Congruent Solutions P Ltd. , CHENNAI V. ACIT Corporate Circle 1(2) , CHENNAI

ITA 1798/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5613 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Reassessment proceedings
• Section: 10B; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 1798/MDS/2017 / ASSESSMENT YEAR : 2007-2008 M/S. CONGRUENT SOLUTIONS P. LTD. FIRST FLOOR, NORTH WING, CENTRAL SQUARE 1 C-28C, 35, CITPET ROAD, THIRUVIKA INDUSTRIAL ESTATE, GUINDY, CHENNAI 600 032. [ PAN AAACC 1386L ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(2) CHENNAI 600 034. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. R. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 12-12-2017 !' /DATE OF PRONOUNCEMENT : 19-12-2017 % / O R D E R ASSESSEE IN THIS APPEAL WHICH IS DIRECTED AGAINST AN ORDER DATED 17.05.2017 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI, HAS ALTOGETHER RAISED TWELVE GROUNDS OF WHICH GROUND NO.1 & 12 ARE GENERAL IN NATURE NEEDING NO SPECIFIC ADJU DICATION. ITA NO. 1798/MDS/2017 :- 2 -: 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE WAS NOT PRESSING GROUNDS 2 & 3 ASSAILING VALIDITY OF THE RE OPENING DONE U/S.147 OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR. 3. RECAPITULATING THE FACTS, LD. AUTHORISED REPRESENTA TIVE SUBMITTED THAT ASSESSEE HAD FILED THE ORIGINAL RETU RN ON 16.10.2007 DISCLOSING TOTAL INCOME OF D1,86,489/- AFTER CLAIMI NG DEDUCTION OF D45,06,462/- U/S.10B OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT). AS PER THE LD. AUTHORISED REPRESENTATIVE, ORIGINAL RETURN WAS PROCESSED U/S.143(1) OF THE ACT. THEREAFTER, AS P ER THE LD. AUTHORISED REPRESENTATIVE NOTICE DATED 27.03.2014 UNDER SECTIO N 148 OF THE ACT TO THE ASSESSEE SEEKING TO REOPEN THE ASSESSMENT. AS PER THE LD. AUTHORISED REPRESENTATIVE REASON FOR REOPENING WAS MENTIONED AS ALLOWANCE OF DEDUCTION U/S.10B OF THE ACT, WHEN IT WAS NOT ELIGIBLE FOR SUCH DEDUCTION. AS PER THE LD. ASSESSING OFFICER, ASSESSEE WAS A UNIT REGISTERED WITH SOFTWARE TECHNOLOGY PARKS OF INDIA AS A 100% EOU. ACCORDING TO HIM, BY VIRTUE OF EXPLANATION 2(IV) OF 10B OF THE ACT DEDUCTION UNDER THAT SECTION WAS AVAILABLE ONLY WH ERE AN UNDERTAKING WAS APPROVED AS 100% EOU BY A BOARD APPOINTED BY TH E CENTRAL GOVERNMENT FOR THIS PURPOSE UNDER SECTION 14 OF TH E INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. AS PER THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE HAVING RECOGNIZED THE A BOVE MISTAKE, HAD IN THE RETURN FILED PURSUANT TO NOTICE U/S.148 OF THE ACT, PREFERRED A ITA NO. 1798/MDS/2017 :- 3 -: CLAIM U/S.10A OF THE ACT. FURTHER, AS PER THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE BEING A RECOGNIZED STPI U NIT WAS ELIGIBLE FOR DEDUCTION U/S.10A OF THE ACT. HOWEVER, AS PER THE LD. AUTHORISED REPRESENTATIVE, LD. ASSESSING OFFICER IN THE REASS ESSMENT REFUSED TO CONSIDER THE CLAIM PREFERRED BY THE ASSESSEE U/S.10 A OF THE ACT, RELYING ON A JUDGMENT OF HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD VS. CIT 284 ITR 323. AS PER THE LD. AUTHORISED REPRESENTATIVE, THE SAID JUDGMENT WAS NOT APPLICABL E SINCE RETURN FILED BY THE ASSESSEE PURSUANT TO THE NOTICE U/S.148 OF T HE ACT HAD TO BE CONSIDERED AS ORIGINAL RETURN. ACCORDING TO HIM, T HOUGH THIS WAS POINTED OUT TO THE LD. COMMISSIONER OF INCOME TAX (APPEALS), LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ALLOW THE CLAIM. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT EVEN IF ASSESSEE WAS NOT ENTITLED TO RELIEF U/S.10B OF THE ACT, IT OUGHT HAVE BEEN GRANTED DEDUCTION U/S.10A OF THE ACT FOR WHICH IT WAS ELIGIBLE. ACCORDING TO HIM, LD. COMMISSIONER OF INCOME TAX (A PPEALS) HAD ERRONEOUSLY RELIED ON THE JUDGMENT OF APEX COURT I N THE CASE OF CIT VS. SUN ENGINEERING WORKS (P) LTD, 198 ITR 297 FOR DENYING THE CLAIM PREFERRED BY THE ASSESSEE. AS PER THE LD. AUTHORISE D REPRESENTATIVE, JUDGMENT OF APEX COURT IN THE CASE OF SUN ENGINEERING WORKS (P) LTD (SUPRA) APPLIED ONLY WHERE THERE WAS AN ORIGINAL ASSESSMEN T. IN ASSESSEES CASE, THE ORIGINAL RETURN HAVING BEEN PR OCESSED U/S.143(1) ITA NO. 1798/MDS/2017 :- 4 -: OF THE ACT, AS PER THE LD. AUTHORISED REPRESENTATIV E IMPUGNED ASSESSMENT HAD TO BE CONSIDERED AS ORIGINAL ASSESSM ENT. IN ANY CASE, ACCORDING TO HIM, BY VIRTUE OF JUDGMENT OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HEARTLAND KG INFORMATION LTD, 359 ITR 0001 , JUST FOR A REASON THAT THE SECTION UNDER WHIC H THE CLAIM WAS PREFERRED WAS INCORRECTLY MENTIONED, SUCH CLAIM CO ULD NOT BE DISALLOWED. 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD CO RRECTLY RELIED ON THE JUDGMENT OF APEX COURT IN THE CASE SUN ENGINEERING WORKS (P) LTD (SUPRA) AND HELD THAT ASSESSEE COULD NOT TAKE ADVANTAGE OF THE REASSESSMENT PROCEEDINGS FOR CLAIMING A RELIEF NOT CLAIMED IN THE ORIGINAL RETURN. FURTHER, ACCORDING TO HIM, CO-ORD INATE BENCH OF THE TRIBUNAL IN THE CASE OF SELLA SYNERGY (INDIA) LTD VS. ACIT, 117 ITD 264 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT DEDUC TION NOT ORIGINALLY CLAIMED COULD NOT BE CLAIMED DURING A REASSESSMENT PROCEEDINGS. RELIANCE WAS ALSO PLACED ON THE DECISION OF BANGALO RE BENCH OF THE TRIBUNAL IN THE CASE OF KARNATAKA STATE CO-OPERATIVE APEX BANK LTD VS. DICT, (2016) 46 ITR( TRIB) 728 . 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. ASSESSEE WAS DENIE D DEDUCTION U/S.10A OF THE ACT FOR A REASON THAT IN THE ORIGIN AL RETURN IT HAD ITA NO. 1798/MDS/2017 :- 5 -: CLAIMED DEDUCTION U/S.10B OF THE ACT AND NOT UNDE R 10A OF THE ACT. IT IS NOT DISPUTED BY THE REVENUE THAT ORIGINAL RET URN FILED BY THE ASSESSEE, WHERE IT HAD CLAIMED DEDUCTION U/S.10B OF THE ACT, WAS NEVER SCRUTINIZED BUT SUBJECTED ONLY TO A PROCESSI NG U/S.143(1) OF THE ACT. IT IS ALSO NOT DISPUTED THAT ASSESSEE HAD PRE FERRED THE CLAIM U/S.10A OF THE ACT AND NOT UNDER 10B, WHEN IT FILE D RETURN A PURSUANT TO NOTICE U/S.148 OF THE ACT. IN MY OPINION WHEN OR IGINAL RETURN WAS ONLY SUBJECT TO A PROCESSING U/S.143(1) OF THE ACT, THE ASSESSMENT DONE PURSUANT TO A REASSESSMENT PROCEEDING, INITI ATED U/S.147 OF THE ACT, HAS TO BE CONSIDERED AS THE FIRST ASSESSMENT. THERE IS NO CASE FOR THE REVENUE THAT RETURN FILED BY THE ASSESSEE PURS UANT TO NOTICE U/S.148 OF THE ACT, WAS BEYOND THE TIME ALLOWED TO IT SUB SECTION (1) THEREOF. IN MY OPINION NOTHING STOPPED THE ASSESS EE TO MAKE A CLAIM U/S.10A OF THE ACT IN THE RETURN FILED PURSUANT TO NOTICE U/S.148 OF THE ACT. IT IS NOT AKIN TO A CASE WHERE AN ASSESSMENT WAS ORIGINALLY COMPLETED AFTER SCRUTINY U/S.143(3) OF THE ACT. HA D IT BEEN SO, ASSESSEE COULD NOT HAVE MADE A FRESH CLAIM IN THE RETURN FILED PURSUANT TO A REASSESSMENT NOTICE ISSUED U/S.148 OF THE ACT. THAT APART, IN MY OPINION, THE CLAIM MADE BY THE ASSESSE E U/S.10A OF THE ACT CANNOT BE TREATED AS AN ENTIRELY NEW CLAIM, SIN CE THE BASIS OF THE CLAIM WAS PROFITS EARNED BY IT FROM ITS STPI UNIT. IT MIGHT BE TRUE THAT PROFITS EARNED FROM STPI WAS NOT ELIGIBLE FOR DEDUC TION U/S.10B OF THE ITA NO. 1798/MDS/2017 :- 6 -: ACT. HOWEVER, ADMITTEDLY, SUCH PROFIT WAS ELIGIBLE FOR DEDUCTION U/S.10A OF THE ACT. JUST BECAUSE THE ASSESSEE MEN TIONED A WRONG SECTION, IN MY OPINION, IT COULD NOT BE DEPRIVED OF A LEGISLATE CLAIM FOR WHICH IT WAS OTHERWISE ELIGIBLE. IN MY OPINION LOWER AUTHORITIES ERRED IN NOT CONSIDERING CORRECTNESS OF THE CLAIM OF DEDUCTION MADE BY THE LD. ASSESSING OFFICER U/S. 10B OF THE ACT. JUDGMENT OF APEX COURT IN THE CASE OF SUN ENGINEERING WORKS (P) LTD (SUPRA) RELIED ON BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IN MY OPINION HAS NO APPLICABILITY SINCE THE CLAIM MADE BY THE ASSESS EE U/S.10A OF THE ACT, CANNOT BE CONSIDERED AS A FRESH CLAIM AS THE CLAIM EMANATED FROM WORKING OF THE SAME STPI UNIT ON WHICH IT HAD EARLIER PREFERRED A CLAIM UNDER SECTION 10B OF THE ACT. THUS, CLAIM O F THE ASSESSEE CANNOT BE CONSIDERED AS FRESH ONE. IN THE CIRCUMS TANCES OF THE CASE, I AM OF THE OPINION THAT THE QUESTION WHETHER ASSES SEE WAS ELIGIBLE FOR CLAIMING DEDUCTION U/S.10B OF THE ACT OUGHT HAVE BE EN CONSIDERED ON THE MERITS OF SUCH CLAIM. IN TAKING THIS VIEW, I R ELY ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HEARTLAND KG INFORMATION LTD (SUPRA ) WHERE IT WAS HELD AS UNDER AT PARA 6: 6. AS FAR AS THE FIRST QUESTION RAISED AS REGARDS THE CLAIM OF THE ASSESSEE ORIGINALLY MADE UNDER SECTION 10B O F THE INCOME-TAX ACT IS CONCERNED, WE DO NOT THINK, THE S AID QUESTION CAN BE ANSWERED IN FAVOUR OF THE REVENUE. A READING OF THE ORDER OF THE ASSESSING OFFICER AS WE LL AS THE COMMISSIONER OF INCOME-TAX (APPEALS) SHOWS THAT EVE N THOUGH THE ASSESSEE ORIGINALLY CLAIMED RELIEF UNDER SECTION 10B, IT WAS CAUTIOUS ENOUGH TO MAKE AN ALTERNATIVE PLEA ITA NO. 1798/MDS/2017 :- 7 -: UNDER SECTION 10A IN VIEW OF THE FACT THAT THE ASSE SSEE'S VENDOR HAD THE BENEFIT UNDER SECTION 10A. IT IS NOT DENIED BY THE REVENUE THAT THE ASSESSEE HAD THE WHOLE BUSI NESS TRANSFERRED TO ITS FAVOUR AND THAT THE FACTUM OF TR ANSFER WAS ALSO INTIMATED TO THE SOFTWARE TECHNOLOGY PARK OF INDIA. THUS, AS A SOFTWARE TECHNOLOGY PARK, THE ASS ESSEE IS ENTITLED TO PLACE HIS CLAIM UNDER SECTION 10A. IN A NY EVENT, EVEN ASSUMING FOR A MOMENT, THE ASSESSEE HAD NOT REFERRED TO THE SECTION CORRECTLY, THE FACT REMAINS THAT IF THE CLAIM COULD BE FAVOURABLY BE CONSIDERED UNDER ANY O F THOSE SPECIAL DEDUCTION PROVISIONS AND ON THE CONDITIONS SPECIFIED THEREIN BEING SATISFIED, WE DO NOT THINK THAT THERE EXISTS ANY JUSTIFIABLE GROUND FOR THE REVENUE TO CONTEND T HAT THE ASSESSEE SHALL NOT BE ENTITLED TO HAVE THE BENEFIT OF SECTION 10A. FOR THE REASONS MENTIONED ABOVE, I SET ASIDE THE OR DERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE REGARDING ELIGIBIL ITY OF THE ASSESSEE FOR CLAIMING DEDUCTION U/S.10A OF THE ACT BACK TO THE F ILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCOR DANCE WITH LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 19TH DAY OF DEC EMBER, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:19TH DECEMBER, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF