MAXVAL TECHNOLOGIES LTD, BELAPUR V. ITO WD 3, PANVEL, RAIGAD

ITA 3714/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7511 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Opportunity of being heard
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 3714/MUM./2015 ( ASSESSMENT YEAR : 20 08 09 ) MAXVAL TECHNOLOGIES PVT. LTD. T 251, ITC 5 TH FLOOR, TOWER NO.10 CBD BELAPUR STATION COMPLEX CBD BELAPUR 400 614 PAN AAECM0983B . APPELLANT V/S INCOME TAX OFFICER WARD 3, PANVEL . RESPONDENT ITA NO. 3715/MUM./2015 ( ASSESSMENT YEAR : 20 10 11 ) MAXVAL TECHNOLOGIES PVT. LTD. T 251, ITC 5 TH FLOOR, TOWER NO.10 CBD BELAPUR STATION COMPLEX CBD BELAPUR 400 614 PAN AAECM0983B . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX PANVEL CIRCLE, PANVEL . RESPONDENT ASSESSEE BY : SHRI BHADRESH DOSHI REVENUE BY : SHRI SUMAN KUMAR DATE OF HEARING 16 . 0 1 .2018 DATE OF ORDER 11.04.2018 2 MAXVAL TECHNOLOGIES PVT. LTD. O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEALS BY THE ASSESSEE ARE AGAINST TWO SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER (APPEALS) 1 AND 2, THANE, PERTAINING TO ASSESSMENT YEARS 2008 09 AND 2010 11. 2 . GROUND NO.3 OF ITA NO.3715/MUM./2015, IS NOT PRESSED, HENCE, DISMISSED. 3 . THE ONLY SURVIVING GROUND, WHICH IS COMMON IN BOTH THE APPEALS ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING OF DEDUCTION UNDER SECTION 10B OF THE ACT. 4 . BRIEF FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND FOR THAT PURPOSE IT HAS SET UP A NEW UNIT IN DOMESTIC TARIFF AREA , BELAPUR STATION COMPLEX, CBD BELAPUR, IS REGISTERED AS 100% EXPORT ORIENTED UNIT WITH SOFTWARE TECHNOLOGY PARK OF INDIA (STPI ) MUMBAI. FOR THE IMPUGNED ASSESSMENT YEAR ASSESSEE FILED IT S RETURN OF INCOME CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH NECESSARY EVIDENCE / INFORMATION REGARDING THE CLAIM OF DEDUCTION 3 MAXVAL TECHNOLOGIES PVT. LTD. UNDER SECTION 10B AND A LSO TO JUSTIFY HOW THE CONDITIONS OF SECTION 10B ARE FULFILLED. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THA T IT HAS BEEN APPROVED AS 100% E XPORT O RIENTED U NIT (EOU) BY THE STPI WHICH IS THE BASIC CONDITION OF SECTION 10B OF THE ACT. FURTHER, REFERRIN G TO MOEF CIRCULAR DATED 9 TH MARCH 2009, IT WAS SUBMITTED BY THE ASSESSEE THAT APPROVAL GIVEN BY AN OFFICER DESIGNATED BY THE MINISTRY OF INFORMATION AND TECHNOLOGY INSTEAD OF DEVELOPMENT COMMISSIONER AND BY THE INTER MINISTERIAL STANDING COMMITTEE INSTEAD OF BOARD OF APPROVAL RECOGNISING THE ASSESSEE AS 100% EXPORT ORIENTED UNIT WOULD FULFIL THE CONDITION OF SECTION 10B. THUS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE APPROVAL GIVEN BY THE DIRECTOR, STPI, IS SUFFICIENT FOR CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT. IN SUPPORT OF SUCH CONTENTION THE ASSESSEE RELIED UPON THE DECISION OF THE TRIBUNAL IN CASE OF ITO V/S REGENCY CREATION LTD. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. RE FERRING TO THE DEFINITION OF 100% EXPORT ORIENTED UNDERTAKING AS PROVIDED UNDER CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10B OF THE ACT, HE OBSERVED THAT AS PER THE CONDITION PRESCRIBED THEREIN, A 100% EXPORT ORIENTED UNDERTAKING HAS TO BE APPROVED BY A BOARD APPOINTED ON THAT BEHAL F BY CENTRAL GOVERNMENT IN EXERCISE OF POWER CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 AND RULES MADE THEREUNDER. F URTHER , REFERRING TO THE BOARDS INSTRUCTION NO.2/2009 DATED 9 TH MARCH 2009, T HE ASSESSING OFFICER OBS ERVED EITHER 4 MAXVAL TECHNOLOGIES PVT. LTD. THE ASSESSEE HAS TO BE APPROVED BY THE BOARD CONSTITUTED BY THE CENTRAL GOVERNMENT AS PER EXPLANATION 2(IV) OF SECTION 10B OR IF THE APPROVAL IS GIVEN BY THE DEVELOPMENT COMMISSIONER OR THE DIRECTOR, STPI IT HAS TO BE RATIFIED BY THE BOARD. TH US, HOLDING THAT ASS HAS NOT BEEN APPROVED BY A BOARD CONSTITUTED IN TERMS OF UNDER CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10B IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER THE SAID PROVISION. ACCORDINGLY, HE DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECT ION 10B OF THE ACT FOR BOTH THE ASSESSMENT YEARS. BEING AGGRIEVED OF THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 10B OF THE ACT, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5 . THE LEARNED COMMISSIONER (APPEALS) , HOWEVER, OBSERVIN G THAT ASSESSEES APPROVED AS A 100% EXPORT ORIENTED UNIT WAS NOT RATIFIED BY THE BOARD FOR APPROVAL , UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE ASSESSEE CHALLENGED THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) FOR THE ASSESSMENT YEAR 2008 09 BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 28 TH OCTOBER 2014, IN ITA NO. 5991/MUM./2011, RESTORED THE ISSUE TO THE LEARNED COMMISSIONER (APPEALS) FOR RE ADJUDICATION. IN PURSUANCE TO THE DIRECTION OF THE TRIBUNAL, THE LEARNED COMMISSIONER (APPEALS) TOOK UP THE PROCEEDINGS AGAIN AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN THE LIGHT OF THE RELEVANT FACTS AND MATERIAL ON RECORD , THE STATUTORY 5 MAXVAL TECHNOLOGIES PVT. LTD. PROVISIONS GOVERNING THE ISSUE AS WELL AS RELYING UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT V/S REGENCY CREATIONS LTD., 27 TAXMANN.COM 322 (DEL.), HELD THAT IN ABSENCE OF APPR OVAL BY THE BOARD CONSTITUTED IN TERMS OF EXPLANATION 2(IV) OF SECTION 10B, ASSESSEES CLAIM OF DEDUCTION CANNOT BE ALLOWED. THE SAME VIEW WAS EXPRESSED BY HIM WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010 11 AS WELL. 6 . LEARNED AUTHORISED REPRES ENTATIVE REI TERATING THE STAND TAKEN BEFORE THE FIRST APPELLATE AUTHORITY SUBMITTED THAT THE ASSESSEE IS APPROVED AS A 100% EXPORT ORIENTED UNIT BY THE DIRECTOR STPI, MUMBAI. HE SUBMITTED, THOUGH, AS PER EXPLANATION 2(IV) OF SECTION 10B, THE APPROVAL IS RE QUIRED TO BE GRANTED BY A BOARD CONSTITUTED BY GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, HOWEVER, NO SUCH BOARD HAS BEEN CONSTITUTED BY THE GOVERNMENT. INSTEAD , THE GOVERNMENT HAS CONSTITUTED AN INTER MINISTERIAL STANDING COMMITTEE TO PERFORM THE FUNCTION OF THE BOARD. IN THIS CONTEXT, HE REFERRED TO NOTIFICATION VIDE S.O. NO.117(E) DATED 22 ND FEBRUARY 1993, ISSUED BY THE DEPARTMENT OF INDUSTRIAL DEVELOPMENT, MINISTRY OF INDUSTRY, GOVERNMENT OF INDIA. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, AFTER GRANT OF APPROVAL BY THE DIRECTOR, STPI, ASSESSEE HAS ENTERED INTO AN AGREEMENT FOR SOFTWARE EXPORT WITH THE GOVERNMENT. HE SUBMITTED, A GREEN CARD HAS BEEN 6 MAXVAL TECHNOLOGIES PVT. LTD. ISSUED ON BEHALF OF IMSC RECOGNIZING THE ASSESSEE AS A 1 00% EXPORT ORIENTED UNIT UNDER THE STPI SCHEME. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE GREEN CARD ISSUED BY DESIGNATED OFFICER , A COPY OF WHICH IS PLACED AT PAGE 7 AND 8 OF THE PAPER BOOK. REFERRING TO THE LETTER DATED 2 ND SEPTEMBER 2011, ISSUED BY THE ASSTT. DIRECTOR, STPI, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , APPROVAL AS 100% EXPORT ORIENTED UNIT UNDER THE STPI SCHEME SHALL BE GRANTED BY AN OFFICER DESIGNATED BY MINISTRY OF COMMUNICATION AND TECHNOLOGY INSTEAD OF DEVELOPMENT COMMISSIONE R AND BY IMSC INSTEAD OF BOARD OF APPROVED. THE SAID LETTER STATED THAT SINCE STPI WORKS UNDER IMSC NO RATIFICATION IS NECESSARY. DRAWING OUR ATTENTION TO THE INFORMATION OBTAINED UNDER RTI ACT FROM THE STPI A COPY OF WHICH IS PLACED AT PAGE 47 OF THE PAPE R BOOK AND THE CLARIFICATION ISSUED BY IMSC TO CBDT ON 7 TH SEPTEMBER 2006, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT STP I UNITS APPROVED BY THE DIRECTOR, STPI STANDS AUTOMATICALLY APPROVED BY STP SCHEME. LEARNED AUTHORISED REPRESENTATIVE SUBMITT ED, SINCE THE ASSESSEE HAS BEEN GRANTED APPROVAL BY THE DIRECTOR, STPI AND IMSC, THERE IS NO NECESSITY OF OBTAINING APPROVAL FROM THE BOARD AS PRESCRIBED UNDER EXPLANATION 2(IV) TO SECTION 10B OF THE ACT. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, SI NCE , THE GOVERNMENT HAS NOT CONSTITUTED ANY BOARD OF APPROVAL AS PRESCRIBED UNDER EXPLANATION 2(IV) TO SECTION 10B, THE ASSESSEE CANNOT BE DENIED ITS LEGITIMATE CLAIM A S CONSTITUTION OF BOARD 7 MAXVAL TECHNOLOGIES PVT. LTD. I S N OT THE HANDS OF THE ASSESSEE. HE SUBMITTED, IN THE PRECEDING ASSESSMENT YEAR S ASSESSEES CLAIM HAS BEEN ALLOWED. THEREFORE, THE DEDUCTION CLAIMED IN THE IMPUGNED ASSESSMENT YEAR CANNOT BE DENIED. IN SUPPORT OF HIS CONTENTION, ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: I ) ITO V/S NEURAL TECHNOLOGIES AND SOFTWARE PVT. LTD., ITA NO. 6525/MUM./2012, DATED 19.10.2015; II ) ITO V/S WIZARD ENTERPRISES PVT. LTD., ITA NO.628/KOL./2011 AND ORS., DATED 04.03.2016; III ) CIT V/S WESTERN OUTDOOR INTERACTIVE PVT. LTD., ITA NO.1150/ 2010 & ORS. DATED 14.08.2012. 7 . WITHOUT PREJUDICE TO TH E AFORESAID CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE IN TERMS OF GROUND NO.2, SUBMITTED THAT IN THE EVENT ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10B IS NOT ALLOWED, ALTERNATIVELY, ASSESSEE SHOULD BE ALLOWED DEDUCTION UNDER SECTION 10 A SINCE I T FULFILLS ALL CONDITIONS OF THE SAID PROVISIONS. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THOUGH, THE ASSESSEE PUT FORWARD ITS ALTERNATIVE CLAIM OF DEDUCTION UNDER SECTION 10A IN COURSE OF PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, HE REJECTED ASSESSEES CLAIM FOR ASSESSMENT YEAR 2008 09 ON THE PLEA THAT IN THE SET ASIDE PROCEEDINGS, ASSESSEE CANNOT RAISE A FRESH CLAIM. SO FAR AS ASSESSMENT YEAR 2010 11 IS CONCERNED, THE LEARNED COMMISSIONER (APPEALS) REJECTED ASSESSEES CLAIM UNDER SECTION 10A ON THE REASONING THAT THE ASSESSEE HAS NOT CLAIMED SUCH DEDUCTION BEFORE THE 8 MAXVAL TECHNOLOGIES PVT. LTD. ASSESSING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THERE IS NO RESTRICTION / PROHIBITION IN LAW IN RAISING A FRESH CLAIM EITHER IN SECOND ROUND OF LITIGATION OR F OR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY. HE SUBMITTED, IF THE ASSESSEE OTHERWISE FULFILLS THE CONDITION S OF SECTION 10A AND IS ELIGIBLE FOR DEDUCTION UNDER THE SAID PROVISION, ITS CLAIM SHOULD BE ALLOWED. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS: I ) FAST BOOKING INDIA PVT. LTD. V/S DCIT, ITA NO.334/2015 & ORS. DATED 02.09.2015 (DEL.); II ) ITO V/S WIZARD ENTERPRISES PVT. LTD., ITA NO.628/KOL./2011 AND ORS., DATED 04.03.2016; III ) GEODIS OVERSEA S PVT. LTD. V/S DCIT, [2015] 67 SOT 220. 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE REASON ING OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS) SUBMITTED , IN THE ABSENCE OF AN APPROVAL BY THE BOARD OR RATIFICATION OF APPROVAL BY BOARD AS CONSTITUTED IN TERMS OF EXPLANATION 2(IV) OF SECTION 10B, THE ASSESSEE CANNOT BE TREATED AS 100% EXPORT ORIENTED UNIT SO AS TO ENTITLE IT TO AVAIL DEDUCTION UNDER SECTION 1 0B OF THE ACT. HE SUBMITTED, NO MATERIAL HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT ANY OTHER AUTHORITY HAS BEEN DELEGATED THE POWERS TO DISCHARGE THE FUNCTIONS OF BOARD. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, EVEN CBDT CIRCULAR NO.2/2009 D ATED 9 TH 9 MAXVAL TECHNOLOGIES PVT. LTD. MARCH 2009, MAKES IT CLEAR THAT APPROVAL GRANTED BY DEVELOPMENT COMMISSIONER CAN BE CONSIDERED AS VALID IF IT IS RATIFIED BY BOARD OF APPROVAL. THEREFORE, HE SUBMITTED, THE APPROVAL BY BOARD AS PRESCRIBED UNDER EXPLANATION 2(IV) IS MANDATORY FOR A VAILING DEDUCTION UNDER SECTION 10B OF THE ACT. IN SUPPORT OF HIS CONTENTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN REGENCY CREATION LTD. (SUPRA). SO FAR AS THE ALTERNATIVE CLAIM OF DEDUCTION U/ S 10A IS CONCERNED, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE VIEW EXPRESSED BY THE LEARNED COMMISSIONER (APPEALS). 