Cloud Softech India Private Limited, Hyderabad V. ITO, Ward 16(2), Hyderabad

ITA 483/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69772 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYA MAHESWARI
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 234B; 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 483/HYD/2013 ASSESSMENT YEAR: 2009-10 CLOUD SOFTECH INDIA PVT. LTD., A PPELLANT HYDERABAD. (PAN AAECP5605M) VS. INCOME TAX OFFICER, RESPONDENT WARD 16(2), HYDERABAD. APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SMT. MAYA MAHESWARI DATE OF HEARING : 04/07/2013 DATE OF PRONOUNCEMENT : 13/09/201 3 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-V, HYDERABAD DATED 05/12/2012 FOR T HE ASSESSMENT YEAR 2009-10. 2. THE APPELLANT HEREIN IS A COMPANY IN WHICH PUBLI C ARE NOT SUBSTANTIALLY INTERESTED AND IS AN EXPORTER OF SOFTWARE. IT IS REGISTERED AS 100% EOU AND IT ELIGIBLE FOR DE DUCTION U/S 10B OF THE LT. ACT. ACCORDINGLY, IT FILED ITS R ETURN OF INCOME ADMITTING THE INCOME TO BE RS. 'NIL' AFTER C LAIMING EXEMPTION U/S 10B OF THE I.T. ACT. THE APPELLANT FI LED ALL THE DETAILS BEFORE THE ASSESSING OFFICER THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE I.T. ACT DETERMINING THE TOTAL INCOME AT RS.1,60,10,281/-. W HILE 2 ITA NO. 483/HYD/13 CLOUD SOFTECH INDIA PVT. LTD. DOING SO, THE ASSESSING OFFICER DISALLOWED THE CLAIM MADE U/ S 10B OF THE I.T. ACT. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), IT WAS SUBMITTED THAT IT IS AN ADMITTED FACT THAT THE APPELLANT IS AN 100% EOU. FU RTHER IT WAS SUBMITTED THAT THE ASSESSING OFFICER OBSERVED ' AN UNDERTAKING WHICH IS APPROVED AS HUNDRED PERCENT EXPORT- ORIENTED UNDERTAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SEC.14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 195] (65 OF 1951) AND THE RULES MA DE UNDER THAT ACT' IS ONLY ELIGIBLE FOR EXEMPTION U/S 10B. T HE ASSESSING OFFICER FURTHER OBSERVED THAT AS THE APPE LLANT HAS NOT FURNISHED APPROVAL FROM THE BOARD APPOINTED FOR THE PURPOSE, THE DISALLOWANCE HAS BEEN RESORTED BY THE ASSESSING OFFICER. 5. FURTHER, THE APPELLANT SUBMITTED THAT ALONG WITH THE RETURN OF INCOME, THE APPELLANT SUBMITTED REPORT IN FORM 56G DULY CERTIFIED BY THE CHARTERED ACCOUNTANT WHER EIN IT HAS SPECIFICALLY BEEN STATED THAT THE APPELLANT IS AN 100% EOU IN STPI, HYDERABAD AND IT IS ELIGIBLE FOR DEDUCTION U/S LOB OF THE I.T.ACT. IT WAS SUBMITTED THAT THE COMPA NY IS APPROVED BY THE APPROPRIATE AUTHORITY. HOWEVER, THE ASSESSING OFFICER NEGATIVED THE CLAIM OF THE ASSESS EE AND DISALLOWED THE DEDUCTION CLAIMED OF RS.1 ,60, 10,28 1/-. 6. IN THIS CONNECTION, THE APPELLANT SUBMITTED THAT IN AN IDENTICAL CASE, THE HON'BLE ITAT, BENCH 'A', HYDERA BAD IN THE CASE OF SMT. K. SUDHA RANI, HYDERABAD IN ITA 3 ITA NO. 483/HYD/13 CLOUD SOFTECH INDIA PVT. LTD. NO.1750/HYD/08 VIDE ORDER DATED 30.10.2009 CATEGORI CALLY HELD THAT APPROVAL OF 100% EOU BY THE BOARD AND STPI IS ONE AND THE SAME AND THE ASSESSEE IS ELIGIBLE FOR E XEMPTION U/S 10 B OF THE LT. ACT. WHILE ALLOWING THE APPEAL, THE HON'BLE ITAT RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. VS CIT REPORTED IN 196 ITR 188. A COPY OF THE ORDER OF THE HON'BLE ITAT HAS SU BMITTED FOR KIND PERUSAL OF THE HON'BLE COMMISSIONER OF INC OME- TAX (APPEALS). 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OB SERVING AS UNDER: 5.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS `OF THE APPELLANT. AS PER PROVISIONS OF SECTION 10B OF THE ACT, THE 100% EOU MEANS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A HUNDRED PERCENT EXPORT ORIENTED UNDER TAKING BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL G OVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SECTION 14 O F THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT 1951 (6 5 OF 1951), AND THE RULES MADE UNDER THAT ACT. THE APPROVAL FR OM BOARD APPOINTED BY THE CENTRAL GOVERNMENT IS AN ESSENTIAL CONDITION UNDER SECTION 10B OF THE ACT. THE APPELLANT HAS NOT SUBMITTED ANY APPROVAL FROM THE BOARD DURING THE ASSESSMENT PROCEEDINGS AND EVEN DURING THE APPELLATE PROCEEDIN GS. IN VIEW OF NON-SUBMISSION OF BOARDS APPROVAL, THE DISALLOW ANCE U/S 10B MADE BY THE ASSESSING OFFICER IS CONFIRMED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FAC TS AND IN LAW. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN HOLDING THAT THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE IT ACT. 3. THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT T HE APPELLANT IS AN 100% EOU AND IS ELIGIBLE FOR EXEMPTION U/S 10 B OF THE IT ACT. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN LEVYING INTEREST U/S 234B OF T HE IT ACT. 4 ITA NO. 483/HYD/13 CLOUD SOFTECH INDIA PVT. LTD. 9. THE GRIEVANCE OF THE REVENUE AUTHORITIES IS THAT AS THE ASSESSEE HAS NOT FURNISHED NECESSARY APPROVAL OF TH E BOARD AS REQUIRED UNDER THE ACT, THE DEDUCTION U/S. 10B CANN OT BE GRANTED. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE ALSO FIND SUPPORT FROM THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. VALIANT COMMUNICATIONS IN ITA.N O. 2002/2010 IN CIVIL MISCELLANEOUS PETITION NO. 12 OF 2013 IN W HICH THE FACTS ARE SIMILAR TO THAT OF THIS CASE. IN THAT CASE, THE ASS ESSEE HAD CLAIMED DEDUCTION UNDER SECTION 10B, WHEREAS, THEY HAVE NOT BEEN APPROVED BY THE BOARD APPOINTED ON THIS BEHALF BY THE GOVERN MENT AS REQUIRED UNDER SECTION 10B BUT WAS REGISTERED WITH STPI. IN THEIR ORIGINAL ORDER, THE DELHI HIGH COURT REJECTED THE C LAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10B. HOWEVER, ON A REVIEW PETITION FILED BY THE ASSESSEE THE DELHI HIGH COURT , SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) TO CONSIDER THE ALT ERNATE CLAIM FOR DEDUCTION UNDER SECTION 10A. 11. THE COORDINATE BENCH OF HYDERABAD TRIBUNAL IN T HE CASE OF INFOTECH ENTERPRISES LTD. VS. JCIT 85 ITD 325 HAD R EJECTED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 10A ON THE GROUND THAT THE UNIT WAS NOT SET UP IN THE YEAR RELEVANT T O ASSESSMENT YEAR 1994-95. THE TRIBUNAL ALSO REJECTED THE CLAIM OF TH E ASSESSEE FOR DEDUCTION UNDER SECTION 10B ON THE GROUND THAT THE UNIT WAS NOT APPROVED BY BOARD APPOINTED BY THE GOVERNMENT FOR A PPROVING 100% EOU. WE AGREE THAT THE UNDERTAKING WHICH HAS N OT BEEN APPROVED AS A 100% EOU, BY THE BOARD APPOINTED BY T HE GOVERNMENT, AS REQUIRED UNDER SECTION 10B, THE ASSE SSEE WILL NOT BE ENTITLED TO DEDUCTION UNDER SECTION 10B. BUT THA T DOES NOT MEAN THAT WE HAVE TO CLOSE OUR EYES TOWARDS THE ALTERNAT E CLAIM FOR 5 ITA NO. 483/HYD/13 CLOUD SOFTECH INDIA PVT. LTD. DEDUCTION MADE BY THE ASSESSEE. AFTER-ALL, THE ASSE SSEE IS CLAIMING DEDUCTION IN RESPECT OF PROFITS FROM EXPORT OF SOFT WARE. DEDUCTION FOR EXPORT OF SOFTWARE IS AVAILABLE UNDER SECTION 1 0A, 10B AND 80HHE. IF THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER ONE SECTION, HIS CLAIM FOR DEDUCTION UNDER ANOTHER SECT ION OF THE ACT SHOULD BE CONSIDERED. RESPECTFULLY FOLLOWING THE DE CISION OF THE DELHI HIGH COURT IN THEIR FINAL DECISION IN THE CAS E OF CIT VS. VALIANT COMMUNICATIONS IN ITA.NO. 2002 OF 2010 IN C IVIL MISC. APPLN. NO. 12/2013 WE HOLD THAT THE CLAIM OF THE AS SESSEE FOR DEDUCTION UNDER SECTION 10A REQUIRES TO BE EXAMINED IN ACCORDANCE WITH LAW AND HENCE, WE REMIT THE ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE DENOVO THE CLAIM OF THE ASSESSEE IN THE PRESENT CASE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.09.2013 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 13/09/2013. VBP/- COPY TO:- 1. CLOUD SOFTECH INDIA PVT. LTD., C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS RESIDENCY, ROAD NO. 9, HIMAYATNAGAR, HYDERABAD. 2. ITO, WARD 16(2), HYDERABAD. 3. CIT(A)-V, HYDERABAD. 4. CIT IV, HYDERABAD 5) THE D.R. B BENCH, I.T.A.T., HYDERABAD .