Infogain India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5720/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74162 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Assessee Lawyers: SAHIL KAPOOR; ANKIT GUPTA VIKAS GAIN
• Section: 143(3); 234B; 10B

Judgement Text

ITA NO. 5720/DEL/10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEM BER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A .NO. 5720 /DEL/2010 (ASSESSMENT YEAR:- 2006-07 INFOGAIN INDIA PVT. LTD. 1-25, JANGPURA EXTENSION NEW DELHI PAN:- AAAC18748Q (APPELLANT) VS DCIT CIRCLE 11(1) C.R. BUILDING NEW DELHI (RESPONDENT) APPELLANT BY SH. SAHIL KAPOOR, ADV & ANKIT GUPTA , VIKAS GAIN, ADV. RESPONDENT BY SH. R. S. GILL, CIT DR ORDER PER CHANDRA MOHAN GARG, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ASSESSMENT ORDER DATED 06/10/2010 PASSED U/S 143(3) READ WITH SECTIO N 144C (5) OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT) FOR THE ASSESSMENT YEA R 2006-07 IN PURSUANCE TO THE ORDER OF DISPUTE RESOLUTION PANEL-II, DELHI, DATED 27/09/2010. 2. THE MAIN GROUND RAISED BY THE ASSESSEE READ AS U NDER:- 1. DEDUCTION U/S 10B 1.1 BY DISALLOWING THE CLAIM OF DEDUCTION OF RS.7, 03,87,701/- U/S 10B OF THE ACT. 1.2 BY CONCLUDING THAT BUSINESS OF THE APPELLANT HA D COMMENCED IN A.Y 1992-93 WHEREAS THE APPELLANT HAD COMMENCED BUSINES S FROM. A.Y 1998-99 AND HAS FAILED TO APPRECIATE THAT DEDUCTION U/S 10B IS ALLOWED FOR A PERIOD OF 10 YEARS STARTING FROM THE YEAR OF COMMENCEMENT OF BUSINESS OF AN UNDERTAKING AND NOT THE ASSESSEE. ITA NO. 5720/DEL/10 2 1.3 BY CONCLUDING THAT 100% EXPORT ORIENTED UNDERTA KING OF THE APPELLANT IS NOT A NEWLY ESTABLISHED UNDERTAKING. 1.4 BY CONCLUDING THAT THE APPELLANT IS NOT REGISTE RED WITH THE COMPETENT BOARD AS SPECIFIED IN SECTION 10B OF THE ACT. 1.5 BY ASSERTING THAT ONCE DEDUCTION U/S 80HHE IS C LAIMED BY THE APPELLANT IN THE EARLIER YEARS, NO DEDUCTION U/S 10 B CAN BE ALLOWED TO THE APPELLANT IN A SUBSEQUENT YEAR. 1.6 BY NOT ALLOWING DEDUCTION U/S 10B WHEN THE CLAI M WAS ALLOWED TO THE APPELLANT IN EARLIER YEARS ON THE SAME SET OF FACTS . 3. WE HAVE HEARD RIVAL ARGUMENT OF BOTH THE PARTIES AND CAREFUL PERUSED THE RECORD PLACED BEFORE US. AT THE OUTSET LD. COUNSEL OF THE ASSESSEE FILED A COPY OF DECISION OF ITAT DELHI C BENCH IN ITA NO. 2339/DE L/2010 FOR THE ASSESSMENT YEAR 2005-06 DATED 29/11/2013 AND SUBMITTED THAT TH E ISSUE OF ALLOWABILITY OF DEDUCTION U/S 10B OF THE ACT HAS BEEN DECIDED IN FA VOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR IMMEDIATELY PRECEDING ASSES SMENT YEAR TO THE YEAR UNDER CONSIDERATION IN THIS APPEAL. THE LD. COUNSEL OF T HE ASSESSEE DRAWN OUR ATTENTION TOWARDS PARAGRAPH NO. 7 & 8 WHEREIN THE CIT(A) CONC LUDED ITS FINDINGS AND OBSERVATIONS BY DIRECTING THE ASSESSING OFFICER TO GRANT EXEMPTION U/S 10B OF THE ACT TO THE ASSESSEE AND ITAT C BENCH, DELHI UPHOL DED THE FINDINGS OF THE CIT(A) BY HOLDING THAT THE ASSESSEE WAS ENTITLED TO EXEMPT ION U/S 10B OF THE ACT THEN THE PERIOD OF EXEMPTION STARTED FROM ASSESSMENT YEAR 19 98-99 AND CANNOT BE SAID TO BE EXHAUSTED IN THE YEAR UNDER CONSIDERATION IN THE PR ESENT APPEAL I.E 2006-07. THE RELEVANT PARAGRAPH OF ITAT ORDER READ AS UNDER:- 7. FURTHER, THE CIT(A) HAS CONCLUDED ITS FINDINGS A ND OBSERVATIONS BY DIRECTING THE ASSESSING OFFICER TO GRANT EXEMPTION U/S 10B OF THE ACT TO THE ASSESSSEE WITH FOLLOWING OPERATIVE PARA OF THE IMPUGNED ORDER:- IN THE CASE OF THE ASSESSEE, NEITHER THE PERIOD OF FIVE YEARS NOR THE BLOCK PERIOD OF EIGHT YEARS EXPIRED WHEN THE AM ENDMENT REPLACING THE WORD TEN FOR FIVE WAS INTRODUCED BY IT (SEC OND AMENDMENT) ACT, 1998 W.E.F 1/4/1999. SINCE THE ASSESSEE WAS ENTITL ED TO EXEMPTION IN THE YEAR IN WHICH AMENDMENT BECAME EFFECTIVE & OPERATIV E, THE ASSESSEE ITA NO. 5720/DEL/10 3 WILL BE ENTITLED TO THE EXTENDED PERIOD OF EXEMPTIO N BECAUSE THE PERIOD OF FIVE YEARS HAD NOT EXHAUSTED UP TO ASSESSMENT YE AR 1999-2000. SINCE THE RIGHT OF THE ASSESSEE WAS CONTINUING IN THE YEA R OF AMENDMENT AND WAS NOT LOST ON THE DATE WHEN THE AMENDMENT CAME IN TO EXISTENCE, THE VIEW TAKEN BY THE LD. CIT(A) CANNOT BE UPHELD. SO FAR AS THE OBJECTIONS OF THE LD. CIT(A) REGARD ING CONDUCT OF THE ASSESSEE FIRM IN NOT CLAIMING THE EXEMPTION IN EARLIER YEAR IS CONCERNED, THE APPROACH OF THE LD. CIT(A) RAISING T HIS OBJECTION, CANNOT BE LEGALLY JUSTIFIED BECAUSE IF THE ASSESSEE IS ENTITLED TO ANY BENEFIT UNDER ANY STATUTORY PROVISION THEN THE PAST CONDUCT CANNOT BE RELEVANT PARTICULARLY WHEN REFERENCE TO SUCH CONDUC T IS NOT MADE IN THE ACT. THE ELIGIBILITY OF THE ASSESSEE HAS TO BE SEE N IN THE YEAR IN WHICH THE CLAIM IS PREFERRED AND IF IN EARLIER YEARS THE ASSESSEE WAIVED HIS RIGHT THEN HE CANNOT BE STOPPED IN CLAIMING THE BEN EFIT IN THE SUBSEQUENT YEARS. THE LD. CIT(A) HAS ALSO OBSERVED THAT THE ASSESSE E DID NOT FILE DECLARATION EXERCISING OPTION PRIOR TO THE DUE DATE FOR FILING OF RETURN BUT FILED IT ALONG WITH THE RETURN AND, THEREFORE, THE ASSESSEE IS DISQUALIFIED FROM CLAIMING EXEMPTION ON THIS GROUND ALSO. WE DO NOT FIND ANY FORCE IN SUCH OBJECTION BECAUSE THIS OBJEC TION IS MERELY OF SUPER TECHNICAL NATURE. IN VIEW OF THE ABOVE, WE A RE LIABLE TO CONCUR WITH THE FINING OF THE LD. CIT(A) AND SET ASIDE THE SAME. CONSEQUENTLY, WE ALLOW THE GROUND OF APPEAL TAKEN BY THE ASSESSEE AND DIRECT THAT THE ASSESSEE SHALL BE ENTITLED TO CLAIM EXEMPTION U/S 1 0B IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 8. ON CAREFUL CONSIDERATION OF RIVAL CONTENTION S AND CAREFUL PERUSAL OF RECORD AND CITATIONS SUBMITTED BEFORE US, WE OBS ERVE THAT THE REVENUE HAS NOT DISPUTED THIS POINT THAT THE ASSESSSEE GOT APPROVAL AS 100% EOU AS PER APPROVAL DATED 27/1/1997. WE FURTHER OB SERVE THAT IN THE IMPUGNED ORDER, THE COMMISSIONER OF INCOME TAX (A) HAS HELD THAT THE ASSESSING OFFICER WAS COMPLETELY IN ERROR IN HOLDIN G THAT SINCE THE ASSESSEE STARTED ITS BUSINESS IN A.Y 1992-93 THEN T HE PRESCRIBED PERIOD OF 10 YEARS FOR THE PURPOSE OF EXEMPTION U/S 10B OF THE ACT HAD COME TO AN END BY A.Y 2001-02. WE ALSO OBSERVE THAT THE SA ID SECTION 10B OF THE ACT HAD COME TO AN END BY A.Y 2001-02. WE ALSO OBSERVE THAT THE SAID SECTION 10B ENVISAGES SETTING UP OF EXPORT ORI ENTED UNDERTAKING WHICH IS ALTOGETHER DIFFERENT AND DISTINCT FROM SET TING UP OF A NORMAL COMMERCIAL ACTIVITY UNIT. THE ASSESSING OFFICER HA S NOT CONTROVERTED THE FACT THAT THE ASSESSEE COMPANY ESTABLISHED 100% EOU IN F.Y 1997- ITA NO. 5720/DEL/10 4 98 FOR EXPORTING OF COMPUTER SOFTWARE AND THIS FACT HAS FOUND PLACE IN THE ASSESSMENT ORDER PARA 4.1 AND 4.2. IN VIEW OF ABOVE AND IN THE LIGHT OF DECISIONS OF HONBLE HIGH COURT OF DELHI I N THE CASE OF LEGATO SYSTEMS INDIA PVT. LTD AND DECISIONS OF HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF EXCEL SOFTECH LTD, (SUPRA ), WE ARE OF THE FIRM OPINION THAT THE COMMISSIONER OF INCOME TAX (A) RIG HTLY GRANTED RELIEF TO THE ASSESSEE BY DIRECTING THE ASSESSING OFFICER TO GRANT EXEMPTION U/S 10B OF THE ACT FOR THE ASSESSEE. WE ARE UNABLE TO FIND ANY PERVERSITY, AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON O I NTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (A). PE R CONTRA, WE CLEARLY OBSERVE THAT THE ASSESSING OFFICER IGNORED THIS FACT THAT THE ASSESSEES 100% EOU WAS ESTABLISHED IN A.Y 1997-98 RELATED TO A.Y 1998-99. THE ASSESSING OFFICER DENIED EXEMPTION ON SURMISES AND CONJECTURES BY TAKING HYPER TECHNICAL APPROACH. SI NCE THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S 10B OF THE ACT, THEN THE PERIOD CANNOT BE SAID TO BE EXHAUSTED IN THE YEAR UNDER CONSIDERATION, HE NCE WE UPHOLD THAT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (A) IN THE IMPUGNED ORDER. ACCORDINGLY, GROUND NO. 2 OF THE REVENUE IS DISMISSED. 4. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF ITA T C BENCH, DELHI IN ASSESSEES OWN CASE FOR THE IMMEDIATE PRECEDING YEA R TO THE YEAR UNDER CONSIDERATION IN THIS APPEAL, WE HOLD THAT THE ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS ORDER. HENCE, WE HOLD THAT TH E AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE FO R DEDUCTION U/S 10B OF THE ACT. FOR THE YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 20 06-07. IN VIEW OF ABOVE MAIN GROUND NO. 1 TO 1.6 OF THE ASSESSEE ARE ALLOWED. CORPORATE TAX ADJUSTMENT: RS.7,03,87,701/- 5. SINCE IN THE EARLIER PART OF THIS ORDER, WE HAVE DECIDED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 10B OF THE ACT. THEREFO RE, THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISS UE IN THE LIGHT OF OUR CONCLUSION PERTAINING TO GROUND NO. 1 TO 1.6 OF THIS APPEAL. WITH THESE DIRECTIONS, THE ISSUE OF CORPORATE TAX ADJUSTMENT IS RESTORED TO THE FILE OF ASSESSING OFFICER TO PASS AN APPROPRIATE ORDER GIVING EFFECT TO OUR ORDER IN ITS LETTERS AND SPIRIT. ITA NO. 5720/DEL/10 5 GROUND NO. 2 OF THE ASSESSEE 6. SINCE, WE HAVE HOLD THAT THE ASSESSEE ENTITLED F OR DEDUCTION U/S 10B OF THE ACT. THUS, GROUND NO. 2 OF THE ASSESSEE BECOMES IN FRUCTUOUS AND WE DISMISS THE SAME. GROUND NO. 3 OF THE ASSESSSEE 7. SINCE GROUND NO. 1 OF THE ASSESSEE HAS BEEN ALLO WED IN FAVOUR OF THE ASSESSEE, THEREFORE, THE ASSESSING OFFICER IS DIREC TED TO DECIDE THE ISSUE OF DEDUCTION FROM EXPORT PROFITS IN THE LIGHT OF OUR O BSERVATIONS AND FINDINGS IN THIS APPEAL. WITH THESE DIRECTIONS THE GROUND OF DEDUCT ION FROM EXPORT PROFITS IS RESTORED TO THE FILE OF ASSESSING OFFICER. GROUND NO. 4 OF THE ASSESSEE. 8. GROUND NO. 4 OF THE ASSESSEE IS GENERAL IN NATUR E WHICH NEEDS NO ADJUDICATION IN THE LIGHT OF OUR OBSERVATIONS AND FINDINGS PERTA INING TO GROUND NO. 1 TO GROUND NO. 1.6 OF THE ASSESSEE. GROUND NO. 5 OF THE ASSESSEE. 9. GROUND NO. 5 OF THE ASSESSEE IS PERTAINING TO LE VY OF INTEREST U/S 234B OF THE ACT WHICH IS CONSEQUENTIAL TO THE MAIN GROUND. THE REFORE, THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE SAME IN THE LIGHT OF OUR OBS ERVATIONS AND FINDINGS PERTAINING TO THE MAIN ISSUE AS WELL AS FINDINGS OF THE A.O WHENE VER EFFECT GIVING ORDER TO THIS APPEAL ORDER IS PASSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN THE MANNER AS INDICATED ABOVE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY 2014. SD/- SD/- (S.V.MEHROTRA) (C. M. GARG) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: 31 /01/2014 *R. NAHEED* ITA NO. 5720/DEL/10 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI