ITO, Ward-3(1), Hyderabad V. M/s. Singularity Software (India) Pvt.Ltd, Hyderabad

ITA 1887/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66502 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 08-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: ANIL SARAF
• Section: 143(3); 142(1); 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALHYDERABAD BENCH HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 1887 & 1888/HYD/2011 ASSESSMENT YEARS : 2005-06 & 2008-09 INCOME-TAX OFFICER, WARD-3(1), APPELLANT HYDERABAD. VS. SINGULARITY SOFTWARE (INDIA) PVT. LTD., RESP ONDENT HYDERABAD. (PAN AAGCS9739R) APPELLANT BY : SHRI R. LAXMAN RESPONDENT BY : SHRI ANIL SARAF DATE OF HEARING : 15/11/2012 DATE OF PRONOUNCEMENT : 23/11/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: BOTH THESE APPEALS FILED BY THE REVENUE ARE DIREC TED AGAINST THE RESPECTIVE ORDERS OF CIT-IV, HYDERABAD, FOR THE ASSESSMENT YEARS 2005-06 AND 2008-09. SINCE IDENTICAL ISSUES A RE INVOLVED IN BOTH THESE APPEALS, THEY WERE CLUBBED AND HEARD TOG ETHER AND, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NO. 1887/HYD/11 FOR AY 2005-06 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY M/S SINGULARITY SOFTWARE (INDIA) PVT. LTD. IS ENGAGED I N THE BUSINESS OF 2 ITA NOS.1887 & 1888/HYD/2011 M/S SINGULARITY SOFTWARE (INDIA) P. LTD. SOFTWARE DEVELOPMENT, FILED ITS RETURN OF INCOME FO R THE YEAR UNDER CONSIDERATION ON 25/10/2005 DECLARING A TOTAL INCOM E OF RS. 4,36,600/-. SUBSEQUENTLY, THE ASSESSEE FILED REVISE D RETURN ON 31/03/2005 DECLARING RS. NIL INCOME AFTER CLAIMING DEDUCTION U/S 10B OF THE ACT OF RS. 47,18,772/-. THE REVISED RETU RN WAS PROCESSED U/S 143(1) OF THE ACT AND THE ASSESSMENT WAS COMPLE TED BY THE AO U/S 143(3) R.W.S. 147 DETERMINING THE TOTAL INCOME AT RS. NIL. 3. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR REVISION U/S 263 OF THE ACT BY THE CIT-III, HYDERABAD AND BY HIS ORDER DIRECTED THAT THE ASSESSEE COMPANY SHOULD BE GIVEN REASONABLE TIME FO R THE SUBMISSION OF THE SAID CERTIFICATE/RATIFICATION BY THE BOARD OF APPROVAL AS ENVISAGED UNDER THE PROVISIONS OF SECTI ON 10B OF THE ACT. 4. WHILE PASSING THE ORDER U/S 143(3) READ WITH SEC TION 263, THE AO ISSUED NOTICES U/S 143(2) & 142(1) AND IN RESPON SE TO THE SAID NOTICES, THE AR OF THE ASSESSEE COMPANY APPEARED FR OM TIME TO TIME, HOWEVER, RATIFICATION BY THE BOARD OF APPROVA L AS ENVISAGED IN THE PROVISIONS OF SECTION 10B WAS NOT FURNISHED. TH E AO HELD THAT STATUTORY APPROVAL BY THE BOARD AS 100% EOU HAS TO BE OBTAINED FOR AVAILING EXEMPTION U/S 10B. HE FURTHER HELD THAT 10 0% EOU UNDER STP SCHEME CANNOT BE EQUATED WITH 100% EOU APPROVED BY BOARD AS HELD IN INFOTECH ENTERPRISES LTD. VS. CIT [2003] 85 ITD 325 (HYD.) THE AO, THEREFORE, CONCLUDED THAT THE ASSESS EE FAILED TO SUBMIT THE NECESSARY APPROVAL OF THE BOARD AS REQUI RED U/S 10B AND FURTHER THE ASSESSEE COMPANY FAILED TO SUBMIT RATI FICATION BY THE DEVELOPMENT COMMISSIONER AS ENVISAGED IN THE INSTRU CTION DATED 09/03/2009 IN SUPPORT OF ITS CLAIM FOR THE DEDUCTIO N U/S 10B. 3 ITA NOS.1887 & 1888/HYD/2011 M/S SINGULARITY SOFTWARE (INDIA) P. LTD. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 6. BEFORE THE CIT(A), THE AR OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD GOT A CLARIFICATION FROM THE JD, STPI, HYDERABAD WHERE THEY HAVE CLEARLY MENTIONED THAT THEY HAVE THE POWE R TO GRANT APPROVAL AND THEIR APPROVAL IS ELIGIBLE TO GET EXEM PTION U/S 10B OF THE ACT. IT WAS ALSO INTIMATED BY THEM THAT IN ALL THE APPROVALS GIVEN BY THEM, A COPY OF THE APPROVAL WAS BEING SEN T TO IMSC (INTER MINISTERIAL STANDING COMMITTEE) FOR RATIFICATION. T HE AR ALSO SUBMITTED THAT THE AO FAILED TO TAKE NOTE OF THE DE CISIONS OF THE HONBLE HYDERABAD TRIBUNAL ALLOWING EXEMPTION U/S 1 0B TO STPI REGISTERED UNITS. 7. IN SUPPORT OF ASSESSEES CLAIM, THE AR OF THE AS SESSEE FILED THE FOLLOWING DOCUMENTS DURING THE COURSE OF APPELLATE PROCEEDINGS: I) COPY OF THE LETTER ISSUED STPI FOR CLARIFYING TH AT THE STPI UNITS ARE ENTITLED TO GET EXEMPTION U/S 10B OF THE IT ACT, 1961. II) COPY OF THE APPROVAL LETTER ISSUED BY THE STPI FOR SETTING 100% EOU AND CONFORMING THAT THEY HAVE SUBMITTED A COPY OF THIS APPROVAL TO IMSC. III) COPY OF EXPORT IMPORT POLICY 2002-2007 ISSUED BY THE DIRECTOR GENERAL OF FOREIGN TRADE. 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AND FOLLOWING THE DECISION OF JURISDICTIONAL BENCH OF I TAT, HYDERABAD IN THE CASE OF SMT. K. SUDHA RANI VS. ITO IN ITA NO. 1 750/HYD/2008 DATED 30/10/2009, THE CIT(A) HELD THAT THE ASSESSEE IS CONSIDERED 4 ITA NOS.1887 & 1888/HYD/2011 M/S SINGULARITY SOFTWARE (INDIA) P. LTD. AS ELIGIBLE FOR DEDUCTION U/S 10B IN VIEW OF THE RE GISTRATION OF THE ASSESSEE WITH SOFTWARE TECHNOLOGY PARK AS A 100% EO U. HE, THEREFORE, DIRECTED THE AO TO ALLOW THE CLAIM OF DE DUCTION U/S 10B AND RECOMPUTED THE INCOME. 9. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE CIT(A) IS ERRONEOUS IN LAW AND ON FACTS. 2. THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE DISA LLOWANCE OF 10B, AS THE ASSESSEE FAILED TO PRODUCE RATIFICATION BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SECTION 10 OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. 3. THE LEARNED CIT(A) SHOULD HAVE APPRECIATED THE I NTENT OF CBDT INSTRUCTION NO. 2 OF 2009 DATED 09/03/2009. 10. WE HAVE HEARD THE LEARNED DR SHRI R. LAXMAN AND THE LEARNED COUNSEL FOR THE ASSESSEE SHRI ANIL SARAF AND PERUSE D THE RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT, HYDER ABAD IN THE CASE OF ITO VS. M/S SELECTSYS INDIA PVT. LTD. IN ITA NO. 1617/HYD/2011 FOR AY 2008-09, VIDE ORDER DATED 11/01/2012, WHERE THE JM WAS ONE OF THE PARTY. THE COORDINATE BENCH IN THE SAID CASE HELD AS UNDER:- 5. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPI TE OF ISSUING NOTICE. WE HAVE HEARD THE LEARNED DR ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. BEFORE THE CIT(A), THE ASSESSEE PRODUCED THE REGIST RATION FROM STP OF INDIA WHICH WAS NOTIFIED BY THE MINISTRY OF COMMERCE, GOV ERNMENT OF INDIA VIDE NOTIFICATION NO. 33/(RE)/92-97 DATED 22.3.1994. THE NOTIFICATION STATES THAT THE SOFTWARE TECHNOLOGY PARK (STP) SCHEME IS A 100% EOU SCHEME. FURTHER THE ASSESSEE PRODUCED COPY OF THE ORDER OF THE TRIB UNAL IN THE CASE OF K. SUDHA RANI CITED SUPRA. PLACING RELIANCE ON THIS OR DER, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BUT THE ASSESSING OFFICER HAS NO OCCASION TO CONSIDER THE SAME. HENCE, IN OUR OPINION, IT IS JUST AND FAI R TO SEND THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE MATERIAL. ACCORDINGLY, THE ORDER OF 5 ITA NOS.1887 & 1888/HYD/2011 M/S SINGULARITY SOFTWARE (INDIA) P. LTD. THE CIT(A) IS SET ASIDE AND THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PASSING A DE NOVO ORDER IN TH E LIGHT OF THE MATERIAL PRODUCED BY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE NECESSARY MATERIAL BEFORE THE ASSESSING OFFICER. 11. SINCE THE ISSUE UNDER CONSIDERATION IS MATERIAL LY IDENTICAL TO THAT OF THE CASE DECIDED BY THE COORDINATE BENCH IN THE CASE OF M/S SELECTSYS INDIA PVT. LTD. (SUPRA), RESPECTFULLY FOL LOWING THE SAME, WE SET ASIDE THE ORDER OF THE CIT(A) AND THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PASSING A DE NOVO ORDER IN THE LIGHT OF THE MATERIAL PRODUCED BY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE NECESSARY MATERIAL BEFORE THE A SSESSING OFFICER. 12. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 13. AS THE FACTS AND GROUNDS OF APPEAL RAISED BY TH E REVENUE IN AY 2008-09 BEING ITA NO. 1888/HYD/2011 ARE MUTATIS-MUT ANDIS TO THAT OF AY 2005-06 BEING ITA NO. 1887/HYD/11(SUPRA), RES PECTFULLY FOLLOWING THE CONCLUSIONS DRAWN THEREIN, WE SET ASI DE THE ORDER OF THE CIT(A) AND REMIT THE ISSUE TO THE FILE OF THE A SSESSING OFFICER TO DECIDE THE ISSUE DE NOVO, WITH IDENTICAL DIRECTIONS . 14. TO SUM UP, BOTH THE APPEALS OF THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 23 RD NOVEMBER, 2012 KV 6 ITA NOS.1887 & 1888/HYD/2011 M/S SINGULARITY SOFTWARE (INDIA) P. LTD. COPY TO:- 1) ITO, WARD 3(1), 7 TH FLOOR, B BLOC, IT TOWERS, AC GUARDS, HYDERABAD. 2) M/S SINGULARITY SOFTWARE (INDIA) PVT. LTD., 201, G. K. CLASSICS, SRINAGAR COLONY, HYDERABAD. 3) THE CIT(A)-IV, HYDERABAD 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYD ERABAD.