ITO 6(3)2, MUMBAI V. ACCENTIA TECHNOLOGIES LTD, NAVI MUMBAI

ITA 1871/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78856 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 08-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHA KALA CHANDA
• Keywords: Additional evidence; Scheme of amalgamation; Revised return
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 1871/MUM/2011 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER - 6(3)-2 M/S. ACCENTIA TECHNOLO GIES LTD. ROOM NO. 514, 5TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 VS. D-207, 2ND FLOOR, INTERNATIONAL INFOTECH CENTRE, CBD BELAPUR NAVI MUMBAI 400614 PAN - AABCH2013F APPELLANT RESPONDENT APPELLANT BY: MS. ABHA KALA CHANDA RESPONDENT BY: NONE DATE OF HEARING: 08.05.2014 DATE OF PRONOUNCEMENT: 08.05.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENUE AND IT PERTAINS TO A.Y. 2007-08. 2. THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM U/S. 10A, WITHOUT APPRECIATING THE FACT THAT THE CLAIM WAS NOT MADE IN THE ORIGINAL RETURN OF INCOME , NOR WAS A REVISED RETURN FILED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN NOT TAKING INTO CONSIDERATION THE A MENDMENT TO SECTION 80A(5) AND THE HON'BLE SUPREME COURT DECISI ON IN THE CASE OF M/S. GOETZE (INDIA) LTD., 284 ITR 323. 3. THOUGH NOTICE WAS SENT TO THE ASSESSEE BY RPAD NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, PROCEED TO D ISPOSE OF THE APPEAL ON MERITS EXPARTE, QUA ASSESSEE. 4. WE HAVE HEARD THE LEARNED D.R. IN THIS REGARD AND C AREFULLY PERUSED THE RECORD. THE UNDISPUTED FACTS OF THE CASE ARE ST ATED IN BRIEF. THE ASSESSEE ITA NO. 1871/MUM/2011 M/S. ACCENTIA TECHNOLOGIES LTD. 2 IS ENGAGED IN THE BUSINESS OF MEDICAL TRANSCRIPTION . IT FILED RETURN OF INCOME ELECTRONICALLY ON 24.07.2007 DECLARING NIL INCOME. THE NET PROFIT AS PER THE P & L ACCOUNT HAS BEEN SHOWN AT ` 6,67,71,702/-. AFTER MAKING CERTAIN DISALLOWANCE THE AO ARRIVED AT THE TOTAL INCOME AT ` 7,19,06,530/-. AGAINST THIS INCOME THE ASSESSEE COMPANY CLAIMED DEDUCTION OF ` 7,12,12,028/- UNDER SECTION 10B OF THE ACT BY CLAIMING THAT IT WA S A 100% EXPORT ORIENTED UNIT AND THE INCOME EARNED THEREFROM IS NOT ASSESSA BLE TO TAX. THE AO OBSERVED THAT THE ASSESSEE IS REQUIRED TO OBTAIN A CERTIFICATE IN FORM NO. 56G TO BE ELIGIBLE TO CLAIM THE DEDUCTION. NEITHER THE CERTIFICATE NOR ANY OTHER EVIDENCE WAS SUBMITTED TO ESTABLISH THE CLAIM AND HENCE THE CLAIM OF DEDUCTION WAS REJECTED. 5. AGGRIEVED, IT WAS CONTENDED BEFORE THE LEARNED CIT( A) THAT THE DISALLOWANCE MADE BY THE AO IS CONTRARY TO THE LAW. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UNDER SECTION 10A OF THE ACT AND ALL THE REQUISITE CONDIT IONS, TO BE ELIGIBLE TO CLAIM SUCH EXEMPTION, WERE FULFILLED AND AVAILABLE BEFORE THE AO AND HENCE DEDUCTION UNDER SECTION 10A OUGHT TO HAVE BEEN GRAN TED. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) CALLED FOR A REMAND REPORT. UPON OBTAINING THE REMA ND REPORT HE NOTICED THE FOLLOWING UNDISPUTED FACTS I.E., (A) THERE IS NO DI SPUTE REGARDING THE AMOUNT WHICH IS CLAIMED AS EXEMPT UNDER SECTION 10A OF THE ACT, (B) THERE IS NO DISPUTE THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEM PTION UNDER SECTION 10A OF THE ACT AND ALL THE CRITERIA REGARDING THE SAID CLA IM HAS BEEN MET BY THE ASSESSEE, AND (C) THERE IS ALSO NO DISPUTE REGARDIN G THE FACT THAT IN THE RETURN OF INCOME THE ASSESSEE CLAIMED DEDUCTION OF THE AMOUNT ADMISSIBLE AS DEDUCTION UNDER SECTION 10A BY MENTIONING IT AS SECTION 10B OF THE ACT. THUS THE ONLY DISPUTE THAT EXISTS IS WHETHER THE CL AIM OF THE ASSESSEE REGARDING DEDUCTION UNDER SECTION 10A IS ALLOWABLE IF THE CLAIM WAS MADE UNDER SECTION 10B IN THE RETURN OF INCOME. 7. THE LEARNED CIT(A) HAS ALSO TAKEN NOTE OF THE FACT THAT IN THE REMAND REPORT THE AO HAS NOT OBJECTED TO THE ALLOWABILITY OF THE CLAIM UNDER SECTION 10A OF THE ACT. IN THIS REGARD HE OBSERVED THAT THE AO HAD RAISED NO QUERIES ITA NO. 1871/MUM/2011 M/S. ACCENTIA TECHNOLOGIES LTD. 3 TO THE ASSESSEE REGARDING ITS COMPLIANCE TO PROVISI ONS OF SECTION 10B. HAD THERE BEEN AN ENQUIRY, IT WOULD HAVE BEEN REVEALED THAT THE ASSESSEES CLAIM DESERVED TO BE CONSIDERED UNDER SECTION 10A, SINCE ALL CONDITIONS FOR CLAIM WERE FULFILLED. THE FOLLOWING PARAGRAPH IN THE REMA ND REPORT ALSO SHOWS THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER S ECTION 10A: - NOW, IN RESPONSE TO THE DIRECTIONS GIVEN VIDE YOUR LETTER REFERRED ABOVE, IT MAY BE STATED THAT THE ASSESSEE HAS NOW S UBMITTED A COPY OF ORDER DATED 13.07.2007 BY WHICH THE BOMBAY HIGH COU RT HAS APPROVED THE SCHEME OF AMALGAMATION OF M/S. IRIDIUM TECHNOLOGIES (I) P. LTD. AND M/S. GEOSOFT TECHNOLOGIES (TRIVANDRUM) LTD. WITH THE ASSESSEE COMPANY WITH EFFECT FROM 01.04.2006. THE A SSESSEE HAS ALSO SUBMITTED COPIES OF PERMISSION/APPROVAL LETTERS DAT ED 17.06.1998 AND 30.03.2000 ISSUED TO THE AFORESAID AMALGAMATING COM PANIES BY THE SOFTWARE TECHNOLOGY PARKS OF INDIA, THIRUVANANTHAPU RAM. CERTIFICATE IN FROM 56F HAS ALSO BEEN SUBMITTED. HAD THE CLAIM OF DEDUCTION BEEN MADE UNDER THE ELIGIBLE SECTION AND HAD THE SUPPORT ING DOCUMENTS BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE CLAIM MIGHT HAVE BEEN ALLOWED. THE LEARNED CIT(A) OBSERVED THAT SECTION 80A(5) IS APPLICABLE ONLY WHEN THE ASSESSEE FAILS TO MAKE A CLAIM IN HIS RETURN OF INC OME FOR ANY DEDUCTION WHEREAS IN THE INSTANT CASE THE ASSESSEE DID MAKE T HE CLAIM THOUGH, BECAUSE OF A TECHNICAL ERROR, THE CLAIM WAS MADE UN DER SECTION 10B INSTEAD OF 10A. IN HIS OPINION, QUOTING OF WRONG SECTION SH OULD NOT DEPRIVE THE ASSESSEE FROM CLAIMING DEDUCTION SO LONG AS THE OTH ER CONDITIONS FOR MAKING SUCH CLAIM ARE SATISFIED. HE RELIED UPON THE CIRCUL AR ISSUED BY THE CBDT DATED 11.04.1955 WHEREIN IT WAS OBSERVED THAT IT IS THE DUTY OF THE AO TO GUIDE THE ASSESSEE WITH REGARD TO ELIGIBILITY TO CL AIM DEDUCTION; IN THE INSTANT CASE WHEN THE ASSESSEE CLAIMED DEDUCTION UN DER SECTION 10B THE AO OUGHT TO HAVE GUIDED THE ASSESSEE WITH REGARD TO EL IGIBILITY TO CLAIM DEDUCTION UNDER SECTION 10A OF THE ACT. HE ALSO REL IED UPON A RECENT DECISION OF THE ITAT TO HOLD THAT IF ALL THE FACTS ARE PLACE D BEFORE THE LOWER AUTHORITIES THE ASSESSEE SHOULD NOT BE DENIED THE BENEFIT OF A CLAIM ON MERITS MERELY BECAUSE IT WAS NOT PROPERLY PROJECTED. HAVING REGAR D TO THE FACTUAL MATRIX OF THE CASE THE LEARNED CIT(A) DIRECTED THE AO TO ALLO W THE BENEFIT UNDER SECTION 10A OF THE ACT BY OBSERVING IN PARAS 6.3 AND 6.4 AS UNDER: - 6.3 A READING OF THE ASSESSMENT ORDER ALSO MAKES IT CLEAR THAT AT NO POINT OF TIME HAD THE ASSESSING OFFICER QUESTION ED THE APPELLANT ITA NO. 1871/MUM/2011 M/S. ACCENTIA TECHNOLOGIES LTD. 4 REGARDING THE CLAIM U/S 10B MADE BY THE APPELLANT I N ITS RETURN OF INCOME. A READING OF THE SAID ORDER ALSO MAKES IT C LEAR THAT AT NO POINT OF TIME WAS THE APPELLANT REQUESTED TO SUBMIT THE A UDIT REPORT REQUIRED FOR THE GRANT OF DEDUCTION OR SERVED WITH A SHOW CA USE ASKING EXPLANATION AS TO WHY THE SAID DEDUCTION SHOULD NOT BE DENIED AS NO AUDIT REPORT WAS FILED. BESIDES IT HAS TO BE KEPT I N VIEW THAT THE HON'BLE HIGH COURT OF DELHI IN CIT VS. AXIS COMPUTE RS (INDIA) P. LTD. (2009) 178 TAXMAN 143 (DELHI) HAS STATED THAT PROVI SIONS OF SUB SECTION (5) OF SEC. 10A ARE DIRECTIONS AND NOT MAND ATORY. THE AUDIT REPORT WAS NOT REQUIRED TO BE FILED WITH THE RETURN OF INCOME BUT COULD HAVE BEEN ASKED FOR AT A LATER DATE. THE AO, I FIND HAS MADE NO ENQUIRIES REGARDING THE AUDIT REPORT. IT IS ALSO TH AT THE APPELLANTS STATEMENT THAT IT HAD FILED AN ELECTRONIC RETURN OF INCOME IS TRUE. THEREFORE ITS CLAIM THAT A MISTAKE HAD BEEN MADE IN ADVERTENTLY WHILE FILING IN THE COLUMNS FOR DEDUCTION CANNOT BE IGNOR ED OR TREATED AS FALSE UNLESS AND UNTIL THE ASSESSING OFFICER HAD MADE AN ENQUIRY AND FOUND THAT THE COMPLIANCE TO THE SAID SECTION HAD NOT BEE N MADE BY THE APPELLANT AT ALL OR THERE WAS NO CLAIM ACTUALLY MAD E IN THE RETURN OF INCOME AND THEREFORE THE APPELLANT WAS NOT LIABLE F OR THE SAID DEDUCTION. THE SAID DEDUCTION UNDER SECTION 10A CAN NOT BE DENIED MERELY BECAUSE AT THE TIME OF FILING OF RETURN THE CLAIM HAD BEEN MADE UNDER SECTION 10B OF THE INCOME TAX ACT. THE PRINCI PLE BEHIND THE OBSERVATION OF THE HON'BLE COURT IN THE CASE OF NAN DLAL JAISWAL AND CO. V. CIT (1997) 142 CTR (MP) 501 WHERE IT HAS BEEN ST ATED THAT WRONG MENTION OF THE PROVISION DOES NOT INVALIDATE THE PE NALTY IS SQUARELY APPLICABLE HERE. 6.4 A READING OF THE REMAND REPORT OF THE ASSESSING OFFICER ALSO MAKES IT VERY CLEAR THAT THE DENIAL TO THE DEDUCTIO N HAS BEEN ADVOCATED ON ACCOUNT OF A TECHNICAL ERROR MADE BY T HE APPELLANT. IF IT WASNT FOR THIS TECHNICAL ERROR THE APPELLANT WAS V ERY MUCH ELIGIBLE TO CLAIM THE SAID DEDUCTION. IN VIEW OF THE ABOVE DETA ILS I FIND THAT THE ACTION OF THE ASSESSING OFFICER IN DENYING THE APPE LLANT THE BENEFIT OF DEDUCTION IT WAS ELIGIBLE FOR CANNOT BE UPHELD. THE APPELLANT HAS CLEARLY PROVED THAT IT HAS COMPLIED WITH ALL THE PR OVISIONS OF THE INCOME TAX ACT AS FAR AS SECTION 10A IS CONCERNED. JUST BE CAUSE THE APPELLANT HAD QUOTED A WRONG PROVISION OF LAW IT WAS NOT A GO OD ENOUGH REASON TO DENY RELIEF WHEN OTHER WISE THE APPELLANT WAS EN TITLED TO ITS. IN VIEW OF THIS THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE SAME BENEFIT UNDER SECTION 10A OF INCOME TAX ACT TO THE APPELLANT. THI S GROUND OF THE APPEAL IS ALLOWED . 8. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. THE LEAR NED SR. D.R. ADMITTED THAT THE ASSESSEE FULFILLED ALL THE OTHER CONDITIONS NECESSARY FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 10A THO UGH HE HAS NOT SPECIFICALLY MENTIONED THE PROVISIONS BEFORE THE AO . IT IS NOT IN DISPUTE THAT AT LEAST BEFORE THE CIT(A) ALL THE FACTS ARE ON REC ORD AND THEY HAVE BEEN TAKEN INTO CONSIDERATION. IT IS NOT THE CASE OF THE REVENUE THAT THE LEARNED ITA NO. 1871/MUM/2011 M/S. ACCENTIA TECHNOLOGIES LTD. 5 CIT(A) HAS WRONGLY ADMITTED ANY ADDITIONAL EVIDENCE IN CONTRAVENTION TO RULE 46A OF THE INCOME TAX RULES. ON A CONSPECTUS O F THE MATTER, WE ARE OF THE FIRM VIEW THAT THE ORDER PASSED BY THE CIT(A) D OES NOT CALL FOR ANY INTERFERENCE AND WE ORDER ACCORDINGLY. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2014. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 8 TH MAY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 12, MUMBAI 4. THE CIT 6, MUMBAI CITY 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.