M/s. Alphatech Software Pvt. Ltd., Vadodara V. The Income Tax Officer, Ward-1(1), Baroda

ITA 2735/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7992 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 28-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Bonafide belief; Condonation of delay
• Section: 10B; 263; 2; 15

Judgement Text

ITA NO S . 2 734 & 2735 / AHD/20 1 5 A.Y S . 20 08 - 09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER I TA NO. 2 734 /AHD /201 5 ASSESSMENT YEAR: 20 08 - 09 M/S. ALPHATECH SOFTWARE PVT. LTD., VS. COMMISSIO NER OF INCOME TAX - I, 5, ARYAN INDUSTRIAL ESTATE, BARODA. OPP. MATRUCHAYA MAR R IAG E HALL, B/H. PVR CINEMA, CHANNI, BARODA 390 024. [PAN A A DCA 0799 A ] APPELLANT BY : SHRI TUSHAR P. HEMANI, RESPONDENT BY : SHRI SURENDRA KUMAR, CIT (DR) I TA NO. 2735/AHD /201 5 ASSESSMENT YEAR: 2008 - 09 M/S. ALPHATECH SOFTWARE PVT. LTD., VS. INCOME TAX OFFICER, 5, ARYAN INDUSTRIAL ESTATE, WARD 1(1), BARODA. OPP. MATRUCHAYA MARRIAGE HALL, B/H. PVR CINEMA, CHANNI, BARODA 390 024. [PAN A ADCA 0799 A ] (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI TUSHAR P. HEMANI, RESPONDENT BY : SHRI MUDIT NAGPAL , SR. D.R. DATE OF HEARING : 04 . 1 2 . 20 17 DATE OF PRONOUNCEMENT : 18 . 12 .2017 O R D E R PER N.K. BILLAIYA, A CCOUNTA NT MEMBER TH ESE ARE APPEAL S BY THE REVENUE PREFERRED AGAINST TWO SEPARATE ORDERS FOR THE ASSESSMENT YEAR 20 08 - 09 . 2. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SA K E OF CONVENIENCE . ITA NO S . 2 734 & 2735 / AHD/20 1 5 A.Y S . 20 08 - 09 PAGE 2 OF 5 3. FIRST WE TAKE UP ITA N O.2734/AHD/2015 . WITH THIS APPEAL , THE ASSESSEE H AS CHALLENGED THE VALIDITY OF ORDER OF THE CIT - I , BARODA DATED 22.03.3013 FRAMED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) PERTAINING TO ASSESSMENT YEAR 2008 - 09 . 4. THE APPEAL IS LATE BY 860 DAYS. IN ITS REQUEST FOR T H E CONDONATION OF DELAY , THE ASSESSEE STATED T HAT IT CAME TO KNOW ABOUT THE ORDER FRAMED UNDER SECTION 263 OF THE ACT ONLY WHEN THE ASSESSMENT WAS FRAMED PURSUANT TO THE DIRECTIONS GIVEN BY THE COMMISSIONER WHICH HAS CAUSED TH E DELAY IN FILING OF THE APPEAL. THE ASSESS E E FURTHER CONTENDS THAT HE WAS UND E R A BONAFIDE BELIEF THAT THE ASSESSEE WAS NOT REQUIRED TO FILE AN APPEAL AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE ACT. 5. WE FIND THAT THE REASONS GIVEN BY T HE ASSESS E E ARE TOO VAGUE TO BE CONSIDERED AS A BONAFIDE CAUSE FOR THE DELAY IN FILING THE APPEAL. WE FIND NO MERIT IN THE CONTENTION OF THE ASSESSEE. THE DELAY IS NOT CONDONED AND ACCORDINGLY THE APPEAL IS DISMISS E D. 6. NOW WE TAKE UP ITA NO.2735/AHD/20 15 . WITH THIS APPEAL , THE ASSESSEE HAS CHALLENGED CORRECTNESS OF THE OR DER OF CIT ( A ) - 1, VADODARA DATED 27.07.2015 PERTAINING TO ASSESSMENT YEAR 2008 - 09 . THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE CIT ( A ) ERRED IN CONFIRMING ACTION OF THE A SSESSING OFF ICER IN DISALLOWING EXEMPTION OF RS.32 , 56 , 998/ - CLAIMED UNDER SECTION 10B OF THE ACT. 7. THE ASSESSEE IS IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND TESTING AND ACCORDINGLY ASSESSEE CLAIMED DEDUCTION OF RS.32 , 56 , 998/ - UNDER SECTION 10B OF THE ACT. THE A SSESSING OFFICER WAS OF THE OPINION THAT TO CLAIM DEDUCTION UNDER SECTION 10B OF THE ACT , AS PER EXPLANATION 2( IV ) TO SECTION 10B , THE DEDUCTION IS ADMISSIBLE TO 100% EOU IF THE APPROVAL IS GRANTED BY T HE BOARD OF APPROVAL CONSTITUTED BY THE CENTRAL GOVERN MENT UNDER S ECTION 14 OF I NDUSTRIES (DEVELOPMENT AND REGULATION) ACT. THE ASSESSING O FFICER NOTICED THAT IN THE CASE IN HAND THE APPROVAL IS GRANTED BY THE D IRECTOR , S OFTWARE TECHNOLOGY PARKS OF INDIA WHICH IS A SOCIETY FORMED UNDER THE SOFTWARE TECHNOLOG Y PARK SCHEME. THE ASSESSING OFFICER W A S OF THE FIRM BELIEF THAT THE APPROVAL FOR THE UNDERTAKING IS NOT GRANTED BY THE BOARD. THEREFORE , THE ASSESSEE IS NOT ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT A ND ACCORDINGLY DENIED DEDUCTION OF RS.32,56,998/ - ITA NO S . 2 734 & 2735 / AHD/20 1 5 A.Y S . 20 08 - 09 PAGE 3 OF 5 8. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE S T ATED THAT THE APPROVAL GRANTED BY THE DIRECTOR , STPI WAS SUBSEQUENTLY RATIFIED BY THE BOARD AN D THEREFORE THE ASSESSEE HAS FULFILLED THE MANDATORY CONDITIONS PRESCRIBED UNDER T HE ACT A ND ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SE CTION 10B OF THE ACT. LEARNED C OUNSEL RELIED UPON THE DECISION OF HON BLE HIGH COURT OF GUJARAT IN THE CASE OF PCIT VS. ECI TECHNOLOGIES PVT. LTD. , [2015] 375 ITR 595 (GUJ.) . LD . C OUNSEL ALSO RELIED UPON THE CBDT CIRCULAR NO.9309 AND 859. 9. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO T HE ORDER S OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN DULY GRANTED APPROVAL BY STPI. WE FIND THAT THE SAID APPROVAL OF THE STPI W A S RATIFIED BY THE BOARD V IDE LETTER DATED 13.08.2007 AND THE SAME IS EXHIBITED AT PAGES 18 TO 2 0 OF THE P APER B OOK. WE ALSO FIND THAT THE CBDT HAS COME OUT WITH THE FOLLOWING CIRCULAR : - CLARIFIFATION REGARDING DEDUCTION UNDER SECTION 10B [ INSTRUCTION NO.02/2009, DATED 9 - 3 - 2009, CORRECTED BY [F. N O.178/19/2008 ITA - I] DATED 8 - 5 - 2009] SECTION 10B OF THE INCOME TAX ACT PROVIDES FOR EXEMPTION OF INCOME IN CASE OF HUNDRED PER CENT EXPORT ORIENTED UNDERTAKINGS SUBJECT TO PRESCRIBED CONDITIONS. EXPLANATION 2(IV) BELOW TO TH E SAID SECTI O N DEFINES A HUNDRED PERCENT EXPORT ORIENTED UNDERTAKING AS AN UNDER TAKING SO APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES DEVELOPMENT AND REGULATION ACT, 1951. SUBSEQUENT TO THE DELEGATION OF THIS POWER BY THE MINISTRY OF COMMERCE AND INDUSTRIES TO THE DEVELO PMENT COMMISSION E RS, SUCH APPROVALS TO 100 PER CENT EOU S ARE NOW BEING GRANTED BY THE DEVELOPMENT COMMISSIONERS, WHICH A RE LATER RATIFIED BY THE BOARD OF APPROVALS. THE MAT T ER REGARDING VALIDITY OF APPROVALS GIVEN BY DEVELOPMENT COMMISSIONERS HAS BEEN EXA MINED IN THE BOARD IT HAS BEEN DECIDED THAT AN A PPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF HUNDRED PER CENT E XPORT ORIENTED UNIT WILL BE CONSIDERED VALID ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FOR EOU SCHEME. 11 . WE FURTHER FIND THAT IDENTICAL ISSUE WAS CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF PCIT VS. ECI TECHNOLOGIES PVT. LTD. (SUPR A ). THE RELEVANT FINDINGS READ AS UNDER : - ITA NO S . 2 734 & 2735 / AHD/20 1 5 A.Y S . 20 08 - 09 PAGE 4 OF 5 HEARD THE LEARNED ADVOCATES APPEARING ON BEHALF O F THE RESPECTIVE PARTIES AT LENGTH. AT THE OUTSET, IT IS REQUIRED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT CLAIMING 100 PER CENT . EXPORT ORIENTED UNIT. IT IS AN ADMITTED POSITION THAT THERE WAS ALREADY A PERMI SSION/ APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER DECLARING/APPR OVING THE ASSESSEE AS 100 PER CENT . EXPORT ORIENTED UNIT. HOWEVER, ON CONSIDE RING THE WORD, APPROVED BY THE BOARD OF APPROVAL AS MENTIONED IN SECTION 1 0B OF THE ACT AND AT THE RELEVANT TIME THERE WAS NO RATIFIC ATION OF THE DE C ISION OF THE DEVELOPMENT COMMISSIONER BY THE BOARD OF APPROVAL, THE ASS ESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 10B OF THE ACT. HOWEVER , IS REQUIRED TO BE NOTED AND IT IS NOT IN DISPUTE THAT, VIDE CIRCULAR/INSTR UCTION OF THE CENTRA L BOARD OF DIRECT TAXES DATED MARCH 9, 2009, IT WAS CLARIFIED THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF EXPORT ORIENTED UNIT SET UP IN AN EXPORT PROCESSING ZONE WILL BE CO NSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY T HE BOARD OF APPROVAL FO R EXPORT ORIENTED UNIT SCHEME. IN THE PRESENT CASE, IT IS NOT IN DISPUTE TH AT THE PERMISSION/APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER HAS BEEN RATIFIED BY THE BOARD OF APPROVAL, MAY BE SUBSEQUENTLY. THE MOMENT THE DECISION/AP PROVAL OF THE DEVELOPMENT COMMISSIONER IS RATIFIED BY THE BOARD OF APPROVAL IT WILL RELATE BACK TO THE DATE ON WHICH THE APPROVAL WAS GRANTED BY THE DEVELOPMENT COMMISSIONER. IF THAT BE SO, IT CANNOT BE SAID THAT THE ASSESSEE WAS NOT A EXPORT ORIENTED UN IT, WHICH WAS EN TITLED TO THE DEDUCTION UNDER SECTION 10B OF THE ACT. INCIDENTALLY IT IS TO BE NOTED THAT IN THE SUBSEQUENT CIRCULAR NO. 68 ISSUED BY THE EXPORT PRO MOTION COUNCIL FOR EOUS AND SEZS, DATED MAY 14, 2009, IT MENTIONS THAT FROM 1990 ONWARDS THE BOARD OF APPROVAL HAD DELEGATED THE POWER OF APP ROVAL OF 100 PER CENT, TO THE DEVELOPMENT COMMISSIONER AND, THERE FORE , IT CAN BE VERY WELL ARGUED AND SAID THAT THE DEVELOPMENT COMMIS SIONER WHILE GRANTING THE APPROVAL OF 100 PER CENT, EXPORT ORIENTED UNIT EX ERCISES DELEGATED POWERS. IN ANY CASE AND APART FROM THE ABOVE WHEN IT IS FOUND THAT AT THE RELEVANT TIME THE DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL OF 100 PER CENT, EXPORT ORIENTED UNIT IN FAVOUR OF THE ASSESSEE - COMPANY, WHICH CAME TO BE SUBSEQ UENTLY RATIFIED BY THE BOARD OF APPROVAL AND AS OBSERVED HEREINABOVE AS SUCH THE RATIFICATION SHALL BE FROM THE DATE ON WHICH THE DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL, BOTH THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AS WELL AS THE LEARNED T RI BUNAL HAVE RIGHTLY HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER ACTION 10B OF THE ACT AS CLAIMED. WE CONFIRM THE VIEW TAKEN BY BOTH THE AU THORITIES BELOW HOLDING THAT THE ASSESSEE WAS ENTITLED TO 100 PER CENT. E OU AS CLAIMED. NO SUBSTANTIAL QUE STION OF LAW ARISES IN THE PRESENT TAX APPEAL. HENCE, THE PRESENT TAX APPEAL DESERVES TO BE DISMISSED AND IS ACC ORDINGLY DISMISSED. 12. RESPECTFULLY FOLLOWING THE FINDINGS OF THE HON BLE JURISDICTIONAL HIGH COURT OF GUJARAT (SUPRA) , WE SET ASIDE THE FIND INGS OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION OF RS.32 , 56 , 998/ - MADE UNDER SECTION 10B OF THE ACT. ITA NO S . 2 734 & 2735 / AHD/20 1 5 A.Y S . 20 08 - 09 PAGE 5 OF 5 13. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 14. IN THE RESULT, ITA NO.2734/AHD/2015 IS DISMISSED AND ITA NO.2735/AHD/2015 IS ALLOWED. ( OR DER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER , 2017 ) SD/ - SD/ - RAJPAL YADAV N.K. BILLAIYA ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) AHMEDABAD, THE 18 T H DAY OF DECEMBER , 201 7 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER E COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHM EDABAD BENCHES, AHMEDABAD