Limtex Infotech Ltd., Kolkata V. ITO, Ward - 7(4), Kolkata , Kolkata

ITA 1368/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1831 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: J M THARD
• Keywords: Benefit of exemption
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 1368/KOL/20 17 ASSESSMENT YEAR : 2010-1 1 LIMTEX INFOTECH LTD. -VS- ITO, WARD-7(4), KO LKATA. [PAN: AABCL 0088 R] (APPELLANT) (RESPOND ENT) FOR THE ASSESSEE : SHRI J.M THAR D, ADVOCATE FOR THE DEPARTMENT : SHRI ROBIN CHOWDHUR Y, ADDL. CIT DR DATE OF HEARING : 30.08.2018 DATE OF PRONOUNCEMENT : 05.09.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-11, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 583/CIT(A)- 11/7(4)/KOL/14-15/KOL DATED 24.03.2017 AGAINST THE ORDER PASSED BY THE ITO, WARD- 7(4), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 1 43(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 26.03.2013 FOR THE ASS ESSMENT YEAR 2010-11. 2. THE ONLY EFFECTIVE ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF DEDUCTIO N CLAIMED U/S 10B OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 2 3. THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSESS EE HAS TWO MAIN VERTICLES IN ITS BUSINESS. ONE VERTICAL COMPRISES DEVELOPMENT OF SOFTWARE AND OTHER VERTICAL COMPRISES OF RUNNING A CALL CENTRE, INCOME FROM WHICH HAS BEEN CLAIMED A S EXEMPT U/S 10B OF THE ACT. THE ASSESSEE WAS REGISTERED UNDER THE SOFTWARE TECHNOLO GY PARK (STP IN SHORT) SCHEME AS 100% EXPORT ORIENTED UNIT (EOU IN SHORT) ON 28.1.20 05. THE SAME WAS SUBSEQUENTLY RENEWED ON 27.7.2010. THE GREEN CARD WAS ISSUED TO THE ASSESSEE BY THE DESIGNATED OFFICER FOR SECRETARY TO THE GOVERNMENT OF INDIA, D EPARTMENT OF INFORMATION TECHNOLOGY AND CHAIRMAN INTER MINISTERIAL STANDING COMMITTEE ON SOFTWARE TECHNOLOGY PARK SCHEME. THE ASSESSEE DOES NOT HAVE ANY APPROVAL FROM THE BOARD OF APPROVAL FOR EOU SCHEME . THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS DI SALLOWED BY THE LD AO. 4. THE ENTIRE DEBATE AND ARGUMENT OF THE A.O. WHO HAS DISALLOWED THE BENEFIT U/S 10B AND THE ASSESSEE WHO HAS ARGUED HIS CASE FOR ELIGIB ILITY OF EXEMPTION OF ITS INCOME U/S 10B REVOLVES AROUND CERTAIN PROVISIONS OF SEC. 10B WHICH IS CLEARLY MENTIONED IN CBDT INSTRUCTION NO. 2/2009 DATED 09.03.2009 AS REC TIFIED BY INSTRUCTION OF EVEN NUMBER ON 08.05.2009. THE FOLLOWING IS EXTRACT OF I NSTRUCTION: SECTION 10B OF THE INCOME TAX ACT PROVIDES FOR EXE MPTION OF INCOME IN CASE OF HUNDRED PER CENT EXPORT ORIENTED UNDERTAKINGS SUBJE CT TO PRESCRIBED CONDITIONS. EXPLANATION 2(IV) BELOW TO THE SAID SECTION DEFINES A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING AS AN UNDERTAKING SO APPROVED BY THE B OARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT U/S 14 OF THE INDUSTRIES DEV ELOPMENT AND REGULATION ACT, 1951. SUBSEQUENT TO THE DELEGATION OF THIS POWER BY THE M INISTRY OF COMMERCE AND INDUSTRIES TO THE DEVELOPMENT COMMISSIONERS, SUCH APPROVALS TO 100 PER CENT EOUS ARE NOW BEING GRANTED BY THE DEVELOPMENT COMMISSIONERS WHIC H ARE LATER RATIFIED BY THE BOARD OF APPROVALS. THE MATTER REGARDING VALIDITY OF APPROVALS GIVEN BY DEVELOPMENT COMMISSIONERS HAS BEEN EXAMINED IN THE BOARD IT HAS BEEN DECIDED THAT AN APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF AN HUNDRED PER CENT EXPORT ORIENTED UNIT WILL BE CONSIDERED VALID ONCE SUCH AN APPROVAL IS RATIFI ED BY THE BOARD OF APPROVAL FOR EOU SCHEME. 3 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 3 AS PER THIS INSTRUCTION, WHICH TRIES TO INTERPRET T HE REQUIREMENT OF AN ENTERPRISE AS PER SECTION 10B FOR AN UNDERTAKING TO BE ELIGIBLE AS 10 0% EXPORT ORIENTED UNDERTAKING, IT SHOULD FULFILL THE FOLLOWING CONDITIONS: I) THE UNDERTAKING MUST HAVE APPROVED BY THE DEVELOPME NT COMMISSIONER II) THE APPROVAL SO GRANTED BY THE DEVELOPMENT COMMISSI ONER SHOULD BE SUBSEQUENTLY RATIFIED BY THE BOARD OF APPROVAL FOR EXPORT ORIENTED UNIT (EOU) SCHEME. THIS CLARIFICATORY INSTRUCTION WAS REQUIRED TO BE I SSUED BY THE BOARD AS THE EXPLANATION TO (IV) OF SEC. 10B REQUIRES APPROVAL TO BE GIVEN B Y THE BOARD. SUBSEQUENTLY, THE MINISTRY OF COMMERCE MADE CERTAIN DELEGATION OF THE POWER WHEREBY THE POWER CONFERRED TO THE BOARD U/S 14 OF INDUSTRIES DEVELOP MENT AND REGULATION ACT, 1951 WAS DELEGATED TO DEVELOPMENT COMMISSIONER. 5. THE ASSESSEE ALSO PLACED RELIANCE ON THE EMAIL R ECEIVED FROM DEPUTY DIRECTOR STP KOLKATA ON 27.3.2013 WHICH IS EXTRACTED HEREUNDER:- DEAR MR RAMAL, WITH REGARD TO RECTIFICATION, IMSC HAS CLARIFIED TH AT NO RATIFICATION IS REQUIRED FOR UNITS APPROVED BY THE DIRECTOR STPI AFTER 31/03 /1999. THANKS AND REGARDS 6. THE ASSESSEE STATED THAT BASED ON THE ABOVE EMAI L, IT IS CLEAR THAT THE RATIFICATION BY THE BOARD OF APPROVAL IS NOT REQUIRED BY STPI UNITS . IT WAS FURTHER ARGUED THAT SINCE ALL THE COMMISSIONER OF STPI ARE MEMBERS OF COMBINED BO ARD OF APPROVAL AND THEREFORE, APPROVAL GRANTED BY A COMMISSIONER OF CONCERNED STP I SHOULD BE CONSTRUED AS APPROVAL OF BOARD OF APPROVAL AS WELL. THE SECOND A RGUMENT OFFERED BY THE ASSESSEE GIVES SIMPLISTIC INTERPRETATION THAT FEW CONSTITUEN TS OF THE BOARD CONSTITUTE THE ENTIRE BOARD. 4 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 4 7. THE REVENUE POINTED OUT THAT THE ABOVE CITED INS TRUCITON OF THE BOARD DATED 8.5.2009 WAS MUCH MORE SUBSEQUENT TO THE YEAR 1999, THE DELE GATION OF WHICH HAS BEEN MADE THE BASIS OF THE OPINION OF THE DEPUTY DIRECTOR, STPI H AS BEEN CONSIDERED BY THE BOARD., AS IT MENTIONS - SUBSEQUENT TO THE DELEGATION OF THIS POWER BY THE MINISTRY OF COMMERCE AND INDUSTRIES ACCORDINGLY, THE LD AO OBSERVED THAT IT COULD BE CO NCLUDED THAT IN ORDER TO AVAIL THE EXEMPTION OF INCOME U/S 10B OF THE ACT, THE ASSESS EE MUST FULFILL THE TWO CONDITIONS MENTIONED ABOVE I.E. IT SHOULD BE APPROVED BY DEPUT Y DIRECTOR STPI AND SUBSEQUENT TO THE SAME, THE APPROVAL MUST BE RATIFIED BY THE BOAR D OF APPROVAL. AS NO SUCH APPROVAL HAS BEEN OBTAINED BY THE ASSESSEE IN THE INSTANT CA SE, THE EXEMPTION SOUGHT BY THEM U/S 10B OF THE ACT IS TO BE DENIED. THIS ACTION OF THE LD AO WAS UPHELD BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THIS ISSUE IS ALREADY SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIB UNAL WHICH WAS AUTHORED BY THE UNDERSIGNED IN THE CASE OF ITO VS WIZARD ENTERPRISE S PVT LTD IN ITA NO. 628/KOL/2011 FOR ASST YEAR 2007-08 ; ASSESSEES CO NO. 134/KOL/2 013 FOR ASST YEAR 2007-08 ; ITA NO. 65/KOL/2012 FOR ASST YEAR 2008-09 ; ASSESSEES CO NO. 133/KOL/2013 FOR ASST YEAR 2008-09 DATED 4.3.2016 WHEREIN IT WAS HELD AS UNDER:- 10. WE HAVE HEARD THE LD.AR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK AS FILED BY THE ASSESSEE BEFORE US. THE FACTS AS STATED HEREIN ABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITER ATED FOR THE SAKE OF BREVITY. WE FIND FROM PAGE 43-46 OF THE ASSESSEES PAPER BOOK C ONTAINING AN AGREEMENT ENTERED INTO BY THE ASSESSEE FOR SOFTWARE EXPORT TECHNOLOGY PARK WITH THE CENTRAL GOVERNMENT ON 20TH DAY OF JANUARY, 2006, WHEREIN THE FOLLOWING CLAUSES REQUIR E CAREFUL CONSIDERATION:- WHEREAS THE GOVERNMENT HAVE COMMUNICATED VIDE STP:D IR 441:2005-06: 1548 DATED 10.01.2006 TO THE UNIT THE TERMS AND CON DITIONS FOR SETTING UP OF THE 100% EXPORT ORIENTED SOFTWARE TECHNOLOGY PARK UNDER SOFTWARE EXPORT SCHEME OF MINISTRY OF COMMUNICATIONS & INFORMATION TECHNOL OGY FOR THE EXECUTION OF 5 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 5 IT ENABLED SERVICES AND THE UNIT HAS DULY ACCEPTED THE SAID TERMS AND CONDITIONS VIDE THEIR LETTER NO. NIL DATED 13TH JANUARY, 2006. AND WHEREAS THE UNIT HAS BEEN GRANTED THE STATUS OF 100% EXPORT ORIENTED UNIT AS DEFINED IN MINISTRY OF COMMERCE RESOLUTION NO. 33/(RE)/92-97 DATED 2ND MARCH, 1994 IN TECHNOLOGY PARK. AS WHEREAS THE UNIT HAS BEEN ALLOWED TO IMPORT THE CAPITAL GOODS, RAW MATERIALS, SPARES AND CONSUMABLES ETC FREE OF IMPOR T DUTY FOR THE EXECUTION OF IT ENABLED SERVICES FOR EXPORT THROUGH SATELLITE DATA LINK OR IN FORM OF PHYSICAL EXPORT. 11. WE FIND FROM PAGE 47-48 OF THE PAPER BOOK REGAR DING COPY OF THE GREEN CARD ISSUED BY THE DESIGNATED OFFICER, GOVT. OF INDIA, DEPTT. O F INFORMATION TECHNOLOGY AND CHAIRMAN, INTER-MINISTERIAL STANDING COMMITTEE ON S OFTWARE TECHNOLOGY PARK SCHEME VIDE GREEN CARD NUMBER STPK/233/06 DATED 16TH FEB., 2006 AS AN UNIT APPROVED UNDER THE STP SCHEME OF THE GOVT. OF INDIA AS 100% EXPORT ORIENTED UNIT TO CARRY OUT IT ENABLED SERVICES (CALL CENTRE). IT WOULD BE PERTINE NT TO REPRODUCE THE SAME HEREIN BELOW:- SL NO. 6047 GREEN CARD NO.STPK/233/06 DATED THE FEBRUARY 16TH 2006 SOFTWARE TECHNOLOGY PARK(STP) UNIT HAS BEEN APPROVED UNDER THE STP SCHEME OF THE GOVT. OF INDIA AS A 100% EXPORT ORIENTED UNIT FOR COMPUTER S OFTWARE. THIS UNIT IS ENTITLED TO TOP PRIORITY TREATMENT FROM ALL CONCERNED CENTRAL AND STATE GOVERNMENT DEPARTMENTS AND OTHER ORGANISATIONS IN ALL MATTERS RELATING TO THE PROJEC T TAXPUNDIT.ORG SD/- DESIGNATED OFFICER FOR SECRETARY TO THE GOVT OF IND IA DEPARTMENT OF INFORMATION TECHNOLOGY AND CHAIRMAN, INTERMINISTERIAL STANDING COMMITTEE ON SOFTWARE TEC HNOLOGY PARK SCHEME. 11.1 THE ABOVE GREEN CARD APPROVAL HAS TO BE UNDERS TOOD IN ITS TRUE AND FULLEST SENSE IN THE LARGER INTEREST AND PURPOSE BEHIND SETTING U P A UNIT AND THE ALLIED BENEFITS IT IS LIKELY TO BRING. THESE EXPORT BENEFITS WOULD AUTOMA TICALLY BE ELIGIBLE FOR DEDUCTION U/S. 10B OF THE ACT. OTHERWISE, THE PURPOSE OF GRANTING THE SAME FOR SETTING UP A UNIT AND REGISTERING WITH STP AS 100% EOU STATUS WOULD GET D EFEATED. 12. WE ALSO FIND LOT OF FORCE IN THE ALTERNATIVE AR GUMENT MADE BY THE LD.AR THAT THE ASSESSEE COMPANY BEING REGISTERED WITH STP IS ENTIT LED FOR CLAIMING DEDUCTION U/S. 10A OF THE ACT. IN THIS CONNECTION, THE CBDTS INSTRUCT ION NO. 1/2006 DATED 31-03- 2006 ASSUMES GREAT SIGNIFICANCE. THE SAME IS REPRODUCED HEREIN BELOW FOR BETTER APPRAISAL :- 6 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 6 SECTIONS 10A AND 10B FREE TRADE ZONES / 100% EXPOR T ORIENTED UNDERTAKINGS, EXEMPTION FOR NEW INDUSTRIAL UNDERTAK INGS IN [SECS.10A AND 10B] DEDUCTION TO STPS - INSTANCES HAVE BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT A LARGE NUMBER OF UNITS REGISTERED/ APPROVED BY THE D IRECTORS OF THE STPI ARE CLAIMING DEDUCTION UNDER SECTION 10A WHEREAS THE STP SCHEME REQUIRES APPROVAL BY THE INTER- MINISTERIAL STANDING COMMITTEE OF THE DEPARTMENT OF ELECTRONICS. ACCORDINGLY, THE CASES OF SUCH CLAIMANTS HAVE BEEN REOPENED BY THE A UTHORITIES. THE MATTER HAS BEEN EXAMINED IN CONSULTATION WITH T HE OFFICERS OF THE DEPARTMENT OF INFORMATION TECHNOLOGY (EARLIER, DEPARTMENT OF ELEC TRONICS). 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 DI RECTOR OF STPS ISSUED IN THE PAST. THEREFORE, WITH A VIEW TO AVOID INFRUCTUOUS DEMAND RAISED IN ASSESSMENT AND REASSESSMENT OF ASSESSEES CLAIMING DEDUCTION UNDER SECTION 10A, IT HAS BEEN DECIDED THAT THE CLAIM OF DEDUCTION UNDER SECTION 10A, SHAL L NOT BE DENIED TO STP UNITS ONLY ON THE GROUND THAT THE APPROVAL/REGISTRATION TO SUCH U NITS HAS BEEN GRANTED BY THE DIRECTORS OF SOFTWARE TECHNOLOGY PARKS. HOWEVER, IT HAS TO BE ENSURED THAT ALL OTHER CONDITIONS SPECIFIED IN SECTION L0A ARE FULLY SATIS FIED BEFORE ALLOWING ANY SUCH CLAIM. IN CASES WHERE ASSESSMENTS/REASSESSMENTS HAVE ALRE ADY BEEN COMPLETED, AND THE CLAIM UNDER SECTION 10A HAS BEEN DISALLOWED ONLY ON THE G ROUND THAT THE APPROVAL TO THE STP HAS NOT BEEN GRANTED BY THE INTER-MINISTERIAL STAND ING COMMITTEE IN ACCORDANCE WITH THE SCHEME, THE DEMAND SO ARISING SHOULD BE KEPT IN ABEYANCE UNTIL FURTHER ORDERS. 13. IT IS NOT IN DISPUTE THAT A CALL CENTRE OPERATI ON HAS BEEN DULY NOTIFIED AS IT ENABLED SERVICES AND THEREBY ELIGIBLE FOR DEDUCTION FOR 100 % EXPORT ORIENTED UNIT CONTEMPLATED U/S. 10A/10B OF THE ACT. 14. WE ALSO FIND FROM PAGE 51 OF THE PAPER BOOK CON TAINING A LETTER DT. 02-09-2011 ADDRESSED TO THE ASSESSEE BY SOFTWARE TECHNOLOGY PA RKS OF INDIA (STPI), MINISTRY OF COMMUNICATION & INFORMATION TECHNOLOGY, DEPT OF IT, GOVT. OF INDIA, KOLKATA REGARDING REGISTRATION FOR SETTING UP STP UNIT ( 10 0% EXPORT ORIENTED UNIT UNDER STP SCHEME). THE SAME IS REPRODUCED HERE IN BELOW FOR T HE SAKE OF CONVENIENCE:- SOFTWARE TECHNOLOGY PARKS OF INDIA MINISTRY OF COM MUNICATION & INFORMATION TECHNOLOGY, DEPT OF IT, GOVT. OF INDI A PLOT NO.5/1 DP SECTOR-V, SALT LAKE, KOLKATA-700 091 PH: 91-33-2 367- 3598/99-2367 3798/99, FAX [phone] EMAIL:[e-mail]/URLHTTP://WWW.KOL.STP.IN TO THE DIRECTOR WIZARD ENTERPRISES PVT. LTD. 5, LAKE AVENUE, KOLKATA - 700026 SUB: YOUR STP UNIT APPROVAL RATIFICATION REG. 7 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 7 REF: YOUR LETTER DT: 29.08.2011 SIR, WITH REFERENCE TO ABOVE AND DISCUSSIONS WITH Y OUR OFFICIALS, THE FACTS W.R.T, YOUR STP UNIT REGISTRATION IS PRODUCED BELOW: 1. YOUR UNIT 'WIZARD ENTERPRISES PVT. LTD.' IS REGI STERED AS A 100% EXPORT ORIENTED UNIT UNDER STP SCHEME VIDE LOP NO. STPK:DI R:441:2005-06:1548 DT: 10.01.2006 AS PER NOTIFICATION NO. 33/(RE)(92-9 7 DT: 22.03.1994 READ WITH SUBSEQUENT AMENDMENTS AND EXIM POLICY ( FOREIGN TRA DE POLICY. 2. AS PER PARA 6.26 OF FOREIGN TRADE POLICY 2004-20 09: 'IN THE CASE OF UNITS UNDER EHTP /STP SCHEMES, NECESSARY APPROVAL/ PERMIS SION UNDER RELEVANT PARAGRAPHS OF THIS CHAPTER SHALL BE GRANTED BY THE OFFICER DESIGNATED BY THE MINISTRY OF COMMUNICATION AND INFORMATION TECHNOLOG Y, DEPARTMENT OF INFORMATION TECHNOLOGY INSTEAD OF THE DEVELOPMENT C OMMISSIONER AND BY THE INTER-MINISTERIAL STANDING COMMITTEE (IMSC) INSTEAD OF BOA: 3. APPROVAL OF YOUR UNIT IS GRANTED BY DIRECTOR, ST PI AS PER POWERS DELEGATED ON HIM BY THE IMSC. THANKING YOU. YOURS FAITHFULLY, SD/- [MANJIT NAYAK] OFFICER- IN -CHARGE COPY TO: 1. THE DIRECTOR, STPI-KOLKATA / GUWAHATI 15. IT WAS ALSO BROUGHT TO OUR ATTENTION BY THE L D.AR THAT THE INSTRUCTION (F.NO.178/19/2008-IT-I) DATED 9 TH MARCH 2009 ISSUED BY CBDT CLARIFIES THAT THE PO WER TO GRANT APPROVAL U/S. 14 OF INDUSTRIAL (DEVELOPME NT & REGULATIONS) ACT, 1951 HAS BEEN DELEGATED TO DEVELOPMENT COMMISSIONERS AND APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER SHALL BE CONSIDERED VALID FOR THE PUR POSE OF EXEMPTION U/S. 10B. IT WOULD BE PERTINENT TO NOTE THAT IN THE INSTANT CASE APPROVA L UNDER THE STP SCHEME IS GRANTED BY THE DESIGNATED OFFICER, DEPARTMENT OF INFORMATION TEC HNOLOGY AND BY THE INTER-MINISTERIAL STANDING COMMITTEE (IMSC). HENCE, THE APPROVAL GRAN TED UNDER STP SCHEME COMPLIES WITH ALL THE REQUIREMENTS CONTEMPLATED U/S. 10B OF THE ACT WHEN READ WITH INDUSTRIAL (DEVELOPMENT & REGULATIONS) ACT, 1951, FOREIGN TRAD E POLICY 2004-2009, HAND BOOK OF PROCEDURES (VOLUME-I) & APPENDIX TO THE HANDBOOK. WE ALSO FIND THAT THE LD.AR FURTHER ARGUED BEFORE US THAT TO THE BEST OF HIS KNOWLEDG E THE ORDER PASSED UNDER SIMILAR CIRCUMSTANCES BY THE LD.CIT(A)-II, KOLKATA IN THE C ASE OF ARB SOFTWARE (INDIA) LTD FOR THE ASSESSMENT YEAR 2003-04 HAS NOT BEEN APPEALED BY T HE REVENUE BEFORE THE TRIBUNAL. WE FIND FORCE IN THE CASE LAW AS RELIED UPON BY THE ASSESS EE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE ITAT CHANDIGARH (SUPRA) IN THE CASE OF BEBO TECHNOLOGIES P.LTD VS. JCIT (SUPRA) , WHEREIN THE LEARNED AO DENIED DEDUCTION U/S. 10B T O THE ASSESSEE ON THE GROUND THAT NO APPROVAL WAS OBTAINED FROM THE BOARD APPOINTED BY T HE CENTRAL GOVT. IN EXERCISE OF POWER CONFERRED BY SECTION 14 OF INDUSTRIAL (DEVELOPMENT & REGULATION) ACT 1951 & RULES MADE UNDER THAT ACT. IT WAS ULTIMATELY HELD IN THAT CA SE AS UNDER:- 39. THE LD. DR FOR THE REVENUE BEFORE US HAS FAIL ED TO POINT OUT ANY CONTRARY EVIDENCE TO THE SAME. THE LD. COUNSEL FOR THE ASSES SEE DREW OUR ATTENTION TO THE GAZETTED NOTIFICATION IN THIS REGARD PLACED AT PAGE 16 OF THE PAPER BOOK-II UNDER 8 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 8 WHICH THE POWERS HAD BEEN GIVEN TO CONSIDER THE APP LICATION FOR SETTING UP OF UNITS UNDER STP SCHEME OPERATED VIDE CUSTOM NOTIFICATION NO. 138 AND 140 DATED 22.10.1991. THE SAID COMMITTEE WAS ALSO EMPOWERED T O CONSIDER THE PROPOSALS FOR INDUSTRIAL LICENSE, FOREIGN TECHNICAL COLLABORATION , AGREEMENT AND IMPORT OF .CAPITAL GOODS. THE ASSESSEE HAS FURNISHED THE REGISTRATION UNDER THE SOFTWARE TECHNOLOGY PARK SCHEME OF INDIA VIDE APPROVAL NO. STPIM/PCMG/P SE/02/199-7492 DATED 17.2.2003 REGISTERING THE ASSESSEE AS AN 100% EOU. THE COPY OF THE SAID CERTIFICATE IS ENCLOSED AT PAGES 105 TO 109 OF THE PAPER BOOK A LONGWITH THE COPY OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE COMPANY WITH STPI ON 1 7.2.2003, A COPY OF WHICH IS ENCLOSED AT PAGES 111 TO 113 OF THE PAPER BOOK. IN VIEW OF THE ABOVE SAID EVIDENCE, UPHOLDING THE ORDER OF CIT(A), WE HOLD THAT THE ASS ESSEE IS ENTITLED TO DEDUCTION U/S 10B OF THE ACT AS A 100% EOU ON BEING REGISTERED WI TH STPI. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF OUR OB SERVATION IN PARAS HEREINABOVE, WE UPHOLD THE ORDER OF CIT(A) IN HOLDING THAT THE A SSESSEE IS ELIGIBLE TO THE EXEMPTION CLAIMED U/S. 10B OF THE ACT. ACCORDINGLY, GROUND NO .2 RAISED BY THE REVENUE IS THUS DISMISSED. 16. WE ALSO FIND GLARING SIMILARITIES BETWEEN SECTI ON 10A AND 10B OF THE ACT AS BELOW:- WHETHER APPLIES WHETHER APPLIES SECTION 10A/ TO SECTION 10B RELEVANT SUB- RELEVANT SUB- SECTION, PROVISO OR SECTION, PROVISO EXPLANATION OR EXPLANATION SL.NO . PROPOSITION 1. BENEFIT OF DEDUCTION FOR EXPORT OF ARTICLES/ COMPUTER SOFTWARE YES YES SUB-SECTION(1) SUB-SECTION(1) 2. BENEFIT IS AVAILABLE FOR A PERIOD OF 10 CONSECUTIVE A.YS. BEGINNING WITH THE YEAR IN WHICH UNDERTAKING BEGINS TO PRODUCE/MANUFACTURE SUCH ARTICLE/ YES YES COMPUTER SOFTWARE SUB-SECTION(1) SUB-SECTION(1) 3. DEFINITION OF COMPUTER SOFTWARE IS YES EX EMPTED YES EXEMPTED AS ANY PRODUCT OR SERVICE OF THE SIMILAR AS P ER CBDT AS PER CBDT NATURE AS MAY BE NOTIFIED BY CBDT. NOTIFICA TION NOTIFICATION CBDT VIDE NOTIFICATION NO.SO 890(E) EXPLANATION ( 2) EXPLANATION (2) DATED 26.09.2000 HAS NOTIFIED THE LIST BELOW SE CTION10A BELOW SECTION10A OF INFORMATION TECHNOLOGY ENABLED PRODUCTS OR SERVICES ELIGIBLE FOR BENEFIT OF EXEMPTION CALL CENTRE ACTIVITY FIGURING AT ITEM (II) OF THE SAID LIST 4. BENEFITS UNDER THE PROVISIONS ARE YES YE S NOT AVAILABLE W.E.F 01.04.2012 4 TH PROVISO TO 3 RD PROVISO TO SUB- SUB-SECTION (1) SECTION (1) 9 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 9 5. BENEFITS AVAILABLE TO THE UNDERTAKINGS YES YES LOCATED AT FREE TRADE ZONE, ELECTRONIC CLAUSE (I) OF SUB-SECTION (1) READ HARDWARE TECHNOLOGY PARK/SOFTWARE SUB-SECTION(2) WITH EXPLANATION 2(IV) TECHNOLOGY PARK OR SPECIAL ECONOMIC BELOW SECTION 10B ZONE OR 100% EXPORT ORIENTED UNDER- TAKINGS. NOTE: STPS ARE NOTHING BUT 100% EOU AS HAS BEEN CLARIFIED BY STPI VIDE LETTER DATED 05.09.2011 6. UNDERTAKING CLAIMING DEDUCTION SHOULD YES YES NOT BE FORMED BY THE SPLITTING UP OR C LAUSE(II)& CLAUSE(II)& (III) OF RECONSTRUCTION OF A BUSINESS ALREADY IN (III) OF SUB- SECTION (2) EXISTENCE AND/OR IS NOT FORMED BY THE SECTION (2) TRANSFER TO A NEW BUSINESS OF MAC HINERY OR PLANT PREVIOUSLY USED FOR ANY PUR POSE. 7. THE PROVISIONS OF SUB-SECTION(8) AND SUB- YES YES SECTION(10) OF SECTION 80-IA APPLY IN SUB-SECTION( 7) SUB-SECTION(7) RELATION TO THE UNDERTAKINGS. 8. RETURN OF INCOME SHOULD BE FURNISHED WITHIN YES YES THE DUE DATE SPECIFIED IN SECTION 139(1) AND SU B-SECTION(8) SUB-SECTION(8) THE RETURN SHOULD BE ACCOMPANIED BY A R.W F ORM NO.56F R.W FORM NO.56G REPORT OF THE CHARTERED ACCOUNTANT 17. WE FIND THAT THE ASSESSEE IS ALSO ENTITLED FOR BENEFIT OF DEDUCTION U/S. 10A OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THOUGH THE ASSESSEE HAD NOT CLAIMED THE SAME UNDER THAT SECTION IN THE RETURN OF INCOME. IN THIS REGARD, WE WOULD LIKE TO PLACE RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE ITAT M UMBAI IN THE CASE OF ITO VS. ACCENTIA TECHNOLOGIES LIMITED IN ITA NO. 1871/MUM/2011 DATED 08-05-2014 , WHEREIN IT WAS HELD THAT : 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) CALLED FOR A REMAND REPORT. UPON OBTAINING THE REMA ND REPORT HE NOTICED THE FOLLOWING UNDISPUTED FACTS I.E., (A) THERE IS NO DISPUTE REGA RDING THE AMOUNT WHICH IS CLAIMED AS EXEMPT UNDER SECTION 10A OF THE ACT, (B) THERE IS N O DISPUTE THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 10A OF THE ACT AND AL L THE CRITERIA REGARDING THE SAID CLAIM HAS BEEN MET BY THE ASSESSEE, AND (C) THERE IS ALSO NO DISPUTE REGARDING THE FACT THAT IN THE RETURN OF INCOME THE ASSESSEE CLAIMED DEDUCTION OF THE AMOUNT ADMISSIBLE AS DEDUCTION UNDER SECTION 10A BY MENTIONING IT AS SECTION 10B OF THE ACT. THUS THE ONLY DISPUTE THAT EXISTS IS WHETHER THE CLAIM OF THE ASSESSEE REGARDI NG DEDUCTION UNDER SECTION 10A IS ALLOWABLE IF THE CLAIM WAS MADE UNDER SECTION 10B I N THE RETURN OF INCOME. THE LEARNED CIT(A) OBSERVED THAT SECTION 80A(5) IS APPLICABLE ONLY WHEN THE ASSESSEE FAILS TO MAKE A CLAIM IN HIS RETURN OF INCOME FOR ANY DED UCTION WHEREAS IN THE INSTANT CASE THE ASSESSEE DID MAKE THE CLAIM THOUGH, BECAUSE OF A TE CHNICAL ERROR, THE CLAIM WAS MADE UNDER SECTION 10B INSTEAD OF 10A. IN HIS OPINION, QUOTING OF WRONG SECTION SHOULD NOT DEPRIVE THE ASSESSEE FROM CLAIMING DEDUCTION SO LONG AS THE OTH ER CONDITIONS FOR MAKING SUCH CLAIM ARE 10 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 10 SATISFIED. HE RELIED UPON THE CIRCULAR ISSUED BY TH E CBDT DATED 11.04.1955 WHEREIN IT WAS OBSERVED THAT IT IS THE DUTY OF THE AO TO GUIDE THE ASSESSEE WITH REGARD TO ELIGIBILITY TO CLAIM DEDUCTION; IN THE INSTANT CASE WHEN THE ASSESSEE CL AIMED DEDUCTION UNDER SECTION 10 B THE AO OUGHT TO HAVE GUIDED THE ASSESSEE WITH REGARD TO ELIGIBILITY TO CLAIM DEDUCTION UNDER SECTION 10A OF THE ACT. 18. WE ALSO FIND THAT THE CONTENTS OF AUDIT REPORT IN FORM NO. 56F AND 56G TOGETHER WITH THE COMPUTATION MECHANISM REMAINS THE SAME FOR CLAI MING THE DEDUCTION U/S. 10A/10B OF THE ACT. IT WAS ARGUED ALTERNATIVELY BY THE LD.AR THAT THE DECISION OF THE LD.AO IS TO EDUCATE THE ASSESSEE OF ITS RIGHTS AND ENTITLEMENTS AS PER LAW AND CANNOT TAKE ADVANTAGE OF IGNORANCE OF ASSESSEE. IN THIS REGARD, HE CITED T HE RELEVANT EXTRACT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SANCHI S OFTWARE & SOLUTIONS PVT. LTD VS. CIT REPORTED IN (2012) 349 ITR 404 (BOM), WHEREIN IT WAS HELD AS UNDER:- INCOME-TAX DEPARTMENT CANNOT TAKE ADVANTAGE OF THE ASSESSEES MISTAKES IN NOT CLAIMING THE EXEMPTION IN THE INCOME-TAX RETURN AN D NOT DENY HIM EXEMPTION. THE ENTIRE OBJECT OF ADMINISTRATION OF TAX IS TO SE CURE THE REVENUE FOR THE DEVELOPMENT OF THE COUNTRY AND NOT TO CHARGE THE AS SESSEE MORE TAX THAN THAT WHICH IS DUE AND PAYABLE BY THE ASSESSEE. 19. WE FIND THAT THE DECISION OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. INDIA CAPACITORS LTD REPORTED IN 180 ITR 641 ALSO SUPPORTS THIS PROPOSITION. WE FURTHER FIND THAT THE ALTERNATIVE ARGUMENT OF THE LD.AR HA S GOT LOT OF FORCE AS IT MAY BE APPRECIATED THAT THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE ASSESSEE IN NOT CLAIMING THE DEDUCTION UNDER THE CORRECT SECTION. IN FACT, IT COULD BE APPRECIATED THAT THE ASSESSEE HAD ONLY RUN THE RISKS OF NOT HAVING BEEN ABLE TO AVAIL THE BENEFIT OF JUSTICE AND NOT GAINED ANYTHING BY NOT CLAIMING DEDUCTION UNDER THE CORR ECT SECTION. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAHALAXMI SUGAR MILLS CO. LTD REPORTED IN (1986) 160 ITR 920(SC) HAS OBSERVED AS UNDER:- 'THERE IS A DUTY CAST ON THE INCOME-TAX OFFICER TO APPLY THE RELEVANT PROVISIONS OF THE INDIAN INCOME-TAX ACT FOR THE PURPOSE OF DETERMININ G THE TRUE FIGURE OF THE ASSESSEE'S TAXABLE INCOME AND THE CONSEQUENTIAL TAX LIABILITY_ THAT THE ASSESSEE FAILS TO CLAIM THE BENEFIT OF A SET-OFF CANNOT RELIEVE THE INCOME-TAX OFFICER OF HIS DUTY TO APPLY SECTION 24 IN AN APPROPRIATE CASE.' HENCE, WE FIND THAT THE ABOVE PRINCIPLE HOLDS GOOD AND IN THE EVENT IT HAD BEEN APPLIED, THE ASSESSEE WOULD NOT HAVE BEEN DEPRIVED OF JUSTICE AN D ADMITTING THE CLAIM UNDER CORRECT SECTION. 20. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES AND J UDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT OF DEDUCTION UNDER THE PROVISIONS OF SECTION 10A AS WELL AS SECTION 10 B OF THE ACT. HENCE WE FIND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE LD.CIT(A) IN DELETING TH E DISALLOWANCE AS MADE BY THE LD.AO ON 11 ITA NO.1368/KOL/2017 LIMTEX INFOTECH LTD. A.YR. 2010-11 11 THIS ISSUE. WE UPHOLD THE IMPUGNED ORDERS OF THE LD .CIT(A). HENCE, THE GROUNDS RAISED BY THE DEPARTMENT IN BOTH THE APPEALS ARE DISMISSED. 21. IN VIEW OF AFORESAID FACTS AND CIRCUMSTANCES AN D JUDICIAL PRECEDENTS AS RELIED UPON BY THE LD.AR BEFORE US, THE GROUNDS OF CROSS OBJE CTIONS AS FILED BY THE ASSESSEE BEFORE US ARE ALLOWED. 22. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED AND CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED AS STATED ABOVE. 9. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PR ECEDENT, WE DIRECT THE LD AO TO GRANT DEDUCTION U/S 10B OF THE ACT TO THE ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 05.09.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 05.09.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. LIMTEX INFOTECH LTD., 25A, SHAKESPEARE SARANI, K OLKATA-700017. 2. ITO, WARD-7(4), KOLKATA, AAYAKAR BHAWAN, P-7, CH OWRINGHEE SQUARE, KOLKATA- 700069. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S