Annam Software Pvt Ltd., Coimbatore V. ACIT, Coimbatore

ITA 2929/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90350 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR NISCHAL
• Assessee Lawyers: K RAGHU
• Section: 143(3); 10B; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 2929/MDS/2014 ( / ASSESSMENT YEAR: 2011-12) M/S.ANNAM SOFTWARE PVT.LTD. 102/1, RAMALINGAPURAM, VADAVALLI, COIMBATORE - 641 041. VS ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE-I(2), C OIMBATORE. PAN: AAECA0986G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K.RAGHU, C.A. /RESPONDENT BY : DR. NISCHAL, JCIT /DATE OF HEARING : 18 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 15 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE DATED 28.10.2015 FOR THE ASSESSMENT YEAR 2011-12. T HE ASSESSEE IS CHALLENGING THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS) IN DENYING THE CLAIM OF THE AS SESSEE FOR RELIEF UNDER SECTION 10B OR ALTERNATIVELY UNDER SECTION 10A OF THE ACT. 2. THE MAIN ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT 2 ITA NO.2929 /MDS/2014 ASSESSEE WAS NOT ENTITLED TO CLAIM RELIEF UNDER SEC TION 10A ONLY ON THE TECHNICAL GROUND THAT THE CLAIM HAD BEE N MADE UNDER SECTION 10B IN THE RETURN OF INCOME FOR THE A SSESSMENT YEAR UNDER CONSIDERATION AND NOT UNDER SECTION 10A IN RESPECT OF ITS PROFIT DERIVED FROM ITS 100% EOU FRO M EXPORT OF COMPUTER SOFTWARE REGISTERED WITH STPI. THE ASSESSE E FILED RETURN OF INCOME ON 29.09.2011 CLAIMING DEDUCTION U NDER SECTION10B OF THE ACT. ASSESSMENT WAS COMPLETED UND ER SECTION 143(3) OF THE ACT ON 12.12.2013 DENYING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10B OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBM ITTED THAT ASSESSEE WAS CLAIMING DEDUCTION UNDER SECTION 10B IN EARLIER ASSESSMENT YEARS. DURING THIS ASSESSMENT YE AR, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10A AND FI LED REPORT IN FORM 56F AS REQUIRED UNDER SECTION 10A O F THE ACT. IT WAS THE SUBMISSION OF THE ASSESSEE THAT IT SATIS FIES ALL THE CONDITIONS RELATING TO SECTION10A AND THEREFORE ENT ITLED TO DEDUCTION UNDER SECTION 10A OF THE ACT. THE ASSESSI NG OFFICER WHILE COMPLETING THE ASSESSMENT DENIED DEDU CTION STATING THAT ASSESSEE CLAIMED DEDUCTION UNDER SECTI ON 10B AND IN VIEW OF THE DECISION OF THE DELHI HIGH COURT IN THE CASE 3 ITA NO.2929 /MDS/2014 OF REGENCY CREATIONS PVT. LTD.(255 CTR 63), THE ASS ESSEE IS NOT ENTITLED FOR CLAIM OF DEDUCTION UNDER SECTION 1 0B, SINCE THE ASSESSEE IS ONLY 100% EXPORT ORIENTED UNIT SETU P UNDER STPI SCHEME AND NOT APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFERRED BY SECTION 14 OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. THE ASSESSEE PREFERRED APPEA L BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ORDER OF THE ASSESSING OFFICER IN DENYING CLAIM OF THE AS SESSEE UNDER SECTION 10A / 10B OF THE ACT. THE COMMISSION ER OF INCOME TAX (APPEALS) WAS OF THE VIEW THAT THE ASSES SEE CLAIMED DEDUCTION UNDER SECTION 10B IN THE RETURN O F INCOME, THE ASSESSING OFFICER FOUND THAT ASSESSEE IS NOT EN TITLED FOR EXEMPTION UNDER SECTION 10B OF THE ACT AND THEREFOR E ASSESSING OFFICER WAS RIGHT IN DENYING THE CLAIM OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIEW THAT SINCE THE ASSESSEE HAS NOT CLAIMED DEDUCTION UNDER SECTION 10A IN THE RETURN OF INCOME , THE ASSESSEE CANNOT CLAIM EXEMPTION UNDER SECTION 10A IN THE APPELLATE PROCEEDINGS. 4 ITA NO.2929 /MDS/2014 3. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMI TS THAT ASSESSEE WAS CLAIMING DEDUCTION UNDER SECTION 10B ALL ALONG FROM THE ASSESSMENT YEAR 2004-05. HOWEVER, DU RING THIS ASSESSMENT YEAR ASSESSEE FILED FORM NO.56F CL AIMING DEDUCTION UNDER SECTION 10A BUT IT WAS WRONGLY MENT IONED IN THE RETURN THAT CLAIM WAS MADE UNDER SECTION 10B OF THE ACT. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITS THAT ASSESSEE SATISFIES ALL THE CONDITIONS LAID DOWN UND ER SECTION 10A OF THE ACT, THEREFORE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 10A OF THE ACT. AUTHORIZED REPRESENT ATIVE SUBMITS THAT AS THE ASSESSEE WRONGLY MENTIONED IN T HE RETURN THAT IT IS CLAIMING DEDUCTION UNDER SECTION 10B, TH E LOWER AUTHORITIES DENIED DEDUCTION WHICH IS NOT CORRECT. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITS THAT IF THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10B, TH E LOWER AUTHORITIES SHOULD HAVE CONSIDERED THE CLAIM OF THE ASSESSEE UNDER SECTION 10A OF THE ACT. HE PLACES RELIANCE ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS . HEARTLAND KG INFORMATION LTD.(359 ITR 1) IN SUPPORT OF HIS SUBMISSIONS. AUTHORIZED REPRESENTATIVE ALSO PLACES RELIANCE ON THE DECISION OF HYDERABAD BENCH OF THIS TRIBUNAL IN THE 5 ITA NO.2929 /MDS/2014 CASE OF VNS MAKRO TECHNOLOGIES PVT.LTD. VS. DCIT IN ITA NO.577/HYD/2012 DATED 8.6.2012. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF LOWER AUTHORITIES IN DENYING EXEMPTION UN DER SECTION 10A / 10B OF THE ACT. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE CASE LAWS RELIED ON. THE ASSESSEE FILED FO RM 56F DATED 2.9.2011 FROM THE ACCOUNTANT, WHO CERTIFIED T HAT ASSESSEE IS CLAIMING DEDUCTION UNDER SECTION 10A OF THE ACT. THE ASSESSEE FILED RETURN CLAIMING DEDUCTION UNDER SECTION 10B IN THE RETURN OF INCOME. THE ASSESSING OFFICER DENIED DEDUCTION UNDER SECTION 10B STATING THAT ASSESSEE H AS NOT FULFILLED THE CONDITIONS SPECIFIED THEREIN. IT WAS THE SUBMISSION OF THE ASSESSEE THAT CLAIM WAS MADE UNDE R SECTION 10A AND ALL THE CONDITIONS STIPULATED UNDER SECTION 10A WERE COMPLIED WITH. IT WAS THE SUBMISSION OF TH E ASSESSEE THAT ITS UNIT WAS GRANTED APPROVAL FOR SE TTING UP OF STPI UNIT BY THE DIRECTOR OF SOFTWARE TECHNOLOGY PA RK OF INDIA WHICH IS A 100% EXPORT ORIENTED UNDERTAKING. IT WAS THE SUBMISSION OF ASSESSEE THAT IN CASE DEDUCTION UNDER SECTION 6 ITA NO.2929 /MDS/2014 10B IS NOT ALLOWABLE, DEDUCTION UNDER SECTION 10A SHOULD BE ALLOWED. 6. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. REGENCY CREATIONS PVT.LTD. (353 ITR 326) HELD THAT IN ORDER TO CLAIM EXEMPTION UNDER SECTION 10B, AN UNDERTAKIN G MUST HAVE BEEN APPROVED BY THE BOARD APPOINTED IN THIS B EHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFER RED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT & REGULAT ION) ACT, 1951 AND RULES MADE THEREUNDER. IN THIS CASE, ASSE SSEE IS A UNIT RECOGNIZED BY THE STPI. IT WAS NOT PLACED ON R ECORD TO SUGGEST THAT UNIT WAS APPROVED BY THE BOARD APPOINT ED BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF INDUSTRI ES (DEVELOPMENT AND REGULATION) ACT, 1951, THEREFORE A SSESSEE IS NOT ELIGIBLE FOR 10B DEDUCTION. HOWEVER, IF THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 10B, THE C LAIM MADE BY THE ASSESSEE UNDER SECTION 10A OF THE ACT SHOUL D BE CONSIDERED BY THE LOWER AUTHORITIES. 7. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. HEARTLAND KG INFORMATION (SUPRA) HELD AS UNDER:- HELD , DISMISSING THE APPEAL, (I) THAT THE TRANSFER WAS NOT THAT OF PLANT AND MACHINERY ALONE BUT OF SA LE 7 ITA NO.2929 /MDS/2014 OF THE WHOLE BUSINESS UNIT OF THE TRANSFEROR COMPAN Y WHICH WAS PRIMARILY ONLY TO THE EXPORT OF ARTICLES OR THINGS. EVEN THOUGH THE ASSESSEE ORIGINALLY CLAIMED RELIEF UNDER SECTION 10B, IT WAS CAUTIOUS ENOUGH TO MAKE AN ALTERNATIVE PLEA UNDER SECTION 10A IN VIEW OF THE FACT THAT THE ASSESSEE'S VENDOR HAD THE BENEFIT UNDER SECTION L0A. IT WAS NOT DENIED BY THE REVENUE THAT THE ASSESSEE HAD THE WHOLE BUSINESS TRANSFERRE D TO ITS FAVOUR AND THAT THE FACTUM OF TRANSFER WAS A LSO INTIMATED TO THE SOFTWARE TECHNOLOGY PARK OF INDIA. THUS, AS A SOFTWARE TECHNOLOGY PARK, THE ASSESSEE WAS ENTITLED TO PLACE ITS CLAIM UNDER SECTION L0A. IN ANY EVENT, EVEN ASSUMING FOR A MOMENT, THE ASSESSEE HAD NOT REFERRED TO THE SECTION CORRECTLY, THE FACT REMAINED THAT IF THE CLAIM COULD BE FAVOURABLY CONSIDERED UNDER ANY OF THOSE SPECIAL DEDUCTION PROVISIONS AND ON THE CONDITIONS SPECIFIED THEREIN BEING SATISFIED, THERE DID NOT EXIST ANY JUSTIFIABL E GROUND FOR THE REVENUE TO CONTEND THAT THE ASSESSEE SHALL NOT BE ENTITLED TO HAVE THE BENEFIT OF SECTIO N 10A. THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 10A. 8. RESPECTFULLY FOLLOWING THE SAID DECISION, WE SE T ASIDE THE ORDERS OF LOWER AUTHORITIES AND REMIT THE MATTE R BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO C ONSIDER THE CLAIM OF THE ASSESSEE UNDER SECTION 10A AFTER EXAMI NING THE ALLOWABILITY OF THE CLAIM AFRESH IN ACCORDANCE WITH LAW AND IN LIGHT OF THE ABOVE OBSERVATIONS. 8 ITA NO.2929 /MDS/2014 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2015 AT CHENNAI. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 15 TH MAY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .