Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 6238 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-09-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
19-09-2016
Assessment Year
2011-2012
Appeal Filed On
18-11-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1307/HYD/2015 ASSESSMENT YEAR 2011-2012 M/S. MOURI TECH P. LTD., (FORMERLY MOURI SOFT SOLUTIONS P. LTD.,), HYDERABAD 500 090. PAN AAECM8324J VS. THE INCOME TAX OFFICER, WARD-16(1), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.C. DEVDAS FOR REVENUE : SMT. SUMAN M ALIK DATE OF HEARING : 19 .0 9 .2016 DATE OF PRONOUNCEMENT : 21 .09.2016 ORDER PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE COMPANY IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-IV, HYDERABAD A ND IT PERTAINS TO THE A.Y. 2011-2012. THE ONLY ISSUE URGED BEFORE US IS WITH REGARD TO THE REJECTION OF CLAIM OF DEDUCTION UNDE R SECTION 10B OF THE I.T. ACT, 1961. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STA TED IN BRIEF. THE ASSESSEE-COMPANY IS ENGAGED IN THE BU SINESS OF SOFTWARE AND ALLIED SERVICES. IT IS A 100% EOU AND R EGISTERED UNDER SOFTWARE TECHNOLOGY PARKS OF INDIA, HYDERABAD . THE GROSS RECEIPTS OF THE ASSESSEE WAS RS.3.71 CRORES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE ADMITTED TOTAL INCOME OF RS.31,08,807 AND BOOK PROFIT UNDER SECTION 115JB WAS ADMITTED AT RS.1,64,02,680. WHEN THE CASE WAS TAKEN-UP FOR SCRU TINY, THE 2 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. ASSESSEE FURNISHED DETAILS OF INCOME DECLARED WHEREI N IT WAS SUBMITTED THAT THE TOTAL TURNOVER WAS RS.3.67 CRORES AND EX PORT TURNOVER WAS RS.3.06 CRORES, OUT OF WHICH, DEDUCTION U NDER SECTION 10B WAS CLAIMED AT RS.1,35,17,323. 2.1. THE ASSESSING OFFICER OBSERVED THAT DEDUCTION FO R 100% EOU HAS TO BE APPROVED BY THE BOARD APPOINTED ON BEHALF OF CENTRAL GOVERNMENT. IN THIS CASE, NO DOUBT, THE APPR OVAL WAS GIVEN BY THE SOFTWARE TECHNOLOGY PARK OF INDIA (IN S HORT STPI) BUT TO ALLOW THE CLAIM OF DEDUCTION, THE ASSESSEE UND ERTAKING HAS TO GET APPROVAL AS 100% EOU BY THE BOARD APPOINTED IN HIS BEHALF BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF TH E INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. SINC E, THERE WAS NO PROOF OF OBTAINING APPROVAL FROM THE BOARD, THE ASSESSEE WAS CALLED-UPON TO EXPLAIN/FURNISH THE EVIDENCE. IN RESPONSE THERETO, THE ASSESSEE SUBMITTED THAT IT IS A MANUFACTURER A ND PRODUCER OF COMPUTER SOFTWARE AND I.T. ENABLED SERV ICES AND IT EXPORTS THE SAME. IT WAS REGISTERED AS A 100% EOU WITH STPI, HYDERABAD VIDE ITS LETTER DATED 28.07.2008. IT WAS A NEW UNIT STARTED ON 19.12.2005. AS PER EXPLANATION-2 TO SECTION 10B, IN ORDER TO GET THE EXEMPTION THE ASSESSEE SHOULD BE A 100% EXPORT ORIENTED UNDERTAKING APPROVED BY THE BOARD. THE ASSES SEE PLACED BEFORE THE ASSESSING OFFICER A COMMUNICATION DATED 23 .03.2006 ISSUED BY THE SECRETARY, MINISTRY OF COMMUNICATION AND TECHNOLOGY WHEREIN IT WAS STATED THAT THE STPI DIRECTORS A RE DULY AUTHORISED AND FULLY EMPOWERED TO ISSUE APPROVALS AS 100% EOU TO THE UNITS UNDER STPI SCHEME AND DELEGATED POWERS A ND THUS THE DIRECTORS HAVE THE AUTHORITY OF INTER MINISTERIAL STAN DING COMMITTEE. IN OTHERWORDS, APPROVAL GRANTED BY THE STPI DIRECTORS IS DEEMED TO BE A VALID APPROVAL BY BOARD. THE ASSESSEE 3 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. ALSO RELIED UPON THE DECISION OF THE ITAT, HYDERABAD BENCH DATED 10 TH APRIL, 2012 IN THE CASE OF M/S. SECUNDERABAD SOFTWA RE SERVICES P. LTD., HYDERABAD WHEREIN THE BENCH OBSERVE D THAT ANY EOU WHICH HAS BEEN REGISTERED WITH STPI IS ENTITLED F OR DEDUCTION UNDER SECTION 10B OF THE ACT SINCE IT IS ENOUG H IF THE ASSESSEE IS REGISTERED WITH STPI. THE INTER MINISTERIA L COMMUNICATION LETTER DATED 23.03.2006 ISSUED BY THE SECRETARY, MINISTRY OF COMMUNICATIONS AND TECHNOLOGIES AND THE D ECISION OF THE ITAT, HYDERABAD BENCHES WERE STRONGLY RELIED U PON TO CONTEND THAT THE ASSESSEE COMPANY IS ENTITLED TO EXEMPTION UNDER SECTION 10B OF THE ACT SINCE IT HAS OBTAINED APPR OVAL FROM THE STPI. THE ASSESSING OFFICER AS WELL AS THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE AND IN THIS REGARD RELIANCE WA S HEAVILY PLACED ON THE LANGUAGE USED IN SUB-CLAUSE (IV) OF EX PLANATION-2 TO SECTION 10B OF THE ACT WHICH READS AS UNDER : (IV) HUNDRED PERCENT EXPORT-ORIENTED UNDERTAKING MEANS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951), AND THE RULES M ADE UNDER THAT ACT. 2.2. ACCORDING TO THE TAX AUTHORITIES APPROVAL OF THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT IS MUST FOR CLAIMING EXEMPTION UNDER SECTION 10B OF THE ACT. THE ASSESSING O FFICER AS WELL AS THE CIT(A) FURTHER OBSERVED THAT THE HONBLE DEL HI HIGH COURT IN THE CASE OF REGENCY CREATIONS LIMITED (353 IT R 326) REFERS TO AN EXPRESS AUTHORISATION BY THE BOARD AND HE NCE, MERE APPROVAL BY THE STPI IS NOT SUFFICIENT TO CLAIM EXEMPTI ON UNDER SECTION 10B OF THE ACT. 4 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. 3. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. AT T HE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE, ADVER TED OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE ASS ESSING OFFICER AS WELL AS THE CIT(A) TO HIGHLIGHT THAT THE IN TER MINISTERIAL COMMUNICATION DATED 23.03.2006 ISSUED BY THE SECRETARY , MINISTRY OF COMMUNICATION AND TECHNOLOGIES HAS DELEG ATED THE POWER OF APPROVAL TO THE STPI DIRECTORS AND HENCE, TH E APPROVAL GRANTED BY THE STPI SHOULD BE DEEMED TO BE AN APPROVAL BY THE BOARD AND THIS ISSUE HAS NOT BEEN CONSIDERED BY THE A SSESSING OFFICER AS WELL AS THE CIT(A). IT WAS FURTHER SUBMITTED THAT THE ITAT, HYDERABAD BENCHES HAVE CONSISTENTLY TAKEN A STAND THAT AN ASSESSEE WHO OBTAINS APPROVAL FROM STPI IS ENTITLE D TO CLAIM EXEMPTION UNDER SECTION 10B OF THE ACT AND IN THIS REGA RD, RELIED UPON THE DECISION OF ITAT, HYDERABAD BENCH IN THE CA SE OF ITO VS., M/S. MEGHA CYBER TECH P. LTD., VIDE ORDER DATED 06.06.2014 WHICH IN TURN, RELIED UPON THE DECISION OF ITAT, HYD ERABAD BENCH IN THE CASE OF SMT. K. SUDHA RANI (ITA.NO.1750/HYD/20 08 DATED 30.10.2009). DURING THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE ALSO ADVERTED OUR ATTENTION TO PAGE-90 OF THE PAPER BOOK TO SUBMIT THAT IN THE CASE OF SMT. K. SUDHA RANI TH E FOLLOWING GROUND WAS URGED BY THE REVENUE BUT THE TRIB UNAL OBSERVED THAT IT IS NOT RELEVANT AS TO HOW THE STATUTORY OBL IGATION OR AUTHORITY IS DELEGATED TO STPI, SINCE IT IS AN INTER NAL MATTER OF THE GOVERNMENT AND ONCE STPI APPROVES THE UNIT AS 100% EOU IT SHOULD BE ALLOWED EXEMPTION UNDER SECTION 10B OF THE ACT SINCE IT IS DEEMED TO HAVE COMPLIED WITH THE CONDITIONS FOR OBTAINING APPROVAL FROM THE BOARD. THE CIT(A) ERRED IN FACTS AND IN LAW IN IGNORING T HE FACT THAT THE ASSESSEES BUSINESS IS NOT APPROVED BY THE BOAR D APPOINTED BY THE CENTRAL GOVT. IN EXERCISE OF POWER S U/S 14 5 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 AND THE RULES MADE THEREUNDER WHICH IS PRESCRIBED UNDER THE INCOME TAX ACT, FOR THE PURPOSE OF CLAIMING DEDUCTI ON U/S.10B. 3.1. IN THIS REGARD, THE TRIBUNAL HAD ALSO TAKEN INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF BAJAJ TEMPO LIMITED 196 ITR 188 WHEREIN THE C OURT OBSERVED THAT A PROVISION IN TAXING STATUTE, GRANTING INCE NTIVES FOR PROMOTING GROWTH AND DEVELOPMENT, SHOULD BE CONSTR UED LIBERALLY SO AS TO ADVANCE OBJECTIVE OF PROVISION AND NOT TO FRUSTRATE IT. LEARNED COUNSEL FOR THE ASSESSEE HAD ALSO ADVERTED OUR ATTENTION TO PAGE 89 OF THE PAPER BOOK TO SUBMIT THAT IN THE CASE OF SMT. K. SUDHA RANI THE HONBLE A.P. HIGH COU RT (ITA.NO.87 OF 2013 DATED 25 TH JUNE, 2013) REJECTED THE APPEAL FILED BY THE REVENUE BY OBSERVING THAT EVEN IN ASSESS EES OWN CASE FOR THE EARLIER YEAR THE REVENUE HAS ACCEPTED THE ORDER PASSED BY THE ITAT. RECENTLY I.E., ON 17.06.2016 THE ITAT, A BENCH, HYDERABAD (ITA.NO.1675/HYD/2014) IN THE CASE OF DCIT, CIRCLE-16(2), HYDERABAD VS., M/S. PENNYWISE SOLUTION S P. LTD., HYDERABAD HAD TAKEN NOTE OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS BUT CHOSE TO FOLLOW THE CONSISTENT VIEW TAKEN BY THE ITAT, HYDERABAD BENCHES WHICH INTURN, WERE PASSED INCONFORMITY WITH THE DECISION O F THE HONBLE A.P. HIGH COURT AS WELL AS HONBLE GUJRAT HIGH COURT, AND HELD THAT AN ASSESSEE WHO OBTAINS APPROVAL FROM THE STPI CAN BE SAID TO HAVE OBTAINED APPROVAL FROM THE BOARD AND IN SUCH C ASES EXEMPTION UNDER SECTION 10B IS ALLOWABLE. LEARNED COU NSEL FOR THE ASSESSEE ALSO REFERRED TO PAGE-14 OF THE PAPER BO OK TO SUBMIT THAT WHEN THERE ARE TWO VIEWS POSSIBLE THE ONE WHICH I S FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED, AS HE LD BY THE 6 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., (1973) 88 ITR 192. HE THUS STRONGLY SUBMITTED THAT TH E VIEW TAKEN BY THE ASSESSING OFFICER AS WELL AS THE CIT(A) D ESERVES TO BE SET ASIDE AND THE ASSESSEE SHOULD BE PERMITTED TO CLAIM EXEMPTION UNDER SECTION 10B OF THE ACT. 4. ON THE OTHER HAND, THE LD. D.R. STRONGLY RELIED UP ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. REGENCY CREATIONS LTD., [(2013) 353 ITR 326] TO SUBMI T THAT INTERPRETATION PLACED UPON EXPLANATION TO SECTION 10B OF THE ACT DESERVES TO BE FOLLOWED SINCE THE LAW MANDATES OBTAINI NG APPROVAL FROM THE MINISTRY, INDEPENDENT OF THE REGISTRAT ION WITH STPI. THE LD. D.R. THUS STRONGLY RELIED UPON THE ORDER S PASSED BY THE TAX AUTHORITIES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. WE HAVE ALSO CAREFULLY PERUS ED THE JUDGMENT OF THE HONBLE DELHI HIGH COURT AS WELL AS DECISIONS RENDERED BY THE ITAT, HYDERABAD BENCHES WHICH IN TUR N, WERE CONFIRMED BY THE HONBLE A.P. HIGH COURT. SINCE WE AR E FUNCTIONING UNDER THE JURISDICTION OF A.P. HIGH COUR T WHICH IS BINDING ON THIS BENCH, WE RESPECTFULLY FOLLOW THE DE CISION OF THE HONBLE A.P. HIGH COURT AS WELL AS THE ITAT, HYDERABA D BENCH IN PREFERENCE TO THE VIEW TAKEN BY THE HONBLE DELHI HIGH COURT AND THEREFORE, HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTIO N UNDER SECTION 10B OF THE ACT SUBJECT TO FULFILLMENT OF OTHER CON DITIONS. 5.1. EVEN OTHERWISE, WHEN THERE ARE TWO VIEWS POSSIB LE THE ONE WHICH IS IN FAVOUR OF THE ASSESSEE DESERVES TO BE TAKEN INTO CONSIDERATION. IT IS ALSO NOT OUT OF PLACE TO MENTION THAT IN THE CASE OF SMT. K. SUDHA RANI THE REVENUE HAS ACCEPTED TH E VIEW 7 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. TAKEN BY THE HYDERABAD BENCHES FOR THE A.YS. 2005-06 A ND 2006-07. THE LD. D.R. COULD NOT PLACE ANYTHING ON REC ORD AS TO WHY THE VIEW TAKEN BY THE HYDERABAD BENCHES WAS ACCEPT ED BY THE REVENUE. IN FACT, THE HONBLE A.P. HIGH COURT HAD TAKEN NOTE OF THE SAME AND THE ASSESSEE-COMPANY HAD CONTINUOUSLY PROJECTED BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) THAT IN THE CASE OF SMT. K. SUDHA RANI EXEMPTION WAS GRANTED U NDER SECTION 10B OF THE ACT EVEN THOUGH THERE WAS NO SEPARA TE APPROVAL BY THE BOARD. UNDER THESE CIRCUMSTANCES, THE L D. D.R. OUGHT TO HAVE OBTAINED PROPER DETAILS AS TO WHY THE REV ENUE HAS ACCEPTED THE DECISION OF THE ITAT AS OTHERWISE THE ONLY INFERENCE POSSIBLE IS THAT THE REVENUE HAS ACCEPTED THE LEGAL PO SITION AND THEREFORE DID NOT PREFER TO GO IN FURTHER APPEAL. THUS, EVEN ON THE PRINCIPLES OF CONSISTENCY THE REVENUE OUGHT NOT TO HAV E PREFERRED A FURTHER APPEAL EVEN IN THIS CASE. AT ANY RATE, CONSIS TENT WITH THE VIEW TAKEN IN THE CASE OF OTHER ASSESSEES WE ACCEP T THE VIEW OF THE ASSESSEE AND HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 10B OF THE ACT. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE-COMPAN Y IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.09.2016. SD/- SD/- (S.RIFAUR RAHMAN) (D.MANMOHAN) ACCOUNTANT MEMBER. VICE PRESIDENT HYDERABAD, DATED 21 ST SEPTEMBER, 2016 VBP/- 8 ITA.NO.1307/HYD/2015 M/S. MOURI TECH P. LTD., HYDERABAD. COPY TO: 1. M/S. MOURI TECH P. LTD., (FORMERLY MOURI SOFT SOLU TIONS P. LTD.,), 6-3-83, 3 RD FLOOR, LOUKYA TOWERS, MALLAMPET ROAD, BACHUPALLY, HYDERABAD 500 090. 2. THE INCOME TAX OFFICER, WARD-16(1), HYDERABAD. 3. CIT(A)-IV, 3 RD FLOOR ANNEXE, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 4. PR. COMMISSIONER OF INCOME TAX-IV, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, A BENCH, HYDERAB AD 6. GUARD FILE.
