The ITO, Ward-6(2), Ahmedabad V. M/s. Interact CRM, Ahmedabad

ITA 2484/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0502 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD , BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 2484/AHD/2012 ASSESSMENT YEAR :2009-10 ITO, WARD 6(2), AHMEDABAD V S . M/S. INTERACT CRM 402, SHASTRA, OPP. DRIVE IN ROAD, AHMEDABAD 380052 PAN NO. AABFI1300E (APPELLANT) .. (RESPONDENT) /BY REVENUE SHRI JAMES KURIAN, SR. D.R. /BY ASSESSEE SHRI SUNIL TALATI, A.R. /DATE OF HEARING 06.09.2016 /DATE OF PRONOUNCEMENT 23.09.2016 O R D E R PER AMARJIT SINGH, A.M.: THIS APPEAL IS DIRECTED AT THE INSTANCE OF REVENUE AGAINST THE ORDER OF LD. CIT(A)-XI, SURAT, DATED 01.08.2012 PASSED FOR A.Y.2 009-10 ON FOLLOWING GROUNDS: I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER (A.O.) O F THE CLAIM OF THE ASSESSEE OF DEDUCTION U/S.10B OF THE INCOME TAX ACT , 1961. II) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S.10B OF THE I.T. ACT OBSERVING THAT ITA NO. 2484/AHD/12 A.Y. 09-10 (ITO VS. M/S. INTERA CT CRM) PAGE 2 THE ASSESSEES UNIT WAS REGISTERED AS 100% EOU WITH SOFTWARE TECHNOLOGY PARK, IGNORING THE FACT THAT THE UNIT WA S NOT APPROVED BY THE BOARD OF APPROVAL APPOINTED BY THE CENTRAL GOVERNME NT WHICH WAS CONFERRED WITH THE SPECIFIC POWERS BY SECTION 14 OF THE INDUSTRIAL (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951) . 2. THE RETURN OF INCOME WAS FILED ON 29.09.2009 DEC LARING TOTAL INCOME OF RS.19,72,900/-. ASSESSEE HAS CLAIMED EXEMPTION OF RS.38,23,604/- U/S.10B OF THE ACT. DURING COURSE OF ASSESSMENT, ASSESSING OF FICER OBSERVED THAT THERE WAS NO PROOF ON RECORD REGARDING APPROVAL OF CENTRA L GOVERNMENT UNDER THE PROVISIONS OF SECTION 10B OF THE ACT FOR STARTING E XPORT ORIENTED UNDERTAKING SCHEME (IN SHORT EOU). IN THIS CONNECTION, ASSES SING OFFICER HAS ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE POINTING OUT THAT BY EXEMPTION CLAIMED U/S.10B OF THE ACT SHOULD NOT BE ALLOWED IN ABSENCE OF RATIFICATION BY BOARD OF APPROVAL FOR EOU AND TAXED ACCORDINGLY. IN THIS CO NNECTION, ASSESSING OFFICER HAS ALSO SOUGHT INFORMATION FROM DIRECTORS, SOFTWAR E TECHNOLOGY PARKS OF INDIA, NAVI MUMBAI. THE ASSISTANT DIRECTOR, STPI H AS FURNISHED THE DETAILS IN THIS CONNECTION AS UNDER: THE STP SCHEME IS BEING ADMINISTRATED BY DEPARTMEN T OF INFORMATION TECHNOLOGY, MINISTRY OF COMMUNICATION AND INFORMATI ON TECHNOLOGY, GOVT. OF INDIA. INTER MINISTERIAL STANDING COMMITTEE (IMSC) HAS BEEN CONSTITUTED UNDER SECTION 14 OF IDR ACT, 1951A NOTIFICATION NO. S. O. 117(E) ISSUED DATED 22 ND FEBRUARY, 1993 AND THIS BODY HAS ALL THE POWER IN RESPECT OF REGULATING STP AND EHTP SCHEME AS BOA HAS IN RESPECT OF 100% O F EOU. M/S. INTERACT CRM AS A STP UNIT WAS GRANTED LETTER F APPROVAL (LO P) AS PER THE PARA 6.26 OF THE FOREIGN TRADE POLICY. IT STATES IN CASE OF UNITS UNDER STP/EHTP SCHEMES, NECESSARY APPROVAL / PERMISSION UNDER RELE VANT PARAGRAPHS OF THIS CHAPTER SHALL BE GRANTED BY OFFICE DESIGNATED BY MI NISTRY OF COMMUNICATION AND TECHNOLOGY INSTEAD OF DEVELOPMENT COMMISSIONER AND BY IMSC INSTEAD OF BOA. FROM THE ABOVE REPLY OF STPI, ASSESSING OFFICER HAS NOTICED THAT THE IMSC OF STP DOES NOT HAVE POWER IN RESPECT OF 100% OF EOU F OR CLAIMING DEDUCTION U/S.10B OF THE ACT AND IT HAS POWER ONLY IN RESPECT OF STP SCHEME. ON THE OTHER HAND, BOA HAVE POWER IN RESPECT OF EOU AND F UNCTION AND JURISDICTION OF BOTH ARE DIFFERENT. THE ASSESSEE IN REPLY TO TH E SHOW CAUSE NOTICE CLAIMED ITA NO. 2484/AHD/12 A.Y. 09-10 (ITO VS. M/S. INTERA CT CRM) PAGE 3 THAT HE HAD APPROVAL BY THE INTER MINISTERIAL STAND ING COMMITTEE ON SOFTWARE TECHNOLOGY PARK SCHEME. THE ASSESSEE ALSO FILED NO TIFICATION NO.117(E) DATED 22.02.1993. THE A.O. POINTED OUT THAT THE NOTIFICA TION FILED BY THE ASSESSEE IS NOT GIVING POWER OF BOARD OF APPROVAL OF EOU UNDER MINISTRY OF COMMERCE TO THE INTER MINISTERIAL STANDING COMMITTEE FOR UNITS IN (EHTP) AND (STP). THE INTER MINISTERIAL STANDING COMMITTEE HAS SEPARATE J URISDICTION OVER STP AND DOES NOT HAVING POWERS OF BOARD OF APPROVAL UNDER E OU SCHEME. THE A.O. STATED THAT THERE ARE THREE SEPARATE ENTITIES GRANT ING APPROVAL TO UNITS CLAIMING DEDUCTION U/S.10A AND 10B OF THE INCOME TAX ACT, 19 61 AS UNDER: 1. BOARD OF APPROVAL FOR HUNDRED PERCENT EXPORT OR IENTED UNDERTAKING APPOINTED BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (D EVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951) AND THE RULES MA DE UNDER THE ACT IN RESPECT OF HUNDRED PER CENT EXPORT ORIENTED UNDERTA KING. 2. INTER MINISTERIAL STANDING COMMITTEE APPOINTED B Y THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE MINISTRY OF INDUS TRY (DEPARTMENT OF INDUSTRIAL DEVELOPMENT) NO. S. O. 117(E), DATED THE 22 ND FEBRUARY, 1993 IN RESPECT OF UNIT IN ELECTRONIC HARDWARE TECHNOLOG Y (EHTP). 3. INTER MINISTERIAL STANDING COMMITTEE APPOINTED B Y THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE MINISTRY OF INDUS TRY (DEPARTMENT OF INDUSTRIAL DEVELOPMENT) NO. S. O. 117(E), DATED THE 22 ND FEBRUARY, 1993 IN RESPECT OF UNIT IN SOFTWARE TECHNOLOGY PARKS (ST P). THESE THREE BOARDS/COMMITTEES ARE SEPARATE ENTITIES . BOARD OF APPROVAL FOR EOU IS FALLING UNDER MINISTRY OF COMMERCE UNDER CHA IRMANSHIP OF COMMERCE UNDER CHAIRMANSHIP OF COMMERCE SECRETARY AND INTER MINISTERIAL STANDING COMMITTEE FOR STP IS ADMINISTERED BY DEPARTMENT OF INFORMATION TECHNOLOGY. BOTH ARE SEPARATE BODIES AND HAVING SEPARATE JURISD ICTION. ASSESSING OFFICER HELD THAT THE CLAIM U/S.10B OF THE ACT IS NOT AVAIL ABLE TO THE ASSESSEE FOR LACK OF VALID APPROVAL U/S.10B OF THE ACT WHICH WAS DISALLO WED AND ADDED TO THE TOTAL INCOME OF ASSESSEE. ITA NO. 2484/AHD/12 A.Y. 09-10 (ITO VS. M/S. INTERA CT CRM) PAGE 4 3. AGAINST THE ORDER OF ASSESSING OFFICER, ASSESSEE HAS FILED APPEAL BEFORE THE CIT(A), CIT(A) HAS ALLOWED THE APPEAL OF ASSESS EE STATING THAT ASSESSEE IS 100% OF EOU WITH SOFTWARE TECHNOLOGY PARK OF INDIA AND IS ELIGIBLE TO CLAIM DEDUCTION U/S.10B OF THE ACT. THE RELEVANT PART OF DECISION OF CIT(A) IS REPRODUCED AS UNDER: 2.2 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IT IS SEEN THAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE HON'BLE HYDER ABAD ITAT IN ITA NO.1501/HYD/2011 A.Y.2005-06 IN THE CASE OF ITO VS SECUNDERABAD SOFTWARE SERVICES PVT. LTD., SECUNDERABAD. THE ISSU E OF ALLOWANCE OF 10B DEDUCTION WERE DECIDED IN FAVOUR OF THE APPELLANT W ITH THE FOLLOWING OBSERVATIONS :- '6. WE HEARD THE PARTIES AND PERUSED THE IMPUGN ED ORDERS OF THE LOWER AUTHORITIES. THE ONLY QUESTION THAT CLINCHE S THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER FOR BECOMING ELI GIBLE TO THE DEDUCTION UNDER S.10B OF THE ACT, WHETHER IT IS ENO UGH IF THE ASSESSEE IS REGISTERED WITH SOFTWARE TECHNOLOGY PAR K OF INDIA AS A 100% EOU OR IT IS ALSO NECESSARY FOR THE ASSESSEE T O HAVE THE APPROVAL OF THE BOARD CONSTITUTED BY THE CENTRAL G OVERNMENT UNDER S.14 OF THE INDUSTRIES (DEVELOPMENT AND REGUL ATION) ACT, 1951. THE CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE, AND HELD THE ASSESSEE AS ELIGIBLE FOR DEDUCTION UND ER S.10B OF THE ACT, FOLLOWING THE DECISIONS OF THE CO-ORDINATE BEN CHES OF THE TRIBUNAL IN THE FOLLOWING CASES (A) VSN MAKRO TECHNOLOGY P. LTD. V/S. ACIT (ITA NO.1057/HYD/2010) DATED 13.1.2011, WHEREIN THE STIL L EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF INFOTECH ENTERPRISES LTD.(SUPRA), RELIED BY THE ASSE SSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER HAS BEEN CONSIDERE D AND THE SAME HAS BEEN HELD TO BE INAPPLICABLE AS THE SA ME HAS BEEN RENDERED PRIOR TO ISSUANCE OF INSTRUCTION NO.1 DATED 31.3.2006 BY THE CBDT AND LETTER DATED 23.3.2006 IS SUED BY THE MINISTRY OF COMMUNICATIONS AND TECHNOLOGIES. (B) DCIT V/S. VALLIANT COMMUNICATION LTD. (ITA NO.2706/DEL/2008 DATED 23.4.2010) (2010 - TIOL-452- ITAT-DEL), WHEREIN THE STILL EARLIER DECISION OF TH E DELHI BENCH IN THE CASE OF ITO VS. REGENCY CREATIONS LTD. (ITA NO.4006/DEL/2006) DATED 13.4.2006 HAS BEEN FOLLOWED . (C) SMT. K. SUDHA RANI V/S. ITO (ITA NO.1750/ HYD/2008) DATED 30.10.2009 ITA NO. 2484/AHD/12 A.Y. 09-10 (ITO VS. M/S. INTERA CT CRM) PAGE 5 CONSISTENT WITH THE VIEW TAKEN BY VARIOUS BENCH OF THE TRIBUNAL, INCLUDING THE BENCHES AT HYDERABAD, IN SIMILAR MATT ERS, WE HOLD THAT THE ASSESSES, HAVING BEEN REGISTERED WITH THE STPI, IS ENTITLED FOR DEDUCTION UNDER S.10B OF THE ACT. IN THAT VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT( A), WHICH IS ACCORDINGLY CONFIRMED AND THE GROUNDS OF THE REVENU E ARE REJECTED.' 