ITO, Pune V. Cat Labs P.Ltd, Pune

ITA 131/PUN/2013

• Counselvise Citation: 13124514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Rule of consistency; Tax effect
• Section: 10B; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.131/PN/2013 (ASSESSMENT YEAR 2009-10) ITO, WARD-1(1), PUNE .. APPELLANT VS. CAT LABS PVT. LTD., 54/1, SIDDHESHWAR NAGAR, TINGRE NAGAR ROAD, VISHRANTWADI, PUNE-411015 .. RESPONDENT PAN NO.AABCC6577C ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 20-02-2014 DATE OF PRONOUNCEMENT : 26-02-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 16-08-2012 OF THE CIT(A)-I, PUNE RELATING TO ASSESS MENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) G ROSSLY ERRED IN DELETING THE DISALLOWANCE OF RS.1,20,73,454/- MADE IN THE ASSESSMENT ON ACCOUNT OF DENIAL OF THE ASSESSEE'S CLAIM OF EXEMPTIO N U/S.L0B OF THE INCOME-TAX ACT, 1961 INSTEAD OF CONFIRMING THE SAID D ISALLOWANCE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) G ROSSLY ERRED IN ALLOWING EXEMPTION BY ERRONEOUSLY CONSIDERING THAT THE REGISTRATION GRANTED BY THE SOFTWARE TECHNOLOGY PARK OF INDIA (S TPI) IS ENOUGH FOR FULFILMENT OF THE CONDITION PRESCRIBED IN SEC.10B FO R APPROVAL OF AN EOU UNIT U/S.14 OF THE INDUSTRIES (DEVELOPMENT & REGULATI ON) ACT, 1951. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) G ROSSLY ERRED IN FAILING TO APPRECIATE THAT IN ORDER TO BE ELIGIB LE U/S.10B, AN ASSESSEE HAS TO BE A 100% EXPORT ORIENTED UNIT AS SPECIFIED UN DER EXPLANATION 2(IV) APPEARING BELOW SECTION 10B OF THE ACT, WHICH DEFINES A 'HUNDRED PERCENT EXPORT ORIENTED UNDERTAKING' AS AN UNDERTAKI NG SO APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GO VERNMENT U/S.14 OF 2 THE INDUSTRIES DEVELOPMENT & REGULATION ACT, 1951. TH E ASSESSEE'S 100% EXPORT ORIENTED UNIT WAS NOT SUCH AN APPROVED UNDERTA KING. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) G ROSSLY ERRED IN FAILING TO APPLY THE RATIO OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. REGENCY CREATIONS LTD., (27 TAX MANN.COM 322) WHICH SQUARELY APPLIES TO THE PRESENT CASE. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANUFACTURE, CUSTOMISATION AND EXPORT O F COMPUTER ANTIVIRUS SOFTWARE. THE ASSESSEE HAS BEEN REGISTERED/APPROVE D AS 100% EXPORT ORIENTED UNDERTAKING BY SOFTWARE TECHNOLOGY PARK OF INDIA. IT FILED ITS RETURN OF INCOME ON 22-09-2009 DECLARING TOTAL INCO ME OF RS.1,60,752/- AFTER CLAIMING EXEMPTION OF RS.1,20,73,453/- U/S. 1 0B OF THE I.T. ACT. THE ASSESSEE SUBMITTED FORM 56G DULY AUDITED AND CE RTIFIED BY THE AUDITORS ALONG WITH RETURN OF INCOME FOR CLAIMING E XEMPTION U/S.10B OF THE I.T. ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION U/S.10B ON THE GROUND THAT IT IS NOT APPROVED BY TH E BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT U/S.14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. FURTHER, T HE 100% EOU AS PER STPI IS NOT AT PAR WITH THE 100% EOU APPROVED BY TH E BOARD APPOINTED U/S.14 OF THE IDRA, 1951 BY THE CENTRAL GOVERNMENT. FOR THIS PROPOSITION, THE ASSESSING OFFICER RELIED ON THE DE CISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF INFO TECH ENTERPRISES LTD. VS. JT. CIT REPORTED IN 85 ITD 325. THE ASSESSING OFFICER ACCORDINGLY REJECTED THE CLAIM OF RS.1,20,73,454/- CLAIMED BY T HE ASSESSEE U/S.10B OF THE I.T. ACT. 3 3.1 IN APPEAL THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2008-09 ALLOWED THE CLAIM OF THE ASSESSEE. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELI ED ON THE ORDER OF THE ASSESSING OFFICER 6. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE LD.CIT( A) IN ASSESSEES OWN CASE FOR A.Y. 2008-09 HAS ALLOWED THE CLAIM OF DEDU CTION U/S.10B AMOUNTING TO RS.46,79,486/-. ALTHOUGH THE TAX EFFE CT IS MORE THAN THE MONETARY LIMITS PRESCRIBED BY THE CBDT, THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE CIT(A). THUS, THE REVENUE HAS ACCEPTED THE ORDER OF THE CIT(A) WHO HAS PASSED AN ELABORATE ORDER DISTINGUISHING THE DECISION RELIED ON BY THE ASSESSING OFFICER. 6.1 RELYING ON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND OTHERS VS. KAUMUDINI NARAYAN DALAL & ANOTHER REPORTED IN 249 ITR 219 (SC) AND THE DECISION IN TH E CASE OF CIT VS. SHIVSAGAR ESTATE REPORTED IN 257 ITR 59 (SC) HE SUB MITTED THAT WHEN THE REVENUE DID NOT FILE ANY APPEAL AGAINST THE ORDER O F THE CIT(A) IN THE PRECEDING YEAR THE APPEAL FILED FOR THE SUBSEQUENT YEAR ON THE SAME ISSUE IS LIABLE TO BE DISMISSED. HE ACCORDINGLY SUBMITTE D THAT THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 4 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASS ESSING OFFICER IN THE ASSESSMENT ORDER FOR A.Y. 2008-09 HAS ALSO DENIED T HE CLAIM OF DEDUCTION U/S.10B ON THE GROUND THAT THE ASSESSEE C OMPANY IS NOT A 100% EOU SINCE IT IS NOT APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT U/S.14 OF THE INDUSTRIES (DEVELO PMENT AND REGULATION) ACT, 1951. FURTHER, THE 100% EOU AS PE R STPI IS NOT AT PAR WITH THE 100% EOU APPROVED BY THE BOARD APPOINTED U /S.14 OF THE IDRA, 1951 BY THE CENTRAL GOVERNMENT. RELYING ON T HE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF INFO TECH ENTERPRISES LTD. (SUPRA) THE ASSESSING OFFICER DISALLOWED THE CLAIM. WE FIND ON AN APPEAL FILED BY THE ASSESSEE, THE LD.CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S.10B OF THE BY OBSERVING AS UNDER : 3.3.1. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE LAW AS ARE APPARENT FROM THE RECORDS. GROUND NO. 1 WHICH IS UNDE R CONSIDERATION HAS BEEN RAISED IN AN ARGUMENTATIVE MANNER AND THERE FORE, WHAT IS BEING CONSIDERED FOR ADJUDICATION ARE 'WHETHER IN THE FACT S AND CIRCUMSTANCES OF THE CASE, THE APPELLANT COMPANY CAN BE DENIED DED UCTION U/S 10B ONLY BECAUSE THE APPROVAL WAS TAKEN FROM THE BODY OF STPI FORMED UNDER THE MINISTRY OF INFORMATION TECHNOLOGY, FORMED BY THE GO VERNMENT FOR CONTROL, MONITORING AND REGULATION OF SOFTWARE EXPOR TS AND NOT FROM THE BOARD APPOINTED ON BEHALF OF THE CENTRAL GOVERNMENT U/S 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951, DESPI TE THE FACT THAT IN SIMILAR FACTS AND CIRCUMSTANCES THIS DEDUCTION HAS BEEN A LLOWED IN EARLIER ASSESSMENT YEARS. FROM THE PERUSAL OF THE ASSESSMENT ORDER IT IS ABUNDANTLY CLEAR THAT THE AO HAS MAINLY RELIED ON TH E NON-FULFILLMENT OF CONDITION PROVIDED IN THE SECTION, TO OBTAIN THE APP ROVAL FROM THE BOARD APPOINTED ON BEHALF OF THE CENTRAL GOVERNMENT U/S 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 WHICH WAS FOUND SPECIFICALLY AVAILABLE IN EXPLANATION 2 TO SEC. 10B WHICH DEFINES A 100% EXPORT ORIENTED UNIT (EOU), TO WHICH THIS PROVISION APPLIES. THE AO FOUND THAT THE EXPLANATION SAYS THAT 100% EXPORT ORIENTED UNDERT AKING MEANS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A 100% EXPORT ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXCISE OF POWER CONFERRED BY SECTION 1 4 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 (65 OF 1951, A ND THE RULES MADE UNDER THAT ACT). AS THE APPELLANT HAD TAKEN THE APPR OVAL OF 100% EXPORT ORIENTED UNIT FROM THE STPI, A TECHNICAL BODY OF MI NISTRY OF INFORMATION & TECHNOLOGY FORMED FOR THE PURPOSE OF CONTROL, MONITO RING AND REGULATION 5 OF SOFTWARE EXPORTS, IT WAS HELD BY THE AO THAT THE STA TUS OF EOU FOR THE PURPOSE OF DEDUCTION U/S 10B CANNOT BE RECOGNIZED. TH E AO FOR THE ABOVE HAS ALSO PLACED RELIANCE ON THE DECISION GIVEN BY THE ITAT, HYDERABAD IN THE CASE OF INFOTECH ENTERPRISES LTD. VS. JT.CIT (2003) 85 ITD 325 (HYD). THE APPELLANT HAS CONTENDED IN DETAIL IN THEIR SUBMI SSION THAT THE FINDING OF THE AO IS HYPER TECHNICAL. THE MINISTRY OF INFORMA TION TECHNOLOGY HAS SPECIFICALLY CONSTITUTED STPI FOR GRANTING 100% EOU A PPROVAL TO THE UNITS ENGAGED IN THE MANUFACTURING OF SOFTWARES AND ITS EXPO RTS AND THEREFORE, THIS APPROVAL MUST BE GIVEN RECOGNITION EQUIVALENT TO THE BOARD CONSTITUTED UNDER INDUSTRIES DEVELOPMENT & REGULATION) ACT. THE APPELLANT HAS PLACED RELIANCE ON DIFFERENT JUDGMENTS, AS CAN BE SEEN FROM THE SUBMISSIONS QUOTED ABOVE, WHICH HAS APPROVED THE ALL OWABILITY OF THIS DEDUCTION ON THE BASIS OF STPI REGISTRATION AND IT WAS ALSO CLAIMED THAT THE ABOVE REFERRED JUDGMENTS HAVE BEEN GIVEN AF TER TAKING INTO ACCOUNT THE JUDGMENT OF INFOTECH ENTERPRISES LTD. REL IED UPON BY THE AO. THE APPELLANT HAS CLAIMED THAT ALL THE CONDITIONS PRE SCRIBED IN THE SECTION HAVE BEEN FULFILLED. FROM THE PERUSAL OF THE ASSESSMENT ORDER ALSO IT IS EVIDENT THAT THE APPELLANT HAS SUBMITTED SUBMISSIONS CLAI MING THAT ALL THE CONDITIONS ARE SATISFIED AND THE AO AFTER EXAMINING TH E SUBMISSIONS MADE BY THE APPELLANT HAS MAINLY HELD THAT THE APPEL LANT IS NOT ELIGIBLE BECAUSE IT HAS NOT OBTAINED THE APPROVAL UNDER THE IN DUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951. A BRIEF REFER ENCE CAN ALSO BE SEEN IN THE ASSESSMENT ORDER, WHICH CAN BE CONSIDERED TO BE SA YING THAT THE AO WAS OF THE OPINION THAT THE APPELLANT IS NOT ENGA GED IN THE MANUFACTURING OF SOFTWARE. HOWEVER, THE ABOVE INFERE NCE OF THE AO SEEMS TO BE LACKING ANY CONVICTION. SHE HAS ONLY REFER RED TO THE SALARY OF DIRECTORS TO CONCLUDE THAT THE APPELLANT IS NOT ENGAG ED IN THE BUSINESS OF MANUFACTURING OF SOFTWARE, DESPITE THE FACT THAT IN T HE SUBMISSION MADE BEFORE HER, WHICH HAS BEEN QUOTED IN THE ASSESSMENT ORD ER, IT IS EVIDENT THAT THE APPELLANT HAD CLAIMED BEFORE THE AO THAT I T HOLDS AN IPR FOR ANTIVIRUS SOFTWARE, WHICH ARE ADOPTED AND MODIFIED AC CORDING TO THE REQUIREMENTS OF THE CLIENTS AND THE COUNTRIES TO WHOM THE SOFTWARES ARE EXPORTED AFTER PUTTING THEM ON COMPACT DISKS. THE APP ELLANT HAS ALSO CONTENDED THAT THE SUPREME COURT IN THE CASE OF ORAC LES SOFTWARE INDIA LTD., QUOTED SUPRA HAD HELD THAT THE PROCESS OF TRANSFO RMING BLANK COMPACT DISKS INTO SOFTWARE LOADED DISKS AMOUNTS TO MANUF ACTURING. THE APPELLANT HAD ALSO CONTENDED BEFORE THE AO THAT THE DEFINITION AVAILABLE IN THE SECTION IN EXPLANATION 2 OF SECTION 10B CLEARL Y SAYS THAT A COMPUTER SOFTWARE MEANS ANY COMPUTER PROGRAMME RECORDED ON ANY DISK, TAPE, PERFORATED MEDIA, OR OTHER INFORMATION STORAGE DEVIC E OR ANY CUSTOMIZED ELECTRONIC DATA OR ANY PRODUCT OR SERVICE OF SIMILAR NATURE WILL CONSTITUTE SOFTWARE WHICH ARE EXPORTED OR TRANSMITTED FROM INDIA TO ANY PLACE OUTSIDE INDIA BY ANY MEANS. THE AO HAS NOT EXAMINED ANY OF THESE CLAIMS OF THE APPELLANT BEFORE SAYING IN AN AMBIGUOUS MANNER THAT THE APPELLANT IS NOT ENGAGED IN THE ACTIVITY OF SOFTWARE MANUFACTURING ON THE BASIS OF SALARY AND NOTE ON ACTIVITY. THEREFORE, IT IS CLEAR FROM THE PERUSAL OF THE ASSESSMENT ORDER THAT THE AO HAS FAILED TO APPREC IATE THE MATERIALS PLACED BEFORE HER IN THE LIGHT OF THE PROVISIONS CONT AINED U/S 10B AND THE INTERPRETATIONS GIVEN TO THE RELEVANT ISSUES IN DIFFER ENT JUDGMENTS AND HAS CONCLUDED WITHOUT ANY BASIS THAT THE APPELLANT IS N OT ENGAGED IN THE BUSINESS OF MANUFACTURING OF SOFTWARE. IN VIEW OF THE ABOVE AND THE FACT THAT THE SUBMISSIONS OF THE APPELLANT HAS REMAINED UNCON TROVERTED, DEMONSTRATING THAT THE APPELLANT IS ENGAGED IN THE AC TIVITY OF MANUFACTURING OF SOFTWARES, IT HAS TO BE HELD THAT TH E AFORESAID FINDING OF THE AO IS NOT CORRECT. THEREFORE, IT HAS TO BE CONSI DERED IN THE FACTS OF THE CASE AVAILABLE ON RECORD THAT THE APPELLANT IS ENGAGE D IN THE BUSINESS OF SOFTWARE MANUFACTURING AND EXPORT. NOW COMING TO THE MAIN OBJECTION OF THE AO THAT THE APPROVAL IS NOT UNDER SEC. 14 OF THE INDUSTRIES (D&R) ACT, 1951, IT IS NOTED THAT THERE IS NO DISPUTE TO THE FAC T THAT THE APPROVAL FOR EOU AVAILABLE WITH THE APPELLANT IS NOT FROM THE BOA RD CONSTITUTED U/S 14 6 OF THE INDUSTRIES (D&R) ACT, 1951, BUT IS FROM THE STP I. HOWEVER, THE CLAIM OF THE APPELLANT THAT THE STPI IS A BODY CONSTI TUTED BY THE GOVT. OF INDIA FOR THE SPECIFIC PURPOSE OF GRANTING APPROVAL O F EOU STATUS TO UNITS ENGAGED IN THE MANUFACTURING AND EXPORTS OF SOFTWARES AND THEREFORE, THE SAME IS EQUIVALENT AND SERVING THE SAME PURPOSE IS REQUI RED TO BE CONSIDERED, IS REQUIRED TO EXAMINED. FOR THIS PURPOSE, THE APPELLANT HAS REFERRED TO A COMPARATIVE TABLE GIVING REFERENCE TO THE BENEFIT OF SECTION 10B IN FOREIGN TRADE POLICY OF 2004-2009 VIS-A-VIS E XPORT IMPORT POLICY, 2002-2007 AND EXPORT IMPORT POLICY 1992-1997, TO BR ING THE POINT TO THE FORE THAT THE GOVERNMENT HAS ACCEPTED THE GRANT OF B ENEFIT U/S 10B UNDER THE APPROVAL GRANTED BY STPI. THE APPELLANT HAS ALSO CLAIMED THAT THE ASSESSING OFFICER HAS INCORRECTLY FOLLOWED THE DECISION O F THE ITAT, HYDERABAD GIVEN IN THE CASE OF INFOTECH ENTERPRISES PV T. LTD. VS. JCIT (2003) 80 TTJ (HYD) 589, WHICH WAS DELIVERED BEFORE THE ISSUANCE OF J INSTRUCTION NO. 1 OF THE CBDT DATED 31.3.2006 AND TH E MINUTES OF THE INDUSTRIAL MINISTERIAL COMMUNICATION VIDE LETTER DATE D 23.3.2006 ISSUED BY THE MINISTRY OF COMMUNICATION & TECHNOLOGY. FOR T HE ABOVE, THE APPELLANT RELIED ON THE INSTRUCTION NO. 1 OF 2006 OF THE CBDT AND THE DECISION OF THE ITAT, DELHI 'H' BENCH GIVEN IN THE C ASE OF DCIT VS. VALLIANT COMMUNICATIONS LTD. (ITA NO. 2706/DEL/2008/A.Y. 2005 -06). THE APPELLANT HAS ALSO PLACED RELIANCE ON THE DECISION OF ITAT DELHI 'F' BENCH GIVEN IN THE CASE OF REGENCY CREATIONS LTD. VS. ACIT C IR.15(1), NEW DELHI, ITA NO. 1588/DEL/2010/A.Y. 2007-08); ITAT, AHMEDABA D 'B' BENCH GIVEN IN THE CASE OF ITO WARD 4(1) VS. E-ENFOCHIP LTD . (ITA NO. 2311/AHD/2008/A.Y. 2005-06); ITAT DELHI 'H' BENCH D ECISION GIVEN IN THE CASE OF DCIT, CIR.16(1) VS. TECHNOVATE E-SOLUTION S PVT. LTD. (ITA NO. 135/DEL/2011/A.Y. 2003-04); CITVS. EXCELL SOFTECH LT D. (2008)219 CTR (P&H) 405. IT CAN BE SEEN THAT THE FINDING OF THE ASSE SSING OFFICER THAT SEC. 10B REQUIRED REGISTRATION BY THE BOARD CONSTITUTED U/ S 14 OF INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951, IS PERFECTLY C ORRECT BUT THE CLAIM OF THE APPELLANT THAT THE ABOVE REQUIREMENT SHOULD BE CONSTRUED TO HAVE BEEN LEGALLY FULFILLED AS PER THE DIRECTIONS OF THE M INISTRY OF COMMUNICATION & TECHNOLOGY AND THE INSTRUCTION ISSUED BY THE CBDT ON A SIMILAR ISSUE FOR REGISTRATION U/S 10A, ALSO LOOKS CORR ECT. INSTRUCTION NO. 1 OF 2006 OF THE CBDT DATED 31.3.2006, IS IN RESPECT OF SEC. 10A BUT IN THIS INSTRUCTION IT HAS BEEN ACCEPTED THAT CONFUSION EXISTED IN RESPECT OF THE AUTHORITIES WHOSE APPROVAL SHOULD BE CONSIDERED TO BE F ULFILLING THE CONDITIONS PRESCRIBED IN SEC. 10A AND IN VIEW OF THE SA ME THE INSTRUCTION DIRECTED THE ASSESSING OFFICER AS UNDER: '6. THE MATTER HAS BEEN EXAMINED IN CONSULTATION WIT H THE OFFICERS OF THE DEPARTMENT OF INFORMATION TECHNOLOGY (EARLIER, DEPARTMENT OF ELECTRONICS). IN VIEW OF THE AMBIGUITY IN THE LEGAL STATUS OF THE APPROVAL BY DIRECTOR OF STPS, THE INTER-MINISTERIAL STANDING COMMITTEE WILL MEET TO CONSIDER THE APPROVALS BY DIRECTORS OF STPS ISSU ED IN THE PAST. THEREFORE, WITH A VIEW TO AVOID INFRUCTUOUS DEMAND RAISED IN ASSESSMENT AND REASSESSMENT OF ASSESSES CLAIMING DE DUCTION U/S 10A, IT HAS BEEN DECIDED THAT THE CLAIM OF THE DEDUCTION U/ S 10A OF THE INCOME TAX ACT, SHALL NOT BE DENIED TO STP UNITS ONLY ON TH E GROUND THAT THE APPROVAL/ REGISTRATION TO SUCH UNIT HAS BEEN GRANTE D BY THE DIRECTORS OF SOFTWARE TECHNOLOGY PARKS. HOWEVER, IT HAS TO BE ENSURED THAT ALL OTHER CONDITIONS SPECIFIED IN SEC. 10A ARE FULLY SA TISFIED BEFORE ALLOWING ANY SUCH CLAIM.' THE TRIBUNALS HAVE IN THE JUDGMENTS RELIED UPON BY TH E APPELLANT, AFTER 2006 HAVE COME TO THE CONCLUSION THAT THE REGISTRATIO N GRANTED BY STPI SHOULD BE CONSIDERED AS ENOUGH FOR THE FULFILLMENT OF THIS CONDITION. THE TRIBUNALS HAVE ALSO CONSIDERED THE MINUTES OF THE INDUST RIAL MINISTERIAL COMMUNICATION VIDE LETTER DATED 23.3.2006 ISSUED BY M INISTRY OF 7 COMMUNICATION &TECHNOLOGY, AS DISCUSSED IN DETAIL IN TH E CASE OF DCIT VS. VALLIENT COMMUNICATIONS LTD. IN REGENCY CREATION LTD. JUDGMENT GIVEN IN ITA NO. 1588/DEL/2010/ A.Y. 2007-08, THE H ON'BLE ITAT ALSO RELIED ON A CLARIFICATION OBTAINED UNDER RTI, WHICH HAD STATED THAT NO APPROVAL / RATIFICATION OF STPI APPROVAL IS REQUIRED FROM BOA FORMED BY MINISTRY OF COMMERCE U/S 14 OF INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951. FOR THE ABOVE REASON, THE TRIBUNALS HAVE F OUND THAT THE DECISION OF INFOTECH ENTERPRISES LTD., 85 ITD 325 (HYD ) WILL NOT BE APPLICABLE AFTER 2006. IN VIEW OF THE DISCUSSIONS MADE ABOVE, FROM WHICH IT IS APPARENT THAT THE OVERWHELMING VIEW OF T HE TRIBUNALS HAVE BEEN TO TREAT THE APPROVAL GRANTED BY THE STPI TO B E ENOUGH FOR THE FULFILLMENT OF CONDITION PRESCRIBED IN SEC. 10B FOR A PPROVAL OF THE EOU UNIT UNDER SEC. 14 OF INDUSTRIES (DEVELOPMENT & REGULA TION) ACT, 1951 AND ON THIS GROUND THE BENEFIT CANNOT BE DENIED HAS T O BE ACCEPTED DESPITE THE FACT THAT THE SEC. 10B SPECIFICALLY TALKS O F ONLY REGISTRATION U/S.14 OF INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1 951. SINCE THE ASSESSING OFFICER IN THIS CASE HAS ONLY RAISED THIS ISSUE, THE SAME HAS TO BE NOT ALLOWED IN VIEW OF THE DISCUSSIONS MADE ABOVE. GROUND NO. 1 THEREFORE, IS ALLOWED. THE TRIBUNAL IN THE ABOVE REL IED CASES HAVE ALSO ALLOWED THE BENEFIT ON THE 'PRINCIPLE OF CONSISTENCY' , WHICH IS APPLICABLE IN THIS CASE ALSO. IT WAS DEMONSTRATED BY THE AR THAT SIM ILAR BENEFIT U/S 10B WAS ALLOWED BY AO IN EARLIER ASSESSMENT YEARS AND NO ACTION TO J WITHDRAW THE SAME HAS BEEN TAKEN. THUS ON THIS BASIS ALSO GROUND NO. 1 IS REQUIRED TO BE ALLOWED. 7.1 WE FIND ALTHOUGH THE TAX EFFECT WAS MORE THAN T HE PRESCRIBED MONETARY LIMIT THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE CIT(A) FOR THE A.Y. 2008-09. WE FIND THE CIT(A ) WHILE ALLOWING THE APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 HAS FOL LOWED HIS EARLIER ORDER UNDER IDENTICAL FACTS AND CIRCUMSTANCES. WE FIND T HE LD.CIT(A) IN HIS ORDER FOR A.Y. 2008-09 HAS DISTINGUISHED THE DECISI ON OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF INFOTECH ENTE RPRISES LTD. (SUPRA) AND FOLLOWING VARIOUS OTHER DECISIONS HAS ALLOWED T HE CLAIM OF DEDUCTION U/S.10B. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY MISTAKE IN THE ORDER OF THE LD.CIT(A) NOR COULD CIT E ANY OTHER DECISION TO CONTROVERT THE FINDING GIVEN BY THE LD.CIT(A). SIN CE THE ORDER OF THE CIT(A) IS BASED ON VARIOUS DECISIONS INCLUDING THE CBDT INSTRUCTION NO.1/2006, THEREFORE, IN ABSENCE OF ANY CONTRARY MA TERIAL BROUGHT TO OUR NOTICE, WE FIND NO INFIRMITY IN THE ORDER OF THE CI T(A). ACCORDINGLY, WE 8 UPHOLD THE SAME. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26-02-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 26 TH FEBRUARY 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE