M/s Arada Systems Private Limited, Bangalore V. DCIT, Bangalore

ITA 1435/BANG/2013

• Counselvise Citation: 143521114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD K
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Revised return
• Section: 143(3); 10B; 10; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T . A. NO. 1435 /BANG/20 1 3 (ASSESSMENT YEAR : 2010 - 11 ) M/S. ARADA SYSTEMS PRIVATE LIMITED, NO.263, 2 ND F LOOR, 21 ST MAIN, 3 RD CROSS, BTM LAYOUT 2 ND STAGE, 1 ST PHASE, BANGALORE - 560 07 6 . APPELLANT. PAN AAACZ 2486J VS. DY. COMMISSIONER OF INCOME T AX, CIRCLE 11 ( 1 ), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI V. SRIDHAR, C.A. R E SPONDENT BY : DR. SHANKAR PRASAD K, JCIT (D.R) . DATE OF H EARING : 12.02.2015. DATE OF P RONOUNCEMENT : 17.4. 201 5 . O R D E R PER SHRI JASON P. BOAZ , A.M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) - I, BANGALORE DT.31.7.2013 AND ORDER UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') FOR ASSESSMENT YEAR 2010 - 11. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER : - 2.1 THE ASSESSEE COMPANY, ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT EXPORTS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010 - 11 ON 5.10.2010 DECLARING INCOME OF RS.1,12,76,940 AFTER CLAIMING DEDUCTION OF RS.1,72,07,475 UNDER SECTION 10B OF THE ACT. THE RETURN WAS 2 IT A NO. 1435 /BANG/201 3 PROCESS ED UNDER SECTION 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DT.30.11.2012 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2,84,84,413. THIS WAS IN VI EW OF THE DISALLOWANCE OF THE DEDUCTION OF RS.1,72,07,475 CLAIMED BY THE ASSESSEE UNDER SECTION 10B OF THE ACT. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2010 - 11 DT.30.11.2012, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS ) I, BANGALORE. THE LEARNED CIT (APPEALS) DISMISSED THE ASSESSEE'S APPEAL BY ORDER DT.31.7.2013, WHEREIN THE LEARNED CIT (APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER IN DENYING THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT. FU RTHER, ON A MISCELLANEOUS APPLICATION BY THE ASSESSEE, SEEKING ALTERNATE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT, WHICH WAS NOT CONSIDERED IN THE IMPUGNED ORDER DT31.7.2013, THE LEARNED CIT (APPEALS) BY ORDER UNDER SECTION 154 OF THE ACT DT.11.9.20 13, REJECTED THE ASSESSEE'S ALTERNATE CLAIM FOR DEDUCTION TO BE GRANTED UNDER SECTION 10A OF THE ACT ALSO. 3. AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) I, BANGALORE FOR ASSESSMENT YEAR 2010 - 11 DT.31.7.2013, THE ASSESSEE HAS PREFERRED THIS APPEAL B EFORE THIS TRIBUNAL RAISING THE FOLLOWING GROUNDS : - 1). THE ORDER OF CIT(A) DT.30.07.2013 AND CORRIGENDUM DT.11.09.2013 IS OPPOSED TO LAW AND FACTS OF THE CASE. 2). THE CIT(A) ERRED IN NOT GRANTING EXEMPTION U/S 10B OF THE ACT EVEN THOUGH THE APPELLAN T HAD FULFILLED ALL THE CONDITIONS FOR EXEMPTION. 3). THE CIT(A) ERRED IN NOT APPRECIATING THE CIRCULAR ISSUED BY EXPORT PROMOTION COUNCIL FOR EOU & SEZ NO.68, DT.14.05.2009 IN PROPER PERSPECTIVE WHICH CLARIFIED THAT THE AUTHORITY FOR APPROVAL SUBSEQUENT T O BOARD S CIRCULAR DT.09.03.2009 IS DEVELOPMENT COMMISSIONER UNDER DELEGATED POWER. 