ACIT, Trivandrum V. Q Burst Technologies P. Ltd, Trivandrum

ITA 173/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96792 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: PANKAJASHAN C G
• Section: 143(3); 10B; 148; 10

Judgement Text

ITA NO S 172 & 173/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO S. 172 & 173/COCH/2015 (ASST YEAR S2008 - 09 & 2010 - 11 ) THE ASST COMMR OF INCOME TAX CIRCLE1(1), THIRUVANTHAPURAM VS M/S Q BURST TECHNOLOGIES P LTD 3 RD FLOOR LEELA TOWERS PATTOM PO TRIVANDRUM 695 004 ( APPELLANT) (RESPONDENT) PAN NO. AAACQ1171B ASSESSEE BY SH. PANKAJASHAN C.G REVENUE BY SH K P GOPAKUMAR, SR DR DATE OF HEARING 16 TH NOV 2015 DATE OF PRONOUNCEMENT 17 TH , NOV 2015 OR D ER PER GEORGE GEORGE. K. J M: THESE TWO APPEALS, AT THE INSTANCE OF THE DEPARTMENT, ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) BOTH DATED 6.1.2015. THE RELEVANT ASSESSMENT YEARS ARE 2008 - 09 AND 2010 - 11. 2 SINCE COMMON ISSUE IS INVOLVED IN THESE A PPEALS, THEY WERE HEARD TOGETHER AND DISPOSE OFF BY THIS CONSOLIDATED ORDER. IDENTICAL GROUNDS ARE RAISED IN BOTH THESE APPEALS , WHICH READ AS UNDER: ITA NO S 172 & 173/C/2015 2 FOR AY 2008 - 09 : 1 . THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX , TRIVANDRUM IS SO FAR AS ON THE P OINTS MENTIONED BELOW ARE CONCERNED IS OPPOSED TO LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE NOTED THAT SECTION 10A(5) OF THE INCOME TAX ACT STIPULATES THAT THE DEDUCTION U / S 10 A SHA LL NOT BE ADMISSIBLE UNLESS THE ASSESSEE FU RNISHES FORM NO.56F ALONG WITH THE RETURN OF INCOME AND THE REPORT OF AN ACCOUNTANT AS SPECIFIED . NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED AND TH I S WAS NOT RAISED AS AN ADDITIONAL GROUN D/CLAIM BUT AS AN ALTERNATIVE CLAIM BEFORE THE APPELLATE AUTHORITY , WHERE A CLAIM FOR DEDUCTION U/S 10B WAS ALREADY MADE I N THE RETURN OF I NCOME . 3 . THE L EA R NED COMM I SS I O N ER OF I NCOME TAX ( APPEALS ) OUGHT TO HAVE FOLLO WE D TH E DEC I S I O N OF T H E HO N ' BL E S UP R E M E CO U RT OF INDIA IN THE CASE OF GOETZ ( IND I A LTD (284 ITR 323) WHERE I T I S HE L D THAT AN ADDITIONAL CLAIM FOR DEDUCTION NO T MADE IN T HE R E T U R N OF I NCOME CANNOT BE ENTERTAINED OTHERWISE THAN BY FILING A REV I SED R ETURN . 4. FOR TH ESE AND OTHER GROUNDS THAT MAY BE ADVANCED AT THE TIME OF H EA RI NG THE O RD E R OF THE L EARNED COMMISSIONER OF APPEALS , TRIVANDRUM ON T H E A BOV E P OINTS M A Y B E SE T ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED .. FOR AY 2010 - 11 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME T AX, TRIVANDRUM IS SO FAR AS ON THE POINTS MENTIONED BELOW ARE CONCERNED IS OPPOSED TO LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE NOTED THAT SECTION 10A(5) OF THE INCOME TAX ACT STIPU LAT ES THAT THE DEDUCTION U/S 10 A SHALL NOT BE ADMISSIBLE UNLESS THE ASSESSEE FU RNISHES FORM NO.56F ALONG WITH THE RETURN OF INCOME AND THE REPORT OF AN ACCOUNTANT AS SPECIFIED. NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED AND THIS WAS NOT RAISED AS AN ADDITIONAL GROUND/CLAIM BUT AS AN ALTERNATIVE CLAIM BEFORE THE APPELLATE AUTHORITY, WHERE A CLAIM FOR DEDUCTION U/S 108 WAS ALREADY MADE IN THE RETURN OF INCOME. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE FOLLOW ED THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF GOETZ(INDIA) LTD (284 ITR 323) WHERE IT IS HELD THAT AN ADDITIONAL CLAIM FOR DEDUCTION NOT MADE ITA NO S 172 & 173/C/2015 3 IN THE RETURN OF INCOME CANNOT BE ENTERTAINED OTHERWISE THAN BY FILING A VALID REVISED RET U RN. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADVANCED AT THE TIME OF HEARING THE ORDER OF THE LEARNED COMMISSIONER OF AP PEALS, TRIVANDRUM ON THE ABOVE POINTS MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4 BRIEFLY FACTS OF THE CASE AR E AS FOLLOWS: THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN DEVELOPMENT AND SALE OF COMPUTER SOFTWARE. FOR THE ASSESSMENT YEAR 2008 - 09, THE RETURN OF INCOME WAS FILED ON 30.9.2008 DECLARING INCOME OF RS.2,170/ - AFTER CLAIMING DEDUCTION U/S 10B OF THE I T AC T AMOUNTING TO RS 94,20,266/ - . THE ASSESSMENT H AS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT FOR THE REASON THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. THE REASSESSMENT WAS COMPLETED ON 2 8 .2.2014 REJECTING THE CLAIM OF DEDUCT ION MADE U/S 10B OF THE ACT RELYING ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS REGENCY CREATIONS LTD REPORTED IN 255 CTR 63 . THE REASONING OF THE AO TO DENY THE DEDUCTION OF SEC. 10B WAS THAT THE EXPORT ORIENT UNIT OF THE ASSESS EE HAS OBTAINED ONLY APPROVAL FROM THE DIRECTOR OF SOFTWARE TECHNOLOGY PARK OF INDIA WHICH IS NOT A VALID APPROVAL FOR THE PURPOSE CLAIMING DEDUCTION U/S 10B OF THE A CT. ACCORDING TO THE AO, FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 10B OF THE ACT, THE E XPORT ORIENTED UNIT IS TO BE APPROVED BY THE CENTRAL GOVERNMENT THROUGH AN APPROPRIATE AUTHORITY CONSTI TUTED U/S 14 OF THE INDUSTRIAL ( DEVELOPMENT AND REGULATION ) ACT 1951. ITA NO S 172 & 173/C/2015 4 4 SIMILARLY, FOR THE AY 2010 - 11, FOR IDENTICAL REASON , DE DUCTION CLAIMED U/S 10B OF THE A CT AMOUNTING TO RS. 77,16,792/ - WAS DENIED BY THE ASSESSMENT ORDER COMPLETED U/S 143(3) OF THE ACT (ORDER DATED 21.3.2013). 5 AGGRIEVED BY THE ABOVE SAID ASSESSMENTS, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE FIRST AP PELLATE AUTHORITY, WITH REGARD TO ASSESSEES PLEA AGAINST REOPENING OF THE ASSESSMENT FOR THE AY 2008 - 09 HELD AGAINST THE ASSESSEE. THE CIT(A) ALSO FOR BOTH THE AY S HELD THAT THE AO HAS CORRECTLY DENIED THE CLA IM OF DEDUCTION U/S 10B OF THE A CT. HOWEVER, THE CIT(A) CONSIDERED THE ALTERNATIVE PLEA OF THE ASSESSEE ; NAMELY WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 10A OF THE ACT AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE . WHILE DECIDING THE ALTERNATIVE PLEA OF THE ASSESSEE, THE C IT(A) ALSO CALLED FOR THE REMAND REPORT OF THE AO. 6 THE REVENUE, BEING AGGRIEVED BY THE CIT(A)S DIRECTION TO AO TO ALLOW DEDUCTION U/S 10A OF THE ACT IS IN APPEAL BEFORE US FOR BOTH THE ASSESSMENT YEARS I.E 2008 - 09 & 2010 - 1 1 . THE LD DR SUBMITTED THAT T HE CIT(A) OUGHT TO HAVE INDEPENDENTLY EXAMINED WHETHER THE ASSESSEE HAS SATISFIED THE ELIGIBILITY CRITERIA FOR CLAIMING THE DEDUCTION U/S 10A OF THE ACT. IT WAS SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS NOT CONSIDERED THE SAME WHILE ALLOWING THE A LTERNATIVE PLEA OF THE ASSESSEE. ITA NO S 172 & 173/C/2015 5 7 THE LD AR ON THE OTHER HAND SUBMITTED THAT THE CIT(A) HAS EXAMINED THE COPIES OF CERTIFICATE OF REGISTRATION ISSUED BY SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI) AND THE CERTIFICATE OF THE CHARTERED ACCOUNTANT IN FORM 56F, WHICH ARE PLACED ON RECORD. FURTHER IT WAS SUBMITTED BY THE LD AR THAT IN THE REMAND REPORT OF THE AO NOTHING ADVERSE HAS BEEN STATED AS REGARDS THE SATISFACTION OF THE CONDITIONS PRECEDENT FOR CLAIMING THE DEDUCTION U/S 10A OF THE ACT. 8 WE HAV E HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT. THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS WITHDRAWN IN THE ASSESSMENT ORDER PASSED FOR BOTH THE ASSESSME NT YEARS BY FOLLOWING THE DICTUM LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD (SUPRA). THE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE ACTION OF THE AO IN MAKING THE DISALLOWANCE OF DEDUCTION U/S 10B OF THE ACT BASED ON TH E JUDGMENT OF THE HONBLE DELHI HIGH COURT, CITED SUPRA. HOWEVER, THE FIRST APPELLATE AUTHORITY HAS ALLOWED THE ALTERNATIVE CLAIM FOR DEDUCTION U/S 10A OF THE ACT BASED ON THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CWP TAYLOR IN ITA NO. 695/COCH/2008(ORDER DATED 28.7.2009). THE CIT(A) HAS ALSO VERIFIED THE FACTS RELATING TO THE COMPLIANCE OF ALL THE CONDITIONS PRESCRIBED UNDER SECTION 10A OF THE ACT ( IN PARA 3.6 .8 FOR AY 2008 - 09 AND IN PARA 3.5.8 FOR AY 2010 - 11 ) . BASED ON THE VERIFIC ATION OF FACTS, THE CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S 10A OF THE ACT. THE FOLLOWING JUDGMENT OF THE HONBLE DELHI HIGH COURT AND ORDERS ITA NO S 172 & 173/C/2015 6 OF THE ITAT HAVE HELD THAT WHEN DEDUCTION U/S 10B IS DENIED, IT IS THE DUTY OF THE REVENUE TO EXAMINE WHE THER THE ALTERNATIVE CLAIM OF DEDUCTION U/S 10A CAN BE GRANTED ON FACTS AND CIRCUMSTANCES OF THE CASE: I) FAST BOOKING (I) PVT LTD VS DCIT IN ITA 334/ 2015 ( JUDGMENT DATED 2.9.2015)(DELHI HIGH COURT JUDGMENT ) II ) M/S DEVICE DRIVEN ( INDIA) P LTD (ITA NO. 28 2/COCH/2013 (ORDER DT 29.11.2013) III ) CRONOS CONSULTING INDIA P LTD VS ACIT (ITA NO. 105/COCH/2014 (ORDER DT 6.6.2014) 9 FURTHER, WE NOTICE THAT THE AO, IN THE REMAND REPORT HAS NOT STATED THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS PRECEDENT TO C LAIM DEDUCTION U/ S 10A OF THE ACT. THE AO HAS ONLY RAISED A TECHNICAL OBJECTION NAMELY , THE ASSESSEE IS NOT ENTITLED DEDUCTION U/S 10A OF THE ACT , SINCE , THE CLAIM WAS NOT MADE IN THE RETURN OF INCOME FILED. HOWEVER, WE NOTICE THAT THE CLAIM OF DEDUCTIO N U/S 10B OF THE ACT WAS MADE IN THE RETURN OF INCOME AND THE REVENUE WAS GRANTING THE DEDUCTION U/S 10B OF THE ACT IN THE PREVIOUS ASSESSMENT YEARS. ONLY WHEN THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD, CITED SUPRA , WAS PRONOUNCED, THE CLAIM OF DEDUCTION U/S 10B WAS DENIED IN THE ASSESSMENT CONCLUDED. WHEN THE CLAIM OF DEDUCTION U/S 10B WAS DENIED, THE AO OUGHT TO HAVE EXAMINED WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT . THE CBDT CIRCULAR NO.14 ( XL - 35) DATED 11.4.1955 HAS CLARIFIED THAT THE REVENUE SHALL NOT TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS AND THE OFFICERS ARE DUTY BOUND TO GRANT DEDUCTION LEGALLY AVAILABLE TO THE ASSESSEE. THE CIT(A) ALSO RELIED THE JUDGMENT OF TH E ITA NO S 172 & 173/C/2015 7 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS TECHNOVATE E SOLUTION P LTD REPORTED IN 354 ITR 110 WHEREIN IT WAS HELD THAT REGISTRATION WITH SOFTWARE TECHNOLOGY PARKS OF INDIA IS SUFFICIENT TO ALLOW DEDUCTION U/S 10A OF THE ACT . THE COPIES OF THE CERTIF ICATE OF REGISTRATION ISSUED BY STPI AND THE CERTIFICATE OF THE CHARTERED ACCOUNTANT IN FORM 56F ARE ALSO ENCLOSED IN THE PAPER BOOK FILED BY THE ASSESSEE FOR THE RESPECTIVE ASSESSMENT YEARS. ON EXAMINATION OF THE CERTIFICATES OF REGISTRATION UNDER STPI A ND THE CERTIFICATE OF THE CHARTERED ACCOUNTANT IN FORM 56F, WE ARE OF THE VIEW THAT THE CIT(A) IS JUSTIFIED IN ALLOWING THE ALTERNATIVE CLAIM OF DEDUCTION U/S 10A OF THE ACT. IT IS ORDERED ACCORDINGLY. 10 IN THE RESULT, THE APPEALS FILED BY THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH , D AY OF NOV 2015 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 17 TH NOV 2015 DEVDAS * ITA NO S 172 & 173/C/2015 8 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN