DCIT, CHENNAI V. M/s. Soft Logic Systems Pvt. Ltd., CHENNAI

ITA 2021/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4528 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 16-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: P HARI BABU
• Keywords: Assessment record
• Section: 143(3); 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.2021, 2022 & 2050/MDS/2016 * * /ASSESSMENT YEARS: 2007-08, 2008-09 & 2009-10 THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-6(2), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M.G.ROAD, CHENNAI-600 034. VS. M/S.SOFT LOGIC SYSTEMS PVT. LTD., NO.10, P.T.RAJAN SALAI, K.K.NAGAR, CHENNAI-600 078. [PAN: AAFCS 5326 P ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.A.V.SREEKANTH, JCIT ./- 0 /RESPONDENT BY : MR.P.HARI BABU, CA 0 /DATE OF HEARING : 16.03.2017 0 /DATE OF PRONOUNCEMENT : 26.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, F OR THE A.Y. 2007-08, 2008-09 AND THE A.Y. 2009-10 AGAINST THE ORDERS OF 9.3.2016 IN APPEAL NO.ITA NO.138, 139 & 140/CIT(A)-15/14-15. SINCE TH E COMMON ISSUE IS ITA NOS.2021, 2022 & 2050/MDS/2016 :- 2 -: INVOLVED IN THE ABOVE APPEALS, THEY ARE CLUBBED, HE ARD TOGETHER AND DISPOSED OFF IN COMMON ORDER FOR THE SAKE OF CONVEN IENCE. 2.0 THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.10B F OR AY 2007-08 WAS RS.3,36,697/-, AY 2008-09 WAS RS.83,73,098/-. ALL THE AYS WERE COMPLETED ORIGINALLY U/S. 143(3) AND ALLOWED THE DE DUCTION CLAIMED BY THE ASSESSEE U/S.10B. SUBSEQUENTLY, THE ASSESSMENTS WE RE RE-OPENED FOR INCORRECT CLAIM OF DEDUCTION U/S.10B FOR WANT OF RA TIFICATION OF APPROVAL FROM THE BOARD UNDER EOU SCHEME. 3.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E DEDUCTION U/S.10A OF INCOME TAX ACT (IN SHORT THE ACT) ALLOWED BY THE LD.CIT(A) ENTERTAINING THE ALTERNATE CLAIM, MADE BY THE ASSESSEE DURING TH E APPELLATE PROCEEDINGS. THE ASSESSEE FILED RETURN OF INCOME O RIGINALLY CLAIMING THE DEDUCTION U/S 10B AS THE ASSESSEE HAS SET UP 100% E OU UNDER THE STPI SCHEME AND OBTAINED APPROVAL FROM THE DIRECTOR, STP I, VIDE LETTER DATED 24.3.2003. THE APPROVAL WAS RENEWED VIDE LETTER DA TED 10.5.2008 FOR THE PERIOD OF 5 YEARS. THE CASE WAS SELECTED FOR SCRUT INY AND THE ASSESSMENTS WERE COMPLETED U/S. 143(3). IN THE RETURNS OF INCO ME THE ASSESSEE CLAIMED THE DEDUCTION U/S.10B WHICH WAS ALLOWED BY THE ASSESSING OFFICER (IN SHORT AO) IN THE ASSESSMENT MADE U/S 143(3) O RIGINALLY. SUBSEQUENTLY, THE AO RE-OPENED THE ASSESSMENTS FOR INCORRECT CLAIM OF DEDUCTION U/S.10B. THE AO FOUND THAT THE ASSESSEE HAS OBTAINED APPROVAL FOR 100% EOU IN STPI SCHEME AND OBTAINED THE APPROV AL FROM THE DIRECTOR, STPI. AS PER THE CBDT INSTRUCTION NO.2/2 009 DATED 09.03.2009, THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONE R HAS TO BE RATIFIED ITA NOS.2021, 2022 & 2050/MDS/2016 :- 3 -: BY THE BOARD OF APPROVALS (BOA) FOR EOU SCHEME. TH E AO CALLED FOR THE RATIFICATION OF BOA BUT THE ASSESSEE COULD NOT FURN ISH THE SAME AND MADE AN ALTERNATE CLAIM FOR DEDUCTION U/S.10A OF THE ACT . THE AO REJECTED THE ALTERNATE CLAIM MADE BY THE ASSESSEE AND WITHDRAWN THE DEDUCTION ALLOWED U/S.10B OF THE ACT. ON APPEAL, LD.CIT(A) D IRECTED THE AO TO ALLOW THE ALTERNATIVE CLAIM MADE BY THE ASSESSEE U/S.10A OF THE ACT PLACING RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT V. HEARTLAND KG INFORMATION LTD. [2013] 39 TAXMANN.COM 132 (MADRAS). 4.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE RE VENUE IS ON APPEAL BEFORE US. DURING THE APPEAL, THE LD. DR ARGUED THAT THE LD. CIT(A) SHOULD NOT HAVE CONSIDERED THE ALTERNATE CLAIM OF THE ASSESSEE U/S.10A IN THE ABSENCE OF ANY SUCH CLAIM IN THE RETURN OF INCOME. THE FACTS IN THE CASE OF CIT V. HEARTLAND KG INFORMATION LTD. [2013] 39 T AXMANN.COM 132 (MADRAS) ARE DISTINGUISHABLE FROM THE ASSESSEES CA SE. FURTHER, THE LD. DR SUBMITTED THAT THE DEDUCTION U/S.10(B) & U/S.10( A) ARE ALLOWED IN DIFFERENT SITUATIONS SUBJECT TO SATISFACTORY COMPLI ANCE OF THE CONDITIONS IN THE RESPECTIVE SECTIONS OF THE IT ACT. IT IS NOT A MERE AUDIT REPORT AND THE QUANTUM OF DEDUCTION. THE LD. DR FURTHER ARGUE D THAT THE LD.CIT(A) SHOULD HAVE GIVEN AN OPPORTUNITY TO THE AO BEFORE A LLOWING THE DEDUCTION U/S 10A. ON THE OTHER HAND, THE LD.AR RELIED ON TH E ORDERS OF THE LD. CIT(A). ITA NOS.2021, 2022 & 2050/MDS/2016 :- 4 -: 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE CLAIMED DEDUCTION U/S.10B BUT COULD N OT FURNISH THE RATIFICATION OF THE BOARD OF APPROVAL AS REQUIRED I N STPI SCHEME FOR 100% EOU SCHEMES. THEREFORE, THE AO HAS REJECTED CLAIM OF THE ASSESSEE U/S.10B OF THE ACT. THE ASSESSEE IS STPI UNIT AND IS ELIGIBLE FOR DEDUCTION U/S.10A OF THE ACT ALTERNATIVELY. HOWEVER, FOR CLA IMING DEDUCTION U/S.10A THE ASSESSEE HAS TO SATISFY THE CONDITIONS LAID DOW N IN THE SEC.10A IN RESPECT OF AUDIT REPORT, QUANTUM OF DEDUCTION NUMBE R OF YEARS, REALIZATION OF FOREIGN EXCHANGE, DATE OF COMMENCEME NT, ETC., AS SPECIFIED IN SEC.10A. THE APPELLATE AUTHORITY IS EMPOWERED T O CONSIDER THE ADDITIONAL/ALTERNATE CLAIM OF THE ASSESSEE DURING A PPELLATE PROCEEDINGS IF THE CLAIM IS LEGALLY VALID. THIS VIEW IS SUPPORTED BY DECISION IN THE CASE OF PRUDHVI PROGRESS AND SHAREHOLDERS PVT. LTD. 349 ITR 336 RELIED UPON BY THE ASSESSEE. THEREFORE, WE ARE IN AGREEMENT WITH THE ORDER OF THE LD. CIT(A) FOR ENTERTAINING THE ALTERNATE CLAIM. HOWEV ER, WHETHER THE ASSESSEE HAS SATISFIED THE CONDITIONS FOR GRANTING RELIEF U/S 10A OR NOT, IS REQUIRED TO BE VERIFIED FROM THE ASSESSMENT RECORDS AND ADDITIONAL INFORMATION IF ANY REQUIRED BY THE A.O. UNLESS, THE ASSESSEE SATISFIES ALL THE CONDITIONS FOR GRANTING THE DEDUCTION U/S 10A, THE SAME CANNOT BE ALLOWED. THIS ASPECT REQUIRED TO BE VERIFIED BY TH E A.O. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE GO BACK TO THE FILE OF THE AO TO VERIFY WHETHER THE ASSESSEE HAS SATISFIED THE CONDITIONS LAID DOWN U/S.10A OR NOT, FOR GRANTING THE RELIEF. IN C ASE, THE ASSESSEE ITA NOS.2021, 2022 & 2050/MDS/2016 :- 5 -: SATISFIES THE CONDITIONS AS SPECIFIED IN SEC.10A AN D ENTITLED FOR DEDUCTION, WE DIRECT THE AO TO ALLOW THE DEDUCTION. ACCORDING LY, THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER, FOR CONS IDERATION OF THE CLAIM U/S 10A ON MERITS. 6.0 IN THE RESULT, THE APPEAL OF THE REVENUE FOR A. Y. 2007-08, 2008-09 AND 2009-10 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 26 TH MAY, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF