Bailey Hydropower (P) Ltd., Sriperambudur V. ACIT, CHENNAI

ITA 2604/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96043 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Keywords: Reasonable cause; Condonation of delay
• Section: 143(3); 10B; 144; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NOS.2603 & 2604/MDS/2014 ( / ASSESSMENT YEARS: 2008-09 & 2009-10) M/S.BAILEY HYDROPOWER (P) LTD., (NOW KNOWN AS WAYNE BURT PETROCHEMICALS P.LTD.,) A-10, SIPCOT INDUSTRIAL PARK, IRUNGATTUKOTTAI, SRIPERUMBUDUR - 602 105. V S ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE-I(3) CHENNAI. PAN:AABCB1804F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS. PUSHYA SITARAMAN, SR.ADVOCATE FOR J.SREE VIDYA, ADVOCATE /RESPONDENT BY : MR A.B.KOLI, JCIT /DATE OF HEARING : 30 TH JULY, 2015 /DATE OF PRONOUNCEMENT : 16 TH SEPTEMBER, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEA LS) I, CHENNAI DATED 25.06.2014 FOR THE ASSESSMENT YEARS 2 008-09 AND 2009-10 ARISING OUT OF ORDERS PASSED BY THE ASS ESSING OFFICER UNDER SECTION 144 READ WITH SECTION 92CA AN D 143(3) READ WITH SECTION 92CA OF THE ACT RESPECTIVELY. 2. BOTH THE APPEALS OF THE ASSESSEE ARE BARRED BY LIMITATION BY EIGHT DAYS. THE ASSESSEE FILED AN AF FIDAVIT EXPLAINING REASON THAT THE AUTHORIZED SIGNATORY HAS BEEN ON 2 ITA NO.2603 & 2604/MDS/2014 CONTINUOUS TRAVEL AND PRE-OCCUPIED WITH OTHER BUSIN ESS MATTERS AND THUS THERE WAS A DELAY OF EIGHT DAYS IN FILING OF APPEALS AND PRAYS FOR CONDONATION OF DELAY FOR BOTH THE APPEALS. WE HAVE PERUSED THE REASONS AND ARE SATISF IED THAT THERE IS A REASONABLE CAUSE FOR THE DELAY IN FILING OF THE APPEALS. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY IN FILING OF THESE APPEALS. THE PETITIONS FOR CONDONAT ION OF DELAY ARE ALLOWED AND THE APPEALS ARE ADMITTED. 3. THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IS THAT COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE AS NIL AS AGAINST LOSS OF ` 2,20,26,369/- REPORTED BY THE ASSESSEE. COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITS THAT ASSESSMENT MADE UNDER SECTION 144 OF T HE ACT, AS THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER. COUNSEL SUBMITS THAT ASSESSE E COMPANY UNDERWENT A ROUGH PATCH DUE TO LABOUR UNRES T AND A NEW MANAGEMENT HAS TAKEN CONTROL OF THE BUSINESS AFFAIRS. THE BOOKS OF ACCOUNTS AND OTHER RECORDS COULD NOT B E TRACED IMMEDIATELY SINCE THE MANAGEMENT PERSONNEL AND THE KEY PERSONS WHO HANDLED THE ACCOUNTS AND FINANCIAL AFFA IRS HAVE 3 ITA NO.2603 & 2604/MDS/2014 LEFT THE COMPANY. SHE SUBMITS THAT COMPANY WAS ALSO NOT FUNCTIONING FOR SOME TIME DUE TO CIRCUMSTANCES BEY OND THE CONTROL OF THE ASSESSEE, THEREFORE IT COULD NOT PR ODUCE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER. THUS THE ASSESSING OFFICER REJECTED THE LOSS DECLARED BY THE ASSESSEE AS THE BOOKS OF ACCOUNTS WERE NOT PRODUCED. COUNSEL SUBMITS THAT IN FACT VARIOUS OTHER DETAILS CALLED F OR BY THE ASSESSING OFFICER WERE FURNISHED BY LETTER DATED 3 0.12.2011, WHATEVER AVAILABLE INFORMATION WERE SUBMITTED BEFOR E THE ASSESSING OFFICER AS WELL AS FIXED ASSETS LEDGER A CCOUNT WITH INVOICES ETC. COUNSEL FOR THE ASSESSEE SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER IGNORING THE FACT THAT BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE HAS PRODUCED CD CONTAINING BOOKS OF ACCOUNTS WHEN CALLE D FOR BY THE COMMISSIONER OF INCOME TAX (APPEALS). COUNSE L SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) SERIOUSLY ERRED IN PASSING THE ORDER ON MISTAKEN GR OUND WHEN BOOKS OF ACCOUNTS CALLED FOR WERE NOT PRODUCED BEFORE HIM WHEN IN FACT CD CONTAINING BOOKS OF ACCOUNTS W ERE FURNISHED BEFORE HIM. THEREFORE, SHE SUBMITS THAT M ATTER MAY 4 ITA NO.2603 & 2604/MDS/2014 BE REMITTED BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 4. DEPARTMENTAL REPRESENTATIVE PLACES RELIANCE ON T HE ORDERS OF LOWER AUTHORITIES. 5. ON HEARING BOTH THE PARTIES AND ON GOING THROUGH THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT ASSESSMEN T WAS COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 14 4 OF THE ACT. IN THE ASSESSMENT ORDER THOUGH THE ASSESSING O FFICER ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT FACTU ALLY WHAT WAS EXPLAINED BEFORE HIM COULD BE CORRECT BUT IN SC RUTINY PROCEEDINGS BEFORE THE TIME BARRING DATE BOOKS OF A CCOUNTS BASED ON WHICH AUDITED FINAL RESULTS HAVE BEEN DRAW N NEED TO BE PRODUCED FOR EXAMINATION. SINCE THE BOOKS OF ACCOUNTS WERE NOT PRODUCED, ASSESSING OFFICER DISBELIEVED T HE CORRECTNESS OF LOSS RETURNED BY THE ASSESSEE AND RE JECTED SUCH LOSS. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSMENT STATING THAT ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS THOUGH AMPLE TI ME WAS GIVEN. THE COMMISSIONER OF INCOME TAX (APPEALS) STA TED THAT BOOKS OF ACCOUNTS WERE NOT PRODUCED EVEN BEFOR E HIM FOR VERIFICATION. HOWEVER THE CONTENTION OF THE ASS ESSEE WAS 5 ITA NO.2603 & 2604/MDS/2014 THAT CD WAS PRODUCED BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS) CONTAINING THE BOOKS OF ACCOUNTS. TA KING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES INTO CONSID ERATION, IN THE INTEREST OF JUSTICE, WE ARE OF THE OPINION THAT THE ASSESSMENT HAS TO BE REDONE AFRESH BY THE ASSESSIN G OFFICER. THUS, WE SET ASIDE THE ORDERS OF LOWER AUT HORITIES AND RESTORE THE ASSESSMENT BACK TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION TO COMPLETE THE ASSESSMENT DE NOVO AND IN ACCORDANCE WITH LAW, AFTER PROVIDING ADEQUAT E OPPORTUNITY TO THE ASSESSEE. 6. THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IS WITH REGARD TO DENIAL O F EXEMPTION UNDER SECTION 10B OF THE ACT. THE ASSESSI NG OFFICER WHILE COMPLETING THE ASSESSMENT DENIED EXEM PTION UNDER SECTION 10B OF THE ACT STATING THAT AS PER SE CTION 10B 100% EXPORT ORIENTED UNIT MEANS THE UNDERTAKING WHI CH HAS BEEN APPROVED AS 100% UNDERTAKING BY THE BOARD APPO INTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCIS E OF THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 AND RULES MADE UNDER THAT ACT. THE ASSESSING OFFICER WAS OF THE OPINION THAT SINCE 6 ITA NO.2603 & 2604/MDS/2014 THE APPROVAL WAS NOT GIVEN BY THE BOARD SET UP UNDE R INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 APP ROVAL OBTAINED BY THE ASSESSEE CANNOT BE ACCEPTED AS APPR OVAL UNDER SECTION 10B OF THE ACT FOR THE PURPOSE OF CLA IMING DEDUCTION. ASSESSING OFFICER FURTHER RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CRE ATIONS LTD. (27 TAXMANN. COM 322) WHILE DENYING DEDUCTION UNDER SECTION 10B OF THE ACT. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE DISALLOWANCE OF DEDUCTI ON UNDER SECTION 10B OBSERVING THAT IN THE PROCEEDINGS BEFOR E HIM ASSESSEE PRODUCED COPY OF GREEN CARD DATED 23.03.20 10 ISSUED BY JOINT DEVELOPMENT COMMISSIONER, CHENNAI G IVING RECOGNITION TO THE ASSESSEE COMPANY AS 100% EOU. SI NCE THE RECOGNITION WAS GIVEN ONLY WITH EFFECT FROM 23. 03.2010, COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VI EW THAT RECOGNITION TO THE ASSESSEE WAS NOT AVAILABLE FOR T HE ASSESSMENT YEAR 2009-10, THEREFORE HE CONCLUDED THA T ASSESSING OFFICER HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE. 7. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE 7 ITA NO.2603 & 2604/MDS/2014 ASSESSEE IS REGULARLY ASSESSED TO INCOME TAX BY THE INCOME TAX OFFICER, COMPANY CIRCLE-I, CHENNAI, UNDE R PAN: AABCB1804F. THE ASSESSEE IS A 100% EXPORT ORIENTED UNIT MANUFACTURING AND EXPORTING HYDRAULIC CYLINDERS AND ITS COMPONENTS TO ITS ASSOCIATED ENTE RPRISES AND REGISTERED THEMSELVES AS SUCH WITH THE MEPZ SPE CIAL ECONOMIC ZONE, GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY, DEPT. OF COMMERCE. THE ASSESSEE STARTED ITS BUSINESS IN 1999 AS A MANUFAC TURER AND EXPORTER OF HYDRAULIC CYLINDER AND ITS COMPONEN TS AND SINCE THEN THEY HAVE FILING THEIR RETURNS CLAIMING EXEMPTION U/S 10B AND THE SAME WAS ALLOWED BY THE DEPARTMENT UPTO THE ASSESSMENT YEAR 2008-09. UNDER THE FOREIG N TRADE POLICY, A UNIT IN A SPECIAL ECONOMIC ZONE CAN BE SET UP AS A 100% EOU IF IT GETS THE APPROVAL OF THE DEVELOPMENT COMMISSIONER - CONSTITUTING THE UNIT APPROVAL COMMITTEE AND WHO IS ALSO A MEMBER OF THE BOARD OF APPROVAL. A COPY OF THE ADMINISTRATIVE SET -UP FOR SPECIAL ECONOMIC ZONES IS FURNISHED. HAVING BEEN REGISTERED AND GRANTED APPROVAL AS 100% EOU UNIT BY THE DEVELOPMENT COMMISSIONER, MEPZ SPECIAL ECONOMIC 8 ITA NO.2603 & 2604/MDS/2014 ZONE - CONSTITUTED BY THE CENTRAL/STATE GOVERNMENTS , THE ASSESSEE HAS IN EFFECT BEEN GRANTED APPROVAL BY TH E BOA AS 100% EOU UNIT. THE ASSESSEE HAD ALWAYS ENJOYED RECOGNITION AS A 100% EOU FROM THE DATE OF ITS COMMENCEMENT OF BUSINESS. A COPY OF THE GREEN CARD EVIDENCING THE APPELLANT'S 100% EOU STATUS FOR THE PERIOD FROM 05.05.2005 TO 22.03.2010 IS FURNISHED. A COPY OF THE GREEN CARD EVIDENCING ASSESSEES RENEWAL OF ITS ST ATUS AS A 100% EOU FOR THE PERIOD FROM 23.03.2010 TO 22.03.2015 IS ALSO FURNISHED. COUNSEL SUBMITS THAT NO SEPARATE APPROVAL PROCEDURES HAVE BEEN LAID DOWN IN THE FOREIGN TRADE POLICY & HANDBOOK OF PROCEDURES RELAT ING TO EXPORT ORIENTED UNITS (EOUS) / UNDER THE EXIM PO LICY FOR SEZ. 8. COUNSEL FOR THE ASSESSEE BEFORE US FURTHER SUBM ITS THAT WHAT WAS PLACED BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS) WAS ONLY RENEWAL OF RECOGNITION AND I N FACT THE ASSESSEE IS HAVING GREEN CARD APPROVAL FROM 05.05.2 005 TO 23.02.2010, A COPY OF WHICH IS PLACED BEFORE US. RE FERRING TO SUCH RECOGNITION, COUNSEL SUBMITS THAT ASSESSEE HAD RECOGNITION RIGHT FROM 2005 TO 2010 WHICH WAS RENEW ED 9 ITA NO.2603 & 2604/MDS/2014 SUBSEQUENTLY ON 23.03.2010 FOR ANOTHER FIVE YEARS TILL 23.10.2015. COUNSEL FOR THE ASSESSEE PLACES RELIANC E ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. TEHNOVATE E SOLUTIONS P.LTD. (354 ITR 110) AND SUBMITS THAT ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 10B OF THE A CT OR IN THE ALTERNATIVE UNDER SECTION 10A OF THE ACT. 9. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 10. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHO RITIES AND THE DECISIONS RELIED ON. ON SIMILAR CIRCUMSTANC ES, THE ISSUE OF ALLOWANCE OF DEDUCTION UNDER SECTION 10B/1 0A OF THE ACT HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. VISHWAK SOLUTIONS P.LTD., IN ITA NOS.1935 & 1936/MDS/2010 AND ITA NOS.67 & 1634/MDS/2014 DATED 30 TH JANUARY, 2015 IN THE LIGHT OF THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. REGENCY CREATIONS LTD. (353 ITR 326) OBSERVING AS U NDER:- 10. BRIEF FACTS ARE THAT ASSESSEE CLAIMED EXEMPTIO N UNDER SECTION 10B OF THE ACT DURING THIS ASSESSMEN T YEAR. WHILE COMPLETING THE ASSESSMENT ASSESSING OFFICER D ENIED EXEMPTION UNDER SECTION 10B OF THE ACT ON THE GROUN D THAT ASSESSEE PRINCIPALLY HAD DOMESTIC BUSINESS IN ITS D TI UNIT. STPI UNIT DOES NOT HAVE ANY NEW COMPUTER SYSTEM AND OTHER NECESSARY EQUIPMENTSFOR THE PURPOSE OF CARRYI NG ON 10 ITA NO.2603 & 2604/MDS/2014 SOFTWARE DEVELOPMENT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE USED COMPUTERS RELATING TO I TS DTI UNIT SITUATED IN THE BUILDING AT SARANGAPANI STRE ET, T.NAGAR, CHENNAI. THE ASSESSING OFFICER WAS OF THE VIEW THAT ADDITIONS OF NEW COMPUTER SYSTEM AND REGULAR EMPLOYEES WERE RECRUITED FOR THE STPI UNIT AFTER ST PI UNIT WAS SHIFTED TO A NEW BUILDING LOCATED AT HABIBULLA H ROAD, T.NAGAR, CHENNAI. THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS USED COMPUTERS BELONGING TO ITS D TI UNIT FOR DEVELOPMENT OF SOFTWARE, THEREFORE NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10B OF THE ACT. HE WAS OF T HE VIEW THAT ASSESSEE HAS NOT HIRED BUILDING WHERE STP I IS SAID TO HAVE BEEN SITUATED AND THEREFORE DENIED EXEMPTION UNDER SECTION 10B OF THE ACT. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED EXEMPT ION CLAIMED BY THE ASSESSEE OBSERVING THAT ASSESSEE HAD PURCHASED NEW COMPUTERS FOR STPI UNIT WHICH IS LOCA TED AT 2 ND FLOOR OF NO.2, SARANGAPANI STREET AND THE ENTIRE F LOOR IS ONLY STPI UNIT. COMMISSIONER OF INCOME TAX (APPEALS ) HELD THAT DTI UNIT WAS FUNCTIONING ONLY FROM THE F IRST FLOOR. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT NEW COMPUTERS WERE DELIVERED IN THE SECOND FLOOR FOR S TPI UNIT. THE ASSESSEE PAID RENT BY WAY OF DEBIT NOTE T O THE OTHER UNIT SINCE LEASE BETWEEN ONE DIVISION AND ANO THER OF THE SAME ASSESSEE, THEREFORE THERE IS NO NECESSIT Y FOR PAYING AMOUNT BY CHEQUE . THE COMMISSIONER OF INCOM E TAX (APPEALS) WAS OF THE VIEW THAT STPI GRANTED APP ROVAL TO OPERATE 100% EXPORT ORIENTED UNDERTAKING FROM N O.2, 2 ND FLOOR, SARANGAPANI STREET, T.NAGAR, CHENNAI BY ISS UE OF GREEN CARD. STPI HAS RECEIVED NEW ORDERS WHEN THEY HAVE BEEN EXECUTED AND ASSESSEE RECEIVED EXPORT PROCEEDS. THUS COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED EXEMPTION CLAIMED BY THE ASSESSEE. 11. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT STPI U NIT DOES NOT HAVE NEW COMPUTER SYSTEM AND OTHER EQUIPMENTSFOR CARRYING ON THE WORK DURING THE YEAR. HE SUBMITS THAT ASSESSEE ONLY UTILIZED EXISTING FACILI TIES OF THE DTI UNIT. HE ALSO SUBMITS THAT EMPLOYEES ALSO BEL ONGED TO THE DTI UNIT AND STPI UNIT HIRED SUCH MANPOWER TEMPORARILY. STPI UNIT DID NOT RECRUIT ANY EMPLOYEE S IN ITS BUSINESS DURING THE YEAR. HE FURTHER SUBMITS THAT E VIDENCE FILED BY THE ASSESSEE ONLY SHOWS THAT PURCHASE OF COMPUTERS BY THE DTI UNIT AND NOT BY THE STPI UNIT . DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITS THAT APPLICATION FOR STPI REGISTRATION AVAILABLE IN PAGE 5 OF THE ASSESSEES PAPER BOOK SHOWS THAT IT WAS ONLY CONVE RSION OF EXISTING UNIT AS STPI UNIT DURING THE YEAR. THI S IS A CASE OF SPLITTING OF EXISTING UNIT AND NOT A NEW UNIT ES TABLISHED 11 ITA NO.2603 & 2604/MDS/2014 BY THE ASSESSEE. THEREFORE, HE PLEADS FOR SUSTAINI NG THE ORDER OF THE ASSESSING OFFICER IN DENYING EXEMPTION UNDER SECTION 10B OF THE ACT. 12. COMING TO THE ADDITIONAL GROUNDS DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSEE IS NOT ELIGIB LE FOR DEDUCTION UNDER SECTION 10B IN VIEW OF EXPLANATION 2(IV) TO SECTION 10B OF THE ACT AS IT IS NOT A 100% EXPORT O RIENTED UNDERTAKING SINCE APPROVAL BY THE BOARD APPOINTED I N THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF PO WERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELO PMENT & REGULATION) ACT, 1951 IS NOT YET OBTAINED. APPROVA L UNDER STPI ACT WILL NOT MAKE THE ASSESSEE ELIGIBLE FOR DE DUCTION UNDER SECTION 10B OF THE ACT. HE PLACES RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. REGENCY CREATIONS LTD. (79 DTR 24). 13. COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND FURTHER REFERRING TO PAGES 1 TO 6 OF THE PAPER BOOK WHICH CONTAIN APPLICATION FOR GREEN CARD, COPY OF GREEN C ARD, SAMPLE INVOICES AND SUBMITS THAT STPI UNIT WAS SIT UATED IN 2 ND FLOOR OF SARANGAPANI STREET, T.NAGAR, CHENNAI AND THIS IS AN INDEPENDENT UNIT AND IT IS NOTHING TO DO WITH THE DTI UNIT SITUATED AT FIRST FLOOR. HE SUBMITS THAT S TPI PERMITTED THE ASSESSEE TO CONDUCT ITS BUSINESS FROM THE SECOND FLOOR. HE FURTHER SUBMITS THAT ALL THE COMPU TERS WERE DELIVERED IN THE ADDRESS GIVEN IN THE SECOND F LOOR WHERE STPI UNIT IS LOCATED AND ALL THESE INVOICES W ERE PRODUCED BEFORE THE ASSESSING OFFICER AS EVIDENCED FROM THE REMAND REPORT ALSO. THEREFORE HE SUBMITS THAT C LAIM MADE BY THE ASSESSEE UNDER SECTION 10B IS IN ORDER . THE ASSESSEE ALSO FILED CROSS OBJECTION CLAIMING THAT I N CASE DEDUCTION UNDER SECTION 10B IS NOT ALLOWABLE, CLAIM FOR RELIEF UNDER SECTION 10A SHOULD BE CONSIDERED AS TH E ASSESSEE SATISFIES ALL THE CONDITIONS OF SECTION 10 A OF THE ACT. THE COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE VERY SAME DECISION RELIED ON BY THE REVENUE IN THE CASE OF CIT VS. REGENCY CREATIONS LTD. (353 ITR 326) SUBMI TS THAT THE HONBLE DELHI HIGH COURT HELD THAT THE CL AIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10B IS NOT ALL OWABLE CLAIM FOR RELIEF UNDER SECTION 10A SHOULD BE CONSID ERED. 14. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHORITIES AND MATERIALS ON RECORD AND THE DECISIO N RELIED ON. EXEMPTION UNDER SECTION 10B IS ALLOWABLE FOR T HE UNDERTAKING WHICH ARE 100% EXPORT ORIENTED UNDERTA KING. EXPLANATION 2 TO SUB-CLAUSE (IV) OF SECTION 10B DE FINES 12 ITA NO.2603 & 2604/MDS/2014 WHAT IS 100% EXPORT ORIENTED UNDERTAKING, WHICH R EADS AS UNDER:- HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING MEA NS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A HUNDRED PE R CENT EXPORT-ORIENTED UNDERTAKING BY THE BOARD APPOI NTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE O F THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951) , AND THE RULES MADE UNDER THAT ACT 15. AS COULD BE SEEN FROM THE ABOVE DEFINITION, IN ORDER TO BE 100% EXPORT-ORIENTED UNDERTAKING AND CLAIM EXEMPTION UNDER SECTION 10B, AN UNDERTAKING MUST HA VE BEEN APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFER RED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGUL ATION) ACT, 1951 AND THE RULES MADE UNDER THAT ACT. IN THI S CASE, THE ASSESSEE IS A UNIT RECOGNIZED BY THE STPI. NOTH ING IS PLACED ON RECORD TO SUGGEST THAT THIS IS A HUNDRED PERCENT EXPORT ORIENTED UNDERTAKING APPROVED BY THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 19 51. AN IDENTICAL SITUATION AROSE IN THE CASE OF CIT VS. RE GENCY CREATIONS LTD. (79 DTR 24) AND THE HONBLE DELHI HI GH COURT HELD THAT UNITS SET UP UNDER STP SCHEME ARE DIFFERENT FROM THOSE THAT GOVERN UNITS SET UP AS HU NDRED PERCENT EXPORT ORIENTED UNDERTAKING AND SO APPROV ED BY THE BOARD. THE HONBLE HIGH COURT HELD THAT A UNIT WHICH IS NOT APPROVED BY THE BOARD APPOINTED BY THE CENTRAL GOVT. IN EXERCISE OF POWERS CONFERRED UNDER SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 I S NOT ENTITLED FOR EXEMPTION UNDER SECTION 10B OF THE ACT . THE HONBLE HIGH COURT HELD THAT ASSESSEE HOLDING APPRO VAL UNDER SOFTWARE TECHNOLOGY PARK SCHEME IS NOT ENTITL ED TO EXEMPTION UNDER SECTION 10B OF THE ACT. THIS DECISI ON SQUARELY APPLIES TO THE ASSESSEE IN THE ABSENCE OF ANY APPROVAL PLACED ON RECORD BY THE ASSESSEE FROM THE BOARD APPOINTED BY THE CENTRAL GOVT. 16. THE ALTERNATIVE PLEA IN THE CROSS OBJECTION FIL ED BY THE ASSESSEE IS THAT THE ASSESSEE UNDERTAKING SHOUL D BE CONSIDERED FOR DEDUCTION UNDER SECTION 10A OF THE A CT AS IT SATISFIES THE CONDITIONS LAID DOWN UNDER SECTION 10 A OF THE ACT. THE ASSESSEE IN ITS SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) STATED THAT IT SATISFIES THE REQUIREMENT OF RELIEF UNDER SECTION 1 0A OF THE ACT. COMMISSIONER OF INCOME TAX (APPEALS) EXTRACTED THE SUBMISSIONS IN HIS ORDER AT PAGE 5 & 6 AS UNDER:- THE REQUIREMENT OF RELIEF UNDER SECTION 10A ARESAT ISFIED: 13 ITA NO.2603 & 2604/MDS/2014 1. STPI APPROVAL HAS BEEN OBTAINED IN RESPECT OF AN IDENTIFIABLE SEPARATE SPACE. 2. THE BUSINESS OF THE STPI WAS NEW AND DIFFERENT F ROM THE EXISTING CONTRACTS OF THE DOMESTIC TARIFF UNIT. 3. THE PROFITS CLAIMED AS EXEMPT UNDER SECTIONS.10A RELATES TO THE NEW EXPORT BUSINESS CARRIED ON THE STPI UNI T AFTER THE APPROVAL OF THE SAME AS A STPI UNIT. 4. ONLY NEW MACHINERY, NOT USED BEFORE FOR ANY OTHE R PURPOSES WERE USED IN THE STPI BUSINESS. LEASE/HIR E OF THE MACHINE BY THE ASSESSEE TO HIMSELF CANNOT BE CONSIDERED AS USED FOR ANY OTHER PURPOSES. 5. MERELY BECAUSE HIRE CHARGES WERE SHOWN PAYABLE T O DTA, WOULD NOT MEAN THAT STPI UNIT AS NOT USING NEW MACHINERY. 6. WITHOUT PREJUDICE CIRCULAR NO.1 OF 2005 DATED 6. 1.2005 WOULD SHOW THAT EVEN EXISTING OLD UNITS ARE ENTITLE D TO RELIEF UNDER SECTIONS.10A/B. THEREFORE EXISTING BUSINESS OR OLD MACHINERY ARE NOT VERY RELEVANT FOR GRANT OF RELIEF UNDER SECTION 10A/B. NEITHER THE ASSESSING OFFICER NOR THE COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED WHETHER THE ASSESSE E IS ENTITLED FOR DEDUCTION UNDER SECTION 10A OF THE ACT IN THE PROCEEDINGS BEFORE THEM. 17. IN VIEW OF OUR ABOVE FINDINGS, WE SET ASIDE TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE UNDER SECTION 10B OF THE ACT IN THE LIGHT OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA) AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. TH E ALTERNATIVE PLEA MADE BY THE ASSESSEE MAY ALSO BE EXAMINED BY THE ASSESSING OFFICER IN CASE THE ASSES SEE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 10B OF THE ACT. 11. COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON TH E DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. 14 ITA NO.2603 & 2604/MDS/2014 TECHNOVATE E.SOLUTIONS P.LTD. (SUPRA). THAT DECISIO N IS WITH REGARD TO DEDUCTION UNDER SECTION 10A OF THE ACT WH EREIN THE DELHI HIGH COURT ALSO CONSIDERED THE DECISION OF RE GENCY CREATIONS LTD. (SUPRA) WHILE DISPOSING OF THE CASE. ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THE MATTER HAS TO BE LOOKED INTO BY THE ASSESSING OFFICER IN THE L IGHT OF THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE O F REGENCY CREATIONS LTD. (SUPRA) AND TECHNOVATE E.SOLUTIONS P .LTD. (SUPRA). IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSEE STARTED ITS BUSINESS IN THE YEAR 1999 AS A MANUFACTURER AND EXPORTER HYDRAULIC CYLINDER AND IT S COMPONENTS AND SINCE THEN THEY HAVE BEEN FILING THE IR RETURN CLAIMING EXEMPTION UNDER SECTION 10B OF THE ACT AN D THE SAME WAS ALLOWED THE DEPARTMENT UPTO THE ASSESSMENT YEAR 2008-09. IN THE CIRCUMSTANCES, WE DO NOT SEE ANY RE ASON AS TO WHY THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCTIO N UNDER SECTION 10A IF IT IS PROVED THAT ASSESSEE IS ENTITL ED FOR DEDUCTION UNDER SECTION 10A INSTEAD OF SECTION 10B OF THE ACT. THEREFORE, WE ARE OF THE VIEW THAT IN CASE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 10B OF THE ACT, THE ASSESSEES CLAIM SHALL BE CONSIDERED UNDER SECTION 10A OF 15 ITA NO.2603 & 2604/MDS/2014 THE ACT, SUBJECT TO FULFILLING OF THE CONDITIONS TH EREIN. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER FOR DE NOVO CONSIDERATION AND DECIDE THE IS SUE KEEPING IN VIEW BOTH THE DECISIONS OF THE DELHI HIG H COURT REFERRED TO ABOVE AFTER PROVIDING ADEQUATE OPPORTUN ITY TO THE ASSESSEE OF BEING HEARD. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2015. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 16 TH SEPTEMBER, 2015 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .