Deputy Commissioner of Income-tax, V. Clarion Technologies Pvt. Ltd., Pune

ITA 296/PUN/2014

• Counselvise Citation: 29624514 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K SRIDHAR
• Keywords: Opportunity of being heard; Fair market value
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.296/PN/2014 ASSESSMENT YEAR: 2010-11 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE . APPELLANT VS. CLARION TECHNOLOGIES PVT. LTD., 4 TH FLOOR, TOWER S-4, CYBER CITY, MAGARPATTA, HADAPSAR, PUNE 411028 . RESPONDENT PAN: AABCC8321Q CO NO.7/PN/2015 ASSESSMENT YEAR: 2010-11 ARISING OUT OF ITA NO.296/PN/2014 CLARION TECHNOLOGIES PVT. LTD., 4 TH FLOOR, TOWER S-4, CYBER CITY, MAGARPATTA, HADAPSAR, PUNE 411028 . CROSS OBJECTOR PAN: AABCC8321Q VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE . RESPONDENT ASSESSEE BY : SHRI V.K. SRIDHAR REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 23-03-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER SUSHMA CHOWLA, JM: THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A)-I, PUNE, DATED 31.10.2013 RELATING TO ASSESS MENT YEAR 2010-11 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE APPEAL OF THE REVENUE. ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 2 2. BOTH THE APPEAL AND CROSS OBJECTION RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.296/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ER RED IN HOLDING THAT THE BANGALORE AND AHMADABAD UNITS OF THE ASSES SEE COMPANY ARE ENTITLED TO DEDUCTION U/S 10B EVEN THOUGH THESE UNITS ARE NOT APPROVED UNDER THE STPI SCHEME AS 100% EOUS AND ALS O HAD NOT MAINTAINED SEPARATE BOOK OF ACCOUNTS. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ER RED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER OF THE ASSESSEE'S CLAIM OF DEDUCTION U/S 10B ON THE PROFIT AND GAINS OF THESE TWO INELIGIBLE UNITS ( COMPUTED ON THE BASIS OF EXPENSES INCURRED BY THE RESPECTIVE UNITS); AND IN RESTRICTI NG THE DISALLOWANCE AT 20% OF THE EXPENDITURE INCURRED BY THE BANGALORE AND AHMADABAD UNITS WITHOUT ASSIGNING ANY REASON THEREF ORE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) ER RED IN FAILING TO APPRECIATE THAT THE PROVISIONS OF SEC.10B NEIT HER CONTEMPLATE NOR PERMIT SUCH RESTRICTED DISALLOWANCE AS DIRECTED IN THE APPELLATE ORDER. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF THE AP PELLATE PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 4. THE ASSESSEE IN CO NO.7/PN/2015 HAS RAISED THE F OLLOWING GROUNDS OF OBJECTIONS:- 1. THAT THE ORDER OF THE LD. CIT (A)-1 PUNE IS BAD IN LAW AND ON FACTS. 2. THAT THE LD. CIT(A)-1 HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE PROFIT OF BANGALORE AND AHMEDABAD CENTERS IS A MARK UP OF 20% ON THE EXPENDITURE ATTRIBUTABLE TO BANGALORE AND AHMEDABAD CENTERS AND THE SAME WILL NOT BE ELIGIBLE FOR DEDUCTION U/S 10A OR 10B IN RESPECT OF THE PROFITS. 2.1 THAT THE LD. CIT(A)-1 THOUGH ADMITS THAT THE BA NGALORE AND AHMADABAD CENTERS ARE INSEPARABLE PART OF SOFTWARE DEVELOPMENT AND EXPORT UNIT AT PUNE AND DO NOT HAVE SEPARATE ACCOUN T BOOKS, HOWEVER, WRONGLY MEANING THEREBY THAT THERE EXISTS ANY OTHER BUSINESS' WITHIN THE MEANING OF SECTION 80-IA(8) R.W.S. 10A(7) OR 10B(7) OF THE INCOME TAX ACT, 1961. 2.2 THAT THE LD. CIT (A)-1 HAS ERRED ON FACTS AND I N LAW IN HOLDING THAT THE SOFTWARE DEVELOPMENT CARRIED OUT AT BANGALORE AND A HMEDABAD CENTERS DOES NOT FORM PART OF THE ELIGIBLE BUSINESS' CARRIE D ON AT PUNE WITHIN THE MEANING OF SECTION 80-IA(8) R.W.S. 10A(7) OR 10B(7) OF THE INCOME TAX ACT, ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 3 1961, THEREBY DENYING DEDUCTION U/S 10A OR 10B IN R ESPECT OF THESE TWO CENTERS. 2.3 THAT THE STAND OF THE CIT(A)-1 IN HOLDING THAT THE PROFITS ARE REQUIRED TO BE ATTRIBUTED TO THE BANGALORE AND AHMEDABAD CENTER S AND ONLY THE RESULTANT PROFIT SHALL BE ELIGIBLE FOR THE DEDUCTIO N U/S 10B OR 10A OF THE ACT, AS THE CASE MAY BE, STANDS DECIDED BY THE HON'BLE I TAT PUNE BENCH 'B', PUNE, VIDE COMMON ORDER FOR AYS 2009-10 AND 2010-11 , DT 30.10.2014. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER OR DELETE ANY ONE OR MORE OF THE GROUNDS OF APPEAL AS MAY BE REQUIRED IN THE NATURE AND CIRCUMSTANCES OF THE CASE. 4. THAT THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FU RTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEMAND. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE AT THE OUTSET POINTED OUT THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2009-10, WHEREIN CROSS APPEALS W ERE FILED BY THE ASSESSEE AND REVENUE AND ALSO CROSS OBJECTION WERE FILED BY THE ASSESSEE, ALONG WITH APPEAL FILED BY THE ASSESSEE RELATING TO ASSESSMENT YEAR 2010-11 AND THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL VIDE ORDER DATED 3 0.10.2014. THE CASE OF THE ASSESSEE WAS THAT THE ISSUES ARISING BEFORE US ARE IDENTICAL TO THE ISSUES BEFORE THE TRIBUNAL IN THE EARLIER YEARS AND ALSO IN THE A PPEAL FILED BY THE ASSESSEE IN ASSESSMENT YEAR 2010-11. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE CIT(A) HAD QUANTIFIED THE PROFITS OF THE THREE UNITS RUN BY THE ASSESSEE FOR THE PURPOSE OF CLAIM OF DEDUCTION UNDER SECTION 10B/10A OF THE ACT AND HAD ALLOWED THE SAID DEDUCTION FOR PUNE UNIT AND NOT ALLOWED FO R THE OTHER TWO UNITS. RELIANCE WAS PLACED ON THE ORDER OF CIT(A) BY THE LEARNED DE PARTMENTAL REPRESENTATIVE FOR THE REVENUE, IN THIS REGARD. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF COMPU TER SOFTWARE AND ITES SERVICES. THE UNDERTAKING OF THE ASSESSEE AT PUNE IS REGISTERED WITH THE SOFTWARE TECHNOLOGY PARK OF INDIA (STPI) AS A 100% EXPORT ORIENTED UNIT AND ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 4 WAS GRANTED APPROVAL ON 26.05.2004. THE ASSESSEE H AD CLAIMED THAT THE PROFITS DERIVED FROM THE SAID UNDERTAKING WERE EXEMPT UNDER THE PROVISIONS OF SECTION 10B OF THE ACT. IN THE YEAR UNDER APPEAL, THE ASSE SSING OFFICER HAD DENIED THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT ON THE GROUND THAT THE UNDERTAKING WAS NOT APPROVED BY THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES (DEVE LOPMENT & REGULATION) ACT, 1951 AND WAS ONLY GRANTED APPROVAL BY THE DIRECTOR, STPI. RELIANCE IN THIS REGARD WAS PLACED BY THE ASSESSING OFFICER ON THE J UDGMENT OF HONBLE DELHI HIGH COURT IN CIT VS. REGENCY CREATIONS LTD. REPORT ED IN 27 TAXMANN.COM 322 (DELHI). HOWEVER, THE ASSESSING OFFICER IN THE IMM EDIATELY PRECEDING ASSESSMENT YEAR 2009-10 HAD ALLOWED THE CLAIM OF EX EMPTION UNDER SECTION 10B OF THE ACT WITH CERTAIN MODIFICATIONS REGARDING THE QUANTIFICATION OF PROFITS ON ACCOUNT OF ASSESSEES OFFICE AT AHMEDABAD AND BANGA LORE. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF CIT(A) BEFORE THE TR IBUNAL RELATING TO ASSESSMENT YEAR 2009-10 ALONG WITH CROSS APPEALS FILED BY THE REVENUE RAISING THE ISSUE OF THE MANNER AND QUANTUM OF EXEMPTION ALLOWABLE TO TH E ASSESSEE UNDER SECTION 10B OF THE ACT. FURTHER, THE ASSESSEE ALSO FILED C ROSS OBJECTION AGAINST THE QUANTIFICATION OF ELIGIBLE EXEMPTION UNDER SECTION 10B OF THE ACT. FOR ASSESSMENT YEAR 2010-11 I.E. CAPTIONED ASSESSMENT Y EAR BEFORE US, THE ASSESSEE HAD FILED AN APPEAL VIDE ITA NO.116/PN/201 4 AGAINST THE ORDERS OF AUTHORITIES BELOW IN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF EXEMPTION UNDER SECTION 10B OF THE ACT. THE TRIBUN AL VIDE ORDER DATED 30.10.2014 DELIBERATED UPON THE CLAIM OF THE ASSESS EE VIS--VIS EXEMPTION UNDER SECTION 10B OF THE ACT WITH RESPECT TO THE PROFITS DERIVED FROM DEVELOPMENT OF COMPUTER SOFTWARE AND EXPORT THEREOF. THE TRIBUNAL VIDE PARA 10 HELD THAT IN THE ABSENCE OF THE APPROVAL FROM THE AUTHORITY REFERRED TO IN EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT AND HAVING REGARD TO THE RAT IO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. REGENCY CREATIONS LTD. (SUPRA), IT WAS HELD THAT THE ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 5 ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. THE RELEVANT PARA 10 OF THE TRIBUNALS DECISION REA DS AS UNDER:- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. THE CASE SET- UP BY THE REVENUE IS THAT THE UNDERTAKING OF THE AS SESSEE HAS NOT BEEN APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY T HE CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFERRED BY SECTION 14 OF TH E INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, WHICH IS AN EXPRESS REQUIREMENT FOR CLAIMING DEDUCTION U/S 10B OF THE ACT BECAUSE O F THE PRESENCE OF EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT. TH E ASSESSEE HAS CANVASSED THAT ITS 100% EOU IS APPROVED BY THE DIR ECTOR, STPI AND THEREFORE IT SHOULD BE TAKEN AS A SUBSTANTIVE COMPL IANCE WITH THE PRESCRIPTION CONTAINED IN EXPLANATION 2(IV) BELOW S ECTION 10B OF THE ACT. THERE IS NO DENYING THE FACT THAT IDENTICAL CONTROV ERSY HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE C ASE OF REGENCY CREATIONS LTD. (SUPRA) AND IT IS ON THE BASIS OF TH E SAID JUDGEMENT, THE LOWER AUTHORITIES HAVE DENIED THE CLAIM OF THE ASSE SSEE FOR DEDUCTION U/S 10B OF THE ACT. ADMITTEDLY, THE 100% EOU OF THE AS SESSEE DOES NOT ENJOY ANY SPECIFIC APPROVAL FROM THE AUTHORITY REFE RRED TO IN EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT. IN-FACT, THE P LEA OF THE ASSESSEE THAT THE APPROVAL BY DIRECTOR, STPI BE TAKEN AS EQUIVALE NT TO OBTAINING OF APPROVAL FROM THE ENTITY PRESCRIBED IN EXPLANATION 2(IV) BELOW SECTION 10B OF THE ACT HAS BEEN SPECIFICALLY NEGATED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA). THE OT HER ASPECT RAISED BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE TO THE EFFECT THAT A CONJOINT READING OF THE EXIM POLICY/FOREIGN TRADE POLICY ENT ITLES THE ASSESSEE TO THE BENEFITS OF SECTION 10B OF THE ACT, ONCE THE UN IT IS APPROVED AS PER THE EXIM POLICY. NO DOUBT, SUCH A PLEA IS NOT FOUND TO HAVE BEEN URGED BEFORE THE HONBLE DELHI HIGH COURT, SO HOWEVER, HA VING REGARD TO THE JUDICIAL DISCIPLINE, THE TRIBUNAL BEING INFERIOR TO THE HIGH COURT, CANNOT DISREGARD THE JUDGEMENT OF THE HIGH COURT IN THE MA NNER SOUGHT TO BE CANVASSED BEFORE US. THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA) IS A SOL ITARY DECISION OF A HIGH COURT ON THIS ISSUE AND SQUARELY COVERS THE CONTROV ERSY BEFORE US. THEREFORE, WE ARE UNABLE TO FIND ANY FAULT IN THE A CTION OF THE LOWER AUTHORITIES IN DENYING THE CLAIM OF THE ASSESSEE FO R DEDUCTION U/S 10B OF THE ACT, BASED ON THE JUDGEMENT OF THE HONBLE DELH I HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA). 8. THE TRIBUNAL THEREAFTER, CONSIDERED THE ALTERNAT E PLEA OF THE ASSESSEE WITH REGARD TO THE ALLOWABILITY OF DEDUCTION UNDER SECTI ON 10A OF THE ACT IN PLACE OF SECTION 10B OF THE ACT, WHERE THE UNDERTAKING IS AP PROVED BY THE DIRECTOR, STPI. THE CIT(A) HAD DENIED THE SAID DEDUCTION TO THE ASS ESSEE. HOWEVER, AFTER CONSIDERING THE RIVAL SUBMISSIONS, THE TRIBUNAL VID E PARAS 16 AND 17 DELIBERATED UPON THE ISSUE AND THE RATIO LAID DOWN BY THE HONB LE DELHI HIGH COURT IN CIT VS. VALIANT COMMUNICATION LTD. IN ITA NOS.440-441/2012, DATED 04.01.2013 IN SUPPORT OF THE ALTERNATE CLAIM OF DEDUCTION UNDER S ECTION 10A OF THE ACT AND ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 6 REMITTED THE MATTER BACK TO THE FILE OF ASSESSING O FFICER FOR VERIFYING THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT, AS PER LAW. THE RELEVANT FINDINGS OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN THE QUANTUM APPEAL FOR ASSESSMENT YEAR 2010-11 ARE AS UNDER:- 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN THE PRESENT CASE, IN THE PAST YEARS ASSESSEE HAS BEEN ALLOWED T HE CLAIM OF DEDUCTION U/S 10B OF THE ACT. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2010-11 ALSO ASSESSEE CLAI MED DEDUCTION U/S 10B OF THE ACT IN RELATION TO THE PROFITS DERIVED FROM ITS STPI UNIT. THIS CLAIM OF DEDUCTION CAME TO BE DENIED ON THE GROUND THAT THE APPROVAL FROM DIRECTOR, STPI WAS INSUFFICIENT AND THAT THE ASSESS EE WAS REQUIRED TO TAKE APPROVAL FROM THE BOARD APPOINTED FOR THIS PURPOSE BY THE CENTRAL GOVERNMENT, FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA). IN THE AFORESAID SITUATION, AT THE TIME OF FILING OF RETURN OF INCOME FOR THE INST ANT ASSESSMENT YEAR, ASSESSEE COULD NOT HAVE ENVISAGED THE DENIAL OF ITS CLAIM OF DEDUCTION U/S 10B OF THE ACT, WHICH WAS BEING ALLOWED IN THE PAST . THE AFORESAID CIRCUMSTANCE CLEARLY ESTABLISHES THE BONAFIDES OF T HE REASONS PREVAILING WITH THE ASSESSEE FOR NOT HAVING MADE A CLAIM FOR D EDUCTION U/S 10A OF THE ACT IN THE RETURN OF INCOME. HAVING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, IN OUR VIEW, THE STAND OF THE REVENUE THAT ASSESSEE CANNOT BE ALLOWED THE BENEFITS OF SEC TION 10A OF THE ACT MERELY BECAUSE THE PRESCRIBED AUDIT REPORT IN FORM NO.56F WAS NOT FILED IN THE RETURN OF INCOME, IS QUITE ERRONEOUS. PERTI NENTLY, AFTER DENIAL OF DEDUCTION U/S 10B OF THE ACT IN THE ASSESSMENT ORDE R, THE EARLIEST OPPORTUNITY FOR THE ASSESSEE TO STAKE CLAIM FOR DED UCTION U/S 10A OF THE ACT WAS BEFORE THE CIT(A); AND, THE ASSESSEE MADE T HE CLAIM BEFORE THE CIT(A) ALONG WITH THE PRESCRIBED AUDIT REPORT IN FO RM NO.56F. THE HONBLE DELHI HIGH COURT IN THE CASE OF VALIANT COM MUNICATIONS (SUPRA) IN SIMILAR CIRCUMSTANCES HELD THAT THE CLAIM OF THE AS SESSEE FOR DEDUCTION U/S 10A OF THE ACT IS REQUIRED TO BE EXAMINED IN ACCORD ANCE WITH LAW. PERTINENTLY, EVEN IN THAT CASE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT IN THE RETURN OF INCOME, WHICH WAS NOT ALLO WED ULTIMATELY IN THE ABSENCE OF THE UNIT BEING APPROVED BY THE BOARD APP OINTED BY THE CENTRAL GOVERNMENT, WHEREAS THE UNIT WAS ONLY REGISTERED WI TH THE STPI. THE HONBLE DELHI HIGH COURT DIRECTED THE LOWER AUTHORI TIES TO CONSIDER THE CLAIM OF DEDUCTION U/S 10A OF THE ACT IN ACCORDANCE WITH LAW. IN THE PRESENT CASE ALSO, WE FIND NO REASON TO DENY THE AS SESSEE AN OPPORTUNITY TO PUT-FORTH ITS CLAIM FOR DEDUCTION U/S 10A OF THE ACT WITH REGARD THE PROFITS OF ITS STPI UNIT, SUBJECT OF-COURSE TO THE FULFILLM ENT OF THE PRESCRIBED CONDITIONS. 17. SECTION 10A OF THE ACT PROVIDES A DEDUCTION OF SUCH PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM EXPORT OF ARTI CLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT. THE ASSESSEE CLAIMED THAT IT HAS UNDERTAKEN EXPORT OF COMPUTER S OFTWARE MANUFACTURED BY IT AND ITS UNIT IS REGISTERED WITH DIRECTOR, STP I. THE APPROVAL GRANTED BY DIRECTOR, STPI HAS BEEN HELD TO BE A SUFFICIENT COM PLIANCE WITH REQUIREMENTS OF SECTION 10A(2)(I)(B) OF THE ACT EVE N AS PER THE CBDT VIDE INSTRUCTION NO.1 OF 2006 DATED 31.03.2006. THEREFO RE, PRIMA-FACIE THE 100% EOU OF THE ASSESSEE, BEING REGISTERED WITH STP I, IS ELIGIBLE TO STAKE CLAIM FOR DEDUCTION U/S 10A OF THE ACT, PROVI DED THE OTHER CONDITIONS LAID DOWN IN SECTION 10A OF THE ACT ARE SATISFIED. THEREFORE, IN CONFORMITY ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 7 WITH THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF VALIANT COMMUNICATIONS (SUPRA), WE DEEM IT FIT AND PROPER T O REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIF YING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT AS PER LA W. THE ASSESSING OFFICER SHALL CONSIDER THE FORM NO.56F FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) AND SUCH OTHER MATERIAL AND SUBMISSIONS THAT THE ASSESSEE MAY PUT-FORTH IN ORDER TO JUSTIFY ITS CLAIM OF DEDU CTION U/S 10A OF THE ACT. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE A DJUDICATING ON THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT IN ACCORDANCE WITH LAW. THUS, ON THE ALTERNATE PLEA ASSESSEE SUCCEEDS . 9. ANOTHER ASPECT OF THE ISSUE CONSIDERED BY THE TR IBUNAL WAS THE ELIGIBILITY OF DEDUCTION BY DIFFERENT CENTRES OF THE ASSESSEE I.E. PUNE, BANGALORE AND AHMEDABAD CENTRES. AS PER THE ASSESSING OFFICER, O NLY PUNE CENTRE WAS REGISTERED AS STPI UNIT AND THE CENTRE AT BANGALORE ESTABLISHED ON 11.07.2006 AND AHMEDABAD CENTRE ESTABLISHED ON 01.05.2008, WER E NOT ELIGIBLE UNITS. THE OBSERVATIONS OF THE ASSESSING OFFICER WAS THAT THOU GH THE ASSESSEE CARRIED OUT VARIOUS SOFTWARE DEVELOPMENT RELATED WORKS AT AHMED ABAD AND BANGALORE UNIT, BUT DELIVERED THE PRODUCT OR SERVICES FROM ITS PUNE UNIT, WHICH WAS REGISTERED UNDER THE STPI UNITS. IT WAS FURTHER NOTED THAT TH E UNITS AT BANGALORE AND AHMEDABAD WERE NOT APPROVED UNDER STPI SCHEME AND T HERE WAS NO EXPORT FROM THE SAID UNITS AND SINCE THE ASSESSEE WAS NOT MAINTAINING SEPARATE BOOKS OF ACCOUNT IN RESPECT OF THE THREE UNITS, NOR THE T URNOVER OR THE EXPENDITURE WERE SEPARATELY ALLOCATED IN THE BOOKS OF ACCOUNT, THE A SSESSING OFFICER WAS OF THE VIEW THAT THE DEDUCTION UNDER SECTION 10B OF THE AC T WAS ONLY IN RESPECT OF BUSINESS OR PROFESSION OF 100% EOU ENGAGED IN CARRY ING ON ELIGIBLE BUSINESS AND HENCE, THE SAID DEDUCTION UNDER SECTION 10B OF THE ACT WAS LIMITED ONLY IN RELATION TO THE PROFITS AND GAINS OF BUSINESS OF TH E UNIT AT PUNE. HOWEVER, AS ENTIRE DEDUCTION UNDER SECTION 10B OF THE ACT WAS D ENIED TO THE ASSESSEE ON THE GROUND THAT THE UNIT WAS NOT APPROVED BY THE COMPET ENT AUTHORITY, NO SEPARATE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON T HIS GROUND. 10. THE TRIBUNAL IN APPEAL FILED BY THE ASSESSEE CONSIDERED THE SAID STAND OF THE ASSESSEE AND ALSO THE ADDITIONAL GROUND OF APPE AL RAISED BY THE ASSESSEE IN ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 8 RESPECT OF THE ALLOCATION MADE BY THE CIT(A) OF PRO FITS BEING RELATABLE TO BANGALORE AND AHMEDABAD UNITS AND DELIBERATED UPON THE ISSUE WHETHER THE CIT(A) WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 10B(7) / 10A(7) R.W.S. 80IA(8) OF THE ACT IN THE PRESENT CASE AND IT WAS H ELD THAT THE SUPPORT CENTRES AT AHMEDABAD AND BANGALORE DO NOT CARRY OUT ANY OTHER BUSINESS AND THERE WAS NO MERIT IN THE ORDERS OF AUTHORITIES BELOW THAT TH ERE EXISTED ANY OTHER BUSINESS WITHIN THE MEANING OF SECTION 80IA(8) OF THE ACT QU A ACTIVITIES BEING CARRIED OUT AT AHMEDABAD AND BANGALORE CENTRES. ACCORDINGLY, IT W AS HELD THAT THERE WAS NO MERIT IN ALLOCATING THE PROFITS ATTRIBUTABLE TO THE BANGALORE AND AHMEDABAD CENTRES AND HOLDING THAT ONLY THE RESULTANT PROFITS SHALL BE ELIGIBLE FOR THE DEDUCTION UNDER SECTION 10B AND 10A OF THE ACT, AS THE CASE MAY BE. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- 22. WE HAVE CONSIDERED THE RIVAL STANDS AND FIND T HAT UNDOUBTEDLY THE AFORESAID ADDITIONAL GROUND OF APPEAL ARISES FROM T HE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND, IN ANY CASE, THE RELEVAN T FACTS IN ORDER TO ADJUDICATE THE AFORESAID ADDITIONAL GROUND ARE AVAI LABLE IN THE ORDERS OF THE INCOME-TAX AUTHORITIES. THEREFORE, WE DEEM IT FIT AND PROPER TO ADMIT THE AFORESAID ADDITIONAL GROUND OF APPEAL, AS WAS A NNOUNCED IN THE COURSE OF HEARING. ACCORDINGLY, BOTH THE PARITIES HAVE MADE THEIR ARGUMENTS ON THE MERITS OF THE SAID ADDITIONAL GROU ND. 23. AS NOTED BY US IN EARLIER PARAGRAPHS, THE ASSES SING OFFICER CONCLUDED THAT THE ENTIRE PROFITS DECLARED BY THE A SSESSEE FROM DEVELOPMENT OF SOFTWARE AND EXPORT THEREOF ARE NOT ENTITLED TO THE DEDUCTION U/S 10B OF THE ACT ON THE GROUND THAT SOM E LEVEL OF PROFITS IS ATTRIBUTABLE TO THE UNITS OF THE ASSESSEE LOCATED A T AHMEDABAD AND BANGALORE, WHICH ARE NOT REGISTERED UNDER STPI AND ONLY PUNE UNIT IS REGISTERED WITH STPI. THE CIT(A) HAS JUSTIFIED THE ACTION OF THE ASSESSING OFFICER IN-PRINCIPLE THOUGH HE HAS DIFFERED WITH TH E ASSESSING OFFICER ON QUANTIFICATION OF PROFIT RELATABLE TO THE STPI UNIT . THE FUNDAMENTAL POINT MADE OUT BY THE CIT(A) IS THAT THE DEDUCTION CONTEM PLATED U/S 10A OR 10B OF THE ACT IS NOT A BENEFIT ATTACHED TO THE ASSESSE E BUT IT IS A DEDUCTION ALLOWABLE WITH REFERENCE TO THE EXPORT PROFITS OF T HE ELIGIBLE UNDERTAKING. THE CIT(A) HAS ALSO JUSTIFIED THE ACTION OF THE ASS ESSING OFFICER IN RE- WORKING THE PROFITS RELATABLE TO THE PUNE UNIT ON A CCOUNT OF SUB-SECTION (7) OF SECTION 10A/10B OF THE ACT, WHICH ARE IDENTICALL Y WORDED AND READ AS UNDER :- THE PROVISIONS OF SUB-SECTION (8) AND SUB-SECTION (10) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE UNDERTAKING REFERRED TO IN THIS SECTION AS THEY APPLY FOR THE P URPOSES OF THE UNDERTAKING REFERRED TO IN SECTION 80-IA. 24. SUB-SECTION (7) OF SECTION 10A AND 10B OF THE A CT PROVIDES THAT THE PROVISIONS OF SUB-SECTION (8) AND SUB-SECTION (10) OF SECTION 80-IA SHALL ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 9 APPLY IN RELATION TO THE UNDERTAKING REFERRED TO IN SECTION 10A OR SECTION 10B AS THE CASE MAY BE. AT THIS STAGE, IT WOULD AL SO BE APPROPRIATE TO REFER TO THE PROVISIONS OF SECTION 80-IA(8) OF THE ACT, WHICH READ AS UNDER:- (8) WHERE ANY GOODS [OR SERVICES] HELD FOR THE PUR POSES OF THE ELIGIBLE BUSINESS ARE TRANSFERRED TO ANY OTHER BUSI NESS CARRIED ON BY THE ASSESSEE, OR WHERE ANY GOODS [OR SERVICES] H ELD FOR THE PURPOSES OF ANY OTHER BUSINESS CARRIED ON BY THE AS SESSEE ARE TRANSFERRED TO THE ELIGIBLE BUSINESS AND, IN EITHER CASE, THE CONSIDERATION, IF ANY, FOR SUCH TRANSFER AS RECORDE D IN THE ACCOUNTS OF THE ELIGIBLE BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS [OR SERVICES] AS ON THE DATE OF THE TRAN SFER, THEN, FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, THE P ROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF T HE TRANSFER, IN EITHER CASE, HAD BEEN MADE AT THE MARKET VALUE OF S UCH GOODS [OR SERVICES] AS ON THAT DATE : PROVIDED THAT WHERE, IN THE OPINION OF THE ASSESSING OFFICER , THE COMPUTATION OF THE PROFITS AND GAINS OF THE ELIGIBL E BUSINESS IN THE MANNER HEREINBEFORE SPECIFIED PRESENTS EXCEPTIONAL DIFFICULTIES, THE ASSESSING OFFICER MAY COMPUTE SUCH PROFITS AND GAIN S ON SUCH REASONABLE BASIS AS HE MAY DEEM FIT. [EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, MARKET VALUE, IN RELATION TO ANY GOODS OR SERVICES, MEANS THE PRI CE THAT SUCH GOODS OR SERVICES WOULD ORDINARILY FETCH IN THE OPE N MARKET.] 