Celoxis Technologies Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 205/PUN/2014

• Counselvise Citation: 20524514 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.205/PN/2014 (ASSESSMENT YEAR : 2010-11) CELOXIS TECHNOLOGIES PVT. LTD., 3, SHREYAS ETERNA, NDA PASHAN ROAD, BAVDHAN, PUNE 411 021. PAN : AABCC7213R . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE. . RESPONDENT ASSESSEE BY : MR. KISHOR PHADKE DEPARTMENT BY : MR. RAJESH DAMOR DATE OF HEARING : 10-03-2015 DATE OF PRONOUNCEMENT : 18-03-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DA TED 31.10.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 07.01.2013 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, ASSESSEE MADE AN APPLICATION SEE KING MODIFICATION OF THE GROUNDS OF APPEAL ORIGINALLY FILED IN THE MEMO OF APPEAL. IN TERMS OF THE SAID APPLICATION, THE MODIFIED GROUNDS OF APPEAL RA ISED BY THE ASSESSEE READ AS UNDER :- 1. THE LEARNED CIT(A)-I, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING ACIT-CIRCLE 1(1) DECISION OF DISALLOWING CLAIM OF D EDUCTION U/S 10-B OF THE ITA, 1961, AMOUNTING TO RS.67,55,240/-; ON THE ANALOGY T HAT THE STP UNDERTAKING OF THE APPELLANT IS NOT AN ELIGIBLE UNDERTAKING AS PER EXPLANATION-2(IV) OF SECTION 10B OF THE ITA, 1961. ITA NO.205/PN/2014 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO GROUND NO .1; THE APPELLANT IS ENTITLED TO DEDUCTION U/S 10A OF THE ITA, 1961; AS THE APPELLANTS 100% EXPORT ORIENTED UNIT IS APPROVED BY THE STPI AUTHORITIES U NDER THE STP SCHEME. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO GROUND NO .1 & 2; THE LEARNED INCOME TAX AUTHORITIES ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT APPELLANTS 100% EXPORT ORIENTED UNIT APPROVED UNDE R STP SCHEME IS ELIGIBLE FOR DEDUCTION U/S 10A OF THE ITA, 1961. 3. IN SO FAR AS THE ASSESSEES APPLICATION FOR MODI FYING THE GROUNDS OF APPEAL IS CONCERNED, IT WAS NOT OPPOSED BY THE LD. DEPARTMENTAL REPRESENTATIVE, AND THEREFORE THE APPEAL WAS HEARD AND IS BEING ADJUDICATED IN THE CONTEXT OF THE AFORESAID MODIFIED GROUNDS OF APPEAL. 4. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELL ANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER- ALIA, ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPME NT AND SOFTWARE EXPORTS. IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2 010-11, IT CLAIMED A DEDUCTION OF RS.67,55,240/- IN TERMS OF SECTION 10B OF THE ACT. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FOR THE DEDUCTION U/S 10B OF THE ACT ON THE GROUND THAT THE UNIT OF THE ASSESSEE WAS REG ISTERED WITH THE DIRECTORATE OF SOFTWARE TECHNOLOGY PARK OF INDIA (STPI) WHEREAS IN TERMS OF EXPLANATION 2(IV) TO SECTION 10B OF THE ACT, ASSESSEES 100% EX PORT ORIENTED UNIT (EOU) WAS TO BE APPROVED BY A BOARD APPOINTED IN THIS BEH ALF BY THE CENTRAL GOVERNMENT U/S 14 OF THE INDUSTRIAL DEVELOPMENT AND REGULATION ACT, 1951. THE CIT(A) HAS ALSO AFFIRMED THE DECISION OF THE AS SESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE AFORESAID DECISION OF THE LOWER AUT HORITIES BY WAY OF MODIFIED GROUND OF APPEAL NO.1. 5. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT T HE AFORESAID ISSUE IS NO LONGER RES-INTEGRA INASMUCH AS THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. REGENCY CREATIONS LTD., 353 ITR 326 (DELHI) HAS UPHELD A SIMILAR ITA NO.205/PN/2014 STAND OF THE INCOME-TAX AUTHORITIES IN DENYING THE CLAIM OF DEDUCTION U/S 10B OF THE ACT. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF CLARION TECHNOLOGIES PVT. LTD. VS. DCIT VIDE ITA NO.2554/PN /2012 & OTHERS DATED 31.10.2014, FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA), ALSO UPHELD THE ACTION OF THE INCOME- TAX AUTHORITIES IN DENYING THE CLAIM FOR DEDUCTION U/S 10B OF THE ACT IN THE ABSENCE OF THE APPROVAL BY THE BOARD APPOINTED IN T HIS BEHALF BY THE CENTRAL GOVERNMENT U/S 14 OF THE INDUSTRIAL DEVELOPMENT AND REGULATION ACT, 1951. AS A CONSEQUENCE, FOLLOWING THE AFORESAID PRECEDENT IN SO FAR AS THE CONTROVERSY RAISED BY WAY OF THE GROUND OF APPEAL N O.1 IS CONCERNED, THE SAME IS HELD AGAINST THE ASSESSEE. THUS, THE GROUN D OF APPEAL NO.1 IS HEREBY DISMISSED. 6. THE SECOND GROUND RAISED BY THE ASSESSEE IS AN A LTERNATIVE GROUND WHEREBY ASSESSEE HAS PUT-FORTH ITS CLAIM FOR DEDUCT ION U/S 10A OF THE ACT. THE AFORESAID GROUND IS A FRESH GROUND RAISED BEFOR E THE TRIBUNAL, WHICH WAS HITHERTO NOT RAISED BEFORE THE LOWER AUTHORITIES. IN THIS CONTEXT, THE CLAIM OF THE ASSESSEE IS THAT SINCE ITS UNIT IS APPROVED BY THE DIRECTORATE OF STPI, THE PROFITS DERIVED THEREFROM ARE ELIGIBLE FOR THE BENE FITS OF SECTION 10A OF THE ACT AND IN SUPPORT A REFERENCE HAS BEEN PLACED ON THE J UDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TECHNOVATE E SOLUTIONS (P.) LTD., (2013) 32 TAXMANN.COM 290 (DELHI). AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT ONCE THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT IS REJECT ED BY THE INCOME-TAX AUTHORITIES FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA), THE ALTERNATIVE CLAIM OF THE ASSESSEE IS QUITE JUSTIFIED AS THE SAME MEETS WITH THE REQUIREM ENTS OF SECTION 10A OF THE ACT. THE LD. REPRESENTATIVE POINTED OUT THAT IN TH E PAST YEARS, ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT UNDER SIMILAR CIRCUMSTANCES, AND IT WAS ITA NO.205/PN/2014 ALSO BEING ALLOWED BY THE INCOME-TAX AUTHORITIES. THEREFORE, AT THE TIME OF FILING OF THE RETURN OF INCOME AND EVEN IN THE COUR SE OF ASSESSMENT PROCEEDINGS, THERE WAS NO OCCASION FOR THE ASSESSEE TO ENTERTAIN A BELIEF THAT THE CLAIM U/S 10B OF THE ACT WAS NOT ALLOWABLE. IT WAS POINTED OUT THAT THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF REGENCY CREATIONS LTD. (SUPRA) WAS OF A DATE LATER THAN THE FILING OF RETURN. JUSTIFYING THE ADDITIONAL GROUND NOW SOUGHT TO BE RAISED, IT WAS P OINTED OUT THAT THE FACTUM OF THE ASSESSEES UNIT BEING APPROVED BY THE PRESCR IBED AUTHORITY U/S 10A IS ALREADY ON RECORD. IT WAS ALSO POINTED OUT THAT TH E FACTS NECESSARY TO EXAMINE ASSESSEES PLEA FOR CLAIM U/S 10A OF THE ACT ARE SU BSTANTIVELY ALREADY ON RECORD AND THAT THE CLAIM U/S 10A OF THE ACT BE ENT ERTAINED HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HONBLE SU PREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, (1998) 229 ITR 383 (SC). IT HAS ALSO BEEN POINTED OUT THAT IN SOMEWHAT SIMILAR CIRC UMSTANCES, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF CLARION TECHNO LOGIES PVT. LTD. (SUPRA) HAS ACCEPTED ASSESSEES PLEA FOR EXAMINATION OF ITS ALT ERNATE CLAIM FOR DEDUCTION U/S 10A OF THE ACT. 7. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE P OINTED OUT THAT IN THIS CASE THE DEDUCTION U/S 10A OF THE ACT WAS NOT CLAIM ED IN THE RETURN OF INCOME AND THEREFORE IT COULD NOT HAVE BEEN ENTERTAINED BY THE ASSESSING OFFICER AT A LATER STAGE. ACCORDINGLY, THE PLEA OF THE ASSESSEE IS SOUGHT TO BE OPPOSED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN OUR CONSIDERED OPINION, ASSESSEE CANNOT BE FAULTED FOR NOT STAKING ITS CLAIM FOR DEDUCTION U/S 10A OF THE ACT IN ITS RETURN OF INCOME BECAUSE IN T HE EARLIER YEARS IT WAS CLAIMING DEDUCTION IN TERMS OF SECTION 10B OF THE A CT, WHICH WAS ALSO ALLOWED BY THE INCOME-TAX AUTHORITIES. THEREFORE, THE STAN D OF THE REVENUE THAT THE CLAIM WAS NOT MADE IN THE RETURN OF INCOME IS NO GR OUND TO SHUTOUT THE PRESENT ITA NO.205/PN/2014 PLEA BEING RAISED BY THE ASSESSEE. NEVERTHELESS, A SSESSEE IS ENTITLED TO RAISE AN ADDITIONAL GROUND EVEN BEFORE THE TRIBUNAL, WHIC H WAS HITHERTO NOT RAISED BEFORE THE LOWER AUTHORITIES, SO FAR AS IT RELATES TO A POINT OF LAW ARISING FROM THE FACTS ALREADY ON RECORD. IN THIS CONTEXT, THE PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONA L THERMAL POWER CO. LTD. (SUPRA) IS WORTHY OF NOTICE. IN THE PRESENT CONTEX T, IT IS UNDISPUTABLE THAT EOU OF THE ASSESSEE IS REGISTERED WITH THE DIRECTORATE OF STPI WHICH IS A FUNDAMENTAL CONDITION FOR ALLOWANCE OF DEDUCTION U/ S 10A OF THE ACT. IN-FACT, UNDER IDENTICAL CIRCUMSTANCES, THE HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. VALIANT COMMUNICATION LTD. IN ITA NOS.440 441 /2012 DATED 04.01.2013 CONSIDERED ASSESSEES ALTERNATE CLAIM FOR DEDUCTION U/S 10A OF THE ACT AND DIRECTED THE INCOME-TAX AUTHORITIES TO EXAMINE THE SAME, ONCE ASSESSEE WAS FOUND TO HAVE FAILED IN ITS CLAIM FOR DEDUCTION U/S 10B OF THE ACT. IN THE CASE OF CLARION TECHNOLOGIES PVT. LTD. (SUPRA), A SOMEWHAT SIMILAR SITUATION HAD ARISEN AND THE FOLLOWING DISCUSSION OF THE TRIBUNAL IS RELEVANT :- 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN THE PRESENT CASE, IN THE PAST YEARS ASSESSEE HAS BEEN ALLOWED T HE CLAIM OF DEDUCTION U/S 10B OF THE ACT. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2010-11 ALSO ASSESSEE CLAIMED DE DUCTION U/S 10B OF THE ACT IN RELATION TO THE PROFITS DERIVED FROM ITS STPI UN IT. THIS CLAIM OF DEDUCTION CAME TO BE DENIED ON THE GROUND THAT THE APPROVAL F ROM DIRECTOR, STPI WAS INSUFFICIENT AND THAT THE ASSESSEE WAS REQUIRED TO TAKE APPROVAL FROM THE BOARD APPOINTED FOR THIS PURPOSE BY THE CENTRAL GOV ERNMENT, FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF REGENCY CREATIONS LTD. (SUPRA). IN THE AFORESAID SITUATION, AT THE T IME OF FILING OF RETURN OF INCOME FOR THE INSTANT ASSESSMENT YEAR, ASSESSEE COULD NOT HAVE ENVISAGED THE DENIAL OF ITS CLAIM OF DEDUCTION U/S 10B OF THE ACT , WHICH WAS BEING ALLOWED IN THE PAST. THE AFORESAID CIRCUMSTANCE CLEARLY ESTABL ISHES THE BONAFIDES OF THE REASONS PREVAILING WITH THE ASSESSEE FOR NOT HAVING MADE A CLAIM FOR DEDUCTION U/S 10A OF THE ACT IN THE RETURN OF INCOM E. HAVING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THE INSTANT CAS E, IN OUR VIEW, THE STAND OF THE REVENUE THAT ASSESSEE CANNOT BE ALLOWED THE BEN EFITS OF SECTION 10A OF THE ACT MERELY BECAUSE THE PRESCRIBED AUDIT REPORT IN FORM NO.56F WAS NOT FILED IN THE RETURN OF INCOME, IS QUITE ERRONEOUS. PERTINENTLY, AFTER DENIAL OF DEDUCTION U/S 10B OF THE ACT IN THE ASSESSMENT ORDE R, THE EARLIEST OPPORTUNITY FOR THE ASSESSEE TO STAKE CLAIM FOR DEDUCTION U/S 1 0A OF THE ACT WAS BEFORE THE CIT(A); AND, THE ASSESSEE MADE THE CLAIM BEFORE THE CIT(A) ALONG WITH THE PRESCRIBED AUDIT REPORT IN FORM NO.56F. THE HO NBLE DELHI HIGH COURT IN THE CASE OF VALIANT COMMUNICATIONS (SUPRA) IN SIMIL AR CIRCUMSTANCES HELD THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT IS REQUIRED TO BE ITA NO.205/PN/2014 EXAMINED IN ACCORDANCE WITH LAW. PERTINENTLY, EVEN IN THAT CASE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT IN THE RET URN OF INCOME, WHICH WAS NOT ALLOWED ULTIMATELY IN THE ABSENCE OF THE UNIT B EING APPROVED BY THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT, WHEREAS THE UN IT WAS ONLY REGISTERED WITH THE STPI. THE HONBLE DELHI HIGH COURT DIRECT ED THE LOWER AUTHORITIES TO CONSIDER THE CLAIM OF DEDUCTION U/S 10A OF THE ACT IN ACCORDANCE WITH LAW. IN THE PRESENT CASE ALSO, WE FIND NO REASON TO DENY TH E ASSESSEE AN OPPORTUNITY TO PUT-FORTH ITS CLAIM FOR DEDUCTION U/S 10A OF THE ACT WITH REGARD THE PROFITS OF ITS STPI UNIT, SUBJECT OF-COURSE TO THE FULFILLMENT OF THE PRESCRIBED CONDITIONS. 17. SECTION 10A OF THE ACT PROVIDES A DEDUCTION OF SUCH PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM EXPORT OF ARTICLES O R THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT. THE ASSES SEE CLAIMED THAT IT HAS UNDERTAKEN EXPORT OF COMPUTER SOFTWARE MANUFACTURED BY IT AND ITS UNIT IS REGISTERED WITH DIRECTOR, STPI. THE APPROVAL GRANT ED BY DIRECTOR, STPI HAS BEEN HELD TO BE A SUFFICIENT COMPLIANCE WITH REQUIR EMENTS OF SECTION 10A(2)(I)(B) OF THE ACT EVEN AS PER THE CBDT VIDE I NSTRUCTION NO.1 OF 2006 DATED 31.03.2006. THEREFORE, PRIMA-FACIE THE 100% EOU OF THE ASSESSEE, BEING REGISTERED WITH STPI, IS ELIGIBLE TO STAKE CL AIM FOR DEDUCTION U/S 10A OF THE ACT, PROVIDED THE OTHER CONDITIONS LAID DOWN IN SECTION 10A OF THE ACT ARE SATISFIED. THEREFORE, IN CONFORMITY WITH THE JUDGE MENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF VALIANT COMMUNICATIONS (S UPRA), WE DEEM IT FIT AND PROPER TO REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U /S 10A OF THE ACT AS PER LAW. THE ASSESSING OFFICER SHALL CONSIDER THE FORM NO.56 F FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) AND SUCH OTHER MATERIAL AND SUBMISSIONS THAT THE ASSESSEE MAY PUT-FORTH IN ORDER TO JUSTIFY ITS CLAI M OF DEDUCTION U/S 10A OF THE ACT. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE A DJUDICATING ON THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT IN AC CORDANCE WITH LAW. THUS, ON THE ALTERNATE PLEA ASSESSEE SUCCEEDS. 9. FOLLOWING THE AFORESAID PRECEDENT, IN OUR VIEW, ASSESSEES PLEA FOR CLAIM OF DEDUCTION U/S 10A OF THE ACT WITH REGARD T O THE PROFITS OF THE STPI UNIT CANNOT BE SHUTOUT WITHOUT APPROPRIATE VERIFICATION. SINCE SUCH A CLAIM WAS NOT BEFORE THE LOWER AUTHORITIES, WE DEEM IT FIT AND PR OPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHAL L ALLOW THE ASSESSEE AN OPPORTUNITY TO PRESENT AND SUBSTANTIATE ITS CLAIM F OR DEDUCTION U/S 10A OF THE ACT IN ACCORDANCE WITH THE CONDITIONS PRESCRIBED IN THE SECTION. THE ASSESSEE SHALL BE AT LIBERTY TO FURNISH SUCH SUBMISSIONS AND MATERIAL WHICH IT MAY FIND APPROPRIATE IN ORDER TO JUSTIFY ITS CLAIM FOR DEDUC TION U/S 10A OF THE ACT. THE ASSESSING OFFICER SHALL EXAMINE THE PLEA SETUP BY T HE ASSESSEE IN ACCORDANCE WITH LAW AND THEREAFTER PASS AN ORDER AFRESH WITH R EGARD TO THE ASSESSEES ITA NO.205/PN/2014 PLEA FOR DEDUCTION U/S 10A OF THE ACT. THUS, ON TH IS ASPECT ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 10. IN SO FAR AS THE GROUND OF APPEAL NO.3 IS CONCE RNED, THE SAME HAS NOT BEEN PRESSED AT THE TIME OF HEARING AND ACCORDINGLY WE DISMISS THE SAME AS NOT PRESSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON 18 TH MARCH, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 18 TH MARCH, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE