ACIT, CHENNAI V. Temenos India Private Limited, CHENNAI

ITA 327/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8108 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2016
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYACIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Audit objection; Difference of opinion; Competent authority; Reason to believe; Change of opinion
• Section: 143(3); 10B; 147; 148; 10

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.327/MDS./2016 / ASSESSMENT YEAR :2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX , CORPORATE CIRCLE 3(1), NEW BLOCK, 3 RD FLOOR, CHENNAI 34. VS. M/S.TEMENOS INDIA PVT LTD., NO.146,STERLING ROAD, NUNGAMBAKKAM, CHENNAI 600 034. [PAN AAACT 2612 E ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.PATHLAVATH PEERYA,CIT D.R /RESPONDENT BY : MR.S.SRIDHAR,ADVOCATE / DATE OF HEARING : 24 - 0 8 - 201 6 !' / DATE OF PRONOUNCEMENT : 09 - 11 - 2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-11(I/C) DATED 12.11.2015 PERTAINING TO ASSESSMENT YEAR 2006-07. ITA NO. 327/MDS./2016 :- 2 -: 2. THE GRIEVANCE OF REVENUE IS WITH REGARD TO G RANTING OF DEDUCTION U/S.10B OF THE ACT FOR ASSESSMENT YEAR 2006-07, THO UGH THE ASSESSEE CLAIMED DEDUCTION U/S.10B OF THE ACT HAS BEEN LAPSE D FOR ASSESSMENT YEAR 2006-07, SINCE THE ASSESSEE HAS COMMENCED THE COMMERCIAL ACTIVITIES IN THE ASSESSMENT YEAR 1997-98. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SOFTWARE EXPORT AND SUP PORT SERVICES AND FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 23.10.2006 DECLARING A TOTAL INCOME OF ` 15,92,723/-. THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 29..12.2009 BY ARRIVING AT AN ASSESSED INCOME OF ` 15,92,723/- UNDER NORMAL PROVISIONS AND 22,12,325/- UNDER SPECIAL PROVISION. SUBSEQUENTLY, THE ASSESSM ENT WAS REOPENED U/S.147 BY ISSUING NOTICE U/S.148 OF THE ACT DATED 30.03.2012 FOR THE REASON THAT THE DEDUCTION U/S.10B WAS CLAIMED, BEYO ND TEN YEARS, BY THE ASSESSEE. THE AO COMPLETED THE ASSESSMENT U /S.143(3) R.W.S.147 ON 21.03.2014 BY ARRIVING AT AN ASSESSED INCOME OF ` 19,88,19,570/- BY WITHDRAWING THE CLAIM OF EXEMPTIO N U/S.10B OF ` 19,72,26,843/-. AGGRIEVED THE ORDER OF LD. ASSESSIN G OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). O N APPEAL, LD.CIT(A) DECIDED THE ISSUE ON REOPENING OF ASSESSM ENT WAS AGAINST THE ASSESSEE. HOWEVER, LD.CIT(A) DECIDED THE ISSUE ON MERITS GRANTING ITA NO. 327/MDS./2016 :- 3 -: OF DEDUCTION U/S.10B OF THE ACT IN FAVOUR OF THE AS SESSEE. AGAINST THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD.D.R SUBMITTED THAT THAT THE ASSES SEE COMPANY HAS STARTED MANUFACTURING & SOFTWARE DEVELOPMENT IN FY 1996-97 RELEVANT TO ASSESSMENT YEAR 1997- 98 ITSELF AND SUBSEQUENTLY CO NVERTED THE EXISTING UNIT INTO SOFTWARE TECHNOLOGY PARK THROUGH APPROVAL OF T HE DIRECTOR OF STPI DATED 19.11.1998. FURTHER, LD.D.R SUBMITTED THAT A S PER APPLICATION DATED 27.10.1998 SUBMITTED BY THE ASSESSEE BEFORE THE DIR ECTOR OF STPI IN COLUMN, COLUMN NO.V.A AND COLUMN NO.XVIII OF THE APPLICATIO N, THE ASSESSEE COMPANY ITSELF HAS DECLARED THAT IT IS CONVERTING T HE ALREADY ESTABLISHED UNIT INTO SOFTWARE TECHNOLOGY PARK AND HENCE IT IS ONLY RECONSTRUCTION OF AN EXIST UNDERTAKING AND HENCE NOT ELIGIBLE FOR DEDUCTION UN DER SECTION 10A OF THE INCOME TAX ACT. ACCORDING TO LD.D.R, THE LEARNED CI T(A) OUGHT TO HAVE SEEN THAT AS THE ASSESSEE HAS SHIFTED THE EXISTING UNDER TAKING TO A NEW PLACE AND OBTAINED STPI LICENSE, IT IS A CLEAR CASE OF RECONS TRUCTION OF BUSINESS AND HENCE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 10 A OR 10B AS PER SUBSECTION 2(U) OF SECTION 1 OA OF THE INCOME TAX ACT. FURTHER , LD.D.R EMPHASIZED THAT THE LEARNED CLTA) FAILED TO CONSIDER THE FACT THAT THE ASSESSEE COMPANY STARTED THAT BUSINESS IN THE ACCOUNTING YEAR 1996-9 7 RELEVANT TO ASSESSMENT YEAR 1997-98 AND CLAIMED DEDUCTION 8OHHE FOR EXPORT OF SOFTWARE TILL AY 2000-2001 AND STARTED CLAIMING EXEMPTION U/S IOA FO R THE SAME UNIT FROM AY 2001-2002 ONLY AND HENCE RECONSTRUCTED THE EXIST ING UNDERTAKING INTO AN STP UNIT FOR CLAIMING EXEMPTION U/S IOA FOR WHICH A SSESSEE IS NOT ELIGIBLE. WITHOUT PREJUDICE TO THE GROUNDS RAISED ABOVE IN GR OUND NO.2.1, 2.2., 2.3 ITA NO. 327/MDS./2016 :- 4 -: AND 2.4, HE PLEADED THAT THE LEARNED CIT(A) ERRED I N ALLOWING THE ASSESSEES APPEAL BY ACCEPTING THE PLEA THAT THE ASSESSEE IS I N 8TH YEAR OF CLAIM WITHOUT VERIFYING THE FACTS OF THE CASE. THE LD.D.R FURTHER SUBMITTED THAT THE LEARNED CIT(A) OUGHT TO HAVE SEEN THE FACT THAT AS PER SL.N O.VA AND XVIII OF APPLICATION, DATED 27.10.1998 SUBMITTED BY THE ASSE SSEE COMPANY BEFORE THE DIRECTOR OF STPI THE ASSESSEE COMPANY ITSELF H AS DECLARED THAT IT IS CONVERTING THE ALREADY ESTABLISHED UNIT INTO SOFTWA RE TECHNOLOGY PARK AND HENCE THE BEGINNING YEAR FOR THE PURPOSE OF CLAIM U /S 10A SHOULD BE RECKONED FROM AY 1997-98 AND HENCE AY 2006-07 IS TH E 10 TH YEAR OF THE CLAIM. THE LD.D.R SUBMITTED THAT THE LEARNED CIT(A) OUGHT TO HAVE CONCLUDED THAT AY 2006-07 IS 10 TH YEAR FROM THE YEAR BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UND ERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR C OMPUTER SOFTWARE. 5. ON THE OTHER HAND, THE LD.A.R FILED A PETITION UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES, 1963 CHALLENGING THE REOP ENING OF ASSESSMENT. THEREAFTER, LD.A.R SUBMITTED FOLLOWING POINTS FOR O UR CONSIDERATION. I) THE ASSESSMENT U/S 143(3) OF THE ACT FOR THE ASS ESSMENT YEAR 2006-07 WAS FRAMED ON 29.12.2009 CONSIDERING THE 8T H YEAR OF CLAIM OF DEDUCTION U/S 10B OF THE ACT IN THE COMPUT ATION OF TAXABLE TOTAL INCOME. II) THE RE-ASSESSMENT U/S 143(3) NW SECTION 147 OF THE ACT BASED ON AUDIT OBJECTION WAS PASSED ON 21.03 .2014 AND THE R EOPENING OF THE PROCEEDINGS WAS INITIATED BY ISSUANCE OF A NOTICE U /S 148 OF THE ACT ITA NO. 327/MDS./2016 :- 5 -: DATED 30.03.2013 (WRONGLY MENTIONED BY THE FIRST AP PELLATE AUTHORITY IN THE IMPUGNED ORDER AT PARA 4 AS 30.03. 2012) ADMITTEDLY AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELE VANT ASSESSMENT YEAR. III) THE VALIDITY OF THE RE-ASSESSMENT WAS CHALLENG ED BEFORE THE FIRST APPELLATE AUTHORITY BASED ON THE WRONG PRESUMPTION OF FACTS BY THE ASSESSING OFFICER ON ITS ELIGIBILITY OF THE DEDUCTI ON U/S 10B OF THE ACT. HOWEVER, THE FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER DATED 12.11.2015 IN I.T.A.NO.119/2014-15 HELD THAT IT WAS POSSIBLE FOR THE ASSESSING OFFICER UNDER CERTAIN CIRCUMSTANC ES TO MISS THE OBVIOUS AND AFTER PLACING RELIANCE ON CERTAIN DECIS IONS, THE FIRST APPELLATE AUTHORITY DISMISSED THE GROUNDS CHALLENGI NG THE VALIDITY OF THE REOPENING OF THE PROCEEDINGS IN PARA 7.3.1. TH E CIT DR IN THE COURSE OF ARGUMENTS ADVANCED TODAY HAD PLACED THE C OPY OF THE (SECOND) REMAND REPORT DATED 10.02.2016 AVAILABLE I N THE APPEAL PROCEEDINGS RELATING TO THE ASSESSMENT YEAR 2007-08 & 2008-09 PENDING BEFORE THE FIRST APPELLATE AUTHORITY IN I.T .A.NOS.707 & 1448/2013-14 AND CONTENDED THAT THE STPT UNIT UNDER CONSIDERATION WAS RECONSTRUCTED AND NOT ELIGIBLE FO R DEDUCTION U/S.10B OF THE ACT. ACCORDINGLY, THE CIT DR BASED H IS SUBMISSIONS BY REFERRING TO THE FINDINGS/OBSERVATIONS CONTAINED IN THE SAID (SECOND) REMAND REPORT DATED 10.02.20 16. IV) COUNTERING THE ARGUMENTS, THE COUNSEL ON RECORD SUBMITTED THAT EVEN IN THE SAID (SECOND) REMAND REPORT AT PARA 3, THE CLAIM FOR ITA NO. 327/MDS./2016 :- 6 -: DEDUCTION U/S 10B OF THE ACT WAS MAINTAINABLE FOR T HE ASSESSMENT YEAR 2006-07 AS THE SAID CLAIM COULD BE CONSIDERED AS THE 10TH YEAR FOR WHICH SUCH DEDUCTION WAS MADE BY THE RESPONDENT . HOWEVER, THE COUNSEL ON RECORD VENTURED INTO THE OTHER ASPEC TS NAMELY, THE VALIDITY OF THE RE-ASSESSMENT AS WELL AS THE CORREC TNESS OF THE DECISION RENDERED BY THE FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER FOR THE ASSESSMENT YEAR 2006-07 IN ACCEPTING THE CLAIM FOR DEDUCTION U/S LOB OF THE ACT AS THE 8TH YEAR OF SUC H CLAIM IN THE PERMISSIBLE BLOCK OF 10 YEARS. (V) IN ORDER TO FORTIFY THE PLEA FOR GETTING DECISI ON UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES, 1963 ON THE ISSUE OF REOPENING, THE RESPONDENT SUBMITTED THAT THE PROVISO BELOW SECTION 147 OF THE ACT WOULD PROHIBIT ASSUMPTION OF JURISDICTION U/S 147 O F THE ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR FOR FRAMING RE-ASSESSMENT ESPECIALLY IN VIEW OF FRA MING OF THE FIRST ASSESSMENT U/S 143(3) OF THE ACT DATED 29.12.2009 C ONSIDERING THE ISSUE RELATING TO COMPUTATION OF DEDUCTION U/S 10B OF THE ACT. (VI) THE REVIEW OF THE COMPLETED ASSESSMENT U/S 143 (3) OF THE ACT IS NOT PERMITTED AFTER EXPIRY OF 4 YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR AS PER THE RATIO LAID DOWN BY THE A PEX COURT IN THE CASE OF CIT VS. (1) KELVINATOR OF INDIA LTD. & (2 ) EICHER LTD. REPORTED IN [2010] 320 ITR 561 (SC). THE RESPONDENT DURING THE COURSE OF THE ARGUMENTS ADVANCED TODAY PLACED ON RE CORD THE EARLIER REMAND REPORT SENT TO THE FIRST APPELLATE A UTHORITY IN THE ITA NO. 327/MDS./2016 :- 7 -: PROCEEDINGS RELATING TO THE ASSESSMENT YEAR 2007-08 & 2008-09 UNDER THE COVERING LETTER DATED 13.01.2016 AND THE SAID DETAILS ARE COMPRISED IN FOUR PAGES INASMUCH AS THE SAID DETAIL S WERE GIVEN/MADE AVAILABLE IN THE SAID APPELLATE PROCEEDI NGS FOR THE SAID TWO ASSESSMENT YEARS. (VII) IN THE SAID DETAILS/REMAND REPORT WHICH MAY B E REFERRED TO AS THE FIRST REMAND REPORT OF THE SAID PROCEEDINGS REL ATING TO THE ASSESSMENT YEARS 2007-08 & 2008-09, THE EXTENSIVE R EFERENCE WAS MADE TO THE RE-ASSESSMENT PROCEEDINGS RELATING TO T HE ASSESSMENT YEAR 2006-07.IN THE SAID FIRST REMAND REPORT, IT WA S ADMITTED THAT THE REOPENING FOR THE ASSESSMENT YEAR 2006-07 WAS B ASED ON AUDIT OBJECTION RAISED BY THE REVENUE AUDIT PARTY WITH RE GARD TO THE CLAIM OF DEDUCTION U/S 10B OF THE ACT. THE RELEVANT PARAG RAPH OF THE FIRST REMAND REPORT DATED 26.06.2014 IS EXTRACTED HEREIN AFTER: THE THEN ASSESSING OFFICER, WHILE COMPLETING THE A SSESSMENT ORDER U/S 143(3) ON 29-12-2009 HAS LEFT A NOTE NOT TO THE ASS ESSEE IN THE ITMR (COPY ENCLOSED). IN THE SAID NOTE, THE AO HAD ANALY SED THE AUDIT OBJECTION RAISED BY THE RAP AND HAD GIVEN A FINDING THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 1 OB WAS IN ORDER. FURTHER, IN TH IS CONNECTION, THE CIT-I, VIDE HIS LETTER DATED 0 1-03- 2013 HAD REQUESTED TH E AG TO TREAT THE AUDIT OBJECTION AS SETTLED FOR WHICH THERE IS NO REPLY TI LL DATE. HENCE ON 28-03-2013, AS A MATTER OF ABUNDANT CAUTIO N, REOPENING ASSESSMENT PROCEEDINGS U/S 148 HAS BEEN INITIATED A FTER GETTING THE DUE APPROVAL OF CIT. SIMULTANEOUSLY, THE REOPENING ASSE SSMENT HAS BEEN COMPLETED ON 21-03-2014 DISALLOWING THE CLAIM OF AS SESSEE U/S LOB FOR THE A.Y. 2006-07 (VIII) IN THE ORIGINAL ASSESSMENT FRAMED BY THE AS SESSING OFFICER FOR THE ASSESSMENT YEAR 2006-07, THE 8TH YEAR OF CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS ACCEPTED AND THE SAID ACCEPT ANCE OF THE CLAIM FOR DEDUCTION FOR THE EIGHTH YEAR OUT OF THE PERMITTED BLOCK OF ITA NO. 327/MDS./2016 :- 8 -: 10 YEARS U/S 10B OF THE ACT WAS CONSIDERED AS LEGAL LY IN ORDER WHEN THE CIT REPLIED TO THE RAP BASED ON THE AOS NOTE NOT TO THE ASSESSEE. THE SAID NOTE NOT TO THE ASSESSEE IS A LSO PART OF THE PAPERS FILED BY THE RESPONDENT AND THE SAID NOTE N OT TO THE ASSESSEE WAS CIRCULATED TO THE RESPONDENT ALONG WI TH THE FIRST REMAND REPORT HEREIN BEFORE REFERRED TO. IN THE SAI D NOTE NOT TO THE ASSESSEE, THE ASSESSING OFFICER ACCEPTED THE CLAIM FOR DEDUCTION BASED ON THE EXTENSIVE INTERACTION WITH THE DIRECTO RATE OF THE STPI AND CONCLUDED THAT THE CLAIM FOR DEDUCTION FOR THE ELIGIBLE UNIT WAS RELATED TO THE SAID ELIGIBLE UNIT NEWLY FORMED AND NOT CONVERTED. (IX) THEREFORE, THE REASON TO BELIEVE WHICH IS T HE FOUNDATION FOR ASSUMING JURISDICTION U/S 147 OF THE ACT ON THE FAC TS OF THE CASE IS LACKING AND NOT AVAILABLE ESPECIALLY ON THE ESCAPEM ENT OF INCOME FOR ASSESSMENT PERTAINING TO THE CLAIM OF DEDUCTION U/S 10B OF THE ACT. IN THIS REGARD, THE COUNSEL ON RECORD PLACED RELIAN CE ON THE LATEST DECISION OF THE BOMBAY HIGH COURT REPORTED IN 382 I TR 574 AND THE BOMBAY HIGH COURT FROM PARAGRAPHS 6 TO 11 HAD TOUCH ED UPON THREE VITAL ASPECTS NAMELY, THE NON-ACCEPTANCE OF T HE AUDIT OBJECTION BY THE ASSESSING OFFICER, THE CHANGE OF O PINION AND THE PROHIBITION FOR REOPENING ENVISAGED IN THE PROVISO BELOW SECTION 147 OF THE ACT. (X) AFTER REJECTING THE AUDIT OBJECTION ON THE ISS UE OF THE CLAIM RELATING TO THE DEDUCTION U/S 10B OF THE ACT, THE Q UESTION OF THE REASON TO BELIEVE THE ESCAPEMENT OF INCOME FOR AS SESSMENT ON THE ITA NO. 327/MDS./2016 :- 9 -: PART OF THE ASSESSING OFFICER WOULD NOT ARISE AND T HEREFORE THE RE- ASSESSMENT UNDER CONSIDERATION SHOULD BE HELD TO BE NOT SUSTAINABLE IN LAW. ACCORDINGLY, THE RESPONDENT PRA YS FOR QUASHING THE RE-ASSESSMENT FRAMED FOR THE ASSESSMENT YEAR 20 06-07 ON 2103-2014 IN THE INTEREST OF JUSTICE. (XI) EVEN ON THE GROUND OF CHANGE OF OPINION, THE CLAIM FOR DEDUCTION U/S 10B OF THE ACT, THE RE-ASSESSMENT FRAMED WOULD FALL TO THE GROUND IN VIEW OF THE ORIGINAL ASSESSMENT ORDER DATED 29.1 2.2009 WHEREIN THE 8TH YEAR OF CLAIM OF SUCH DEDUCTION U/S 10B OF THE ACT WAS CONSIDERED AND ACCEPTED. ON THE OTHER FACET, NAMELY , THE PROHIBITION IN THE PROVISO TO SECTION 147 OF THE AC T WOULD NULLIFY THE RE-ASSESSMENT UNDER CONSIDERATION AND ACCORDING TO THE RESPONDENT THERE WAS NO SUPPRESSION OF FACTS WITH REGARD TO TH E CLAIM OF DEDUCTION U/S 10B OF THE ACT INASMUCH AS THERE WAS FULL AND TRUE DISCLOSURE OF MATERIAL FACTS RELATING TO THE CLAIM OF DEDUCTION U/S 1 OB OF THE ACT WHICH FORMED PART OF THE RETURN OF IN COME FILED ON 23.10.2006 SUPPORTED BY THE AUDIT REPORT IN FORM NO .56G DATED 23.08.2006. ON THIS COUNT ALSO, THE RESPONDENT PRAY S FOR QUASHING THE RE-ASSESSMENT ORDER DATED 21.03.20 14 FOR THE A SSESSMENT YEAR 2006-07 AND THUS RENDER JUSTICE. (XII) ON MERITS, EVEN THOUGH THE SUBMISSIONS TO SU PPORT THE CLAIM OF DEDUCTION U/S 10B OF THE ACT IS NOT REQUIRED TO BE ADDRESSED, THE RESPONDENT SUBMITS WITH A VIEW TO PROTECT THEIR INT EREST SO AS TO ITA NO. 327/MDS./2016 :- 10 - : SUBSTANTIATE THE CORRECTNESS OF SUCH CLAIM MADE FOR THE GTH CONSECUTIVE YEAR OUT OF THE PERMITTED BLOCK OF 10 Y EARS IN TERMS OF SECTION 10B OF THE ACT THAT THE SAID CLAIM WAS ACCE PTED BY THE ASSESSING OFFICER AS CORRECT IN THE NOTE NOT TO TH E ASSESSEE WHICH WAS ENCLOSED IN THE FIRST REMAND REPORT FURNISHED F OR THE APPEAL PROCEEDINGS RELATING TO THE ASSESSMENT YEARS 2007-0 8 & 2008- 09.HOWEVER, IN THE SECOND REMAND REPORT THE ASSESSI NG OFFICER TOOK SHELTER UNDER THE APPLICATION FILED FOR THE RECOGNI TION OF EXPORT UNIT UNDER STPI REGULATIONS AND CONTENDED THAT THE UNIT AT NANDANAM, CHENNAI WAS RECONSTRUCTED FROM THE UNIT ALREADY EST ABLISHED AT POONAMALLEE HIGH ROAD, CHENNAI. (XIII) THE SAID ASPECT OF CONVERSION THEORY WAS NOT ACCEPTED IN THE FIRST REMAND REPORT AS WELL AS IN THE NOTE NOT TO THE ASSESSEE AFTER PROPER VERIFICATION WITH THE DIRECTORATE OF STPI. A FTER REFERRING TO THE CORRESPONDENCE/COMMUNICATION WITH THE STPI AUTH ORITIES, THE ASSESSING OFFICER ACCEPTED THAT THE NANDANAM UNIT W AS ESTABLISHED NEWLY AND NOT A CONVERTED UNIT. THEREFORE, THE ATTE MPT OF THE CIT DR IN THE PRESENT PROCEEDINGS IS NOT FACTUALLY ACCE PTABLE AND THE RESPONDENT PRAYS FOR REJECTING THE SAID GROUNDS RAI SED ON MERITS. DURING THE COURSE OF THE ARGUMENTS TODAY, THE COUNS EL ON RECORD PLACED ON RECORD 4 SHEETS UNDER THE COVERING LETTER DATED 8.12.2009 AND WHEREIN THE STPI IN THEIR CONFIRMATION DATED 8. 12.2009 STATED AS FOLLOWS: ITA NO. 327/MDS./2016 :- 11 - : WITH REFERENCE TO THE ABOVE, M/S TEMENOS INDIA PV T. LTD., UNIT-I WAS ACCORDED AS UNIT UNDER STP SCHEME FOR THE ESTAB LISHMENT OF NEW UNDERTAKING UNIT VIDE LETTER NO. STPI(C)/IMSC/9 8-99/7392 DATED 19.11.1998. IF THE UNIT IS ALREADY EXPORTING UNIT, WE WILL ISSU E THE APPROVAL WITH THE LINES CONVERSION FROM EXPORTING UNIT TO STP UN IT AND COPY OF THE SAMPLE IS ENCLOSED AS ANNEXURE. THE COMPETENT AUTHORITY HAD CERTIFIED THAT THE UNIT AT NANDANAM, CHENNAI WAS A NEW UNIT AND NOT RECONSTRUCTED OR CON VERTED AND HENCE THE CIT DR HAS NO AUTHORITY TO CHALLENGE THE SAID CONFIRMATION OF THE STPI WITHOUT MATERIALS. THE MIS TAKE MADE IN THE APPLICATION CANNOT BE CONSIDERED AS FATAL TO THE CL AIM FOR DEDUCTION INASMUCH AS AFTER PROCESSING THE SAID APPLICATION, THE STPI HAD GRANTED THE APPROVAL FOR A NEW UNIT AND NOT FOR REC ONSTRUCTED UNIT, THEREBY PROVING THE MISTAKE COMMITTED BY THE RESPON DENT IN FILLING UP THE APPLICATION. (XIV) IN THIS REGARD, THE PROVISIONS OF SECTION L0B OF THE ACT WHICH ENVISAGE OBTAINING NECESSARY APPROVAL FROM THE STPI FOR THE ELIGIBILITY TO GET THE SAID TAX HOLIDAY BENEFIT MAY BE RELEVANT TO UNDERSTAND THE SUBMISSIONS MADE IN THE PRECEDING PA RAGRAPH. THEREFORE, IT IS TOO LATE IN THE DAY TO CANVASS THE SAID ARGUMENT TO PERSUADE THE BENCH FOR REVERSING THE ORDER OF THE F IRST APPELLATE AUTHORITY FOR THE ASSESSMENT YEAR 2006-07. (XV) ON THE CUMULATIVE REASONS, THE RESPONDENT PRAY S FOR THE QUASHING THE REASSESSMENT ORDER DATED 21.03.2014 IN THE INTEREST ITA NO. 327/MDS./2016 :- 12 - : OF JUSTICE AND ALTERNATIVELY PLEADS FOR SUSTAINING THE ORDER OF THE FIRST APPELLATE AUTHORITY DATED 12.11.2015 IN THE I NTEREST OF JUSTICE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE FILED A PETITION UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES, 1963 TO THE EFFECT THAT REOPENING AFTER FOUR YEARS IS BAD IN LAW AND IT IS ONLY CHANGE OF OPINION IN V IEW OF THE JUDGEMENT OF SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LT D., CITED SUPRA. ADMITEDLY THE ASSESSEE RAISED THE GROUNDS RELATING TO THE REO PENING OF ASSESSMENT ARGUING BEFORE THE CIT(A) THAT IT IS ONLY A CHANGE OF OPINION AND REOPENING IS BAD IN LAW. NOW THE CONTENTION OF THE LD.A.R BE FORE US THROUGH A PETITION UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES, 1963 THAT REOPENING FOR ASSESSMENT YEAR 2006-07 WAS BASED ON AUDIT OBJECTIO N RAISED BY THE REVENUE AUDIT PARTY IS WITH REGARD TO CLAIM OF DEDU CTION U/S.10B OF THE ACT AND IT WAS SUBMITTED BY THE LD.A.R BEFORE US THAT I N REPLY TO AUDIT OBJECTION, THE AO STATED THAT THE GRANT OF DEDUCTION U/S.10B O F THE ACT WAS IN ORDER. HOWEVER, THIS ARGUMENT OF ASSESSEES COUNSEL WAS NO T BEFORE THE CIT(A), WHEN IT HAS ARGUED BEFORE THE LD.CIT(A). HENCE, IN THE INTEREST OF JUSTICE, IN OUR OPINION IT IS APPROPRIATE TO REMIT BACK THE ISS UE RAISED BY THE ASSESSEE IN ITS PETITION FILED UNDER RULE 27 OF THE APPELLATE T RIBUNAL RULES, 1963 TO THE FILE OF LD.CIT(A) TO ADJUDICATE THIS LEGAL ISSUE FI RST, THEREAFTER DECIDE THE ISSUE RELATING TO GRANTING OF DEDUCTION U/S.10B OF THE ACT, IF NECESSARY. WITH THIS OBSERVATION, WE REMIT THE LEGAL ISSUE TO THE FILE OF LD.CIT(A) FOR FRESH CONSIDERATION. ITA NO. 327/MDS./2016 :- 13 - : 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON 9 TH NOVEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 9 TH NOVEMBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF