ITO, WARD-3(1), Hyderabad V. M/s. Secunderabad Software Services Pvt. Ltd, Secunderabad

ITA 1501/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61818 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 19-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B V PRASAD REDDY
• Assessee Lawyers: S VENKATESWARA RAO
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER. ITA NO.1501/HYD/2011 : ASSESSMENT Y EAR 2005-06 INCOME TAX OFFICER, WARD-3(1), HYDERABAD V/S M/S. SECUNDERABAD SOFTWARE SERVICES P. LTD.,SECUNDERABAD. (PAN - AAGCS 6603 J ) (APPELLANT) (RESPONDENT) APPELLANT BY : DR. B.V.PRASAD REDDY RESPONDENT BY : SHRI S.VENKATESWARA RAO DATE OF HEARING 29 3.2012 DATE OF PRONOUNCEMENT 10.4.2012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV HYDERABAD DATED 30.6.2011 FOR THE ASS ESSMENT YEAR 2005-06. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEA L IS AGAINST THE ACTION OF THE CIT(A), IN ALLOWING THE DEDUCTION UNDER S.10B OF THE INCOME-TAX ACT, 1961 TO THE ASSESSEE. EFFECTIVE GR OUNDS RAISED BY THE REVENUE IN THIS BEHALF READ AS FOLLOWS- 1. ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT(A) ERRED IN ALLOWING THE APPEAL OF THE A SSESSEE DESPITE THE FACT THAT THE ASSESSEE HAD NOT COMPLIED WITH THE STATUTORY PROVISIONS. 3. THE CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER SINCE THE ASSESSEE FAILED TO PRODUCE THE RATIFICATION BY THE DEVELOPM ENT COMMISSIONER AS ENVISAGED IN THE INSTRUCTION NO.2/2009 OF THE CBDT DATED 09.03.2009. ITA NO.1501/HYD/2011 M/S. SECUNDERABAD SOFTWARE SERVICES P. LTD.,SECUNDERABAD . 2 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE C ASE LAWS ON WHICH HE RELIED UPON HAVE NOT BECOME FINAL AND THE DEPARTM ENT HAS FILED FURTHER APPEAL ON THESE DECISIONS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN SOFTWARE DEVELOPMENT. FOR THE ASSESSMEN T YEAR 2005-06, ASSESSEE FIELD RETURN OF INCOME ON 27.10.2005 DECLA RING NIL INCOME, AFTER CLAIMING DEDUCTION UNDER S.10B OF THE ACT. THE ASS ESSING OFFICER OBSERVED THAT AS PER THE LETTER OF THE ASSESSEE DAT ED 16.11.2010, THE ASSESSEE COMPANY WAS REGISTERED WITH SOFTWARE TECHN OLOGY PARK OF INDIA AS A 100% EOU . HOWEVER, HE OPINED THAT AS PER THE PROVISIONS OF S.10B, AN UNDERTAKING MUST SATISFY THE CONDITION TH AT IT MUST BE AN APPROVED 100% EXPORT ORIENTED UNDERTAKING, FOR CLAI MING DEDUCTION UNDER S.10B. HE FURTHER OPINED THAT HUNDRED PERCE NT EXPORT ORIENTED UDNERTAKING FOR THE PURPOSE OF DEDUCTION UNDER S.1 0B MEANS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A HUNDRED P ER CENT EXPORT ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT UNDER S.14 OF INDUSTRIES (DEVELOPMENT AN D REGULATION) ACT, 1951. HE THEREFORE, OBSERVED THAT THE STATUTORY BOA RD APPROVAL BY THE BOARD AS A 100% EOU HAS TO BE OBTAINED FOR AVAILING EXEMPTION UNDER S.10B. HE HELD THAT 100% EOU UNDER STPI SCHEME CA NNOT BE EQUATED WITH 100% EOU APPROVAL BY THE BOARD, AND FOR THIS P URPOSE, HE PALCED RELIANCE ON INFOTECH ENTERPRISES LTD. V/S. JCIT (85 ITD 325). FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM IN RESPECT OF DEDUCTIONS UNDER S.10B WITH NEC ESSARY DOCUMENTARY EVIDENCES IN RESPECT OF ITS ELIGIBILITY FOR THE DED UCTION. THE ASSESSEE ALSO COULD NOT FURNISH THE RATIFICATION BY THE DEVELOP MENT COMMISSIONER, AS ENVISAGED IN THE INSTRUCTION DATED 9.3.2009 (FILE N O.178/19/2008-ITA 01). WITH THESE OBSERVATIONS, THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER S.10B OF THE ACT, CLAIMED BY THE ASSESSEE, AN D COMPLETED THE ITA NO.1501/HYD/2011 M/S. SECUNDERABAD SOFTWARE SERVICES P. LTD.,SECUNDERABAD . 3 ASSESSMENT ON A TOTAL INCOME OF RS.16,86,065, VIDE ORDER OF ASSESSMENT DATED 15.12.2010 PASSED UNDER S.143(3) READ WITH S. 147 OF THE ACT. 4. ON APPEAL, THE CIT(A) HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER S.10B IN VIEW OF THE REGISTRATION W ITH SOFTWARE TECHNOLOGY PARK AS A 100% EOU, AND DIRECTED THE ASS ESSING OFFICER ACCORDINGLY TO ALLOW THE CLAIM OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), REVENUE I S IN APPEAL BEFORE US. 6. WE HEARD THE PARTIES AND PERUSED THE IMPUGNED O RDERS OF THE LOWER AUTHORITIES. THE ONLY QUESTION THAT CLINCHE S THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER FOR BECOMING ELIGIBLE TO THE DEDUCTION UNDER S.10B OF THE ACT, WHETHER IT IS ENOUGH IF THE ASSESSEE IS REGISTERED WITH SOFTWARE TECHNOLOGY PARK OF INDIA AS A 100% EOU OR IT IS ALSO NECESSARY FOR THE ASSESSEE TO HAVE THE APPROVAL OF THE BOARD CONSTITUTED BY THE CENTRAL GOVERNMENT UNDER S.14 OF THE INDUSTRIES (DE VELOPMENT AND REGULATION) ACT, 1951. THE CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE, AND HELD THE ASSESSEE AS ELIGIBLE FOR DED UCTION UNDER S.10B OF THE ACT, FOLLOWING THE DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE FOLLOWING CASES- (A) VSN MAKRO TECHNOLOGY P. LTD. V/S. ACIT (ITA NO.1057/HYD/2010) DATED 13.1.2011, WHEREIN THE STIL L EARLIER DECISION OF THE TRIBUNAL IN THE CSE OF INFOTECH EN TERPRISES LTD. (SUPRA), RELIED BY THE ASSESSING OFFICER IN THE IMP UGNED ASSESSMENT ORDER HAS BEEN CONSIDERED AND THE SAME HAS BEEN HELD TO BE INAPPLICABLE AS THE SAME HAS BEEN RENDER ED PRIOR TO ISSUANCE OF INSTRUCTION NO.1 DATED 31.3.2006 BY THE CBDT AND ITA NO.1501/HYD/2011 M/S. SECUNDERABAD SOFTWARE SERVICES P. LTD.,SECUNDERABAD . 4 LETTER DATED 23.3.2006 ISSUED BY THE MINISTRY OF CO MMUNICATIONS AND TECHNOLOGIES. (B) DCIT V/S. VALLIANT COMMUNICATION LTD. (ITA NO.2706/ DEL/2008 DATED 23.4.2010) (2010-TIOL-452-ITAT-DEL), WHEREIN THE STILL EARLIER DECISION OF THE DELHI BENCH IN THE CASE OF ITO VS. REGENCY CREATIONS LTD. (ITA NO.4006/DEL/2006) DATED 13.4.2006 HAS BEEN FOLLOWED. (C) SMT. K.SUDHA RANI V/S. ITO (ITA NO.1750/HYD/2008) D ATE 30.10.2009 CONSISTENT WITH THE VIEW TAKEN BY VARIOUS BENCH OF THE TRIBUNAL, INCLUDING THE BENCHES AT HYDERABAD, IN SIMILAR MATTERS, WE HO LD THAT THE ASSESSEE, HAVING BEEN REGISTERED WITH THE STPI, IS ENTITLED F OR DEDUCTION UNDER S.10B OF THE ACT. IN THAT VIEW OF THE MATTER, WE F IND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A), WHICH IS ACCORDINGLY CONFIRMED AND THE GROUNDS OF THE REVENUE ARE REJECTED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 10.4.2012 SD/- SD /- (SAKTIJIT DEY) ( D.KARUNAKARA R AO ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 10 APRIL, 2012 COPY FORWARDED TO: 1. M/S. SECUNDERABAD SOFTWARE SERVICES P. LTD., 10 - 3 - 44, EAST MARREDPALLY, SECUNDERABAD-500 034. 2. INCOME - TAX OFFICER, WARD 3 ( 1 ), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) - I V HYDERABAD ITA NO.1501/HYD/2011 M/S. SECUNDERABAD SOFTWARE SERVICES P. LTD.,SECUNDERABAD . 5 4. COMMISSIONER OF INCOME - TAX II I , HYDERABAD 5 . THE DEPARTMENTAL REPRESENTATIVE, ITAT HYDERABAD B.V.S.