3 IT A NO. 1435 /BANG/201 3 4). THE CIT(A) ERRED IN NOT INDEPENDENTLY DECIDING ON MERITS THE ISSUE OF CIRCULAR NO.68, DT.14.05.2009, BUT BLINDLY HOLDING THAT THE ASSESSING OFFICER HAD ALREADY CONSID ERED THE SAME. 5). THE CIT(A) ERRED IN NOT CONSIDERING THE FOREIGN TRADE POLICY WHICH CLARIFIED THAT APPROVAL GRANTED BY STP IS SUFFICIENT FOR CLAIMING EXEMPTION U/S 10B OF THE ACT. 6). THE CIT(A) ERRED IN NOT GRANTING THE EXEMPTION CLAIMED IN THIS YEAR, WHEN THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES WHEN THE EXEMPTION WAS ALLOWED IN THE YEARS EARLIER AND IT IS ONLY IN THE FIRST YEAR THE ALLOWANCE OF CLAIM TO BE SUBSTANTIATED. 7). THE CIT(A) ERRED IN NOT GRANTING AN OPPORTUNITY TO THE APPELLANT AS SPEC IFICALLY REQUESTED BY THE APPELLANT VIDE MISC. APPLICATION DT.02.09.2013 WHICH IS OPPOSED TO THE PRINCIPLE OF NATURAL JUSTICE. 8). THE CIT(A) ERRED IN NOT GRANTING THE ALTERNATIVE CLAIM U/S 10A OF THE ACT ON TECHNICAL GROUNDS RATHER THAN DEALING WITH THE C LAIM ON MERIT WITHOUT CONSIDERING THE BOARD CIRCULAR RELIED ON BY THE APPELLANT. 9). THE CIT(A) OVERLOOKED THE GROUND IN RESPECT OF ALTERNATIVE CLAIM OF EXEMPTION U/S 10A BEING A LEGAL GROUND WHICH SHOULD HAVE BEEN CONSIDERED ON MERITS RATHER THAN SIMPLY R EJECTING ON THE BASIS OF HON BLE SUPREME COURT AS HELD IN GOETZE (INDIA) LTD VS CIT. 10). THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS NOT ELIGIBLE FOR EXEMPTION U/S 10A BASED ON THE DECISION OF HON BLE SUPREME COURT IN THE GOETZE (INDIA) LTD VS CIT (2006) 284 ITR 323 (SC) WHICH IS APPLICABLE TO CLAIM BEFORE THE ASSESSING OFFICER AND NOT BEFORE APPELLATE AUTHORITIES. 11). FOR THESE AND OTHER GROUNDS THAT MAY BE URGED THE APPEAL MAY KINDLY BE ALLOWED AND JUSTICE RENDERED. 4. THE GROUNDS RAISED AT S .NOS. 1 & 11 (SUPRA), BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLED FOR THEREON. 5. GROUNDS AT S.NOS.2 TO 6 DEDUCTION U/S.10B OF THE ACT . GROUNDS AT S.NOS.7 TO 10 DEDUCTION U/S.10A OF THE ACT (ASSESSEE'S ALTERNATE CLAIM) 5.1.1 THE LEARNE D AUTHORISED REPRESENTATIVE WAS HEARD IN RESPECT OF THE GROUNDS RAISED (SUPRA). IN WRITTEN SUBMISSIONS FILED BY THE LEARNED AUTHORISED REPRESENTATIVE ON 6.2.2015, THE ASSESSEE SUBMITS AND CONTENDS AS UNDER : - I. NON CONSIDERATION OF EOU CIRCULAR N O.68, DT.14.05.2009 IN PROPER PROSPECTIVE : THE EOU CIRCULAR DT.14.05.2009 CLEARLY MENTIONED WHY THE ABOVE CIRCULAR WAS ISSUED BY REFERRING TO THE BOARD CIRCULAR DT.09.03.2009. HENCE, THE CONCLUSION OF BOTH THE ASSESSING OFFICER AND COMMISSIONER OF INCO ME TAX (APPEALS), BANGALORE THAT EVEN AFTER CLARIFICATION ON 14.05.2009 ONLY THE CIRCULAR ISSUED ON 09.03.2009 IS APPLICABLE HAS NOT APPRECIATED THE CIRCULAR 4 IT A NO. 1435 /BANG/201 3 IN PROPER PERSPECTIVE. THE EOU CIRCULAR WHICH IS SUBSEQUENCE TO BOARDS CIRCULAR CLARIFYING THE DI FFICULTIES IN CIRCULAR DT.09.03.2009 SHOULD BE APPLICABLE. HENCE, AS PER CIRCULAR THE APPROVAL GRANTED BY DEVELOPMENT COMMISSIONER IS UNDER DELEGATED POWER OF THE BOARD OF APPROVAL. HENCE, THE ASSESSING OFFICER CONCLUSION THAT THE APPROVAL GRANTED BY DE VELOPMENT COMMISSION IS NOT APPROVED BY BOARD OF APPROVAL IS NOT CORRECT. THE CONCLUSION OF THE ASSESSING OFFICER THAT IN THE ABOVE CIRCULAR THE BOARD S CIRCULAR DT.09.03.2009 IS REPRODUCED DOES NOT MAKE THE SUBSEQUENT CLARIFICATION OF EOU DT.14.05.2009 I NVALID OR NOT A CLARIFICATION TO BOARDS INSTRUCTION. II. EXEMPTION U/S 10B IS AS PER F.T. POLICY ISSUED BY THE GOVERNMENT : THE APPELLANT RELIED ON THE HAND BOOK OF F.T. POLICY (FTP) WHICH CLARIFIED AT PARA 6.37 AS UNDER : THEREAFTER, PRARGRAGH 6.3.7 PROVIDES IN CLEAR TERMS THAT LOP/LOI ISSUED TO EOU/EHIP?STP?BTP UNITS BY CONCERNED AUTHORITY WOULD BE CONSTRUED AS AN AUTHORIZATION FOR ALL PURPOSES. STANDARD FORMAT FOR LOP FOR EOU UNITS IS GIVEN IN APPENDIX 14 - I - E TO SUCH HANDBOOK. THUS THE WORDS ,FOR A LL PURPOSES ,IMPLY THAT THE APPROVAL GIVEN BY STPI, BEING THE CONCERNED AUTHORITY ,SHALL BE DEEMED TO BE ONE MEETING THE PURPOSE OF APPROVAL UNDER SECTION10B OF THE ACT . HENCE, DENIAL OF EXEMPTION WHEN THE APPELLANT IS ELIGIBLE FOR EXEMPTION U/S 10B AS P ER F.T. POLICY IS NOT CORRECT. III. EXEMPTION ALLOWED IN EARLIER YEAR DENIAL DECISION THIS YEAR IS NOT CORRECT : THE EXEMPTION U/S 10B WAS ALLOWED FOR ASST. YEAR 2008 - 09 VIDE ORDER U/S 143(3), DT.30.09.2010 (COPY ENCLOSED) WHEN THERE IS NO CHANGE IN FAC TS AND CIRCUMSTANCES OF THE CASE THE DENIED EXEMPTION U/S 10B OF THE ACT THIS YEAR IS NOT CORRECT. COPY OF THE RETURN OF INCOME, COMPUTATION AND FORM NO.56G FOR CLAIM EXEMPTION U/S 10B IS ENCLOSED HEREWITH. IV. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO GRANT OPPORTUNITY AS REQUESTED VIDE APPLICATION DT.02.09.2013 : THE APPELLANT ON RECEIPT OF COMMISSIONER OF INCOME TAX (APPEALS) ORDER DT.31.07.2013 ON 02.09.2013 FILED ON APPLICATION FOR NOT HAVING CONSIDERED THE GROUNDS RAISED IN THE APPEAL. THE APPLICATION SPECIFICALLY REQUESTED FOR PERSONAL HEARING TO PRESENT THE CASE. THE COMMISSIONER OF INCOME TAX (APPEALS), WITHOUT AFFORDING A OPPORTUNITY DISPOSED OFF THE APPLICATION ON 11.09.2013 ITSELF DENYING THE CLAIM MADE IN THE APPLICATION. THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS) IS ARBITRARY AND WITHOUT FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE AS REQUESTED IN THE APPLICATION IS NO VALID IS LIABLE TO QUASHED. 5 IT A NO. 1435 /BANG/201 3 V. NON - CONSIDERATION OF ALTERNATIVE GROUND : THE APPELLANT MADE A ALTERNAT IVE CLAIM U/S 10A OF THE ACT BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO FILED REQUISITE FORM IN 56F. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE ORDER PASSED DT.31.07.2013 FAILED TO CONSIDER THIS GROUND. THE APPELLANT FILED A MISC. APP LICATION DT.02.09.2013 TO CONSIDER THE ALTERNATIVE GROUND AND PASS THE ORDER. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE ORDER U/S 154, DT.07.09.2013 TO HIS ORDER DT.31.07.2013 DISMISSED THE GROUNDS ON THE FOLLOWING REASON : IN THE INSTANT CASE FO RM NO.56F HAS BEEN FILED ON 30/07/2013 I.E., AFTER COMPLETION OF ASSESSMENT. MOREOVER, ORIGINALLY DEDUCTION HAS BEEN CLAIMED U/S 10B OF THE ACT AND IF CLAIM DEDUCTION U/S 10A OF THE ACT, THE APPELLANT SHOULD HAVE FILED REVISED RETURN OF INCOME WITHIN PERM ISSIBLE PERIOD AND CLAIMED DEDUCTION ACCORDINGLY. IN THIS, MATTER I RELYING UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD VS CIT (2006) 284 ITR 323(SC). IN ABSENCE OF SUCH REMEDIAL PROCEDURE, SHIFTING OF DEDUCTION U/S 1 0B TO 10A OF THE ACT IS REJECTED . THE COMMISSIONER OF INCOME TAX (APPEALS) RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN GOETZE INDIA LTD. V/S CIT (2006) 284 ITR 323 TO HOLD THAT THE APPELLANT IS NOT ENTITLED TO ALTERNATIVE CLAIM U/S 10A OF THE AC T. THE APPELLANT IN THE WRITTEN SUBMISSION RELIED ON THE BOARD CIRCULAR NO.14(11 - 35) OF 1955, DT.11.04.1955 WHEREIN IT WAS SPECIFICALLY MENTIONED THAT ASSESSING OFFICER NOT TO TAKE ADVANTAGE OF ASSESSEE S IGNORANCE AND / OR MISTAKE. THE RELEVANT PORTION OF THE CIRCULAR WHICH WERE REPRODUCED IN THE SUBMISSION AT PAGE 5 AND ALSO REPRODUCED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS AS UNDER : THE APPELLANT SUBMITS THAT IN ANY CIVILIZED SYSTEM, THE ASSESSEE IS BOUND TO PAY THE TAX WHICH HE IS L IABLE UNDER THE LAW TO THE GOVERNMENT. THE GOVERNMENT ON THE OTHER HAND IS OBLIGED TO COLLECT ONLY THAT AMOUNT OF TAX WHICH IS LEGALLY PAYABLE BY THE ASSESSEE. THE ENTIRE OBJECT OF ADMINISTRATION OF TAX IS TO SECURE THE REVENUE FOR THE DEVELOPMENT OF THE C OUNTRY AND NOT TO CHARGE ASSESSEE MORE THAN THAT WHICH IS DUE AND PAYABLE BY THE ASSESSEE. IT IS IN AFORESAID CIRCUMSTANCES THAT AS FAR BACK AS IN 11.04.1955 THE CENTRAL BOARD OF DIRECT TAX HAD ISSUED A CIRCULAR VIDE NO. 14(11 - 35) OF 1955 DIRECTING ASSESSI NG OFFICER NOT TO TAKE ADVANTAGE OF ASSESSEE S IGNORANCE AND /OR MISTAKE. THE RELEVANT PORTION OF THE ABOVE CIRCULAR IS AS UNDER: 3. OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIE S TO ASSIST A TAX PAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE CLAIMING OF ANY SECURING ANY RELIEFS AND IN THIS REGARD THE OFFICERS SHOULD TAKE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULAR BEFORE 6 IT A NO. 1435 /BANG/201 3 THEM INDICATE THAT SOME REFU ND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AN D RELIEFS RESTS WITH ASSESSEES ON WHOM IT IS IMPOSED BY LAW, OFFICERS SHOULD: - A. DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAIM FOR SOME REASON OR OTHER; B. FREELY ADVISE THEM W HEN APPROACHED BY THEM SO TO THEIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED FOR CLAIMING REFUNDS AND RELIEFS. THEREFORE THE ABOVE CIRCULAR SHOULD ALWAYS BE BORNE IN MIND BY THE OFFICERS OF THE RESPONDENT - REVENUE WHILE ADMINISTERING THE SAID ACT. IT IS SUBMITTED THAT THE CIRCULARS ARE APPLICABLE AND IT IS BINDING IN NATURE ON DEPARTMENT. THE PETITIONER PLACES RELIANCE ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF STATE OF KERALA AND OTHERS VS. KURIAN ABRAHAM PRIVATE LIMITED A ND ANOTHER (2008) 303 ITR 284 (SC) . IN THIS CONNECTION THE APPELLANT RELIES ON THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S PRUTHVI BROKERS & SHAREHOLDERS (P) LTD., IN ITA NO.3908 OF 2010 DT.21.06.2012 (2012) 208 TAXMAN 498 (BOM) (COPY ENCLOSED), WHEREIN AT PARA 23 HELD AS UNDER : IT IS CLEAR TO US THAT THE SUPREME COURT DID NOT HOLD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENT TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING OFFICER, IT CAN BE MADE BEFORE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE OF THE POWER OF THE TRIBUNAL U/S 254 . IN THIS CIRCUMSTANCES THE APPELLANT RELIES ON THE DECISION OF HON BLE MADRAS HIGH COURT DECISION IN CIT VS M/S. HEARTLAND KG INFORMATION LTD ( 2013) 39 TAXMAN.COM 132 WHICH IS AT PARA 6 HELD AS UNDER : THUS A SOFTWARE TECHNOLOGY PARK, THE ASSESSEE IS ENTITLED TO PLACE HIS CLAIM UNDER SECTION 10A. IN ANY EVENT, EVEN ASSUMING FOR A MOMENT, THE ASSESSEE HAD NOT REFERRED TO THE SECTION CORRECTLY, T HE FACT REMAINS THAT IF THE CLAIM COULD BE FAVOURABLY BE CONSIDERED UNDER ANY OF THOSE SPECIAL DEDUCTION PROVISIONS AND ON THE CONDITIONS SPECIFIED FOR THE REVENUE TO CONTEND THAT THE ASSESSEE SHALL NOT BE ENTITLED TO HAVE THE BENEFIT OF SECTION 10A . 7 IT A NO. 1435 /BANG/201 3 HEN CE, THE DENIAL OF EXEMPTION U/S10A OF THE ACT MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) RELYING ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. V/S CIT IS NOT CORRECT. APART FROM THE ABOVE EXEMPTION MADE IN THE RETURN U/S 10B WAS DENIED BOTH BY THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) RELYING ON THE DECISION OF HON BLE DELHI HIGH COURT DECISION IN CASE OF CIT V/S. REGENCY CREATIONS LTD. (2012) 353 ITR 326. THE 2 ND RESPONDENT S NAMELY M/S VALIANT C OMMUNICATIONS LTD. MADE A CIVIL MISC. APPLICATION IN ITA NO.12/2013 (COPY ENCLOSED) AND THE HON BLE HIGH COURT AFTER CONSIDERING THE APPLICATION HELD AS UNDER : THE APPLICANT ASSESSEE HAD SUCCEEDED BEFORE THE TRIBUNAL IN THE CONTENTION THAT IT WAS ENTIT LED TO THE BENEFIT OF SECTION 10B OF THE INCOME TAX ACT. IT HAD URGED THAT THE SUPPORTING MATERIALS DISCLOSE THAT THERE WAS STP CLEARANCE / APPROVAL UNDER SECTION 10A AND THAT SUCH APPROVAL WAS SUFFICIENT TO ENTITLE IT TO THE BENEFIT OF SECTION 10B. BY JUDGMENT, THIS COURT NAGATIVED THE PLEA WITH REGARD TO THE APPROVAL VIS - A - VIS SECTION 10B AND HAS RULED THAT SEPARATE REGIME EXISTS. THE APPLICANT CONTENDS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AND TRIBUNAL HAD, IN THE PRESENT CASE, NOT GONE INTO THE MERITS OF THE ALTERNATIVE CLAIM FOR ENTITLEMENT UNDER SECTION 10A. THIS FACT IS APPARENT FROM A READING OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IN THE ORDER IMPUGNED. IN THE CIRCUMSTANCES, THE TRIBUNAL SHA LL CONSIDER THE RELEVANT DOCUMENTS ON THE BASIS OF THE CLAIMS AND ASCERTAIN WHETHER THE APPLICANT IS ENTITLED TO THE BENEFIT OF SECTION 10A, AS CLAIMED. THE JUDGMENT AND ORDER OF THIS COURT DATED 17.03.2012 IS ACCORDINGLY MODIFIED; THE TRIBUNAL SHALL PROC EED TO PASS APPROPRIATE ORDER ALTER HEARING BOTH PARTIES . HENCE, BASED ON THE ABOVE DECISION WHICH HAD BEEN RELIED ON BY THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) WHICH WAS LATER MODIFIED ON C/M APPLICATION BEFORE THE HON BLE DELHI H IGH COURT SET ASIDE TO TRIBUNAL TO ALLOW ALTERATIVE CLAIM U/S 10A, THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 10A WHICH WAS CLAIMED BEFORE COMMISSIONER OF INCOME TAX (APPEALS) MAY KINDLY BE ALLOWED. 5.1.2 IN ADDITION TO THE ABOVE, THE LEARNED AUTH ORISED REPRESENTATIVE SUBMITTED THAT THERE WAS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAD BEEN CLAIMING AND WAS BEING ALLOWED DEDUCTION UNDER SECTION 10B OF THE ACT. IN THIS CONTEXT, THE LEARNED AUTHORISED REPRESENTATIVE PLACED ON RECORD COP IES OF THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2008 - 8 IT A NO. 1435 /BANG/201 3 09; THE STATEMENT OF COMPUTATION OF INCOME THEREOF AND FORM NO.564, WHICH ARE PLACED AT PAGES 35 TO 41 OF THE ASSESSEE'S PAPER BOOK FILED ON 6.2.2015, TO SHOW THAT THE DEDUCTION CLAIMED BY THE ASSESS EE UNDER SECTION 10B OF THE ACT WAS ALLOWED. ACCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE, THE ASSESSEE HAD WRONGLY CLAIMED THE DEDUCTION UNDER SECTION 10B OF THE ACT INSTEAD OF UNDER SECTION 10A OF THE ACT. THE LEARNED AUTHORISED REPRESENTATIVE S UBMITTED THAT EVEN IN THE CASES OF CIT V REGENCY CREATIONS LTD. / VALIA NT COMMUNICATIONS LTD. (2013) 353 ITR 26 (DELHI), WHEREIN THE ASSESSING OFFICER HAD DENIED THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT WHICH WAS UPHELD BY THE HON' BLE HIGH COURT, ON A CIVIL MISC. APPLICATION NO.12/2013 BY THE ASSESSEE, THE HON'BLE DELHI HIGH COURT IN ITS ORDER DT.4. 1.2013 HELD THAT SINCE THE MERI TS OF THE ASSESSEE'S ALTERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT WAS NOT EXAMINED BY THE TRIBUNAL, TH E MATTER OF DEDUCTION UNDER SECTION 10A OF THE ACT WAS RESTORED TO THE TRIBUNAL FOR FRESH EXAMINATION IN ACCORDANCE WITH THE LAW. 5.1.3 THE LEARNED AUTHORISED REPRESENTATIVE ALSO PLACED RELIANCE ON THE DECISION OF A CO - ORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF ANSR SOURCES INDIA PVT. LTD. IN ITA NO.562/BANG/2013 DT.13.11.2013. IT WAS SUBMITTED THAT IN THE CITED CASE, ONE OF ISSUES THAT AROSE FOR CONSIDERATION WAS WHETHER THE ASSESSEE COULD BE PERMITTED TO CHANGE ITS CLAIM FOR DEDUCTI ON FROM SECTION 10B TO SECTION 10A OF THE ACT. IN THAT CASE THE ASSESSEE HAD INITIALLY MADE A CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT; WHICH HOWEVER IN THE STATEMENT OF COMPUTATION OF INCOME WAS MENTIONED AS DEDUCTION UNDER SECTION 10B OF THE AC T. BOTH THE ASSESSING OFFICER AND THE LEARNED CIT(A) REJECTED THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER 9 IT A NO. 1435 /BANG/201 3 SECTION 10B OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD FAILED TO FURNISH THE APPROVAL CERTIFICATE FOR ITS 100% EOU BY THE DEVELOPMENT COMMISSION ER A S RATI FIED BY THE BOARD FOR APPROVAL OF THE EOU SCHEME. IT IS SUBMITTED THAT BECAUSE THE ASSESSEE IN THAT CASE COULD NOT FILE THE APPROVAL REQUIRED UNDER SECTION 10B OF THE ACT AND SINCE THE ASSESSEE WAS REGISTERED AS A 100% EOU UNDER THE STPI SCHEME, THE ASSESSEE IN THAT CASE, AS HAS BEEN DONE IN THE CASE ON HAND, MADE AN ALTERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT BEFORE THE CIT (APPEALS). THE CO - ORDINATE BENCH OF THIS TRIBUNAL EXAMINED THE ABOVE CLAIM AND FOUND THAT THE ITAT, CHENNAI BE NCH IN THE CASE OF ITO V HEARTLAND K.G. INFORMATION LTD. (2010) 131 TTJ 216 (CHENNAI) HAD DEALT AN ALTERNATIVE CLAIM SITUATION AND HAD HELD THAT REVENUE WAS BOUND TO EXAMINE THE ELIGIBILITY OF THE CLAIM FOR DEDUCTION IN ACCORDANCE WITH LAW. 5.1.4 THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE BEING SIMILAR TO THAT IN THE DECISION OF THE ITAT, CHENNAI BENCH AND THE FACT THAT DECISION HAS BEEN CONFIRMED BY THE HON'BLE HIGH COURT OF MADRAS IN IT S ORDER REPORTED IN (2013) 39 TAXMANN.COM 132 (MADRAS), THE ASSESSEE'S ALTERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT OUGHT TO BE RESTORED TO THE AUTHORITIES BELOW FOR FRESH EXAMINATION IN ACCORDANCE WITH LAW. 5.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED AND RELIED ON THE DECISIONS OF THE ORDERS OF THE AUTHORITIES BELOW. 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED A ND PLACED RELIANCE UPON. 10 IT A NO. 1435 /BANG/201 3 5.3.2 THE FACTS OF THE MATTER, AS EMANATE FROM THE RECORD ARE THAT, IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2010 - 11 THE ASSESSEE IN ITS RETURN OF INCOME HAD CLAIMED DEDUCTION OF RS.1,72,07,475 UNDER SECTION 10B OF THE ACT I N RESPECT OF EXPORT OF COMPUTER SOFTWARE IN ITS STPI UNIT SINCE IT IS REGISTERED AS A 100% EOU EXPORTING SOFTWARE PRODUCTS. THE ASSESSING OFFICER REQUIRED THE ASSESSEE, INTER ALIA, TO SUBSTANTIATE ITS CLAIM AS TO WHETHER THE NECESSARY CERTIFICATE OF APPRO VAL BY THE DEVELOPMENT COMMISSIONER AS RATIFIED BY THE BOARD FOR APPROVAL OF THE EOU SCHEME HAD BEEN OBTAINED AND WHETHER IT HAD COMPLIED WITH ALL THE CONDITIONS LAID DOWN IN SECTION 10B OF THE ACT. THE ASSESSING OFFICER AFTER EXAMINING THE ASSESSEE'S SUB MISSIONS AND THE MATERIAL ON RECORD HELD AT PARA 3.16 OF THE ORDER OF ASSESSMENT THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT; THE RELEVANT FINDINGS BEING EXTRACTED HEREUNDER : - 3.16 THEREFORE BASED ON ALL THE ABOVE, IT IS SEEN THAT THE ASSESSEE OUGHT TO HAVE COMPLIED WITH ALL THE CONDITIONS GIVEN UNDER SECTION 10B BEFORE IT HAD CLAIMED THE EXEMPTION UNDER SECTION 10B. IT IS NOT THE CASE HERE. THE ASSESSEE HAS FAILED TO PRODUCE THE APPROVAL / RATIFICATION REQUIRED AS PE R THE SECTION 10B UNDER WHICH THE CLAIM IS BEING MADE. THEREFORE THE CLAIM CANNOT BE ACCEPTED. THE ASSESSEE IS NOT ELIGIBLE FOR THE EXEMPTION CLAIM UNDER SECTION 10B OF THE IT ACT. THEREFORE THE CLAIM AMOUNT OF RS.1,72,07,475 IS BEING DISALLOWED AND ADD ED BACK TO THE RETURNED INCOME. 5.3.3 ON APPEAL BEFORE THE LEARNED CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS PUT FORTH BEFORE THE ASSESSING OFFICER AND CONTENDED THAT THE ASSESSING OFFICER ACTION IN DENYING THE ASSESSEE'S CLAIM FOR DEDUCTION UN DER SECTION 10B OF THE ACT WAS NOT CORRECT. IN APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A), THE ASSESSEE RAISED THE ADDITIONAL GROUND OF APPEAL THAT IN THE EVENT OF THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT WAS REJECTED, THEN ALTE RNATIVELY, THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT BE 11 IT A NO. 1435 /BANG/201 3 CONSIDERED AND IN THIS CONTE X T ALSO FILED FORM NO.56F RW RULE 16D. THE LEARNED CIT(A) ALSO REJECTED THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT IN THE ABSENC E OF REQUISITE APPROVAL FROM THE BOARD OF APPROVAL RATIFYING THE PERMISSION GRANTED BY THE DEVELOPMENT COMMISSIONER. IN RESPECT OF THE ASSESSEE'S ALTERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT, WHICH WAS NOT CONSIDERED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER DT.31.7.2013, HE SUBSEQUENTLY PASSED AN ORDER UNDER SECTION 154 OF THE ACT DT.11.9.2013, ON A MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE, REJECTING THE ASSESSEE'S ALTERNATE CLAIM FOR ALLOWING DEDUCTION UNDER SECTION 10A OF THE ACT , HOLDING AS UNDER AT PARA 8 THEREOF : - 8. IN THE INSTANT CASE FORM NO.56F HAS BEEN FILED ON 30.7.2013 I.E. AFTER COMPLETION OF ASSESSMENT. MOREOVER, ORIGINALLY DEDUCTION HAS BEEN CLAIMED UNDER SECTION 10B OF THE ACT AND IF CLAIM DEDUCTION UNDER SECTI ON 10A OF THE ACT, THE APPELLANT SHOULD HAVE FILED REVISED RETURN OF INCOME WITHIN PERMISSIBLE PERIOD AND CLAIMED DEDUCTION ACCORDINGLY. IN THIS, MATTER I RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (2 006) 284 ITR 323 (SC). IN ABSENCE OF SUCH REMEDIAL PROCEDURE, SHIFTING OF DEDUCTION UNDER SECTION 10B OF THE ACT IS REJECTED. 5.3.4 FROM A PERUSAL OF THE ORDER OF ASSESSMENT, IT IS SEEN THAT THE QUESTION FOR CONSIDERATION BEFORE THE ASSESSING OFFICE R WAS WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT IN THE ABSENCE OF REQUISITE APPROVAL FROM THE BOARD OF APPROVAL RATIFYING THE PERMISSION GRANTED BY THE DEVELOPMENT COMMISSIONER. ADMITTEDLY, THE ASSESSEE HAD NOT OBTAINED THE REQUIRED APPROVAL ENVISAGED UNDER SECTION 10B OF THE ACT. THE ASSESSEE'S ALTERNATE CLAIM RAISED IN APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) WAS THAT IT BE ALLOWED DEDUCTION UNDER SECTION 10A OF THE ACT , FOR WHICH IT HAD THE REQUIRED APPROVALS , WHICH WAS NOT ACCEPTED. WITH REGARD TO THE QUESTION AS TO WHETHER THE ASSESSEE CAN BE ALLOWED TO SHIFT ITS CLAIM FOR DEDUCTION UNDER SECTION 10B TO SECTION 10A OF THE ACT; IN OUR CONSIDERED VIEW THE 12 IT A NO. 1435 /BANG/201 3 DECISION RENDERED BY THE HON'BLE HIGH COURT OF DELHI IN THE CIVIL MISC. APPLICATION NO.12/2013 IN THE CASE OF VALI A NT COMMUNICATIONS LTD., ALLOWING THE CHANGE OF THE ALTERNATE CLAIM OF THAT ASSESSEE TO CONSIDER ITS ELIGIBILITY DEDUCTION UNDER SECTION 10A IN PLACE OF 10B OF THE ACT, SQUARELY COVERS THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION IS EXTRACTED HEREUNDER : - THE APPLICANT CONTENDS THAT THE CIT (APPEALS) AND THE TRIBUNAL HAD, IN THE PRESENT CASE, NOT GONE INTO THE MERITS OF THE ALTERNATIVE CLAIM FOR ENTITLEMENT UNDER SECTION 10A. THIS FACT IS APPARENT FROM A READING OF THE ORDER OF THE CIT (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IN THE ORDER IMPUGNED. IN THE CIRCUMSTANCES, THE TRIBUNAL SHALL CONSIDER THE RELEVANT DOCUMENTS ON THE BASIS OF THE CLAIMS AND ASCERTAIN WHETHER THE APPLICA NT IS ENTITLED TO THE BENEFIT UNDER SECTION 10A, AS CLAIMED. THE JUDGEMENT OF THIS COURT DT.17.9.2012 IS ACCORDINGLY MODIFIED; THE TRIBUNAL SHALL PROCEED TO PASS APPROPRIATE ORDERS AFTER HEARING BOTH PARTIES. 5.3.5 FOLLOWING THE AFORESAID DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF VALI A NT COMMUNICATIONS LTD., IN CIVIL MISC. APPLICATION NO.12/2013 DT.4.1.2013 (SUPRA), WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE ALTERNATE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A OF T HE ACT IS TO BE CONSIDERED, WE HOLD THAT THIS FINDING COVERS THE ISSUE SQUARELY IN FAVOUR OF THE ASSESSEE S PLEA THAT ITS ALTERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT IS TO BE CONSIDERED IN ACCORDANCE WITH LAW. THE AUDITOR S REPORT IN FORM N O.56F FILED BEFORE THE LEARNED CIT(A) AND ADMITTED AS ADDITIONAL EVIDENCE BUT NOT CONSIDERED, IS ALSO TO BE CONSIDERED WHILE EXAMINING THE ASSESSEE'S ALTERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT. THIS VIEW OF OURS FINDS SUPPORT IN THE DECISI ON OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ANSR SOURCES INDIA PVT. LTD. IN ITA NO.562/BANG/2013 DT.13.1.2013. WE FIND THAT FROM A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, SINCE THIS ISSUE OF THE 13 IT A NO. 1435 /BANG/201 3 ASSESSEE'S ALTERNATE CLAIM FOR DEDU CTION UNDER SECTION 10A OF THE ACT HAS NOT BEEN CONSIDERED BY THEM, WE ARE OF THE VIEW THAT IN THE INTEREST OF EQUITY AND JUSTICE , THIS ISSUE BE EXAMINED BY THE ASSESSING OFFICER AFRESH IN THE LIGHT OF THE FINDINGS AND OBSERVATIONS THEREON IN THE DECISIONS OF THE HON'BLE HIGH COUR T OF DELHI IN THE CASE OF VALIA NT COMMUNICATIONS LTD. (SUPRA) AND OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ANSR SOURCES INDIA PVT. LTD. (SUPRA) AND OUR OBSERVATIONS MADE BY US EARLIER IN THIS ORDER (SUPRA). THE AS SESSING OFFICER IS DIRECTED TO CONSIDER AFRESH AND DECIDE THE ISSUE OF THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS AND SUBMISSIONS REQUIRED IN THIS REG ARD. IT IS ORDERED ACCORDINGLY. CONSEQUENTLY, SINCE THE GROUNDS AT S.NOS.7 TO 10 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES, THE GROUNDS AT S.NOS.2 TO 6 ARE DISMISSED. 6. IN THE RESULT, THE ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2 015. SD/ - (P. MADHAVI DEVI) JUDICIAL MEMBER SD/ - (JASON P BOAZ) ACCOUNTANT MEMBER *REDDY GP