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ITA 2872/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6918 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 26-10-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Keywords: Depreciation; Opportunity of being heard
• Section: 10B; 10

Judgement Text

I.T.A. NO.2872 /DEL/10 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2872 /DEL/2010 ASSESSMENT YEAR : 2007-08 STYLE SOLUTIONS PVT.LTD., ITO, C-134, DEFENCE COLONY, WARD-9 (2), NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAGCS-5899-C APPELLANT BY : SHRI R.K. GUPTA, ADVOCATE. RESPONDENT BY : SHRI KISHORE B. DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)- XII, NEW DELHI DATED 25.3.2010 FOR ASSESSMENT YEAR 200 7-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1(A) THAT THE LD CIT(A) HAS ERRED IN DISMISSING THE AP PEAL OF THE APPELLANT COMPANY BY UPHOLDING THE DECISION OF THE A SSESSING OFFICER THAT PROFIT OF `.95,60,106/- OF ITS UNDERTAK ING, DID NOT QUALIFY FOR EXEMPTION U/S 10A OF THE ACT, WITHOUT PR OPERLY ADJUDICATING THE APPELLANT COMPANYS ALTERNATE CLAI M THAT THE APPELLANT WAS ENTITLED TO SUCH EXEMPTION U/S 10B, IF N OT U/S 10A OF THE ACT, AS A RESULT OF CONVERSION AND REGISTRATION OF THE SAID UNIT 100% EOU BY THE CERTIFICATE DATED 21.9.2005 OF THE OFFICE OF . I.T.A. NO.2872/DEL/10 2/5 DEVELOPMENT COMMISSIONER, GOVT. OF INDIA, MINISTRY OF COMMERCE & INDUSTRY, DEPARTMENT OF COMMERCE, OFFICE LOCATED IN NOIDA SPECIAL ECONOMIC ZONE, NOIDA AND BECAME EN TITLED FOR EXEMPTION U/S 10B OF THE INCOME TAX ACT, 1961 IN TE RMS BOARDS CIRCULAR NO.1 OF 2005. 1(B) THAT TO REJECT THE CLAIM OF THE APPELLANT, BOT H THE AUTHORITY BELOW WRONGLY CONCLUDED THAT THE BUSINESS OF THE APPEL LANT COMPANY WAS A NEW BUSINESS FORMED BY SPLITTING UP/RECONSTRUCTION OF BUSINESS, ALREADY IN EXISTENCE, IN WHICH OLD MACHINERY IN RESPECT OF WHICH DEPRECIATION ALREADY A VAILED IN EARLIER YEARS WAS USED, DISENTITLING THE APPELLANT ANY EXEMPTION U/S 10A OF THE ACT, ESPECIALLY IN VIEW OF EXEMPTION A LLOWED IN THE PRECEDING ASSESSMENT YEAR 2006-07 U/S 10 OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO.1 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS C LAIMED DEDUCTION U/S 10A OF THE INCOME TAX ACT, 1961. THE A SSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM FOR DEDUCTION U/S 1 0A. HE ALSO CALLED FOR A COPY OF THE REPORT IN FORM NO.54F. TH E ASSESSING OFFICER ALSO CALLED FOR CERTAIN OTHER DOCUMENTS AND INFORMATI ON. SOME REPLY WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS PER LETTER DATED 12.11.2009. THEREAFTER, IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO.2 OF THE ASSESSMENT ORDER THAT ON EX AMINATION OF THE PAPERS FURNISHED BY THE ASSESSEE, IT IS REVEALED THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 10A OF THE ACT. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE DATED 11.12.2009. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT AND DEDUCT ION U/S 10A WAS CLAIMED AS A MISTAKE AT THE END OF THE AUDITORS. THE A SSESSEE REQUESTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 10 B IN LIEU OF . I.T.A. NO.2872/DEL/10 3/5 SECTION 10A. NO FINDING IS GIVEN BY THE ASSESSING OFFICER REGARDING THIS ALTERNATE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT. THE MATTER WAS DECIDED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE ON THIS BASIS THAT THE ASSESSEE DOES NOT QUALIFY FOR DEDUCTION U/S 10A OF THE ACT. IN THIS MANNER, THE ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM OF DEDUCTION U/S 10A. BEING AGGRIEVED, THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE LD CIT (A). LD CIT(A) HAS AL SO NOT EXAMINED THIS ASPECT OF THE MATTER AS TO WHETHER DEDUCTION IS ALLOWABLE TO THE ASSESSEE U/S 10B OR NOT AND HE HAS CONFIRMED THE ASSESSMENT O RDER. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THE ISSUE REGARDING ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION U/S 10B WAS NOT EXAMINED AND DECIDED BY THE AUTHORITIES BELOW ALTHOU GH A CERTIFICATE OF THE AUDITOR HAS BEEN SUBMITTED BEFORE THE AUTHORI TIES BELOW IN WHICH IT HAS BEEN CERTIFIED BY THE AUDITORS THAT THE CERTIFICATE WAS WRONGLY ISSUED FOR DEDUCTION U/S 10A DUE TO MISTAKEN BE LIEF AND INADVERTENT ERROR. IT IS SUBMITTED THAT THIS CERTIFIC ATE OF THE AUDITOR IS AVAILABLE ON PAGE NO.31A OF THE PAPER BOOK AND THE RELEVANT CERTIFICATE IN FORM NO.56G IS ALSO AVAILABLE ON PAGES 32, 32A AND 32B OF THE PAPER BOOK. IT IS ALSO SUBMITTED THAT AS PER BO ARDS CIRCULAR NO.1 OF 2005 DATED 6.1.2005, DEDUCTION U/S 10B IS AVA ILABLE TO AN UNDERTAKING IF SUCH UNDERTAKING WAS EARLIER SET UP IN DOMESTIC TARIFF AREA (DTA) AND WAS DERIVING PROFIT FROM EXPORT OF A RTICLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT AND SUBSEQUENTLY CONVERTED INTO 100% EOU ON GETTING APPROVAL 100% EO U AND THE PERIOD OF DEDUCTION TO BE ALLOWED U/S 10B SHOULD BE T HE REMAINING PERIOD OF 10 CONSEQUENT ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICL ES OR THINGS OR COMPUTER SOFTWARE AS A DTA UNIT. IT IS SUBMITTED THAT IN THE PRESENT CASE ALSO, THE ASSESSEES UNDERTAKING WAS INITIALLY SET UP A S A DTA UNIT . I.T.A. NO.2872/DEL/10 4/5 AND SUBSEQUENTLY IT WAS APPROVED AS 100% EOU AS PER GRE EN CARD NO.57 DATED 27.10.2005 HAVING VALIDITY UP TO 31.3.2 010, COPY OF WHICH IS AVAILABLE ON PAGES 46-48 OF THE PAPER BOOK. IT IS S UBMITTED THAT IN THE FACTS OF THE PRESENT CASE, DEDUCTION SHOULD BE ALL OWED TO THE ASSESSEE U/S10B. LD DR OF THE REVENUE SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CASE OF THE ASSESSEE IS THAT IN THE PRESENT YEAR, THE ASSESSEE IS ELIGIBLE FOR DE DUCTION U/S 10B AND NOT U/S 10A AND BY MISTAKE, THE ASSESSEE CLAIMED DEDU CTION U/S 10A BUT INSTEAD OF THAT, THE ASSESSEE SHOULD BE ALLOWED U /S 10B OF THE ACT. IT WAS ALSO SUBMITTED THAT THE AMOUNT OF DEDUCTIO N TO BE ALLOWABLE TO THE ASSESSEE WILL REMAIN THE SAME EVEN U/S 10B. UNDER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE CLAIM WAS MADE UNDER THE WRONG SECTION, THE CLAIM OF THE ASSESSEE SHOULD NOT BE REJECTED IF IT IS FOUND THAT OTHERWISE, THE ASSESSEE IS EL IGIBLE FOR DEDUCTION U/S 10B. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE BACK THE ENTIRE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AFTER EXAMINING TH E CLAIM OF THE ASSESSEE AS TO WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10B. THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING I.E. 26 TH OCTOBER, 2010. (R.P. TOLANI) (A.K. GARO DIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 26.10.2010. HMS . I.T.A. NO.2872/DEL/10 5/5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).