Apache Labs Pvt. Ltd., Gurgaon V. Pr.CIT- 1, New Delhi

ITA 4035/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7861 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: SOMNATH SHUKLA
• Keywords: Revision of order; Earning of tax free income; Benefit of exemption
• Section: 10AA; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE VICE PRES IDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.-4035/DEL/2018 ( ASSESSMENT YEAR: 2014-15) APACHE LABS PVT. LTD. 1023, TOWER B-04, SPAZE ITECH, SECTOR-49, SOHNA ROAD, GURGAON PAN : AAKCA2691N VS . PR. CIT - 1 ROOM NO. 363A, C.R.BUILDING, I.P.ESTATE, NEW DELHI APPELLANT RESPONDENT ASSESSEE BY: SH. SOMNATH SHUKLA, ADV. REVENUE BY: SHRI APARNA KARAN, CIT(DR) ORDER PER SUDHANSHU SRIVASTAVA, J.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST O RDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CA LLED THE ACT) VIDE ORDER DATED 30.03.2018 FOR ASSESSMENT YEAR 20 14-15 WHEREIN THE LD. PR. COMMISSIONER OF INCOME TAX ACT, NEW DEL HI HAS HELD THAT THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3 ) OF THE ACT ON 30.08.2016 IS ERRONEOUS IN SO FAR PREJUDICIAL TO TH E INTEREST OF REVENUE AS THE ASSESSING OFFICER HAD FAILED TO DISA LLOW THE ASSESSEES CLAIM OF EXEMPTION AMOUNTING TO RS. 93,0 6,592/- MADE U/S 10AA OF THE ACT. DATE OF HEARING 09.10.2018 DATE OF PRONOUNCEMENT 07.01.2019 2 ITA N O. 4035/DEL/2018 (M/S. APACHE LABS PVT. LTD.) 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PRODUCTION AND DISTRIBUTION OF SOFTWARE DEFINED HIGH FREQUENCY RADIOS SERVING COMMERCIAL, INSTITUTIONAL, GOVERNMEN T AND AMATEUR RADIO OPERATORS. THE RETURN FOR THE YEAR WAS FILED DECLARING INCOME AT NIL. IN THE RETURN OF INCOME, THE ASSESSEE HAD C LAIMED EXEMPT INCOME OF RS. 93,06,592/- U/S 10AA OF THE ACT.. SUB SEQUENTLY, ON 21.03.2018 THE LD. PR. COMMISSIONER OF INCOME TAX I SSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT ON THE GROUND THAT THE AUDITORS REPORT IN FORM 56F FOR THE PURPOSE OF CLAIMING EXEM PTION U/S 10AA WAS NOT FILED ELECTRONICALLY BY THE ASSESSEE. THE LD. PR. CIT REFERRED TO THE AMENDMENT TO RULE 12 OF THE INCOME TAX RULES, 1962, WHICH HAD BEEN AMENDED WITH EFFECT FROM 01.04 .2013, WHEREIN IT HAD BEEN PROVIDED THAT THE SAID REPORT I N FORM 56F HAD TO BE FURNISHED IN THE ELECTRONIC FORM. AS THE ASSE SSEE HAD BEEN NOT FILED THE REPORT ELECTRONICALLY, THE LD. PR. CI T HELD THAT THE AOS ORDER ALLOWING BENEFIT OF EXEMPTION WAS ERRONEOUS I N SO FAR AS HAS BEING PREJUDICIAL TO THE INTEREST OF THE REVENUE. N OW, THE ASSESSEE IS BEFORE THE ITAT AND HAS CHALLENGED THE ORDER OF THE LD. PR. CIT PASSED U/S 263 WHEREIN THE ORIGINAL ASSESSMENT ORDE R DATED 30.08.2016 HAS BEEN SET ASIDE WITH THE DIRECTION TO THE ASSESSING OFFICER TO DISALLOW THE ASSESSEES CLAIM OF EXEMPTI ON U/S 10AA. 3 ITA N O. 4035/DEL/2018 (M/S. APACHE LABS PVT. LTD.) 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IT IS NOT THE DEPARTMENTS CASE THAT THE CLAIM OF THE ASSESSEE U/ S 10AA OF THE ACT WAS NOT EXAMINED BY THE ASSESSING OFFICER. HE D REW OUR ATTENTION TO THE QUERY LETTER RAISED BY THE ASSESSI NG OFFICER IN THIS REGARD AND ALSO THE COPY OF THE REPLY FURNISHED BEF ORE THE ASSESSING OFFICER IN THIS REGARD. IT WAS ALSO SUBMI TTED BY THE LD. AUTHORISED REPRESENTATIVE THAT AT THE MOST IT WAS A CASE OF TECHNICAL BREACH THAT FORM 56F WAS NOT FILED ELECTR ONICALLY. IT WAS FURTHER SUBMITTED THAT FORM 56F IN MANUAL FORM WAS DULY PRODUCED BEFORE THE LD. PR. CIT DURING THE COURSE O F 263 PROCEEDINGS BUT THE LD. PR. CIT DID NOT EXAMINE THE VERACITY OF THE ASSESSEES CLAIM OF EXEMPTION BUT PROCEEDED TO SET ASIDE THE ASSESSMENT ORDER. IT WAS ALSO SUBMITTED THAT THE AS SESSING OFFICER ALSO DID NOT REQUIRE THE ASSESSEE TO SUBMIT FORM 56 F AT THE TIME OF THE SECOND ROUND OF ASSESSMENT PROCEEDINGS SUBSEQUE NT TO THE ORIGINAL ASSESSMENT HAVING BEEN SET ASIDE. IT WAS S UBMITTED THAT THE 263 PROCEEDINGS WERE BAD IN LAW INASMUCH AS IT WAS ONLY A TECHNICAL BREACH AND THERE WAS NO FAILURE ON THE PA RT OF THE ASSESSING OFFICER TO HAVE EXAMINED THE ASSESSEES C LAIM OF EXEMPTION DURING THE ORIGINAL ASSESSMENT PROCEEDING S. 4. IN RESPONSE THE LD. CIT (DR) PLACED RELIANCE ON THE ORDER OF REVISION PASSED BY THE LD. PR. CIT AND SUBMITTED TH AT IGNORANCE OF 4 ITA N O. 4035/DEL/2018 (M/S. APACHE LABS PVT. LTD.) LAW IS NO EXCUSE AND, THEREFORE, THE REVISION PROCE EDINGS HAD RIGHTLY BEEN INITIATED BY THE LD. PR. CIT. 5. ON A QUERY FROM THE BENCH, BOTH THE PARTIES BEFO RE US AGREED THAT INTEREST OF JUSTICE WOULD BE SERVED IF THE AO RE-EXAMINES THE CLAIM OF THE ASSESSEE AFTER DULY CONSIDERING THE RE PORT IN FORM 56F. 6. ACCORDINGLY, IN VIEW THE CONSENT OF BOTH THE PAR TIES, WE RESTORE THIS FILE TO THE OFFICE OF THE ASSESSING OF FICER WITH THE DIRECTION TO RE-EXAMINE THE ASSESSEES CLAIM U/S 10 AA AFTER DULY TAKING INTO ACCOUNT THE AUDITORS REPORT IN FORM 56 F AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS C ASE. THUS, THE ORDER OF THE LD. PR. CIT STANDS MODIFIED IN TERMS O F OUR DIRECTIONS. 7. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.01.2019. SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SR IVASTAVA) VICE PRESIDENT JUDICIA L MEMBER DATED: 07.01.2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY 5 ITA N O. 4035/DEL/2018 (M/S. APACHE LABS PVT. LTD.) ASSISTANT REGISTRAR ITAT NEW DELHI