25. IN TERMS OF THE AFORESAID PROVISION, IT IS PROV IDED THAT WHERE THERE IS TRANSFER OF GOODS AND SERVICES FROM AN ELIGIBLE BUS INESS TO ANY OTHER BUSINESS CARRIED ON BY THE ASSESSEE OR WHERE THERE IS A TRANSFER OF GOODS AND SERVICES FROM ANY OTHER BUSINESS CARRIED OUT BY THE ASSESSEE TO THE ELIGIBLE BUSINESS THEN IN EITHER CASE, FOR THE PURP OSES OF THE DEDUCTION ALLOWABLE, THE PROFITS AND GAINS OF SUCH ELIGIBLE B USINESS SHALL BE COMPUTED AS IF THE TRANSFER IN EITHER CASE HAS BEEN MADE AT THE MARKET VALUE OF SUCH GOODS OR SERVICES AS ON THAT DATE. O N THE BASIS OF THE AFORESAID, AS PER THE CIT(A), THE ACTION OF THE ASS ESSING OFFICER TO RE- COMPUTE THE PROFITS OF PUNE UNIT IS JUSTIFIED. THE RELEVANT DISCUSSION IN THE ORDER OF THE CIT(A) IS AS UNDER :- 3.11.1 WHERE THERE IS INTER UNIT TRANSFER OF G OODS AND SERVICES (I.E. TRANSFER FROM ELIGIBLE UNIT TO THE O THER UNIT AND VICE VERSA), SUB-SEC.(8) OF SECTION 80-IA PROVIDES THAT THE PROFITS AND GAINS OF ELIGIBLE BUSINESS SHALL BE COMPUTED HAVING REGARD TO FAIR MARKET VALUE OF SUCH GOODS AND SERVICES. IN THE CA SE OF PRESENT APPELLANT, AS EXPLAINED BY THE APPELLANT ITSELF, TH E SYSTEM ANALYSIS FOR A PARTICULAR PROJECT IS DONE AT BANGALORE UNIT AND TRANSMITTED TO PUNE UNIT. THE DESIGN TEAM AT AHMEDABAD UNIT PROVI DES THE REQUIRED IMAGES TO DELIVERY TEAM AT PUNE. THUS, TH ERE IS INTER UNIT TRANSFER OF GOODS AND SERVICES I.E. TRANSFER FROM N ON-ELIGIBLE UNITS TO THE ELIGIBLE UNIT AT PUNE AND THE PROFITS OF THE EL IGIBLE UNDERTAKING CAN BE COMPUTED HAVING REGARD TO FAIR MARKET VALUE OF SUCH GOODS AND SERVICES SO TRANSFERRED BY THE NON-ELIGIBLE UNI TS UNDER SUB-SEC. (8) OF SEC. 80-IA. AS REGARDS THE CONTENTION OF TH E APPELLANT THAT BANGALORE AND AHMEDABAD CENTERS ARE ONLY SUPPORT CE NTERS, IT IS TO ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 10 BE NOTED THAT THE UNDERTAKINGS AT AHMEDABAD, BANGAL ORE AND PUNE ARE DISTINCT AND SEPARATE UNDERTAKINGS/UNITS STARTE D IN DIFFERENT YEARS AND EACH CENTER HAS SEPARATE ESTABLISHMENT OF ITS OWN AND CARRIED OUT A PARTICULAR ACTIVITY. THEREFORE, THE UNITS AT AHMEDABAD AND BANGALORE CANNOT BE SAID TO BE MERE SUPPORT CEN TERS OF PUNE UNIT EVEN IF THE SPECIFIC JOBS BEING EXECUTED BY TH ESE CENTERS WERE INSEPARABLE PART OF SOFTWARE EXPORTED BY PUNE UNIT. AS THE UNITS OF THE APPELLANT AT AHMEDABAD AND BANGALORE ARE NOT RE GISTERED UNDER STPI OR UNDER CLAUSE (IV) OF EXPLANATION-2 TO SECTION 10B, DEDUCTION U/S 10A/10B CANNOT BE ALLOWED IN RESPECT OF PROFITS ATTRIBUTABLE TO BANGALORE AND AHMEDABAD UNDERTAKING S. 26. THE MOOT POINT IS AS TO WHETHER THE CIT(A) IS J USTIFIED IN INVOKING SECTION 10B(7)/10A(7) R.W.S. 80-IA(8) OF THE ACT IN THE PRESENT CASE. IN THE PRESENT CASE, THE BUSINESS OF THE ASSESSEE IS DEVEL OPMENT OF SOFTWARE AND EXPORT THEREOF. THE UNDERTAKING OF THE ASSESSE E AT PUNE IS REGISTERED WITH STPI. THERE IS NO DISPUTE THAT THE EXPORTS AR E EFFECTUATED FROM THE STPI UNIT AT PUNE. AS PER THE ASSESSEE, THE BANGAL ORE AND AHMEDABAD CENTERS ARE ONLY SUPPORT CENTERS AND ARE NOT DISTIN CT OR SEPARATE UNITS. THE CIT(A) DISAGREED WITH THE ASSESSEE AND CONCLUDE D THAT THE BANGALORE AND AHMEDABAD CENTERS ARE DISTINCT UNDERT AKINGS EVEN THOUGH ACCORDING TO HIM, THE SPECIFIC JOBS BEING EXECUTED BY THESE CENTERS WERE INSEPARABLE PART OF SOFTWARE EXPORTED BY PUNE UNIT . 27. IN THIS CONNECTION, THE ACTIVITIES BEING CARRIE D OUT AT DIFFERENT CENTERS WERE DETAILED BY THE ASSESSEE BEFORE THE LO WER AUTHORITIES, AND IN PARTICULAR THE SAME HAS BEEN EXTRACTED BY THE CIT(A ) IN PARA 3.4 OF HIS ORDER, WHICH READS AS UNDER :- TEAMS USED: FROM PUNE: DELIVERY TEAM SERVICE DELIVERY MANAGER (SDM), TEAM LEADER, DEVELOPER, QUALITY AUDITOR, FROM BANGA LORE: R&D TEAM, SYSTEM ANALYST, FROM AHMEDABAD: GRAPHIC DESIG NER. WORK SUMMARY: AFTER ASSIGNING THE PROJECT SDM AND TEAM LEADER UND ERSTOOD THE PROJECT REQUIREMENTS AND GOT THE SYSTEM ANALYSIS DO NE FROM BANGALORE TEAM. TEAM PREPARED THE REQUIREMENT DOCU MENT AND HANDED BACK TO DELIVERY TEAM. IT WAS THEN GOT VERI FIED BY CLIENT AND DEVELOPMENT WAS KICKED OFF. THE ENTIRE SYSTEM WAS BUILT IN CLASSIC ASP AND CLIE NT WANTED US TO EVALUATE IF THE NEW MODULES CAN BE BUILT IN ASP.NET AND INTEGRATED WITH CURRENT CLASSIC ASP SYSTEM. THIS TASK OF RESE ARCH WAS GIVEN TO BANGALORE TEAM WHO DID THE STUDY AND CONFIRMED T HAT WE CANNOT USE ASP.NET FOR DEVELOPING NEW MODULES AS THE EXIST ING CODE IS NOT FEASIBLE BE INTEGRATION. TEAM CONTINUED THE DE VELOPMENT IN CLASSIC ASP. WHEN THE PAYMENT INTEGRATION MODULE DEVELOPMENT CAM E, DELIVERY TEAM AND CLIENT WAS NOT ABLE TO DECIDE WHICH THE BE ST PAYMENT GATEWAY SUITABLE FOR THIS PROJECT IS. BANGALORE R& D TEAM DID THE ANALYSIS AND TOLD THAT PAYPAL/PAYFLOW PAYMENT GATEW AY IS THE BEST SUITED ONE. IT WAS THEN INTEGRATED BY DELIVERY TEA M. ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 11 CLIENT WANTED TO HAVE SOME GRAPHIC IMAGES MODIFIED IN HIS APPLICATION DESIGN TEAM FROM AHMEDABAD WORKED ON IT AND PROVIDED THE REQUIRED IMAGES TO DELIVERY TEAM. 28. THE AFORESAID WOULD SHOW THAT THE ACTIVITIES BE ING CARRIED OUT AT AHMEDABAD AND BANGALORE CENTERS ARE NOT INDEPENDENT OF THE SOFTWARE DEVELOPMENT ACTIVITY UNDERTAKEN AT PUNE AND IN ANY CASE IT IS ALSO THE CONCLUSION OF THE CIT(A) THAT THE JOBS BEING EXECUT ED BY THESE CENTERS ARE INSEPARABLE PART OF THE SOFTWARE EXPORTED BY THE ST PI UNIT AT PUNE. MOREOVER, THE ASSESSING OFFICER HAS ALSO EMPHASIZED THAT THERE IS NO INDEPENDENT ACTIVITY OF EXPORT CARRIED OUT FROM AHM EDABAD AND BANGALORE CENTERS. IT HAS ALSO BEEN HELD BY THE ASSESSING OF FICER THAT NO SEPARATE ACCOUNT BOOKS OR SEPARATE EXPENDITURE OR SEPARATE T URNOVER IS BEING MAINTAINED/ALLOCATED WITH RESPECT TO THE DIFFERENT CENTERS. IN THIS BACKGROUND, WE MAY NOW CONSIDER THE PHRASEOLOGY OF SECTION 80-IA(8) OF THE ACT. A PERUSAL OF SUB-SECTION (8) OF SECTION 8 0-IA OF THE ACT WOULD REVEAL THAT IT APPLIES IN SITUATIONS WHERE AN ASSES SEE IS CARRYING ON AN ELIGIBLE BUSINESS AND ANY OTHER BUSINESS. OSTE NSIBLY, THE PROVISIONS OF SUB-SECTION (8) OF SECTION 80-IA OF THE ACT WOULD C OME INTO PLAY IF AN ASSESSEE CAN BE SAID TO BE CARRYING ON AN ELIGIBLE BUSINESS AS WELL AS ANY OTHER BUSINESS. IN THIS BACKGROUND, ONE IS REQUIRE D TO EXAMINE AS TO WHETHER THE AHMEDABAD AND BANGALORE CENTERS CAN BE CONSIDERED TO BE ANY OTHER BUSINESS BEING CARRIED OUT BY THE ASSES SEE SO AS TO FALL WITHIN THE MEANING OF SECTION 80-IA(8) OF THE ACT. 29. THE FACTUAL MATRIX NOTED ABOVE DOES NOT SUGGEST THAT THE SUPPORT CENTERS AT AHMEDABAD AND BANGALORE CARRY OUT ANY OT HER BUSINESS. THE ACTIVITIES BEING CARRIED OUT CAN, AT BEST BE, CONSI DERED AS SUPPORTING ACTIVITIES TO THE ACTIVITY OF SOFTWARE DEVELOPMENT AND EXPORTS EFFECTUATED FROM THE STPI UNIT AT PUNE. THE FINDING OF THE CIT (A) THAT THE SPECIFIC JOBS BEING EXECUTED BY THE AHMEDABAD AND BANGALORE CENTE RS ARE INSEPARABLE PART OF SOFTWARE DEVELOPMENT AND EXPORT UNIT AT PUN E COUPLED WITH THE FINDINGS OF THE ASSESSING OFFICER THAT THE BANGALOR E AND AHMEDABAD CENTERS DO NOT HAVE SEPARATE ACCOUNT BOOKS, EXPENDI TURE OR TURNOVER REFLECTS THAT THE TWO CENTERS CANNOT BE SAID TO BE ANY OTHER BUSINESSES BEING RUN BY THE ASSESSEE. THEREFORE, CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES, WE ARE UNABLE TO CONCUR WITH THE REVENUE THAT THERE EXISTS ANY OTHER BUSINESS WITHIN THE MEANING OF S ECTION 80-IA(8) OF THE ACT QUA THE ACTIVITIES BEING CARRIED OUT AT AHMEDAB D AND BANGALORE CENTERS. THUS, IN OUR VIEW, INVOKING OF SECTION 80 -IA(8) R.W.S. 10A(7) OR 10B(7) OF THE ACT IN THE PRESENT CASE IS NOT JUSTIF IED. AS A CONSEQUENCE, IN OUR VIEW, THE STAND OF THE CIT(A) IN HOLDING THAT T HE PROFITS ARE REQUIRED TO BE ATTRIBUTED TO THE BANGALORE AND AHMEDABAD CENTER S AND ONLY THE RESULTANT PROFIT SHALL BE ELIGIBLE FOR THE DEDUCTIO N U/S 10B OR 10A OF THE ACT, AS THE CASE MAY BE, IS NOT JUSTIFIED. THUS, WE SET -ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ASPECT. ACCORDINGLY, ASS ESSEE SUCCEEDS ON THIS ASPECT. 11. IN VIEW OF THE ISSUE BEING DECIDED BY THE T RIBUNAL IN ASSESSEES OWN CASE, NOW, WE PROCEED TO DECIDE THE ISSUE RAISED BY THE R EVENUE IN THE APPEAL FILED IN ITA NO.296/PN/2014. ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 12 12. THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT (A) IN HOLDING THAT THE BANGALORE AND AHMEDABAD UNITS OF THE ASSESSEE COMPA NY WERE ENTITLED TO THE DEDUCTION UNDER SECTION 10B OF THE ACT EVEN THOUGH THE SAID UNITS WERE NOT APPROVED UNDER THE STPI SCHEME AS 100% EOU AND HAD ALSO NOT MAINTAINING SEPARATE BOOKS OF ACCOUNTS. THE REVENUE IS ALSO AG GRIEVED BY THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER OF THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT ON THE PROFITS AND GAINS OF THESE TWO ELIGIBLE UNITS AND IN RESTRICTIN G DISALLOWANCE AT 20% OF THE EXPENDITURE INCURRED BY THE BANGALORE AND AHMEDABAD UNITS. WE FIND THAT THE ISSUES RAISED BY THE REVENUE VIDE THE ABOVE SAID GR OUNDS OF APPEAL IN THE PRESENT APPEALS FILED BY THE REVENUE ARE SQUARELY C OVERED BY THE RATIO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE, WHEREIN THE QUANTUM APPEAL FILED BY THE ASSESSEE RELATING TO ASSESSMENT