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. AT THE OUTSET, WE HAVE EXAMINED THE VALIDITY OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. SECTION 10B SPEAKS OF PROVIDING DEDUCTION OF PROFIT DERIVED FROM NEW LY ESTABLISHED 100% EXPORT ORIENTED UNDERTAKINGS FROM THE EXPORT OF ARTICLES OR THINGS OF COMPUTER SOFTWARE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS. THUS, THE BASIC CONDITION WHICH HAS TO BE FULFILLED IS , THE ASSESSEE MUST BE A 100% EXPORT ORIENTED UNDERTAKING. EXPLANATION 2(IV) OF SECTION 10B DEFINES A 100% EXPORT ORIENTED U NDERTAKING AS UNDER: ' (IV) HUNDRED PER CENT EXPORT - ORIENTED UNDERTAKING' MEANS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A HUNDRED PER CENT EXPORT - ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF 10 MAXVAL TECHNOLOGIES PVT. LTD. BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951), AND THE RULES MADE UNDER THAT ACT; 10 . AS PER THE AFORESAID DEFINITION, A 100% EXPORT ORIENTED UNDERTAKING WOULD MEAN AN UNDERTAKING APPROV ED AS SUCH BY THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. UNDISPUTEDLY, THE ASSESSEE HAS ESTABLISHED A UNIT FOR SOFTWARE DEVELOPMENT UNDER THE FREE TRADE ZONE AS PER STPI SCHEME. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAS BEEN REGISTERED AS A 100% EXPORT ORIENTED UNIT BY THE DIRECTOR, STPI. HOWEVER, THE ISSUE BEFORE US IS , WHETHER SUCH APPROVAL OF DIRECTOR, STPI RECOGNIZING THE ASSESSEE AS A 100% EXPORT ORIENTED UNIT FULFILLS THE CONDITION O F EXPLANATION 2(IV) OF SECTION 10B. ADMITTEDLY, THE ASSESSEE HAS NOT BEEN APPROVED BY THE BOARD OF APPROVAL AS 100% EXPORT ORIENTED UNIT AS PER EXPLANATION 2(IV) OF SECTION 10B. NEITHER, THE APPROVAL GRANTED TO THE ASSESSEE AS 100% EXPORT ORIENTED UNIT HAS BEEN RATIFIED BY THE BOARD OF APPROVAL IN TERMS OF INSTRUCTION NO.2 OF 2009 DATED 9 TH MARCH 2009. THE HON'BLE DELHI HIGH COURT IN REGENCY CREATION LTD. (SUPRA) AFTER CONSIDERING ALMOST IDENTICAL ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE AS WERE TAKEN B EFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE HAS HELD AS UNDER: 13. THERE IS NO DISPUTE ABOUT THE ESSENTIAL FACTS. BOTH ASSESSES HAD RECEIVED APPROVAL TO START 100 PER CENT EOU UNDER STP SCHEME. THE QUESTION IS WHETHER THIS APPROVAL CAN BE DEEMED ON E UNDER SECTION 10 - B OF THE ACT. FOR THAT PURPOSE A 100 PER CENT EOU 11 MAXVAL TECHNOLOGIES PVT. LTD. IS ONLY THAT WHICH IS SO APPROVED BY THE BOARD APPOINTED BY CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFERRED UNDER SECTION 14 OF IDAR ACT, 1951. THE PRE - CONDITIONS THAT GOVERN UNITS SET UP UNDER STP SCHEME ARE DIFFERENT FROM THOSE THAT GOVERN THE UNITS SET UP AS 100 PER CENT EOUS AND SO APPROVED BY THE BOARD. SOME CONDITIONS MAY UNDOUBTEDLY OVERLAP YET, CRITERIA, SUCH AS FULFILMENT OF TH E EMPLOYMENT CRITERIA, FOREIGN EXCHANGE, ETC., ARE NOT COMMON. 14. THE INTER - MINISTERIAL STANDING COMMITTEE SET UP FOR GRANTING LICENCES UNDER STP SCHEME IS ALSO APPOINTED BY THE CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFERRED UNDER, SECTION 14 OF IDAR ACT. HOWEVER, THE QUESTION IS WHETHER THAT PART OF THE BOARD'S FUNCTION (UNDER SECTION 14 IDR ACT) - TO GRANT APPROVAL UNDER ITAS 69/08, 783/09, 1239/11, 2002/10, 438,439,440, 441/12 PAGE 23 SECTION 10 - B AL SO STANDS DELEGATED. THE ASSESSES SUBMIT THAT THE INTER - MINISTERIAL STANDING COMMITTEE HAS BEEN REPLACED BY THE BOARD ON THE BASIS OF THE CONTENTS OF PARA 2 OF THE NOTIFICATION OF THE MINISTRY OF COMMERCE DT. 22ND MARCH, 1994, IS UNPERSUASIVE. THAT NOTIFI CATION STATES THAT FOR THE PURPOSE OF PARAS 111 TO 117 OF CHAPTER IX OF THE EXPORT AND IMPORT POLICY (1992 - 97), BOARD OF APPROVAL SHALL BE SUBSTITUTED BY THE INTER - MINISTERIAL STANDING COMMITTEE. PARAS 111 TO 117 OF CHAPTER - DC OF EXPORT AND IMPORT POLICY ( 1992 - 97) DO NOT DEAL WITH THAT ASPECT, BUT OTHER QUESTIONS SUCH AS SUBCONTRACTING BY EOU/EPZ, SALE OF IMPORTED MATERIALS, DISPOSAL OF SCRAP, PRIVATE BONDED WAREHOUSES, PERIOD OF BONDING, AND DE - BONDING. THE NOTIFICATION THEREFORE EXTENDED INCENTIVES TO EOU S TO SET UP UNITS UNDER THE STP SCHEME. HOWEVER, FOR THE COURT TO CONCLUDE THAT THE INTERMINISTERIAL COMMITTEE WAS AUTHORIZED TO ISSUE APPROVAL UNDER SECTION 10 - B AND THAT ITS IMPRIMATUR OR APPROVAL UNDER SECTION 10 - A OUGHT TO BE DEEMED AS AN APPROVAL UNDER SECTION 10 - B , THERE OUGHT TO BE MORE DIRECT, OR EXPRESS AUTHORIZATION. 15. SECTION 10A EXTENDS THE EXEMPTION TO THE UNITS SET UP UNDER STP SCHEME WHICH START PRODUCTION OF GOODS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER 1ST APRIL, 1994. THE ASSESSEE'S PLEA ABOUT ELI GIBILITY OF A 100% EOU STP ELIGIBLE FOR EXEMPTION WOULD RENDER THE AMENDMENT BROUGHT ABOUT BY THE FINANCE ACT , 1993 (EXTENDING THE BENEFIT UNDER SECTION 10A OF THE ITAS 69/08, 783/09, 1239/11, 2002/10, 438 ,439,440,441/12 PAGE 24 ACT TO THE STPS FROM 1ST APRIL, 1994) SUPERFLUOUS. THERE IS NO REASON FOR PARLIAMENT TO AMEND THE LAW, AND EXTEND BENEFITS OF SECTION 10A TO UNITS UNDER STP SCHEME AND, RESTRICT TH E BENEFITS TO THOSE COMMENCING THEIR OPERATIONS IN THE YEAR OF ACCOUNT RELEVANT TO THE ASSESSMENT YEAR 1994 - 95, IF A STP UNIT IS OTHERWISE ELIGIBLE FOR EXEMPTION UNDER SECTION 10B OF THE ACT ON THE GROUND OF ITS BEING 100 PER CENT EOU. 12 MAXVAL TECHNOLOGIES PVT. LTD. 16. IT IS A SETTLED PRINCIPLE OF LAW THAT UNLESS THERE IS EXPRESS AUTHORIZATION, IN TERMS OF A STATUTE, AND AN ACTUAL DELEGATION OF POWER, A STATUTORY AUTHORITY IN WHOM JURISDICTION OR POWER IS REPOSED, IS ALONE VESTED WITH I T, TO THE EXCLUSION OF OTHERS (REF. HARI CHAND AGARWAL V BATALA ENGINEERING CO. LTD AIR 1969 SC 483; AND AJAIB SINGH VS. STATE OF PUNJAB AIR 1965 SC 1619). IN THE ABSENCE OF A STATUTORY POWER TO DELEGATE, AND FURTHER TO THAT POWER, AN ACTUAL DELEGATION IN ACCORDANCE WITH LAW, SUCH FUNCTIONS CANNOT BE PERFORMED OR DEEMED TO HAVE BEEN PERFORMED BY A THIRD AGENCY OR AUTHORITY. ANOTHER CARDINAL RULE WHICH BINDS THE COURT TO INTERPRET STATUTES IS THAT 'WHERE PO WER IS GIVEN TO DO A CERTAIN THING IN A CERTAIN WAY, THE THING MUST BE DONE IN THAT WAY OR NOT AT ALL, AND OTHER METHODS OF PERFORMANCE ARE NECESSARILY FORBIDDEN...' (SEE NAZIR AHMED V KING EMPEROR (1936) I. L. R. 17 LAH 629). 17. IN THE PRESENT CASE, THER E IS NO NOTIFICATION OR OFFICIAL DOCUMENT SUGGESTING THAT EITHER THE INTER MINISTERIAL COMMITTEE, OR ANY OTHER ITAS 69/08, 783/09, 1239/11, 2002/10, 438,439,440,441/12 PAGE 25 OFFICER OR AGENCY WAS NOMINATED TO PERFORM THE DUTIES OF THE BOARD (CONSTITUTED UNDER SECTION 14 OF THE IDR ACT), FOR PURPOSES OF APPROVALS UNDER SECTION 10 - B . THOUGH THE CONSIDERATIONS WHICH APPLY FOR GRANTING APPROVAL UNDER SECTION S 10 - A AND 10 - B MAY TO AN EXTENT, OVERLAP, YET THE DELIBERATE SEGREGATION OF THESE TWO BENEFITS BY THE STATUTE REFLECTS PARLIAMENTARY INTENTION THAT TO QUALIFY FOR BENEFIT UNDER EITHER, THE SPECIFIC PROCEDURE ENACTED FOR THAT PURPOSE HAS TO BE FOLLOWED. THERE IS NOTHING IN ANY OF THE CIRCULARS OR INSTRUCTIONS RELIED ON BY THE TRIBUNAL IN ALL THE ORDERS, IMPLYING THAT APPROVAL FOR PURPOSES OF AN STP ALSO ENTITLED THE UNIT TO A BENEFIT UNDER SECTION 10 - B . THE ORDERS OF THE TRIBUNAL ARE CONSEQUENTLY ERRONEOUS, AND ITS REASONING, UNSUPPORTABLE. 11 . FROM THE AFORESAID DECISION, IT BECOMES CLEAR THAT FOR AVAILING DEDUCTION UNDER SECTION 10B OF THE ACT APPROVAL OF BOARD AS PRESCRIBED UNDER EXPLANATION 2(IV) OF SECTION 10B IS MANDATORY. OF COURSE, IT NEEDS TO BE OBSERVED, VIEWS E XPRESSED BY DIFFERENT BENCHES OF THE TRIBUNAL ON THIS PARTICULAR ISSUE ARE CONFLICTING. THOUGH, THE TRIBUNAL, KOLKATA BENCH, IN ITO V/S WIZARD ENTERPRISES PVT. LTD. (SUPRA) AND MUMBAI BENCH IN ITO V/S NEURAL TECHNOLOGIES AND SOFTWARE PVT. LTD. (SUPRA) APPEARS TO HAVE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE, 13 MAXVAL TECHNOLOGIES PVT. LTD. HOWEVER, THOSE DECISIONS ARE WITHOUT TAKING INTO CONSIDERATION THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN REGENCY CREATION LTD. (SUPRA). ON THE OTHER HAND, THE TRIBUNAL, PUNE BENCH, IN ANSH SYSTEMS PVT. LTD V/S DCIT, ITA NO.185/PN./2014 DATED 30 TH DECEMBER 2015, FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT V/S REGENCY CREATION LTD. (SUPRA) HAS HELD THAT IN THE ABSENCE OF APPROVAL BY BOARD AS PRESCRIBED UNDER EXPLANATION 2(IV) OF SECTION 10B, DEDUCTION CANNOT BE ALLOWED. IN OUR CONSIDERED OPINION, WHEN THERE IS NO DECISION OF THE HON'BLE JURISDICTIONAL HIGH C OURT ON THE ISSUE AND THERE IS A DECISION OF NON JURISDICTION HIGH COURT DIRECTLY ON THE ISSUE, THE DECISION OF THE NON JURISDICTIONAL HIGH C OURT SHOULD PREVAIL OVER THE DECISION OF THE TRIBUNAL , SINCE , IN THE HIERARCHY OF JUDICIAL SYSTEM HIGH COURTS ARE AT A HIGHER PEDESTAL THAN THE TRIBUNAL. THEREFORE, ADHERING TO THE NORMS OF JUDICIAL DISCIPLINE AND FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN REGENCY CREATION LTD. (SUPRA), WE HOLD THAT IN THE ABSENCE OF AN APPROVAL BY THE BOARD OR RATIFICA TION OF APPROVAL GRANTED BY THE DIRECTOR, STPI, BY THE BOARD AS PRESCRIBED UNDER EXPLANATION 2(IV) TO SECTION 10B, ASSESSEES CLAIM OF DED UCTION UNDER THE SAID PROVISION CANNOT BE ALLOWED. SO FAR AS THE ASSESSEES CONTENTION THAT ITS CLAIM OF DEDUCTION SIN CE , WAS ALLOWED IN THE PRECEDING ASSESSMENT YEAR IT HAS TO BE ALLOWED IN THE IMPUGNED ASSESSMENT YEAR , WE MUST OBSERVE THAT NOTHING HAS BEEN BROUGHT BEFORE US TO DEMONSTRATE THAT IN THE PRECEDING ASSESSMENT YEARS, THE ASSESSING OFFICER EXAMINED THE ISSUE W HETHER THE ASSESSEE HAS FULFILLED THE CONDITION OF SECTION 10B TO ENTITLE IT TO CLAIM DEDUCTION. THEREFORE, CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE CANNOT BE ACCEPTED. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF THE 14 MAXVAL TECHNOLOGIES PVT. LTD. LEARNED COMMISSIONER (APPEALS) INSOFAR AS IT RELATE TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. 12 . HAVING HELD SO, NOW WE HAVE TO DEAL WITH ASSESSEES ALTERNATIVE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT. UNDISPUTEDLY, AS PER THE FACTS EMANATING FROM RECORD , THE ASSESSEE IS A 100% EXPORT ORIENTED UNIT REGISTERED WITH STPI. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS DERIVED PROFIT FROM EXPORT OF SOFTWARE AS PER THE CONDITION OF SECTION 10A. THE FIRST APPELLATE AUTHORITY HAS REFUSED TO ENTERTA IN ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A FOR THE ASSESSMENT YEAR 2008 09 ON THE GROUND THAT SUCH CLAIM CANNOT BE RAISED IN THE SECOND ROUND OF LITIGATION. IN OUR VIEW, THE AFORESAID REASONING OF THE LEARNED COMMISSIONER (APPEALS) CANNOT BE SUPPOR TED CONSIDERING THE FACT THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION EITHER UNDER SECTION 10A OR SECTION 10B. IF THE ASSESSEE IS FOUND TO BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 10A , SUCH DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE. THEREFORE, IF THE ASSESSEE IN TERMS OF PROVISIONS OF THE ACT IS ENTITLED TO CLAIM CERTAIN DEDUCTIONS IT CANNOT BE DEBARRED FROM RAISING SUCH ISSUE EVEN IN THE SECOND ROUND OF PROCEEDINGS. THIS VIEW OF OURS GET S SUPPORT FROM THE DECISION OF THE CO ORDINATE BENCH IN GEOD IS OVERSEAS PVT. LTD. (SUPRA). SO FAR AS ASSESSMENT YEAR 2010 11 IS CONCERNED, ASSESSEES ALTERNATIVE CLAIM OF DEDUCTION UNDER SECTION 10A WAS REJECTED BY THE FIRST APPELLATE AUTHORITY ON THE REASONING THAT ASSESSEE HAS NOT RAISED SUCH ISSUE BEFORE THE ASS ESSING OFFICER. IT IS FAIRLY WELL SETTLED THAT EVEN IF THE ASSESSEE HAS NOT RAISED A CLAIM BEFORE THE ASSESSING OFFICER IT CERTAINLY CAN RAISE SUCH ISSUE BEFORE THE APPELLATE AUTHORITY. THEREFORE, 15 MAXVAL TECHNOLOGIES PVT. LTD. THE LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN REF USING TO EXAMINE ASSESSEES CLAIM., IN VIEW OF THE AFORESAID, WE RESTORE THE ISSUE RELATING TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT FOR BOTH THE ASSESSMENT YEAR S UNDER APPEAL TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATIO N AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, GROUND NO.1 IN BOTH THE APPEALS ARE DISMISSED AND GROUND NO.2 IN BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 13 . IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); / ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR/SR.P.S) ITAT, MUMBAI