Ansh Systems Pvt. Ltd., Pune V. Income-Tax Officer,

ITA 2492/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9093 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion
• Section: 10B

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.2492/PUN/2016 / ASSESSMENT YEAR : 2009-10 ANSH SYSTEMS PVT. LTD., NYATI TECH PARK, BUILDING A, 4 TH FLOOR, VADGAON SHERI, PUNE 411 014 PAN : AAGCA7731B . /APPELLANT VS. ITO, WARD-1(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI PRATEEK JHA & SHRI PRAYAG JHA / RESPONDENT BY : SHRI AJAY MODI, JCIT / DATE OF HEARING : 13.03.2018 / DATE OF PRONOUNCEMENT: 26.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF CIT(A)-1, PUNE, DATED 30-08-2016 FOR THE ASSESSMENT YEAR 2009 -10. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE LD.CIT(A) ERRED IN UPHOLDING THE REASSESSME NT PROCEEDINGS THOUGH THE LD AO HAD REOPENED THE ASSESSMENT MADE U /S.143(3) ON 28- 11-2011 ON THE BASIS OF SAME SET OF FACTS AND MEREL Y ON THE BASIS OF CHANGE OF OPINION. 2. WITHOUT PREJUDICE TO GROUND NO.1, THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S.10A ONLY IN RESPECT OF PROFIT EARNED BETWEEN 01-01-2009 AND 31-03-2009 AND NOT FOR THE ENTIRE YEAR THOUGH THERE IS NO SUCH PROVISION IN THE INCOM E TAX ACT. 3. THE APPELLANT CRAVES LEAVE TO REVISE, MODIFY, AL TER OR DELETE ANY OF THE ABOVE GROUNDS OR TO ADD NEW GROUNDS OF APPEAL. 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE OUTSOURCING OF SOFTWARE DEVELOPMENT . ASSESSEE FILED ITS RETURN OF INCOME ON 02-11-2009 DECLARING TOTAL INC OME AT NIL AND CLAIMED DEDUCTION OF RS.47,32,885/- U/S.10B OF THE ACT. ASSESSMENT U/S.143(3) OF THE ACT WAS MADE ON 28-11-2011 DETERMINING THE INCOME AT RS.3,94,861/-. THEREAFTER, THE CASE WAS RE OPENED U/S.148 OF THE ACT ON 10-03-2014. DURING THE ASSESSME NT PROCEEDINGS, AO NOTICED THAT ASSESSEE FAILED TO COMPLY WITH THE CONDIT IONS SPECIFIED IN SECTION 10B OF THE ACT. FURTHER, THE ALTERNATE CLAIM MADE BY THE ASSESSEE U/S.10A OF THE ACT AND THE SAME WAS NOT CONS IDERED FAVOURABLE AS PER THE DISCUSSION GIVEN IN PARA NO.5 OF TH E ASSESSMENT ORDER. CONSIDERING THE FACT THAT THE ALTERNATE CLAIM IS RA ISED FOR THE FIRST TIME WITHOUT FILING THE RETURN OF INCOME, AO DENIED THE A LTERNATE CLAIM OF THE ASSESSEE RELYING ON THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF GOETZE INDIA LTD. VS. CIT 157 TAXMANN 1 R ELIED ON BY THE ASSESSEE. EVENTUALLY, THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS.39,48,610/- VIDE HIS ORDER U/S.143(3) R.W.S.147 OF THE AC T, DATED 27-03-2015. CONTENTS OF PARA NO.5.8 OF THE AOS ORDER A RE RELEVANT AND THE SAME ARE EXTRACTED BELOW : 5.8 IN VIEW OF THE ABOVE DISCUSSION THE CONTENTION OF THE ASSESSEE HEREBY REJECTED AND THE CASE IS DECIDED AS PER THE LAW. FOR CLAIMING DEDUCTION U/S.10B OF THE ACT, THE ASSESSEE SHOULD B E A 100% EXPORT ORIENTED UNIT (EOU) AS SPECIFIED UNDER EXPLANATION 2(IV) BELOW TO THE SECTION 10B OF THE ACT WHICH DEFINES A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING AS A UNDERTAKING SO APPROVED BY THE BO ARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES DEVELOPMENT AND REGULATION ACT, 1951. SUBSEQUENT T O THE DELEGATION OF THIS POWER BY THE MINISTRY OF COMMERCE AND INDUSTRI ES TO THE DEVELOPMENT COMMISSIONERS, SUCH APPROVALS TO 100% E OUS ARE NOW BEING GRANTED BY THE DEVELOPMENT COMMISSIONERS WHIC H ARE LATER RATIFIED BY THE BOARD OF APPROVAL. HOWEVER THE ASSESSEE IS NOT APPROVED BY DEVELOPMENT COMMISSIONER HENCE DEDUCTION UNDER SECT ION 10B OF THE ACT AT RS.47,32,885/- IS HEREBY DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE UNDERSIGNED IS SATISFIED THAT TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HENC E PENALTY PROCEEDINGS U/S.271(1)(C) ARE SEPARATELY INITIATED. 3 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE C HALLENGED THE VALIDITY OF REOPENING OF THE ASSESSMENT ON THE BASIS O F SAME SET OF FACTS AND ON THE BASIS OF MERE CHANGE OF OPINION AND MADE ELABORATE SUBMISSIONS. THE CIT(A) CALLED FOR COMMENTS OF THE AO. ASSE SSEE ALSO SUBMITTED THE COUNTER COMMENTS FOR THE SAME. PARA NO.4 OF THE ORDER OF CIT(A) CONTAINS THE SUBMISSIONS OF THE ASSESSEE, COMMENT S OF THE AO AND THE COUNTER COMMENTS OF THE ASSESSEE. EVENTUALLY , THE CIT(A) HELD THE REASSESSMENT MADE BY THE AO AS VALID. FURTHER, ASS ESSEE RAISED THE GROUND RELATING TO ALLOWABILITY OF CLAIM OF DEDUCTION U/S.10 B OF THE ACT BEFORE THE CIT(A). CIT(A) UPHELD THE ALLOWABILITY OF CLAIM OF DEDUCTION U/S.10B OF THE ACT. HOWEVER, WITH REGARD TO TH E ALTERNATE CLAIM OF DEDUCTION MADE BY THE ASSESSEE U/S.10A OF THE AC T, HE RESTRICTED THE DEDUCTION TO ONLY 3 MONTHS, I.E. FROM 1-01- 2009 TO 31-03- 2009 (DATE OF STPI APPROVAL ON 01-01-2009) RELYING ON T HE DECISION OF CLARION TECHNOLOGIES PVT. LTD. VS. DCIT ITA NO. 2554/PN/2 012 & CONNECTED APPEALS, DATED 30-10-2014 5. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS MENTIONED ABOVE. 6. NARRATING THE ABOVE FACTS OF THE CASE, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS LOCATED IN THE STPI UNIT. THIS IS THE FIRST YEAR OF CLAIM OF DEDUCTION U/S.10B OF THE ACT. BRINGING MY A TTENTION TO PAGE NOS. 46 AND 47 OF THE PAPER BOOK, LD. COUNSEL SUBMIT TED THAT THE SAME CONSTITUTES CERTIFICATE OF APPROVAL DATED 01-01-2009 AND THE SAME IS VALID UPTO 31-12-2013 (I.E. 4 YEARS). LD. COUNSEL EXPLAINED THE SIGNIFICANCE OF DATE OF APPROVAL AND SUBMITTED THAT APPROV AL IS STPI UNIT SPECIFIC AND THE DATE OF APPROVAL NEED NOT BE TAKEN AS THE CUT OFF DATE FOR THE PURPOSE OF ALLOWING THE DEDUCTION U/S.10A/10B OF THE ACT. 4 HE ALSO BROUGHT MY ATTENTION TO A CASE WHERE APPROVAL WAS GIVEN TO A CASE WHICH INVOLVES CLAIM OF DEDUCTION U/S.35(2AB) OF THE ACT AND ALSO BROUGHT MY ATTENTION TO THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. SUNDAN VIKAS (INDIA) LTD. 22 TAXMANN.COM 19 (DEL.) AN D SUBMITTED THAT THE CUT OFF DATES MENTIONED IN THE CERTIFIC ATE ISSUED BY DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH IS IRRELEVANT. THE CLAIM U/S.35(2AB) OF THE ACT HAS TO BE ALLOWED FOR THE ENTIRE YE AR AND NOT ON PROPORTIONATE BASIS. THE SAID JUDGMENT HAS KEPT RELIANCE TO ANOTHER JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. CLA RIS LIFESCIENCES LTD. 174 TAXMAN 113 (GUJARAT) WHICH IS AGAIN RE LEVANT FOR THE SIMILAR PROPOSITION THAT THE CUT OFF DATE MENTIONED IN T HE CERTIFICATE ISSUED BY DSIR IS OF NO RELEVANT. REFERRING TO THESE JUD GMENTS, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEDUCTION IS TO BE ALLOWED TO THE ASSESSEE FOR THE ENTIRE YEAR AND FOR THE ENTIRE EXPENDITURE INCURRED ON RESEARCH & DESIGN FACILITIES. 7. LD. COUNSEL FOR THE ASSESSEE ALSO DREW MY ATTENTION T O THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSE E OWN CASE IN ITA NO.185/PN/214, ORDER DATED 30-12-2015 FOR THE A.Y . 2010-11 AND SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS ALLOWED IN THE SUBSEQUENT YEAR. THUS, IT IS THE CASE OF THE ASSESSEE T HAT DEDUCTION U/S.10A IS ALLOWABLE, IN PRINCIPLE. THE CUT OFF DATE MENTIONED O N THE CERTIFICATE ISSUED BY STPI AUTHORITIES IS OF NO SIGNIFICANCE OR RELEVANCE IN VIEW OF THE ABOVE REFERRED JUGDMENTS/DECISION. 8. LD. DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO DUTIFULLY. 9. I HEARD BOTH THE PARTIES ON THE LIMITED ISSUE OF GRAN TING PROPORTIONATE DEDUCTION U/S.10A OF THE ACT MERELY RELYIN G ON THE CUT OFF DATE APPEARING ON THE CERTIFICATE ISSUED BY THE STPI AUT HORITIES. ON 5 SIMILAR FACTS, THE VARIOUS JUDGMENTS AND THE TRIBUNAL IN ASS ESSEES OWN CASE HAS DECIDED THE ISSUE AND HELD THAT THE CUT OFF DAT E MENTIONED ON THE CERTIFICATES ARE OF NO RELEVANCE. THEREFORE, I AM OF TH E VIEW THAT THE CLAIM MADE BY THE ASSESSEE U/S.10A OF THE ACT HAS TO BE ALLOWED FOR THE ENTIRE YEAR. IN MY VIEW, THE SETTLED LEGAL PROPOSITION DELIVE RED IN THE CONTEXT OF CLAIM OF DEDUCTION U/S.35(2AB) OF THE ACT HOLDS GO OD FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S.10A OF THE ACT AS WELL. A S SUCH, THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.185/PN/2014, DA TED 30-12-2015 FOR THE A.Y. 2010-11, HAS ALREADY HELD THAT, I N PRINCIPLE, THE ASSESSEE IS ENTITLED TO CLAIM OF DEDUCTION U/S.10A OF TH E ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF MARCH, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 26 TH MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1, PUNE 4. / THE CIT-1, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE