ITO, New Delhi V. M/s. Nutech Information Systems (P) Ltd., New Delhi

ITA 2164/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7344 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Rule of consistency
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI G.D. AGARWAL , VICE PRESIDENT , AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 2164 /DEL /20 1 3 ASSESSMENT YEAR : 20 0 8 - 09 THE I.T .O VS. M / S N UTECH INFORMATION SYSTEMS P. LTD WARD 13 ( 3 ) AE - 49, TAGORE GARDEN N EW DELHI NEW DELHI 110 0 27 . PAN : AACCN 00781 [APPELLANT] [RESPONDENT] DATE OF HEARING : 10 . 1 2 . 2015 DATE OF PRONOUNCEMENT : 18 . 0 1 .2016 APPELLANT BY : SHRI P. DAM KANUNJNA , SR. DR RESPONDENT BY : SHRI ARUN KISHORE, CA ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - X V I , NEW DELHI, DATED 14 / 0 1 /20 1 3 IN APPEAL NO. 162/10 - 11 FOR A.Y 200 8 - 09 . 2 ITA NO. 2164/DEL/2013 2 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS IN RELATION TO THE LD. CIT(A) S ORDER ALLOWING THE ASSESSEE S CLAIM U/S 10A OF THE INCOME - TAX ACT, 1961 [ THE ACT FOR SHORT]. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RELEVANT MATERIAL ON RECORD. AT THE VERY OUTSET, IT IS PERTINENT TO NOTE THAT IN THE FIRST ROUND OF PROCEEDINGS ITAT BENCH DELHI IN REVENUE S APPEAL IN ITA NO. 4270/DEL/2011 FOR A.Y 2008 - 09 VIDE ORDER DATED 29.06.2012 RESTORED THE ISSUE TO THE FILE OF THE LD. CIT(A) FOR A FRESH CONSIDERATION SO AS TO DECIDE WHETHER THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 10A OF THE ACT IN PURSUANCE TO THE ORDER OF THE TRIBUNAL [SUPRA]. THE LD. CIT(A) PASSED T HE IMPUGNED ORDER AND ALLOWED EXEMPTION U/S 10A OF THE ASSESSEE TO THE ASSESSEE WITH THE FOL L OW I NG OBSERVATION AND CONCLUSION : 3.1 I HAVE CONSIDERED FACTS OF THE CASE, THE FINDING OF THE A.O. AS WELL AS THE SUBMISSIONS OF THE APPELLANT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS POINTED OUT BEFORE THE A.O. BY THE APPELLANT COMPANY BY ITS LETTER DT.23/12/2010 THAT AT THE TIME FILING OF IT RETURN, INSTEAD OF MENTIONING SECTION 10A, SECTION 10B WAS ERRONEOUSLY REFERRED THEREIN. HOWEVER THE DED UCTION CLAIMED READ WITH RULE 16D AND FORM NO.56F WAS U/S 10A OF THE ACT. THE APPELLANT IS AN STPI REGISTERED UNIT AND DEDUCTION WAS CLAIMED IN FORM NO. 56 F UNDER RULE 16D. STPI REGISTERED UNITS ARE CONSIDERED UNDER SEC 10A AND NOT U/S 10B. DEDUCTION U/S 10A IS CLAIMED IN FORM NO. 56F UNDER RULE 16D. 3 ITA NO. 2164/DEL/2013 3 THEREFORE, IT IS EVIDENT THAT DEDUCTION WAS CLAIMED BY THE APPELLANT U/S 10A AS PER FORM NO. 56F UNDER RULE 16D WHICH WAS ALSO CLARIFIED BY THE APPELLANT BY ITS LETTER DT. 23/12/2010. FURTHER CITATION OF A WRO NG SECTION DOES NOT MATTER IN VIEW OF PROVISION OF SEC 292 B M/S NUTECH INFORMATION SYSTEMS P LTD. 3.2 IN ORDER TO EXAMINE WHETHER, ALL THE NECESSARY CONDITIONS SPECIFIED IN SEC 10A HAVE BEEN COMPLIED WITH BY THE APPELLANT, IT IS OBSERVED THAT: I . THE APPELLANT COMPANY WAS INCORPORATED FOR PROVIDING IT & IT ENABLED SERVICES ON 18 TH NOVEMBER 2004. II . AS PER SECTION 10A(1), THE DEDUCTION U/S 10A IS ALLOWABLE FOR A CONTINUOUS PERIOD OF 10 YEARS BEGINNING WITH THE A.Y. IN WHICH THE UNDERTAKING BEGINS TO PRODUCE COMPUTER SOFTWARE. IN THE INSTANT CASE, THE ACTIVITIES OF THE UNIT COMMENCED IN JANUARY 2005 AND CLAIM FOR A.Y.2008 - 09 FALLS WITHIN THE FIRST 10 YEARS. III . AS PER SUB SECTION 2(I)(B) OF SECTION 10A THE UNIT IS REQUIRED TO COMMENCE PRODUCTION OF COMPU TER SOFTWARE AFTER 1 ST APRIL 1994 IN ANY SOFTWARE TECHNOLOGY PARK. THE STP UNIT OF APPELLANT COMPANY WAS REGISTERED WITH SOFTWARE TECHNOLOGY PARK OF INDIA (STPI), NOIDA AS EVIDENT FROM APPROVAL LETTER DT. 4 TH JANUARY 2005 OF STPI, NOIDA. FROM THE STP APPRO VAL LETTER AND GREEN CARD, IT IS EVIDENT THAT THE APPELLANT HAD COMMENCED PRODUCTION OF SOFTWARE AND PROVIDING IT ENABLED SERVICES FROM THE SOFTWARE TECHNOLOGY PARK APPROVED. FROM THE INVOICES IT IS EVIDENT THAT PRODUCTION OF SOFTWARE AND IT ENABLED SERVIC ES PROVIDED DURING THE RELEVANT PERIOD WERE FROM THE SOFTWARE TECHNOLOGY PARK APPROVED. GREEN CARD WAS ISSUED 4 ITA NO. 2164/DEL/2013 4 BY THE STPI AUTHORITY ON 31 ST JANUARY 2005 VALID UPTO 30 TH JANUARY 2006, THEREAFTER THE SAID GREEN CARD WAS RENEWED UPTO 31 ST DEC 2007. THE ARGUME NT OF THE A.O. THAT APPELLANT WAS NOT IN A POSSESSION OF VALID GREEN CARD AS ON 31/03/2008, IS OF NO RELEVANCE BECAUSE THE GREEN CARD WAS VALID UPTO 31/12/2007 AND THE EXPORT TRANSACTION WAS UPTO THE MONTH OF SEPTEMBER 2007, AS IS EVIDENT FROM THE LAST INV OICE DT. 10/09/2007. IV . AS PER SECTION 10A(2)(II), THE UNIT IS NOT TO BE FORMED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. SINCE IT WAS A NEW UNIT SETUP IN JANUARY 2005, THEREFORE, THE ABOVE CONDITION IS ALSO FULFILLED. V. T HERE IS NO DISPUTE AS PER SECTION 10A(2)(III), THAT THE UNIT IS NOT FORMED BY TRANSFER TO BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. VI . AS PER SECTION 10A(3), THE PROCEEDS OF EXPORT OF COMPUTER SOFTWARE OUT OF INDIA ARE TO BE RECEIVED IN INDIA IN CONVERTIBLE FOREIGN EXCHANGE WITHIN 6 MONTHS FROM END OF THE PREVIOUS YEAR. FROM THE COPY OF STATEMENT GIVING EXPORT SALES AND COLLECTION OF PROCEEDS IN FOREIGN EXCHANGE WITH COPIES OF FIRCS IT IS EVIDENT THAT ALL SALE PROCEEDS OF RS.85.96 LAKHS WERE COLL ECTED MUCH BEFORE THE PRESCRIBED TIME LIMIT. FROM THE INVOICES ISSUED BY THE APPELLANT, AUDIT REPORT IN FORM NO. 56F AND CERTIFICATE OF FOREIGN INWARD REMITTANCE ISSUED BY THE CONCERNED BANK IT IS EVIDENT THAT THE COLLECTION OF PROCEEDS IN FOREIGN EXCHANGE ARE FROM EXPORT OF COMPUTER SOFTWARE AS DEFINED IN EXPLANATION 2 OF SEC 10A. VII . AS PER SECTION 10A(4), DEDUCTION UNDER SECTION 10A IS ALLOWABLE IN PROPORTION TO EXPORT TURNOVER AND DOMESTIC TURNOVER. IN THE INSTANT CASE FROM THE AUDIT REPORT, 5 ITA NO. 2164/DEL/2013 5 INVOICES AND CE RTIFICATE OF FOREIGN INWARD REMITTANCE IT IS EVIDENT THAT THERE IS NO DOMESTIC SALE AND THE ENTIRE SALE PROCEEDS OF RS.85.96 LAKHS REPRESENT EXPORTS OF COMPUTER SOFTWARE. VIII . AS REQUIRED U/S 10A(5), REPORT OF AN ACCOUNTANT IN THE PRESCRIBED FORM 56F IS FILED A S SPECIFIED UNDER RULE 16D OF IT RULES 1962. IX. AS PER SECTION 10A(8) OF THE ACT, RETURN OF INCOME IS FILED WITHIN THE TIME LIMIT SPECIFIED U/S 139(1) OF THE ACT ON 29.08.2008. 3.3 FROM THE ABOVE IT IS EVIDENT THAT ALL THE CONDITIONS STIPULATED IN SEC 10A ARE FULFILLED IN THE INSTANT CASE. THE A.O. STATED THAT ALL THE NECESSARY CONDITIONS FOR CLAIMING DEDUCTION U/S 10A OR 10B HAVE NOT BEEN STRICTLY FOLLOWED. HOWEVER, THE A.O. HAS NOT SPECIFIED WHICH OF THE CONDITIONS STIPULATED IN THE SECTION HAS NOT BEEN MET BY THE APPELLANT. AS REGARDS THE ALLEGED MISMATCH OF SALE AND FIRCS, THE APPELLANT HAS FILED COPIES OF THE FIRCS AND THEIR RECONCILIATION WITH THE EXPORT SALES AS PER WHICH PAYMENTS AGAINST THE INVOICES WERE RECEIVED WITHIN THE YEAR (COPIES OF FIRCS WE RE FILED BEFORE THE A.O. AS WELL). REGARDING THE NON PREPARATION OR NON - FILING OF SOFTEX FORMS, THIS WAS A PROCEDURAL ISSUE BETWEEN THE STPI UNIT AND STP OFFICE AND DOES NOT IMPINGE UPON THE ALLOWANCE OF EXEMPTION U/S 10A, IN CASE THE CONDITIONS THEREOF A RE SATISFIED. THE APPELLANT SUBMITTED THAT OTHER REPORTS I.E. ANNUAL AND MONTHLY PROGRESS REPORTS WERE DULY FILED WITH THE STP OFFICE WHICH DID NOT RAISE ANY OBJECTIONS OR CANCEL ITS REGISTRATION AND IN FACT THE DELAY IN FILING OF SOFTEX FORMS HAS ALSO SUB SEQUENTLY BEEN CONDONED ON THE BASIS OF PERMISSIONS FROM RBI . THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND THE PROVISIONS OF LAW IN THIS REGARD, I AM OF THE VIEW THAT THERE WAS NO JUSTIFICATION FOR NOT ALLOWING THE EXEMPTION U/S 10A TO THE APPELLANT. THE 6 ITA NO. 2164/DEL/2013 6 DISALLOWANCE MADE BY THE A.O. IS THEREFORE DELETED. THE APPEAL IS ALLOWED ON THIS GROUND. 4. IN VIEW OF THE ABOVE, WE NOTE THAT FIRSTLY, THE LD. CIT(A) HAS DECIDED THE ISSUE OF APPLICABILITY OF SECTION 10A OR 10B OF THE ACT AND HELD THA T THE CITATION OF WRONG SECTION DOES NOT MATTER IN VIEW OF SECTION 292B OF THE ACT AND WE ARE IN AGREEMENT WITH THIS CONCLUSION BECAUSE DEDUCTION U/S 10A OF THE ACT HAS BEEN CLAIMED IN FORM NO. 56F U/S 16D OF THE I.T. RULES, 1962 WHICH WAS ALSO CLARIFIED B Y THE ASSESSEE VIDE LETTER DATED 23.12.2010. THUS, THE CONCLUSION OF THE FIRST APPELLATE AUTHORITY IS QUITE CORRECT IN THIS REGARD. 5. FURTHER, FROM THE OPERATIVE PARA 6 OF THE TRIBUNAL ORDER, WE NOTE THAT THE MATTER WAS RESTORED TO THE FILE OF THE LD. CIT(A) FOR CONSIDERING THE MATTER AFRESH SO AS TO DECIDE WHETHER THE ASSESSEE IS ENTITLED T O EXEMPTION U/S 10A OF THE ACT AND IF YES, WHETHER CONDITIONS PRECEDENT FOR GRANT OF THIS EXEMPTION ARE SATISFIED IN THIS CASE. WE ALSO NOTE THAT THIS EXEMPTION WA S CONSISTENTLY ALLOWED FROM A.YS 2005 - 06 TO 2007 - 08 AND THERE WAS NO VA L ID REASON TO DEVIATE WITH THE PRINCIPLE OF CONSISTENCY IN THE YEAR UNDER CONSIDERATION, I.E. A.Y 2008 - 09. IN THE LIGHT OF THE 7 ITA NO. 2164/DEL/2013 7 DIRECTIONS OF THE TRIBUNAL ORDER [SUPRA], WHEN WE LOGICA LLY ANALYSE THE OPERATIVE PART OF THE FIRST APPELLATE ORDER AS REPRODUCED HEREINABOVE, IT IS AMPLY CLE A R THAT THE FIRST APPELLATE AUTHORITY HAS CATEGORICALLY OBSERVED ALL THE NECESSARY CONDITIONS SPECIFIED AN D REQUIRED U/S 10A OF THE ACT WHICH ENTITLE THE CLAIMANT ASSESSEE FOR THE SAME. TH E REAFTER, THE FIRST APPELLATE AUTHORITY PROCEEDED TO CONSIDER THE ALLEGATIONS OF THE AO AND HELD THAT THE AO HAS NOT SPECIFIED WHICH OF THE STIPULATED AND NECESSARY CONDITIONS OF SECTION 10A OF THE ACT HAS NOT BEEN MET OR COMPLIED WITH BY THE ASSESSEE. REGARDING THE NON - PREPARATION OR NON - FILING OF THE SALES TAX FORM, IT WAS HELD BY THE LD. CIT(A) THAT THIS WAS PROCEDURAL ISSUE BETWEEN THE STP I UNIT AND STP OFFICE AND DOES NOT IMPINGE UPON THE ALLOWANCE OF EXEMPTION U/S 10 A, IN CASE THE CONDITIONS THER E OF ARE SATISFIED. 6. ON THE BASIS OF FOREGOING DISCUSSION, WE ARE IN AGREEMENT WITH THE LD. DR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE COMPANY HAS FULFILLED ALL THE CONDITIONS STIPULATED IN FORM NO. 10A OF THE ACT AND THE FIRST APPELLATE AUTHORITY FURTHER ERRED IN NOT TAKING INTO CONSIDERATION THE DETAILED FACTS AND DEFICIENCIES RECORDED BY THE AO IN THE ASSESSMENT ORDER . PER CONTRA, AS WE HAVE OBSERVED HEREINABOVE, THE LD. CIT(A) RIGHTLY 8 ITA NO. 2164/DEL/2013 8 FOLLOWED THE PRINC IPAL OF CONSISTENCY AND PROPERLY AND CORRECTLY FOLLOWING THE DIRECTIONS OF THE TRIBUNAL, THE FIRST APPELLATE AUTHORITY PROPERLY CONSIDERED AND ADJUDICATED THE ISSUE AND AFTER TAKING INTO CONSIDERATION THE CONDITIONS PRECEDENT FOR GRANT OF EXEMPTION U/S 10A OF THE ACT HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S10A OF THE ACT . WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND THUS WE UPHOLD THE CONCLUSION OF THE FIRST APPELLATE AUTHORITY . ACCORDINGLY , WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND THUS GROUND NO. 1 AND 2 OF THE REVENUE, BEING DEVOID OF MERITS, ARE DISMISSED . 7. IN THE RESULT, T HE APPEAL OF THE REVENUE STANDS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18 . 01 .201 6 . SD/ - SD/ - ( G.D. AGARWAL ) (C.M. GARG) VICE PRESIDENT JUDICIAL MEMBER DATED: 18 TH JANUARY, 2016. VL/ 9 ITA NO. 2164/DEL/2013 9 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI