THE AUDITOR IN FORM NO. 5 6F, AS EARLY AS ON 08/08/2009, BUT, ASSESSEE DID NOT PRODUCE BEFORE TH E CIT(A) BEING UNDER IMPRESSION THAT PRIOR TO ADMISSION OF HIS AD DITIONAL GROUND IT CANNOT BE PRODUCED. HE FURTHER SUBMITTED THAT AS AS SESSEE WAS CLAIMING EXEMPTION U/S 10B OF THE ACT BEFORE AO, TH ERE IS NO OCCASION FOR FURNISHING THE CERTIFICATE IN 56F BEFORE AO. LE ARNED AR SUBMITTED THAT RATIO LAID DOWN IN CASE OF GOETZ INDIA LTD. A ND ORISSA RURAL HOUSING DEVELOPMENT CORPN. LTD. (SUPRA) ARE NOT APP LICABLE TO THE FACTS OF THE PRESENT CASE AS THE RESTRICTION FOR EN TERTAINING A FRESH CLAIM WITHOUT MAKING SUCH CLAIM IN THE REVISED RETU RN IS APPLICABLE TO PROCEEDING BEFORE AO ALONE AND WILL NOT APPLY TO TH E APPELLATE AUTHORITY. IN THIS CONTEXT, HE RELIED UPON A DECISI ON OF ITAT, MUMBAI BENCH IN CASE OF DIRECTOR (FINANCE), THE SHIPPING C ORPORATION OF INDIA LTD. VS. ADDITIONAL CIT IN ITA NO. 2944-2945/ MUM/2010 DATED 21/03/14. THE LEARNED AR SUBMITTED THAT WHEN THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE IS A 100% EOU AND HAS EXPORT ED SOFTWARE SERVICES TO USA, ITS ALTERNATIVE CLAIM U/S 10A CANN OT BE REJECTED. IN THIS CONTEXT, HE RELIED UPON A DECISION OF ITAT, HY DERABAD BENCH IN 4 ITA NO. 129/HYD/2014 M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD. CASE OF CLOUD SOFTEK OF INDIA LTD., VS. ITO IN ITA NO. 483/HYD/13 DATED 13/09/13. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF CIT(A). 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS THE OT HER MATERIALS ON RECORD. THE ONLY ISSUE ARISING FOR CONSIDERATION BE FORE US IN THE PRESENT APPEAL IS WHETHER CIT(A) WAS JUSTIFIED IN N OT ENTERTAINING ASSESSEES ADDITIONAL GROUND CLAIMING EXEMPTION U/S 10A. AS CAN BE SEEN, CIT(A) HAS DISMISSED ASSESSEES ADDITIONAL GR OUND ONLY FOR THE REASON THAT THE CLAIM OF DEDUCTION U/S 10A WAS NOT RAISED BY ASSESSEE BY FILING A REVISED RETURN RELYING UPON A DECISION OF GOETZ INDIA LTD. AND HINDUSTAN HOUSING DEVELOPMENT CORPN (SUPRA). HOWEVER, WE FIND FORCE IN THE CONTENTION OF LEARNED AR THAT RATIO LAID DOWN IN THE AFORESAID TWO DECISIONS ARE RESTRICTED TO THE PROCEEDING BEFORE THE AO AND WILL NOT APPLY TO THE APPELLATE A UTHORITIES. ITAT, MUMBAI BENCH WHILE ANALYZING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. (SUPR A) HELD AS FOLLOWS: 13. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORDS. IT IS O BSERVED THAT THE CLAIM MADE BY THE ASSESSEE FOR RELIEF U/S 90 AND 91 OF TH E ACT ON ACCOUNT OF FOREIGN TAXES PAID OUTSIDE INDIA WAS DISALLOWED BY THE A.O. AS WELL AS THE LD. CIT(A) MAINLY ON THE GROUND THAT THE SAME W AS NOT MADE BY THE ASSESSEE BY FILING A REVISED RETURN. RELIANCE IN TH IS REGARD WAS PLACED BY THE AUTHORITIES BELOW ON THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA). AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SH AREHOLDERS P. LTD. [2012] 349 ITR 336 (BOM) CITED BY THE LD. COUNSEL F OR THE ASSESSEE, THE ASSESSEE IS ENTITLED TO RAISE ANY ADDITIONAL CLAIMS BEFORE THE APPELLATE AUTHORITIES AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS. CIT [1998] 229 ITR 383 (SC) AND THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) DID NOT HOLD ANYTHING CONTRARY TO WHAT WAS HELD BY THE PREVIOUS JUDGMENT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. (SUPRA) TO THE EFFECT THAT EVEN IF A CLAIM NOT MADE BEFORE THE A.O ., IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. IT WAS HELD BY TH E HONBLE BOMBAY HIGH COURT THAT THE POWER OF THE APPELLATE AUTHORITY TO ENTERTAIN SUCH A CLAIM 5 ITA NO. 129/HYD/2014 M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD. HAS NOT BEEN NEGATED BY THE HONBLE SUPREME COURT I N THE JUDGMENT IN THE CASE OF GOETZE (INDIA) LTD. AND THE HONBLE SUP REME COURT IN FACT HAS MADE IT CLEAR THAT THE ISSUE IN THAT CASE WAS L IMITED TO THE POWER OF ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL U/S 254 OF THE ACT. 7. SO FAR AS THE ALLEGATION OF CIT(A) THAT ASSESSEE HAS NOT SUBMITTED REPORT OF THE AUDITOR IN FORM NO. 56F FOR CLAIMING EXEMPTION U/S 10A. IT IS TO BE OBSERVED THAT ASSESS EE BEFORE US HAS SUBMITTED A REPORT OF THE AUDITOR IN FORM NO. 56F D ATED 08/08/09. FURTHER, THE COORDINATE BENCH OF THIS TRIBUNAL IN C ASE OF CLOUD SOFTEK (SUPRA) WHILE CONSIDERING ASSESSEES ALTERNATIVE CL AIM OF EXEMPTION U/S 10A OF THE ACT, RAISED FOR THE FIRST TIME BEFOR E THE CIT(A) HELD AS UNDER: 11. THE COORDINATE BENCH OF HYDERABAD TRIBUNAL IN THE CASE OF INFOTECH ENTERPRISES LTD. VS. JCIT 85 ITD 325 HAD R EJECTED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 10A ON THE GROUND THAT THE UNIT WAS NOT SET UP IN THE YEAR RELEVANT TO ASSESSM ENT YEAR 1994-95. THE TRIBUNAL ALSO REJECTED THE CLAIM OF THE ASSESSEE FO R DEDUCTION UNDER SECTION 10B ON THE GROUND THAT THE UNIT WAS NOT APP ROVED BY BOARD APPOINTED BY THE GOVERNMENT FOR APPROVING 100% EOU. WE AGREE THAT THE UNDERTAKING WHICH HAS NOT BEEN APPROVED AS A 10 0% EOU, BY THE BOARD APPOINTED BY THE GOVERNMENT, AS REQUIRED UNDE R SECTION 10B, THE ASSESSEE WILL NOT BE ENTITLED TO DEDUCTION UNDER SE CTION 10B. BUT THAT DOES NOT MEAN THAT WE HAVE TO CLOSE OUR EYES TOWARD S THE ALTERNATE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE. AFTER-AL L, THE ASSESSEE IS CLAIMING DEDUCTION IN RESPECT OF PROFITS FROM EXPOR T OF SOFTWARE. DEDUCTION FOR EXPORT OF SOFTWARE IS AVAILABLE UNDER SECTION 10A, 10B AND 80HHE. IF THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER ONE SECTION, IS CLAIM FOR DEDUCTION UNDER ANOTHER SECTION OF THE AC T SHOULD BE CONSIDERED. RESPECTFULLY FOLLOWING THE DECISION OF THE DELHI HIGH COURT IN THEIR FINAL DECISION IN THE CASE OF CIT VS. VALIANT COMMUNICATIONS IN ITA.NO. 2002 OF 2010 IN CIVIL MISC. APPLN. NO. 12/2 013 WE HOLD THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 1 0A REQUIRES TO BE EXAMINED IN ACCORDANCE WITH LAW AND HENCE, WE REMIT THE ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE DENOVO THE CLAI M OF THE ASSESSEE IN THE PRESENT CASE. 8. CONSIDERING THE FACT THAT THERE IS NO DISPUTE TH AT ASSESSEE IS A 100% EOU AND HAS EXPORTED SOFTWARE SERVICES TO OUTS IDE INDIA, ASSESSEES ALTERNATIVE CLAIM U/S 10A REQUIRES TO BE CONSIDERED. SINCE THE EXEMPTION CLAIMED U/S 10A WAS NOT RAISED BEFORE AO AND THOUGH 6 ITA NO. 129/HYD/2014 M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD. RAISED BEFORE THE CIT(A), BUT, WAS NOT ENTERTAINED BY HIM, WE CONSIDER IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF AO FOR EXAMINING THE SAME AFTER CONSIDERING ALL FACTS AND MATERIALS ON RECORD AND IN ACCORDANCE WITH THE STATUTORY PROVISI ON. THE ASSESSEE MUST BE AFFORDED A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER. 9. IN VIEW OF OUR AFORESAID DECISION, GROUND NO. 3 HAS BECOME INFRUCTUOUS. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10/10/2014. SD/- SD/- (P.M. JAGTAP) (SAKT IJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 10 TH OCTOBER, 2014 KV COPY TO:- 1) M/S VIVERA IT APPLICATIONS CONSULTING (P) LTD., C/O K. VASANTKUMAR & A.V. RAGHURAM, ADVOCATES, 610, 6 TH FLOOR, BABHUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001 2) ITO, WARD 3(2), HYDERABAD 3) CIT(A)-IV, HYDERABAD. 4) CIT, RANGE - 3, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.