ACIT, Trivandrum V. M/s.Firmusoft Solutions P. Ltd, Trivandrum

ITA 244/COCH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7543 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Keywords: Revised return
• Section: 10B; 148; 10

Judgement Text

ITA NO . 244/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 244/COCH/2015 (ASST YEAR 2008 - 09 ) THE ASST COMMR OF INCOME TAX CIRCLE 1(1), THIRUVANANTHAPURAM 695 004 VS FIRMUSOFT SOLUTIONS P LTD KRA 189 BRIGADE LANE KUNNUKUZHY VANCHIYOOR PO TRIVANDRUM 695 010 ( APPELLANT) (RESPONDENT) PAN NO. AAGCS9973B ASSESSEE BY NONE REVENUE BY SH K P GOPAKUMAR, SR DR DATE OF HEARING 12 TH JAN 2015 DATE OF PRONOUNCEMENT 22 ND JAN 2016 OR D ER PER G EORGE GEORGE. K. J M: THIS APPEAL, AT THE INSTANCE OF THE DEPARTMENT, IS DIRECTED AGAINST THE ORDER OF THE CIT(A), TRIVANDRUM DATED 31.1.2015. THE RELEVANT ASSESSMENT YEAR IS 2008 - 09. 2 THE EFFECTIVE GROUND S RAISED READS AS UNDER: 1 . THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) OUGHT TO HAVE NOTED THAT SECTION 10A(5) OF THE INCOME TAX ACT STIPULATES THAT THE DEDUCTION U / S 10 A SHALL NOT BE ADMISSIBLE UNLESS THE ASSESSEE FURNISHES FORM NO.56F ALONG WITH THE RETURN OF INCOME AND THE REPORT OF AN ACCOUN TANT AS SPECIFIED . NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED AND TH I S WAS NOT RAISED AS AN ADDITIONAL GROUND/CLAIM BUT AS AN ALTERNATIVE CLAIM BEFORE THE APPELLATE AUTHORITY , WHERE A CLAIM FOR DEDUCTION U/S 10B WAS ALREADY MADE I N THE RETURN OF I NCOME . ITA NO . 244/C/2015 2 2 . THE L EA R NED COMM I SS I O N ER OF I NCOME TAX ( APPEALS ) OUGHT TO HAVE FOLLO WE D TH E DEC I S I O N OF T H E HO N ' BL E S UPR E M E CO U RT OF INDIA IN THE CASE OF GOETZ (IND I A LTD (284 ITR 323) WHERE I T I S HE L D THAT AN ADDITIONAL CLAIM FOR DEDUCTION NO T MADE IN T HE R E T U R N OF I NCOME CANNOT BE ENTERTAINED OTHERWISE THAN BY FILING A REV I SED R ETURN . 3 BRIEFLY FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN DEVELOPMENT AND SALE OF COMPUTER SOFTWARE. FOR THE ASSESSMENT YEA R 2008 - 09, THE RETURN OF INCOME WAS FILED ON 29.9. .2008 DECLARING INCOME OF RS. 30,350 / - AFTER CLAIMING DEDUCTION U/S 10B OF THE I T ACT AMOUNTING TO RS 52,39,356 / - . THE ASSESSMENT HAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT FOR THE REASON THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED REVISED RETURN OF INCOME ON 9.10.2013 DECLARING A TOTAL INCOME OF RS. 30,350/ - AFTER CLAIMI NG A DEDUCTION/S 10B OF THE ACT, AS ORIGINALLY CLAIMED . THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS IN SUPPORT OF RETURN OF INCOME FILED FOR VERIFICATION. DURING THE COURSE OF RE ASSESSMENT PROCEEDING, THE ASSESSEE WAS ASKED TO SUBMIT THE AUTHORITY UNDER WHICH DEDUCTION/S 10B WA S CLAIMED. THE ASSESSEE FILED A LETTER DATED 26.11.2013 CLAIMING THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION U/S 10B AS IT IS REGISTERED WITH STP. THE REASSESSMENT WAS COMPLETED ON 9.3.2013 BY DENYING THE BENEFIT OF DEDUCTION U/S 10B OF THE ACT. THE AO, RELYING ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS REGENCY CREATION LTD., REPORTED IN 255 CTR 63 HELD THAT THE ASSESSEE IS NOT ELIGIBLE DEDUCTION U/S 10B AS THE ASSESSEE HAS ITA NO . 244/C/2015 3 OBTAINED ONLY APPROVAL FROM THE DIRECTOR OF SOFTWAR E TECHNOLOGY PARK OF INDIA , WHICH IS NOT A VALID APPROVAL FOR THE PURPOSE CLAIMING DEDUCTION U/S 10B OF THE ACT. ACCORDING TO THE AO, FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 10B OF THE ACT, THE EXPORT ORIENTED UNIT IS TO BE APPROVED BY THE CENTRAL GOVE RNMENT THROUGH AN APPROPRIATE AUTHORITY CONSTITUTED U/S 14 OF THE INDUSTRIAL (DEVELOPMENT AND REGULATION)ACT 1951. ACCORDINGLY, DEDUCTION CLAIMED U/S 10B FOR RS. 52,39,356/ - WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4 AGGRIEVED BY THE REASSESSMENT COMPLETED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY, WITH REGARD TO ASSESSEES PLEA AGAINST REOPENING OF THE ASSESSMENT FOR THE AY 2008 - 09 HELD AGAINST THE ASSESSEE. THE CIT(A) ALSO HELD THAT THE AO HAS CORRECTLY DENIED THE CLAIM OF DEDUCTION U/S 10B OF THE ACT. HOWEVER, THE CIT(A) CONSIDERED THE ALTERNATIVE PLEA OF THE ASSESSEE; NAMELY WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 10A OF THE ACT AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WHILE DECIDING THE ALTERNATIVE PLEA OF THE ASSESSEE, THE CIT(A) ALSO CALLED FOR THE REMAND REPORT OF THE AO. 5 THE REVENUE, BEING AGGRIEVED BY THE CIT(A)S DIRECTION TO AO TO ALLOW DEDUCTION U/S 10A OF THE ACT IS IN APPEAL BEFORE US. THE LD DR SUBMITTED THAT THE CIT(A) OUGHT TO HAVE INDEPENDENTLY EXAMINED WHETHER THE ASSESSEE HAS ITA NO . 244/C/2015 4 SATISFIED THE ELIGIBILITY CRITERIA FOR CLAIMING THE DEDUCTION U/S 10A OF THE ACT. IT WAS SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS NOT CONSIDERED THE SAME WHILE ALLOWING THE ALTERNATIVE PLEA OF THE ASSESSEE. NONE W AS PRESENT ON BEHALF OF THE RESPONDENT ASSESSEE 6 WE HAVE HEARD THE LD DR AND PERUSED THE MATERIAL ON RECORD. IN THE RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION U /S 10B OF THE ACT. THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS WITHDRAWN IN THE RE ASSESSMENT ORDER DATED 9.3.2013 BY FOLLOWING THE DICTUM LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD (SUPRA). THE FIRST APPELLATE AUTHORI TY HAS CONFIRMED THE ACTION OF THE AO IN MAKING THE DISALLOWANCE OF DEDUCTION U/S 10B OF THE ACT BASED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT, CITED SUPRA. HOWEVER, THE FIRST APPELLATE AUTHORITY HAS ALLOWED THE ALTERNATIVE CLAIM FOR DEDUCTION U/S 10A OF THE ACT BASED ON THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CWP TAYLOR IN ITA NO. 695/COCH/2008(ORDER DATED 28.7.2009). THE CIT(A) HAS ALSO VERIFIED THE FACTS RELATING TO THE COMPLIANCE OF ALL THE CONDITIONS PRESCRIBED UNDER S ECTION 10A OF THE ACT ( IN PARA 3.6.8 OF THE IMPUGNED ORDER) . BASED ON THE VERIFICATION OF FACTS, THE CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S 10A OF THE ACT. THE FOLLOWING JUDGMENT OF THE HONBLE DELHI HIGH COURT AND ORDERS OF THE ITAT HAVE HELD TH AT WHEN DEDUCTION U/S 10B IS DENIED, IT IS THE DUTY OF THE REVENUE TO EXAMINE WHETHER THE ALTERNATIVE CLAIM OF DEDUCTION U/S 10A CAN BE GRANTED ON FACTS AND CIRCUMSTANCES OF THE CASE: ITA NO . 244/C/2015 5 I) FAST BOOKING (I) PVT LTD VS DCIT IN ITA 334/ 2015 ( JUDGMENT DATED 2.9.2015)(DELHI HIGH COURT JUDGMENT ) II ) M/S DEVICE DRIVEN (INDIA) P LTD (ITA NO. 282/COCH/2013 (ORDER DT 29.11.2013) III ) CRONOS CONSULTING INDIA P LTD VS ACIT (ITA NO. 105/COCH/2014 (ORDER DT 6.6.2014) 7 FURTHER, WE NOTICE THAT THE AO, IN THE REMAND REPOR T HAS NOT STATED THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS PRECEDENT TO CLAIM DEDUCTION U/S 10A OF THE ACT. THE AO HA D ONLY RAISED A TECHNICAL OBJECTION NAMELY, THE ASSESSEE IS NOT ENTITLED DEDUCTION U/S 10A OF THE ACT , SINCE, THE CLAIM WAS NOT M ADE IN THE RETURN OF INCOME FILED. HOWEVER, WE NOTICE THAT THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS MADE IN THE RETURN OF INCOME AND THE REVENUE WAS GRANTING THE DEDUCTION U/S 10B OF THE ACT IN THE PREVIOUS ASSESSMENT YEARS. ONLY WHEN THE JUDGMENT O F THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD, CITED SUPRA, WAS PRONOUNCED, THE CLAIM OF DEDUCTION U/S 10B WAS DENIED IN THE ASSESSMENT CONCLUDED. WHEN THE CLAIM OF DEDUCTION U/S 10B WAS DENIED, THE AO OUGHT TO HAVE EXAMINED WHETHER T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. THE CBDT CIRCULAR NO.14 (XL - 35) DATED 11.4.1955 HAS CLARIFIED THAT THE REVENUE SHALL NOT TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS AND THE OFFICERS ARE DUTY BOUND TO GRANT DEDUCT ION LEGALLY AVAILABLE TO THE ASSESSEE. THE CIT(A) ALSO RELIED THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS TECHNOVATE E SOLUTION P LTD REPORTED IN 354 ITR 110 WHEREIN IT WAS HELD THAT REGISTRATION WITH SOFTWARE TECHNOLOGY PARKS OF I NDIA IS SUFFICIENT TO ALLOW DEDUCTION U/S 10A OF THE ACT .THE ITA NO . 244/C/2015 6 COPIES OF THE CERTIFICATE OF REGISTRATION ISSUED BY STPI AND THE CERTIFICATE OF THE CHARTERED ACCOUNTANT IN FORM 56F WERE EXAMINED BY THE CIT(A) AND NO DEFECT WAS POINTED OUT BEFORE US. THERE FORE, WE ARE OF THE VIEW THAT THE CIT(A) IS JUSTIFIED IN ALLOWING THE ALTERNATIVE CLAIM OF DEDUCTION U/S 10A OF THE ACT. IT IS ORDERED ACCORDINGLY. 8 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JAN 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 22 ND JAN 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN