Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 4058 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 21 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-05-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Assessment Year
2009-2010
Appeal Filed On
16-11-2018
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , ! . , ! ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.3136/CHNY/2018 /ASSESSMENT YEAR: 2009-10 M/S.SQS INDIA BFSI LTD., (FORMERLY KNOWN AS M/S.THINKSOFT GLOBAL SERVICES LTD.), DOOR NO.6A, 6 TH FLOOR, PRINCE INFOCITY II, NO.283/3 & 283/4, RAJIV GANDHI SALAI (OMR), KANDANCHAVADI, CHENNAI-600 096. [PAN: AABCT 0976 G] VS. THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-6(2), CHENNAI. ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.VIKRAM VIJAYARAGHAVAN, ADV. *+) , /RESPONDENT BY : MR.AMOL B.KIRTANE, ADDL.CIT , /DATE OF HEARING : 07.05.2019 , /DATE OF PRONOUNCEMENT : 07.05.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, I N ITA NO.199/2016- 17/CIT(A)-15 DATED 30.08.2018 FOR THE AY 2009-10. ITA NO.3136/CHNY/2018 :- 2 -: 2. SHRI AMOL B.KIRTANE, ADDL.CIT, REPRESENTED ON BE HALF OF THE REVENUE AND SHRI VIKRAM VIJAYARAGHAVAN, ADV., REPRESENTED O N BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE, SALE, AND EXPORT OF SOFTWARE. IT WAS A SUBMISSION THAT FOR THE RELEVANT AY, THE ASSESSMENT CAME TO BE COMPLETE D, WHEREIN, THE ASSESSEES CLAIM FOR DEDUCTION U/S.10A WAS HELD TO BE THE 10 TH YEAR AND CERTAIN DISALLOWANCES HAD BEEN MADE. IT WAS A SUBM ISSION THAT ON APPEAL, THE LD.CIT(A) HAD GRANTED THE ASSESSEE SUBS TANTIAL RELIEF. HOWEVER, IN RESPECT OF THE CLAIM OF DEDUCTION U/S.1 0A, THE ASSESSEE HAD CLAIMED THAT THE AY 2009-10 BEING THE IMPUGNED ASSE SSMENT YEAR WAS 9 TH YEAR AND NOT THE 10 TH YEAR. THE LD.CIT(A) HAD CALLED FOR REMAND REPORT AND IN THE REMAND PROCEEDINGS, THE AO HAD TAKEN A S TAND THAT THE ASSESSEE HAD COMMENCED ITS MANUFACTURE IN THE AY 19 99-2000 AND THEREFORE, THE ASSESSEES FIRST YEAR OF CLAIM WAS A Y 1999-2000, AND THE AY 2009-10 WAS IN FACT THE 11 TH YEAR AND THE ASSESSEE WAS NOT ENTITLED THE CLAIM FOR DEDUCTION U/S.10A. IT WAS A SUBMISSION T HAT THE AO HAD RELIED UPON THE CERTIFICATE ISSUED BY THE CHARTERED ACCOUN TANT, WHEREIN, IT WAS CERTIFIED THAT THE ASSESSEE STARTED MANUFACTURE OR PRODUCTION RIGHT FROM THE DATE OF INCORPORATION I.E. 08.06.1998. THE LD. AR DREW OUR ATTENTION TO THE FINANCIAL STATEMENT OF THE ASSESSEE FOR THE FY 1998-99 RELEVANT TO THE AY 1999-2000 AT PAGE NO.1 OF THE PAPER BOOK AND AT PAGE NO.9 THERETO, THE INCOME AND EXPENDITURE ACCOUNT SHOWED NIL. THE LD.AR FURTHER DREW ITA NO.3136/CHNY/2018 :- 3 -: OUR ATTENTION TO THE FINANCIAL STATEMENT FOR THE FY 1999-2000 AT PAGE NO.12 OF THE PAPER BOOK RELEVANT TO THE AY 2000-01, WHEREIN, AT PAGE NO.26, THE ASSESSEE HAS DERIVED INCOME FROM EXPORT AT RS.1,12,01,793/- AND DOMESTIC INCOME OF RS.32,27,099/-. THE LD.AR A LSO DREW OUR ATTENTION TO THE FY 2000-01 RELEVANT TO THE AY 2001 -02 AT PAGE NO.36 OF THE PAPER BOOK AND AT PAGE NO.45, THE ASSESSEE HAD SHOWN A NET INCOME OF RS.11,10,04,229/-. THE LD.AR FURTHER DREW OUR AT TENTION TO PAGE NO.63 OF THE PAPER BOOK WHICH WAS THE GREEN CARD ISSUED T O THE ASSESSEE AS AN STPI ON 26.05.2000. IT WAS A SUBMISSION THAT AS TH E ASSESSEE HAD RECEIVED ITS GREEN CARD ONLY ON 26.05.2000, THE FIR ST YEAR OF ASSESSEES CLAIM U/S.10A WAS LIABLE TO TAKEN AS THE YEAR ENDIN G 31.03.2001 RELEVANT TO THE AY 2001-02. IT WAS A SUBMISSION THAT THE AY 2009-10 BEING THE IMPUGNED ASSESSMENT YEAR WOULD BE THE 9 TH ASSESSMENT YEAR. 4. IN REPLY, THE LD.DR SUBMITTED THAT THE WORD USED IN SEC.10A WAS BEGINS MANUFACTURE. IT WAS A SUBMISSION THAT AS PER THE AUDITORS REPORT, THE ASSESSEE HAS STARTED MANUFACTURE RIGHT FROM THE DATE OF INCORPORATION AND CONSEQUENTLY, AY 2009-10 WAS LIAB LE TO BE CONSIDERED AS THE 11 TH YEAR AND THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTI ON U/S.10A. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. A PERUSAL OF THE PROVISIONS OF SEC.10A(1) SHOWS THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S.10A FOR T EN CONSECUTIVE ITA NO.3136/CHNY/2018 :- 4 -: ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MA NUFACTURE OR PRODUCE . WHAT IS TO BE UNDERSTOOD IS THAT THE PROVIS IONS OF SEC.10A REQUIRE THAT THE ASSESSEE SHOULD HAVE BEGUN MANUFAC TURE OR PRODUCTION OF THE ARTICLE OR THING SPECIFIED THEREIN IN SEC.10A. ONCE THE MANUFACTURE IS STARTED, THEN FOR TEN CONSECUTIVE YEARS, THE ASSESS EE IS ENTITLED FOR DEDUCTION U/S.10A. IT MAKES NO DIFFERENCE WHETHER THE ASSESSEE CLAIMED DEDUCTION U/S.10A OR NOT. A PERUSAL OF THE FINANCI AL STATEMENT OF THE ASSESSEE SHOWS THAT THE ASSESSEE WAS INCORPORATED O N 08.06.1998 RELEVANT TO THE AY 1999-2000. THE FIRST ANNUAL REPO RT OF THE ASSESSEE COMPANY CLEARLY SHOWS THAT THE ASSESSEE HAS NOT EAR NED ANY INCOME OR INCURRED ANY EXPENDITURE. CLEARLY, THE ASSESSEE HAS NOT STARTED MANUFACTURE. THE BALANCE SHEET ALSO DOES NOT SHOW ANY PHYSICAL ASSET BEING AVAILABLE OTHER THAN CASH IN HAND. THE SECON D ANNUAL REPORT FOR THE FY 1999-2000 RELEVANT TO THE AY 2000-01 SHOWS T HAT THE ASSESSEE HAS ACHIEVED A TURNOVER OF RS.1.44 CRS. HAS ACQUIRE D ASSETS AND EVEN HAS INCURRED HIRE CHARGES FOR COMPUTERS. IT HAS INCURRE D SUB-CONTRACTING CHARGES AND SALARY CHARGES AS ALSO CONSULTANCY AND PROFESSIONAL CHARGES. THUS, CLEARLY THE MANUFACTURE OF THE SOFTWARE HAS C OMMENCED DURING THE PERIOD FROM 01.04.1999 TO 31.03.2000 RELEVANT TO TH E AY 2000-01. AS THE ASSESSEE HAS COMMENCED ITS MANUFACTURE DURING THE A Y 2000-2001, THE SAME IS TO BE CONSIDERED AS THE FIRST YEAR FOR THE PURPOSE OF DEDUCTION U/S.10A OF THE ACT. ONCE THE AY 2000-01 HAS CONSID ERED AS THE FIRST YEAR FOR DEDUCTION U/S.10A THEN THE IMPUGNED ASSESSMENT BEING 2009-10 ITA NO.3136/CHNY/2018 :- 5 -: WOULD BE THE 10 TH YEAR FOR THE CLAIM OF DEDUCTION U/S.10A AS HAS BE EN ORIGINALLY ACCEPTED BY THE AO IN HIS ORDER U/S.154 DATED 30.03.2012. THIS BEING SO, THE AO IS DIRECTED TO GRANT THE ASSESSEE THE BENEFIT OF DEDUCTION U/S.10A FOR IMPUGNED ASSESSMENT YEAR. NO OTHER ISS UES HAVE BEEN ARGUED BY THE ASSESSEE. CONSEQUENTLY, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 07 TH DAY OF MAY, 2019, IN CHENNAI. SD/- SD/- ( . ) ( S. JAYARAMAN ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 07 TH MAY, 2019. TLN , *45 65 /COPY TO: 1. ) /APPELLANT 4. 7 /CIT 2. *+) /RESPONDENT 5. 5 * /DR 3. 7 ( ) /CIT(A) 6. /GF
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