2.3 IN THIS REGARD THE APPELLANT HAD RIGHTLY PLACED RELIANCE ON THE FOLLOWING CASES :- (I) I.T.O., WARD - 3(1) V/S. M/S. SECUNDERABAD SOFTWARE SERVICES PVT. LTD. (ITA NO.1501/HYD/2011 - A.Y.2005-06) (II) REGENCY CREATIONS LTD. V/S. AC IT CIRCLE 15 (1), NEW DELHI (ITA NO.1588/DEL./2010-A.Y.2007-08) (III) DCIT CIRCLE 17(1),NEW DELHI V/S. M/S. VALLIAN T COMMUNICATIONS LTD. (I.T.A. NO.2706/DEL/2008 -A.Y.2 005-06) (IV) DCIT CIRCLE 16(1), NEW DELHI V/S. M/S. TECHN OVATE ESOLUTIONS PVT. LTD. (ITA NO. 135/DEL/2011 - A.Y.20 03-04) 2.4 RESPECTFULLY FOLLOWING THE ABOVE CASE LAWS AND KEEPING IN VIEW THE FACT THAT THE APPELLANT IS REGISTERED AS 100% E XPORT ORIENTED UNIT WITH SOFTWARE TECHNOLOGY PARK, INDIA, I HOLD T HAT THE APPELLANT IS ELIGIBLE TO CLAIM DEDUCTION U/S.10B OF THE I.T.ACT. ACCORDINGLY, THE A.O. IS DIRECTED TO DELETE DISALLO WANCE OF RS. 38,23,604/-. 4. BEFORE US, LD. D.R. RELIED ON THE ORDER OF A.O. AND STATED THAT THE CLAIM OF DEDUCTION U/S.10B OF THE ACT IS WRONGLY ALLOWED BY THE CIT(A) IN ABSENCE OF VALID APPROVAL FROM THE BOARD OF APPROVAL, APPOINTE D BY THE CENTRAL GOVERNMENT WHICH CONFERRED WITH SPECIFIC POWERS BY SECTION 14 OF THE INDUSTRIAL DEVELOPMENT AND REGULATION ACT, 1951. O N THE OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE RELIED ON THE ORDER OF CI T(A) AND REFERRED TO THE VARIOUS PAGES OF PAPER BOOK PERTAINING TO APPROVAL OBTAINED FROM SOFTWARE TECHNOLOGY PARK OF INDIA AND THE CORRESPONDINGS MAD E IN THIS CONNECTION FOR SEEKING APPROVAL. 5. AFTER HEARING BOTH SIDES AND PERUSED THE MATERIA L ON RECORD CAREFULLY, WE FIND THAT ASSESSEE HAS FILED PAPER BOOK CONTAINING CORRESPONDENCE MADE BY THE ASSESSEE TO OBTAIN RATIFICATION LETTER ISSUED BY TH E BOARD OF APPROVAL FOR EOU ITA NO. 2484/AHD/12 A.Y. 09-10 (ITO VS. M/S. INTERA CT CRM) PAGE 6 SCHEME AND COPY OF JUDGMENT OF HONBLE HIGH COURT O F GUJARAT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX, GANDHINAGAR V S. ECI TECHNOLOGIES PVT. LTD. IN TAX APPEAL NO. 203 OF 2015 ON WHICH THE ASS ESSEE HAS PLACED RELIANCE. IN THIS CONNECTION, DURING THE COURSE OF PROCEEDING BEFORE US THE LD. COUNSEL FAILED TO PRODUCE THE BOARD OF APPROVAL FOR EOU SCH EME. WE OBSERVED THAT IN THE END OF JUSTICE, IT IS REQUIRED TO VERIFY THE VA LID CERTIFICATE, IF ANY, OBTAINED BY ASSESSEE FROM THE BOARD OF APPROVAL FOR CLAIMING EX EMPTION U/S.10B OF THE ACT. ACCORDINGLY, WE SET ASIDE THE CASE TO THE FIL E OF ASSESSING OFFICER TO VERIFY AND IF THERE IS VALID CERTIFICATE OBTAINED BY ASSES SEE FROM THE BOARD OF APPROVAL, THEN DECIDE THE CASE ACCORDINGLY AFRESH. 6. IN THE RESULT, THE APPEAL FILED BY REVENUE IS A LLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 23.09.20 16 SD/- SD/- ( RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD: DATED 23/09/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ! '# $ / CONCERNED CIT 4. $ - / CIT (A) 5. %&' (('# , '# , ! / DR, ITAT, AHMEDABAD 6. '+, / GUARD FILE. BY ORDER/ , / '# , !