YEAR 2010-11, HAS B EEN ADJUDICATED BY THE TRIBUNAL VIDE ORDER DATED 30.10.2014. THE CIT(A) V IDE PARA 3.11.2 AT PAGE 25 OF THE APPELLATE ORDER HAD HELD THAT THE APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION AT ALL UNDER SECTION 10B OR 10A OF THE ACT AND AT BEST, TH E DEDUCTION UNDER SECTION 10B OF THE ACT WAS ADMISSIBLE ONLY IN RESPECT OF PROFIT S AND GAINS OF BUSINESS OF 100% EOU AT PUNE. FURTHER, IT WAS HELD THAT THE PR OFITS ATTRIBUTABLE TO THE UNITS OF BANGALORE AND AHMEDABAD ARE NOT ELIGIBLE FOR DED UCTION UNDER SECTION 10B AND 10A OF THE ACT AND THE SECOND ASPECT OF THE ISS UE WAS THE ALLOCATION OF PROFITS OR OPERATING MARGINS TO THE ELIGIBLE UNITS AND NON-ELIGIBLE UNITS, WHERE THE ASSESSEE HAD NOT MAINTAINED SEPARATE BOOKS OF ACCOU NT FOR EACH UNIT. THE CIT(A) VIDE PARA 3.12 AT PAGES 25 AND 26 OF THE ORD ER HAS DELIBERATED UPON THE ISSUE AND FOLLOWING HIS PREDECESSOR OF APPELLATE OR DER DATED 08 . 10.2012 FOR ASSESSMENT YEAR 2009-10 HAD HELD THAT 20% OF THE EX PENDITURE INCURRED AT BANGALORE AND AHMEDABAD CENTRES AS REASONABLE MARK- UP OF PROFITS IN CASE OF THE SAID TWO UNITS AND ACCORDINGLY, DIRECTED THE AS SESSING OFFICER TO RE-COMPUTE THE BUSINESS PROFITS OF EACH UNIT AS ALSO DEDUCTION ADMISSIBLE UNDER SECTION 10B OF THE ACT ON THE REVISED PROFITS OF THE PUNE UNIT. WE FIND NO MERIT IN THE GROUND ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 13 OF APPEAL NO.1 RAISED BY THE REVENUE AGAINST THE OR DER OF CIT(A) IN HOLDING THAT THE BANGALORE AND AHMEDABAD UNITS OF THE ASSESSEE C OMPANY WERE ENTITLED TO THE DEDUCTION UNDER SECTION 10B OF THE ACT. THE SA ID GROUND OF APPEAL RAISED BY THE REVENUE IS MIS-PLACED AS THE CIT(A) HAD NOT ALL OWED THE DEDUCTION UNDER SECTION 10B OF THE ACT VIS--VIS BANGALORE AND AHME DABAD UNITS OF THE ASSESSEE COMPANY AND HAD ONLY DIRECTED THAT THE SAID DEDUCTI ON UNDER SECTION 10B OF THE ACT SHOULD BE ALLOWED IN RESPECT OF PUNE UNIT. THE FIRST ASPECT OF THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 10B HAS BEEN DENIE D BY THE TRIBUNAL FOLLOWING THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. REGENCY CREATIONS LTD. (SUPRA). 13. NOW, THE SECOND ASPECT OF THE ISSUE IS AGAIN ST THE RESTRICTION IN THE DISALLOWANCE OF 20% OF EXPENDITURE INCURRED BY BANG ALORE AND AHMEDABAD UNITS. THE TRIBUNAL HAD ALSO CONSIDERED THE SAID I SSUE IN ASSESSMENT YEAR 2010- 11 ITSELF AND HAD HELD THAT THE ACTIVITIES BEING CA RRIED OUT AT BANGALORE AND AHMEDABAD AT BEST COULD BE CONSIDERED AS SUPPORTING ACTIVITIES TO THE ACTIVITIES OF SOFTWARE DEVELOPMENT AND EXPORTS EFFECTUATED FRO M THE STPI UNIT AT PUNE. THE TRIBUNAL THUS, HELD THAT THE INVOKING OF PROVIS IONS OF SECTION 80IA(8) R.W.S. 10A(7) OR 10B(7) OF THE ACT IN THE PRESENT CASE WAS NOT JUSTIFIED. AS A CONSEQUENCE, THE STAND OF THE CIT(A) IN HOLDING THA T THE PROFITS WERE TO BE ATTRIBUTED TO THE BANGALORE AND AHMEDABAD CENTRES A ND ONLY THE RESULTANT PROFITS BEING ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AND 10A OF THE ACT, WAS HELD TO BE NOT JUSTIFIED BY THE TRIBUNAL. FOLLOWING THE SAID ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 201 0-11, WE FIND NO MERIT IN THE GROUNDS OF APPEAL NOS.2 AND 3 RAISED BY THE REV ENUE AND HENCE, ARE DISMISSED. 14. NOW, COMING TO THE CROSS OBJECTION FILED BY T HE ASSESSEE. THE GRIEVANCE IS AGAINST THE ORDER OF CIT(A) IN HOLDING THAT THE PRO FITS OF BANGALORE AND AHMEDABAD CENTERS WITH MARK-UP OF 20% ON THE EXPEND ITURE ATTRIBUTABLE TO ITA NO.296/PN/2014 CO NO.7/PN/2015 CLARION TECHNOLOGIES PVT. LTD. 14 BANGALORE AND AHMEDABAD CENTRES AND THE SAME WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AND 10A OF THE ACT IN R ESPECT OF PROFITS. THE ISSUE RAISED BY THE ASSESSEE VIDE CROSS OBJECTION IS SQUA RELY COVERED BY THE ORDER OF TRIBUNAL IN THE CASE OF ASSESSEE ITSELF, WHEREIN IT HAS BEEN HELD THE INVOKING OF SECTION 80IA(8) R.W.S. 10A(7) OR 10B(7) OF THE ACT IN THE PRESENT CASE WAS NOT JUSTIFIED. IT WAS FURTHER HELD THAT THE STAND OF C IT(A) IN HOLDING THAT THE PROFITS ARE REQUIRED TO BE ATTRIBUTED TO THE BANGALORE AND AHME DABAD CENTERS AND ONLY THE RESULTANT PROFIT SHALL BE ELIGIBLE FOR DEDUCTION UN DER SECTION 10A OR 10B OF THE ACT, AS THE CASE MAY BE, IS NOT JUSTIFIED. THUS, THE CR OSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MARCH, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 31 ST MARCH, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE