M/s. ONS Interactive Solutions (P) Ltd., New Delhi V. ITO, New Delhi

ITA 2922/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82191 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 25-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AO ON GROUND THAT COM

Judgement Text

DELHI BENCH E : NEW DELHI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 2922 /DEL/ 2013 (ASSESSMENT YEAR: 2009 - 10 ) M/S. ONS INTERACTIVE SOLUTIONS (P) LTD. G - 4, NDSE - II, NEW DELHI VS. INCOME TAX OFFICER, WARD - 13(4) NEW DELHI (APPELLANT) (RESPONDENT) O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XVI DATED 27 TH FEBRUARY 2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE SOLITARY ISSUE INVOLVED IN THE INSTANT APPEAL RELATES TO DISALLOWANCE OF RS.39,63,800/ - REPRESENTING CLAIM U /S 10A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT ) . 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF DEVELOPMENT AND PROMOTION OF WEBSITES, OUTSOURCING AND SEARCH OPTIMIZATION. THE CLAIM MADE U/S 10A OF THE ACT HAS BEEN DENIED BY THE AO, ON THE GROUND THAT THE ASSESSEE COMPANY HAD ALREADY COMMENCED MANUFACTURING EVEN BEFORE APPROVAL WAS GRANTED BY SOFTWARE TECHNOLOGY PARK OF INDIA (STPI). THUS HE HAS HELD THAT ASSESSEE COMPANY COMMENCED OPERATIONS IN THE UNIT AT NOIDA IN 2007, HOWEVER APPROVAL WAS GIVEN BY STPI ON 23 RD SEPTEMBER 2008. 4. THE AO HAS CONCLUDED THAT THE ASSESSEE COMPANY IS REQUIRED TO SET UP A NEW UNIT TO BE ELIGIBLE FOR CLAIM U/S 10A OF THE ACT. THE LD CIT(A) HAS SUSTAINED THE ABOVE DISALLOWANCE BY HOLD ING THAT SINCE THE UNIT WAS APPROVED ON 23/09/2008, THEREFORE, ONLY THE PROFITS DERIVED FROM THE EXPORT OF COMPUTER SOFTWARE FROM AND AFTER THE DATE OF APPROVAL OF THE STP UNIT ON APPELLANT BY : ASHWANI TAJENJA, ADV RESPONDENT BY : GAURAV DUOEJA, SR. DR PAGE 2 OF 3 23/09/2008 WILL BE ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT . BECAUSE IN RES PECT OF THE PERIOD PRIOR TO THE DATE OF APPROVAL, DURING THE RELEVANT PREVIOUS YEAR, EVEN IF THE PROFITS ARE DERIVED FROM EXPORT OF COMPUTER SOFTWARE, THE SAME ARE NOT DERIVED FROM EXPORT OF COMPUTER SOFTWARE PRODUCED FROM STP UNIT AS REQUIRED U/S 10A(2)(I )(B) OF THE ACT . 5. THE LD CIT(A) HAS THEREAFTER CONSIDERED THE CIRCULAR NO.1/2005 ISSUED BY THE CBDT AND HELD AS UNDER: - 6.4 FROM THE ABOVE CIRCULAR ALSO IT IS CLEAR THAT ONLY THE PROFITS DERIVED FROM THE SOFTWARE EXPORT FROM AND AFTER THE DATE OF APPRO VAL ON 23/09/2008 SHALL BE EXEMPT U/S 10A. THE APPELLANT HAS FAILED TO PROVIDE DETAILS BEFORE THE A.O. TO PROVE THAT THE PROFITS DERIVED ARE FROM SOFTWARE EXPORTS AFTER THE DATE OF APPROVAL. EVEN BEFORE ME IN THE APPELLATE PROCEEDINGS NO DETAILS HAVE BEEN FURNISHED TO PROVE THAT THE PROFITS DERIVED ARE NOT FROM EXPORT OF SOFTWARE BEFORE THE DATE OF APPROVAL BUT FROM EXPORT OF SOFTWARE AFTER THE DATE OF APPROVAL ON 23/09/2008. IN VIEW OF THE ABOVE, AS THE APPELLANT HAS FAILED TO PROVE THAT PROFITS DERIVED AR E FROM EXPORT OF SOFTWARE AFTER THE DATE OF APPROVAL AS STP UNIT, THEREFORE, THE A.O. IS JUSTIFIED IN DISALLOWING THE DEDUCTION U/S 10A. THE APPEAL FAILS IN THIS GROUND. 6 . HAVING CONSIDERED THE RIVAL SUBMISSION AND AFTER PERUSAL OF THE MATERIAL ON RECORD , WE FIND THAT THE APPELLANT AUTHORITY HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT AFTER RECEIPT OF THE APPROVAL OF STPI FROM 23 RD SEPTEMBER 2008, THE ASSESSEE IS ENTITLED TO THE EX EMPTION U/S 10A OF THE ACT. HOW EVER HE DENIED T HE CLAIM SINCE HE WAS HANDICAPPED FROM DETERMINING THE AMOUNT OF EXEMPTION POST 23.09.2008 BECA USE THE ASSESSEE COULD NOT PLACE THE NECESSARY DETAILS APPORTIONING THE PROFITS BEFORE HIM. WE FURTHER FIND THAT IN THE SUBSEQUENT ASSESSMENT YEAR , THE AO HIMSEL F HAS ALLOWED THE ASSESSEE EXEMPTION U/S10A BY ORDER DATED 17.02.2014 FOR ASSESSMENT YEAR 2011 - 12. THEREFORE WE FIND THAT THE LIMITED ISSUE THAT IS BEFORE US IS TO DETERMINE THE PROFITS DERIVED BY THE ASSESSEE FROM THE DATE OF APPROVAL FROM STPI I.E. POST 23 RD SEPTEMBER 2008. FOR THAT WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF AO TO DETERMINE THE PROFITS ELIGIBLE FOR EXEMPTION TO THE ASSESSEE F R O M 23 RD SEPTEMBER 2008. FOR THAT , THE ASSESSEE SHALL PRODUCE ALL THE RELEVANT DOCUMENTS NECESSARY FOR THE AO TO DETERMINE THE PROFITS PAGE 3 OF 3 DERIVED BY THE ASSESSEE FROM 23 RD SEPTEMBER 2008 AND THE AO SHALL PASS FRESH ORDER ON THIS ISSUE . 7 . IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 23 . 12 .2014. - SD/ - - SD/ - ( PRAMOD KUKMAR ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 / 12 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI