The ACIT, Circle-2(1), Baroda V. Smt. Florence V. Parmar, Baroda

ITA 1793/AHD/2013

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6524 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Additional evidence; Set aside
• Section: 143(3); 10B; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 1793/AHD/2013 / ASSTT. YEAR: 2008-2009 A.C.I.T., CIRCLE-2(1), BARODA. VS. SMT. FLORENCE V. PARMAR, 42, SUNDARMNAGAR SOCIETY, VASNA ROAD, BARODA-390020. PAN: AHKPP5892L (APPLICANT) (RESPONDENT) REVENUE BY : SHRI R.R. MAKWANA, SR.D.R. ASSESSEE BY : SHRI BANDISH SOPARKAR , A . R . /DATE OF HEARING : 26/08/2021 /DATE OF PRONOUNCEMENT: 01/09/2021 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, BARODA, DATED 30/03/2013 (IN SHORT LD. CIT(A)) ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2008-09. ITA NO.1793/AHD/2013 A.Y. 2008-2009 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS) ERRED IN IN DIRECTING THE ASSESSING OFFICER TO ALLOW EXEMPTION U/S.10A AMOUNTING TO RS.1,58,61,000/- BY EXERCISING UNDUE JURISDICTIONAL POWERS BY ENTERTAINING APPEAL AGAINST THE ASSESSMENT ORDER U/S.143(3) OF THE ACT PASSED IN PURSUANT TO DIRECTIONS OF THE CIT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER U/S.263 OF THE ACT 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS) ERRED IN ADMITTING ADDITIONAL EVIDENCES WITHOUT APPRECIATING THAT THESE EVIDENCE WERE NOT FURNISHED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OR BEFORE THE CIT DURING THE COURSE OF PROCEEDINGS U/S.263 OF THE ACT. 3. THE LD.CIT(A) SUBSTANTIALLY ERRED IN IGNORING THE SUBMISSION OF THE ASSESSEE UNDER OATH DURING THE COURSE OF SURVEY PROCEEDINGS, SUBMISSIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND PROCEEDINGS U/S.263 OF THE ACT, BUT ADMITTING THE REPORT OF M/S.MANAN THAKKAR ASSOCIATES, WHICH IS NOT ONLY IRRELEVANT TO THE ISSUE INVOLVED BUT HAS NO EVIDENTIARY VALUE. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL IT IS PRAYED THAT THE ORDER OF THE CIT (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE ONLY ISSUE RAISED BY THE REVENUE IS THAT THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 1,58,61,000/- BY DISALLOWING THE DEDUCTION CLAIMED U/S 10A OF THE ACT AND THAT TOO AFTER ADMITTING THE ADDITIONAL EVIDENCES. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND CLAIM TO BE ENGAGED IN THE BUSINESS OF DEVELOPMENT OF WEBSITE AND PROVIDING CALL CENTRE BACK END SERVICES UNDER THE NAME AND STYLE OF IMAT GROUP. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED DEDUCTION OF RS. 1,58,61,000/- UNDER THE PROVISION OF SECTION 10A OF THE ACT. 4.1 HOWEVER, THE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF EXPORT OF THE WEBSITE. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. THUS, THE AO DISALLOWED THE SAME OF RS. 1,58,61,000/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.1793/AHD/2013 A.Y. 2008-2009 3 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT(A), WHO ALLOWED THE EXEMPTION U/S 10A OF THE ACT, BY OBSERVING AS UNDER: THE APPELLANT HAS SUFFICIENTLY ESTABLISHED BY EVIDENCES THAT THE STATEMENT WAS GIVEN UNDER MISCONCEIVED NOTION AND HAS ALSO ESTABLISHED THAT THE OWNERSHIP OF THE ULTIMATE INTRODUCTIONS INC. OF USA FROM WHOM THE INCOME IS RECEIVED IS AN INDEPENDENT ENTITY AND THAT THE ACTIVITY CONDUCTED BY THE APPELLANT IS OF SOFTWARE DEVELOPMENT AND ALSO ITS MAINTENANCE. IN VIEW OF THE ABOVE FINDINGS, IT IS HELD THAT THE APPELLANT'S CLAIM OF EXEMPTION U/S. 10A AMOUNTING TO RS.1,58,61,000/- FOR A.Y. 2008-09 AND RS.99,33,000/- FOR A.Y. 2009- 10 WITHDRAWN BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND HE IS DIRECTED TO ALLOW THE RELIEF TO THE ASSESSEE. THIS FINDING IS BASED ON FOLLOWING: (I) THE ACTIVITIES OF THE APPELLANT BEING ELIGIBLE FOR CLAIM OF EXEMPTION U/S. 10A IN TERMS OF THE PROVISIONS ITSELF AND ALSO THE NOTIFICATION NO. SO 890(E) DATED 26.9.2000 PROVIDING FOR AVAILABILITY OF THE BENEFIT TO BACK-OFFICE OPERATIONS AS WELL AS WEBSITE SERVICES, DATA PROCESSING. (II) THE APPELLANT'S UNDERTAKING IS REGISTERED WITH STPI AND THE NECESSARY CERTIFICATES OF REGISTRATION ARE ENCLOSED AT PAGE NOS. 41 TO 51 OF THE PAPER BOOK. THERE IS NO INFRINGEMENT OF THE LAW & PROVISIONS OF STPI. (III) THE INCOME OF THE UNDERTAKING IS FROM EXPORTS WHICH HAVE BEEN BROUGHT INTO INDIA DURING THE SPECIFIED TIME. THIS IS EVIDENT FROM THE COPIES OF FIRCS SUBMITTED BY THE APPELLANT. (IV) THE STATEMENTS OF SHRI VIJAY PARMAR HAS NO EVIDENTIARY VALUE IN VIEW OF THE DECISIONS OF VARIOUS HIGH COURTS/TRIBUNALS MENTIONED SUPRA. 4. RESULT OF APPEAL: IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. DR BEFORE US FILED THE ADDITIONAL EVIDENCES AND REQUESTED TO RESTORE THE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME A FRESH IN THE LIGHT OF THESE EVIDENCES. 8. ON THE OTHER HAND THE LD. AR BEFORE CONTENDED THAT THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.806/AHD/2011 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 23/01/2017. ITA NO.1793/AHD/2013 A.Y. 2008-2009 4 9. BOTH THE LD. DR AND THE AR BEFORE US RELIED ON THE ORDER OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT THE ISSUE ON HAND IS COVERED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE AS MENTIONED ABOVE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: 8. THERE IS NO DISPUTE THAT DURING THE COURSE OF SURVEY OPERATION CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE. STATEMENT WAS RECORDED BY WHICH THE ASSESSEE STATED TO HAVE WITHDRAWN THE CLAIM OF DEDUCTION U/S. 10A OF THE ACT. IT IS ALSO TRUE THAT THE ASSESSEE REQUESTED TO THE A.O. AND THE A.O. SENT A PROPOSAL TO THE LD. CIT TO ISSUE DIRECTIONS FOR REVISING THE ASSESSMENT ORDER U/S. 263 OF THE ACT. 9. THE CONTENTIOUS ISSUE BEFORE US IS TO SEE WHETHER THE CLAIM OF THE ASSESSEE WAS NOT AS PER THE PROVISIONS OF THE LAW WHICH PROMPTED HER TO WITHDRAW THE SAID CLAIM. 10.A PERUSAL OF THE STATEMENT OF SHRI VIJAY PARMAR EXHIBITED AT PAGES 5 TO 34 OF THE PAPER BOOK SHOW THAT THE ASSESSEE IS HIS WIFE AND HE IS WORKING AS AN EMPLOYEE. WHEN SHRI VIJAY PARMAR WAS CONFRONTED WITH THE STATEMENT OF HIS WIFE (ASSESSEE) THAT SHE HAS STATED THAT SHE KNOWS NOTHING ABOUT THE AFFAIRS OF IMAT GROUP. SHRI VIJAY PARMAR STATED THAT HE IS LOOKING AFTER THE OPERATION. A FURTHER PERUSAL OF THE STATEMENT SHOWS THAT AT EVERY STAGE, THE DEPONENT ACCEPTED THE BUSINESS ACTIVITIES AND EXPLAINED IN DETAIL HOW THE WEB PORTAL OF THE ASSESSEE OPERATES. 11.WE ALSO FIND THAT THE SOFTWARE TECHNOLOGY PARKS OF INDIA (AN AUTONOMOUS SOCIETY UNDER DEPARTMENT OF INFORMATION TECHNOLOGY), HAS ISSUED A REGISTRATION CERTIFICATE TO THE ASSESSEE AS EXHIBITED AT PAGES 41 TO 51 OF THE PAPER BOOK. 12.IN THE LIGHT OF THE NATURE OF ACTIVITIES EXPLAINED IN THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY PROCEEDINGS. LET US NOW CONSIDER THE NOTIFICATION NO. 890(E) ISSUED BY THE GOVERNMENT IN REFERENCE TO SECTION 10A(B)(I)(2), 10B(B)(I)(2) AND 80HHE(B) AND THE SAME READS AS UNDER:- NOTIFICATION: 890(E) SECTION(S) REFERRED: S. 10A(B)(I)(2) ,S. 10B(B)(I)(2) ,S. 80HHE(B) STATUTE: INCOME TAX DATE OF ISSUE: 26/9/2000 IN EXERCISE OF THE POWERS CONFERRED BY CLAUSE (B) OF ITEM (I) OF EXPLANATION 2 OF SECTION 10A, CLAUSE (B) OF ITEM (I) OF EXPLANATION 2 OF SECTION 10B AND CLAUSE (B) OF EXPLANATION TO SECTION 80HHE OF THE INCOME-TAX ACT, 1961 (43 OF 1961), THE CENTRAL BOARD OF DIRECT TAXES HEREBY SPECIFIES THE FOLLOWING INFORMATION TECHNOLOGY ENABLED PRODUCTS OR SERVICES, AS THE CASE MAY BE, FOR THE PURPOSE OF SAID CLAUSES, NAMELY : (I) BACK-OFFICE OPERATIONS ; (II) CALL CENTRES ; (III) CONTENT DEVELOPMENT OR ANIMATION ; (IV) DATA PROCESSING; ITA NO.1793/AHD/2013 A.Y. 2008-2009 5 (V) ENGINEERING AND DESIGN ; (VI) GEOGRAPHIC INFORMATION SYSTEM SERVICES ; (VII) HUMAN RESOURCES SERVICES ; (VIII) INSURANCE CLAIM PROCESSING ; (IX) LEGAL DATABASES ; (X) MEDICAL TRANSCRIPTION; (XI) PAYROLL; (XII) REMOTE MAINTENANCE; (XIII) REVENUE ACCOUNTING; (XIV) SUPPORT CENTRES, AND; (XV) WEB-SITE SERVICES. [NOTIFICATION NO. 11521/F. NO. 142/49/2000-TPL] 13. WE FIND THAT THE BUSINESS ACTIVITIES OF THE ASSESSEE FIT INTO THE ELIGIBILITY CRITERIA FOR CLAIMING THE IMPUGNED DEDUCTION AS PER THE ABOVE NOTIFICATION. WE FIND THAT ON THE BASIS OF CERTAIN DISCUSSION AT THE TIME OF SURVEY PROCEEDINGS, THE ASSESSEE FORMED A BELIEF THAT SHE IS TECHNICALLY WRONG IN CLAIMING EXEMPTION U/S. 10A OF THE ACT WHICH TRIGGERED FOR HER REQUEST OF WITHDRAWAL OF THE CLAIM OF DEDUCTION. 14.IN OUR UNDERSTANDING OF THE FACTS RELATING TO THE BUSINESS ACTIVITIES OF THE ASSESSEE QUA THE STATEMENT RECORDED AT THE TIME OF SURVEY, THE ASSESSEE UNDER A MISTAKEN BELIEF HAS ACCEPTED TO WITHDRAW THE CLAIM OF DEDUCTION WHICH SHE WAS OTHERWISE LEGALLY ENTITLED. 15. IT WOULD BE PERTINENT TO REFER TO THE OBSERVATIONS OF THE HONBLE HIGH COURT OF GUJARAT GIVEN IN THE CASE OF S. R. KOSHTI IN 276 ITR 165 AND THE SAME READS AS UNDER:- THE AUTHORITIES UNDER THE INCOME-TAX ACT, 1961 ARE UNDER AN OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MISTAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INSTRUCTED, IS OVER-ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUE ARE COLLECTED. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WHEN AN ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW, WHICH HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW, WITH WHICH THE COMMISSIONER DOES NOT AGREE, THE ORDER CANNOT BE TREATED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ONCE AN ASSESSEE IS IN A POSITION TO SHOW THAT HE HAS BEEN OVER-ASSESSED UNDER THE PROVISIONS OF THE ACT, REGARDLESS OF WHETHER THE OVER- ASSESSMENT IS AS A RESULT OF THE ASSESSEE'S OWN MISTAKE OR OTHERWISE, THE COMMISSIONER HAS THE POWER TO CORRECT SUCH AN ASSESSMENT UNDER SECTION 264(1) OF THE INCOME-TAX ACT, 1961. IF THE COMMISSIONER REFUSES TO GIVE RELIEF TO THE ASSESSEE, HE WOULD BE ACTING DE HORS THE POWERS UNDER THE ACT. 16. IN THE LIGHT OF THE AFORE-STATED OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT, WE CAN SAY THAT THE LD. COMMISSIONER SHOULD NOT HAVE INVOKED THE POWERS VESTED UPON HIM U/S. 263 OF THE ACT MERELY ON THE STRENGTH OF THE STATEMENT RECORDED AT THE TIME OF SURVEY PROCEEDINGS. A CONSPECTUS READING OF THE STATEMENT RECORDED AT THE TIME OF SURVEY SHOWS THAT THERE IS NO CONCESSION ON FACT. THE CONCESSION IS ONLY IN RELATION TO THE LAW AND THAT TOO WAS UNDER A WRONG BELIEF. AS OBSERVED BY THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), THE LD. COMMISSIONER SHOULD NOT HAVE REVISED THE COMPLETED ASSESSMENT MADE U/S. 143(3) OF THE ACT. THE LD. COMMISSIONER FURTHER ERRED IN DIRECTING THE A.O. TO WITHDRAW THE CLAIM OF DEDUCTION IN SUBSEQUENT ASSESSMENT YEARS ALSO I.E. A.YS. 2008-09, 2009-10 & 2010-11. 17. IN OUR CONSIDERED OPINION, THE LD. CIT OUGHT TO HAVE VERIFIED INDEPENDENTLY THE ELIGIBILITY OF THE CLAIM AND THE DEDUCTION PERMISSIBLE TO THE ASSESSEE. CONSIDERING THE BUSINESS ACTIVITIES OF THE ASSESSEE AS EXPLAINED DURING THE COURSE OF THE SURVEY PROCEEDINGS, ITA NO.1793/AHD/2013 A.Y. 2008-2009 6 IN OUR UNDERSTANDING OF THE LAW, THE ASSESSEE WAS VERY MUCH ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S. 10A OF THE ACT WHICH IS WELL SUPPORTED BY THE NOTIFICATION EXHIBITED ELSEWHERE. CONSIDERING THE FACTS IN TOTALITY, WE SET ASIDE THE ORDER OF THE LD. CIT AND RESTORE THAT OF THE A.O. 11. THE FACTS OF THE CASE ON HAND ARE IDENTICAL TO THE FACTS OF THE CASE AS DISCUSSED ABOVE. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD BY THE REVENUE TO DEMONSTRATE THAT THE DECISIONS OF TRIBUNAL AS DISCUSSED ABOVE WHILE DISMISSING THE APPEAL OF REVENUE HAS BEEN SET ASIDE / STAYED OR OVERRULED BY THE HIGHER JUDICIAL AUTHORITIES. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEAR NOR HAS PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (A). HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 01/09/2021 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 01/09/2021 MANISH