DCIT, New Delhi V. Valiant Communication Ltd, New Delhi

ITA 5764/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77774 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 17-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: SALIL AGARWAL SHRI GAUTAM JAIN; SH
• Keywords: Revision of order; Opportunity of being heard; Rule of consistency; Revised return
• Section: 10B; 263; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .2706/DEL/2008 AND 5762/DEL/2010 TO 5765/DEL/2010 2706/DEL/2008 AND 5762/DEL/2010 TO 5765/DEL/2010 2706/DEL/2008 AND 5762/DEL/2010 TO 5765/DEL/2010 2706/DEL/2008 AND 5762/DEL/2010 TO 5765/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 2005 2005 2005 2005- -- -06, 2003 06, 2003 06, 2003 06, 2003- -- -04, 2004 04, 2004 04, 2004 04, 2004- -- -05, 2006 05, 2006 05, 2006 05, 2006- -- -07 07 07 07 & 2007 & 2007 & 2007 & 2007- -- -08 0808 08 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -17(1), 17(1), 17(1), 17(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S VALLIANT COMMUNICATIONS M/S VALLIANT COMMUNICATIONS M/S VALLIANT COMMUNICATIONS M/S VALLIANT COMMUNICATIONS LIMITED, LIMITED, LIMITED, LIMITED, 71/1, SHIVAJI MARG, 71/1, SHIVAJI MARG, 71/1, SHIVAJI MARG, 71/1, SHIVAJI MARG, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 015. 110 015. 110 015. 110 015. PAN : AAACV4250G. PAN : AAACV4250G. PAN : AAACV4250G. PAN : AAACV4250G. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEER SHARMA, SR.DR. RESPONDENT BY : SHRI SALIL AGARWAL, ADVOCATE, SHRI GAUTAM JAIN AND SHRI SHAILESH GUPTA, CAS. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : ITA NO.2706/DEL/2008 ITA NO.2706/DEL/2008 ITA NO.2706/DEL/2008 ITA NO.2706/DEL/2008 (REVENUES APPEAL FOR AY 2005 (REVENUES APPEAL FOR AY 2005 (REVENUES APPEAL FOR AY 2005 (REVENUES APPEAL FOR AY 2005- -- -06) : 06) : 06) : 06) :- -- - THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XIX, NEW DELHI DATED 26 TH MAY, 2008 FOR THE AY 2005-06. 2. THE FACTS OF THE CASE ARE THAT FOR THE YEAR UNDE R CONSIDERATION, THE ASSESSEE HAD FILED THE RETURN ON 31 ST JULY, 2005 DECLARING AN INCOME OF ` 78,31,350/-. IN THE RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 10B OF THE INCOME-T AX ACT, 1961 AMOUNTING TO ` 1,70,17,473/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE AN ALTERNATIVE CLAIM CLAIMING DEDUCTION UNDER SECTION 10A FOR THE SIMILAR AMOUNT. THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION UNDER SECTION 10B O N THE GROUND THAT THE ASSESSEE DID NOT OBTAIN THE SPECIFIC APPROVAL B Y THE BOARD WHICH IS REQUIRED FOR THE PURPOSE OF CLAIMING OF DEDUCTION U NDER SECTION 10B. THE ASSESSING OFFICER ALSO REJECTED THE ASSESSEES ALTERNATIVE CLAIM ITA-2706/D/2008 AND OTHERS 2 UNDER SECTION 10A ON THE GROUND THAT (I) NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOME, (II) DEDUCTION UNDER SECTION 10A IS AVAILABLE ONLY TO A NEWLY SET UP UNIT IN EHTP/STP WHILE THE ASSESS EE HAD THE UNDERTAKING IN DTA, AND (III) THE SALE PROCEEDS ARE NOT RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE F OREIGN EXCHANGE. 3. ON APPEAL, LEARNED CIT(A) ALLOWED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 10B AND, THEREFORE, HE DID NOT EXAMINE THE ASSESSEES ALTERNATIVE CLAIM FOR ALLOWABILITY OF DE DUCTION UNDER SECTION 10A. THE REVENUE HAD FILED THE APPEAL TO THE ITAT AGAINST THE ORDER OF LEARNED CIT(A) WHILE THE ASSESSEE WAS IN CROSS OBJE CTION AGAINST THE NON-ADJUDICATION OF THE ASSESSEES CLAIM UNDER SECT ION 10A. THE ITAT, IN ITA NO.2706/DEL/2008, DISMISSED THE REVENUES AP PEAL WITH THE FOLLOWING FINDING:- 7. SINCE THE FACTS ARE IDENTICAL IN THE PRESENT CA SE, THIS TRIBUNAL DECISION RENDERED IN THE CASE OF REGENCY CREATIONS LTD. (SUPRA) IS DIRECTLY APPLICABLE IN TH E PRESENT CASE AND RESPECTFULLY FOLLOWING THIS TRIBUNAL DECIS ION, WE HOLD THAT THE STIP REGISTRATION GRANTED TO THE ASSE SSEE ON 16.11.1998 IS VALID FOR ALLOWING DEDUCTION TO THE A SSESSEE U/S 10B AND HENCE WE DO NOT FIND ANY REASON TO INTE RFERE IN THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. WE WOULD ALSO LIKE TO POINT OUT THAT IN AN EARLIER YEAR I.E. ASSESSMEN T YEAR 2004-05, THE ASSESSING OFFICER HIMSELF HAS ALLOWED DEDUCTION U/S 10B TO THE ASSESSEE IN A SCRUTINY ASSESSMENT. IT IS ALSO NOT BROUGHT ON RECORD BY TH E REVENUE THAT THIS ORDER IS REVISED U/S 263 OR REOPE NED U/S 147. UNDER THESE FACTS, WE FEEL THAT HAVING DECIDE D IN ASSESSMENT YEAR 2004-05 THAT THE ASSESSEE IS ELIGIB LE FOR DEDUCTION U/S 10B, IT CANNOT BE DENIED IN THIS SUBS EQUENT YEAR ON THE BASIS THAT THE ASSESSEE IS NOT AN 100% EOU FOR THE REASON THAT NECESSARY APPROVAL IS NOT WITH THE ASSESSEE. THIS IS AGAINST THE RULE OF CONSISTENCY. FOR THIS REASON ALSO, WE DECLINE TO INTERFERE IN THE ORDER O F LD.CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA-2706/D/2008 AND OTHERS 3 4. THE CROSS-OBJECTION OF THE ASSESSEE WAS NOT ADJU DICATED WITH THE FOLLOWING FINDING:- 11. SINCE THE ISSUE IN DISPUTE IS DECIDED BY US IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REV ENUE, THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR ALLOWING DEDUCTION U/S 10A DOES NOT CALL FOR ANY ADJUDICATION. 5. THE REVENUE HAD FILED THE APPEAL BEFORE THE HON' BLE JURISDICTIONAL HIGH COURT WHICH, BY ORDER DATED 17 TH SEPTEMBER, 2010, ALLOWED THE REVENUES APPEAL. THE CONCLUDING PORTI ON OF THE ORDER READS AS UNDER:- 17. IN THE PRESENT CASE, THERE IS NO NOTIFICATION OR OFFICIAL DOCUMENT SUGGESTING THAT EITHER THE INTER MINISTERI AL COMMITTEE, OR ANY OTHER OFFICER OR AGENCY WAS NOMIN ATED TO PERFORM THE DUTIES OF THE BOARD (CONSTITUTED UND ER SECTION 14 OF THE IDR ACT), FOR PURPOSES OF APPROVA LS UNDER SECTION 10-B. THOUGH THE CONSIDERATIONS WHICH APPL Y FOR GRANTING APPROVAL UNDER SECTIONS 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 SPECI FIC PROCEDURE ENACTED FOR THAT PURPOSE HAS TO BE FOLLOW ED. THERE IS NOTHING IN ANY OF THE CIRCULARS OR INSTRUC TIONS RELIED ON BY THE TRIBUNAL IN ALL THE ORDERS, IMPLYI NG THAT APPROVAL FOR PURPOSES OF AN STP ALSO ENTITLED THE U NIT TO A BENEFIT UNDER SECTION 10-B. THE ORDERS OF THE TRIB UNAL ARE CONSEQUENTLY ERRONEOUS, AND ITS REASONING, UNSUPPOR TABLE. 18. IN THE LIGHT OF THE ABOVE DISCUSSION, THE QUEST ION OF LAW FRAMED IS ANSWERED IN FAVOUR OF THE REVENUE, AN D AGAINST THE ASSESSEE; THE APPEALS ARE THEREFORE ALL OWED. 6. THEREAFTER, THE ASSESSEE FILED THE REVIEW PETITI ON BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WHICH, BY ORDER D ATED 4 TH JANUARY, 2013, DISPOSED OF THE ASSESSEES PETITION AS UNDER: - ISSUE NOTICE. SH. KIRAN BABU, SR. STANDING COUNSE L ACCEPTS NOTICE ON BEHALF OF THE REVENUE. ITA-2706/D/2008 AND OTHERS 4 THE APPLICANT ASSESSEE HAD SUCCEEDED BEFORE THE TRI BUNAL IN THE CONTENTION THAT IT WAS ENTITLED TO THE BENEF IT OF SECTION 10B OF THE INCOME TAX ACT. IT HAD URGED TH AT THE SUPPORTING MATERIALS DISCLOSE THAT THERE WAS STP CLEARANCE/APPROVAL UNDER SECTION 10A AND THAT SUCH APPROVAL WAS SUFFICIENT TO ENTITLE IT TO THE BENEFI T OF SECTION 10B. BY JUDGMENT, THIS COURT NEGATIVED THE PLEA WI TH REGARD TO THE APPROVAL VIS-A-VIS SECTION 10B AND HA S RULED THAT SEPARATE REGIME EXISTS. THE APPLICANT CONTENDS THAT THE CIT(A) AND THE TRIB UNAL HAD, IN THE PRESENT CASE, NOT GONE INTO THE MERITS OF THE ALTERNATIVE CLAIM FOR ENTITLEMENT UNDER SECTION 10A . THIS FACT IS APPARENT FROM A READING OF THE ORDER OF CIT (A) AS WELL AS THAT OF THE TRIBUNAL IN THE ORDER IMPUGNED. IN THE CIRCUMSTANCES, THE TRIBUNAL SHALL CONSIDER THE RELE VANT DOCUMENTS ON THE BASIS OF THE CLAIMS AND ASCERTAIN WHETHER THE APPLICANT IS ENTITLED TO THE BENEFIT OF SECTION 10A, AS CLAIMED. THE JUDGMENT AND ORDER OF THIS CO URT DATED 17.09.2012 IS ACCORDINGLY MODIFIED; THE TRIBU NAL SHALL PROCEED TO PASS APPROPRIATE ORDERS AFTER HEAR ING BOTH PARTIES. 7. IN VIEW OF THE ABOVE ORDER OF HON'BLE JURISDICTI ONAL HIGH COURT IN THE REVIEW PETITION DIRECTING THE ITAT TO CONSIDER THE ASSESSEES CLAIM UNDER SECTION 10A, THESE APPEALS WERE RE-LISTED FOR HEARING. FROM THESE FACTS, IT IS EVIDENT THAT THE LIMITED ISSUE B EFORE US NOW IS WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTIO N 10A IN THE YEAR UNDER APPEAL. 8. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ASSESSING OFFICER HAD REJECTED THE ASSESSEES ALTERNATIVE CLAIM FOR DEDUCTION UNDER SECTION 10A O N THREE GROUNDS :- (I) THE ASSESSEE DID NOT CLAIM THE DEDUCTION IN THE RET URN OF INCOME. ITA-2706/D/2008 AND OTHERS 5 (II) THAT THE ASSESSEE IS NOT A NEWLY SET UP UNIT IN EHT P/STP SCHEME BUT IT WAS AN OLD UNIT SET UP AS DTA UNIT AN D THEREFORE, NOT ENTITLED TO DEDUCTION UNDER SECTION 10A. (III) THAT THE SALE PROCEED WAS NOT RECEIVED IN CONVERTIB LE FOREIGN EXCHANGE IN INDIA AS REQUIRED BY SECTION 10 A(3). 9. LEARNED COUNSEL SUBMITTED THAT NONE OF THE ABOVE GROUNDS IS A VALID GROUND FOR DENIAL OF DEDUCTION UNDER SECTION 10A. HE EXPLAINED THAT THE ORIGINAL CLAIM OF THE ASSESSEE WAS UNDER S ECTION 10B WHICH WAS MADE IN THE RETURN OF INCOME AND THE DEDUCTION UNDER SECTION 10A WAS ONLY AN ALTERNATIVE CLAIM WHICH AROSE WHEN THE ASSESSING OFFICER RAISED DOUBT ABOUT THE ASSESSEES ELIGIBILITY TO DE DUCTION UNDER SECTION 10B. THE ASSESSEE DULY FURNISHED THE AUDIT REPORT R EQUIRED UNDER SECTION 10A. THEREFORE, ON THE FACTS OF THIS CASE, THE ASSESSEE WAS DULY ENTITLED TO MAKE AN ALTERNATIVE CLAIM UNDER SE CTION 10A. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECI SION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CO NTIMETERS ELECTRICALS P.LTD. [2009] 317 ITR 249 (DELHI). WITH REGARD T O POINT NO.(II), THE ASSESSEE REFERRED TO THE CERTIFICATE DATED 16.11.19 98 ISSUED BY THE ELECTRONICS HARDWARE TECHNOLOGY PARK SECRETARIAT CE RTIFYING THAT THE ASSESSEE IS ENTITLED TO ALL THE BENEFITS AVAILABLE TO EHTP UNIT ON CONVERSION OF DTA UNIT TO BE EHTP UNIT. HE ALSO RE FERRED TO NINE CONDITIONS IMPOSED UPON BY EHTP SECRETARIAT FOR PER MITTING THE CONVERSION OF DTA UNIT TO EHTP UNIT. HE SUBMITTED THAT ONCE THE GOVERNMENT OF INDIA HAS PERMITTED THE ASSESSEE TO C ONVERT ITS DTA UNIT INTO EHTP UNIT AND ALSO CERTIFIED THAT ALL THE FACILITIES AND PRIVILEGES ADMISSIBLE UNDER THE EHTP SCHEME WOULD BE AVAILABLE TO THE ASSESSEE, THE OBJECTION OF THE ASSESSING OFFICER THAT THE ASS ESSEE IS WORKING IN DTA AND NOT IN EHTP IS UNTENABLE. WITH REGARD TO R ECEIPT OF SALE PROCEED IN FOREIGN EXCHANGE, IT IS SUBMITTED BY THE LEARNED COUNSEL THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSE E HAD FURNISHED ALL THE EVIDENCES WHICH DULY ESTABLISHED THAT THE S ALE PROCEED WAS ITA-2706/D/2008 AND OTHERS 6 RECEIVED BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXC HANGE. HE HAD ALSO SUBMITTED THAT AUDITORS CERTIFICATE IN WHICH IT IS CERTIFIED THAT THE SALE PROCEEDS HAD BEEN RECEIVED IN CONVERTIBLE FOREIGN E XCHANGE. IT IS FURTHER SUBMITTED BY THE LEARNED COUNSEL THAT THE R EQUIREMENT OF RECEIPT OF SALE PROCEEDS IN THE FOREIGN EXCHANGE IS EQUALLY APPLICABLE FOR ALLOWABILITY OF DEDUCTION UNDER SECTION 10B. T HAT WHEN THE CIT(A) HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UND ER SECTION 10B IN THE APPEAL FILED BEFORE THE ITAT, THE ONLY GROUND RAISE D IN THE GROUNDS OF APPEAL AS WELL AS ARGUED BY THE REVENUE BEFORE THE ITAT WAS THAT THE ASSESSEE IS NOT APPROVED BY THE BOARD AS REQUIRED B Y SECTION 10B. THUS, IMPLIEDLY, THE REVENUE HAD ALSO ACCEPTED RECE IPT OF SALE PROCEED IN CONVERTIBLE FOREIGN EXCHANGE. HE, THEREFORE, SU BMITTED THAT ASSESSING OFFICER MAY BE DIRECTED TO ALLOW THE DEDU CTION UNDER SECTION 10A. 10. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND HE STATED THAT THE ASSESSEE S TARTED DOMESTIC OPERATION IN THE YEAR 1994. TEN YEARS FROM THE YEA R 1994 ARE ALREADY COMPLETE AND THEREFORE, THE ASSESSEE CANNOT BE ENTI TLED TO DEDUCTION UNDER SECTION 10A IN AY 2005-06. HE FURTHER SUBMIT TED THAT THE ISSUE OF NON-REMITTANCE OF SALE CONSIDERATION IN A CONVER TIBLE FOREIGN EXCHANGE WAS NOT RAISED BY THE ASSESSING OFFICER FO R DISALLOWING DEDUCTION UNDER SECTION 10B. DEDUCTION UNDER SECTI ON 10B WAS DISALLOWED BECAUSE THE ASSESSEE WAS NOT APPROVED BY THE BOARD WHICH IS A MANDATORY REQUIREMENT FOR THE PURPOSE OF ALLOW ABILITY OF DEDUCTION UNDER SECTION 10B. THEREFORE, THE PRESUMPTION OF T HE LEARNED COUNSEL THAT WHEN THE CIT(A) AND THE ITAT HELD THAT THE ASS ESSEE IS ENTITLED TO DEDUCTION US/ 10B, IT SHOULD BE INFERRED THAT THE C IT(A)/ITAT HAS HELD THAT THE ASSESSEE HAD RECEIVED THE SALE PROCEED IN CONVERTIBLE FOREIGN EXCHANGE IS A BASELESS PRESUMPTION. HE FURTHER SUB MITTED THAT THE FURNISHING OF THE AUDIT REPORT ALONGWITH THE RETURN OF INCOME IS A BASIC REQUIREMENT FOR CLAIMING OF DEDUCTION UNDER SECTION 10A. NO SUCH ITA-2706/D/2008 AND OTHERS 7 CLAIM WAS MADE IN THE RETURN OF INCOME, NO AUDIT RE PORT AS REQUIRED UNDER SECTION 10A WAS FURNISHED ALONGWITH THE RETUR N AND NO REVISED RETURN WAS FILED BY THE ASSESSEE. IN THESE CIRCUMS TANCES, THE ASSESSING OFFICER RIGHTLY DENIED THE CLAIM OF DEDUC TION UNDER SECTION 10A TO THE ASSESSEE. THE SAME SHOULD BE SUSTAINED. 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. SO FAR AS NON- CLAIMING OF THE DEDUCTION UNDER SECTION 10A IN THE RETURN OF INCOME IS CONCERNED, WE FIND THAT THIS ISSUE IS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONTIMETERS ELECTRICALS P.LTD. (SUPRA), WHE REIN THEIR LORDSHIPS HELD AS UNDER:- HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD ARRIVED AT THE CORRECT CONCLUSION THAT THE REQUIREMENT OF F ILING THE AUDIT REPORT ALONG WITH THE RETURN WAS NOT MANDATOR Y BUT DIRECTORY AND THAT IF THE AUDIT REPORT WAS FILED AT ANY TIME BEFORE THE FRAMING OF THE ASSESSMENT, THE REQUIREME NT OF SECTION 80-IA(7) WOULD BE MET. 12. THE RATIO OF THE ABOVE DECISION OF HON'BLE JURI SDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE ASSESSEE S CASE BECAUSE, IN THE PRESENT CASE ALSO, ADMITTEDLY, THE ASSESSEE MAD E A CLAIM OF DEDUCTION UNDER SECTION 10A DURING ASSESSMENT PROCE EDINGS AND ALSO FILED THE AUDIT REPORT. IN FACT, THE ASSESSEES CA SE IS IN A BETTER FOOTING BECAUSE IN THE RETURN OF INCOME, THE ASSESSEE HAD C LAIMED DEDUCTION UNDER SECTION 10B. THE DEDUCTION UNDER SECTION 10A WAS ONLY AN ALTERNATIVE CLAIM WHICH ASSESSEE MADE ONLY WHEN THE ASSESSING OFFICER DISPUTED THE ASSESSEES ELIGIBILITY TO DEDU CTION UNDER SECTION 10B. ADMITTEDLY, THE ASSESSEE COULD NOT HAVE CLAIM ED DEDUCTION UNDER SECTION 10B AND 10A BOTH IN THE RETURN OF INC OME. MOREOVER, HON'BLE JURISDICTIONAL HIGH COURT, IN THE REVIEW PE TITION, HAS DIRECTED TO CONSIDER THE ASSESSEES CLAIM UNDER SECTION 10A ON THE BASIS OF ITA-2706/D/2008 AND OTHERS 8 RELEVANT DOCUMENTS. IN VIEW OF THE ABOVE, WE HOLD THAT THE REVENUES OBJECTION, THAT THE ASSESSEE IS NOT ENTITLED TO DED UCTION UNDER SECTION 10A ONLY BECAUSE THE SAME WAS NOT CLAIMED IN THE RE TURN OF INCOME, IS UNTENABLE AND IS REJECTED AS SUCH. 13. NOW, WE COME TO ANOTHER GROUND ON WHICH THE ASS ESSING OFFICER REJECTED THE ASSESSEES CLAIM OF DEDUCTION UNDER SE CTION 10A. THE SECOND GROUND ON WHICH THE ASSESSING OFFICER REJECT ED THE ASSESSEES CLAIM UNDER SECTION 10A WAS THAT THE ASSESSEE DID N OT BEGIN TO MANUFACTURE OR PRODUCE ARTICLE OR THINGS IN ANY EHT P OR IN ANY STP BUT STARTED MANUFACTURING IN DTA. HOWEVER, AT THE TIME OF HEARING BEFORE US, THE ASSESSEE PRODUCED THE CERTIFICATE ISSUED BY THE GOVERNMENT OF INDIA, DEPARTMENT OF ELECTRONICS, ELECTRONICS HARDW ARE TECHNOLOGY PARK SECRETARIAT DATED 16 TH NOVEMBER, 1998. THE RELEVANT PORTION OF THE LETTER READS AS UNDER:- SUB : YOUR APPLICATION FOR SETTING UP 100% EXPORT ORIENTED UNIT UNDER ELECTRONIC HARDWARE TECHNOLOGY PARK (EHTP) SCHEME FOR THE MANUFACTURE OF TELECOM TRANSMISSION EQUIPMENT:. REF : YOUR APPLICATION SUBMITTED TO SOFTWARE TECHNO LOGY PARKS OF INDIA NOIDA. DEAR SIR, WITH REFERENCE TO THE ABOVE MENTIONED APPLICATION, GOVERNMENT IS PLEASE TO EXTEND TO YOU ALL THE FACIL ITIES AND PRIVILEGES ADMISSIBLE UNDER THE EHTP SCHEME FOR THE CONVERSION OF YOUR DTA UNIT INTO EHTP UNIT AT 71/1, SHIVAJI MARG, NEW DELHI 110 015 FOR THE MANUFACTURE AND E XPORT OF FOLLOWING ITEMS : ITEM OF MANUFACTURE TELECOM TRANSMISSION EQUIPMENT. ITA-2706/D/2008 AND OTHERS 9 14. FROM THE ABOVE, IT IS EVIDENT THAT ON THE ASSES SEES APPLICATION FOR SETTING UP 100% EXPORT ORIENTED UNIT IN EHTP SC HEME, THE GOVERNMENT OF INDIA WAS PLEASED TO EXTEND ALL FACIL ITIES AND PRIVILEGES ADMISSIBLE UNDER THE EHTP SCHEME FOR CONVERSION OF ASSESSEES DTA UNIT INTO EHTP UNIT. THE ABOVE PRIVILEGE WAS EXTEN DED SUBJECT TO THE CONDITIONS SPECIFIED IN PARAGRAPH 2 OF THE LETTER W HICH IS ALSO REPRODUCED BELOW FOR READY REFERENCE:- 2. THE ABOVE PERMISSION IS SUBJECT TO THE CONDITIO NS STIPULATED IN ANNEXURE IN ADDITION TO THE FOLLOWING CONDITIONS:- I) THE ENTIRE (100%) PRODUCTION SHALL BE EXPORTED AGAINST HARD CURRENCY EXCEPT THE SALES IN DOMESTIC TARIFF AREA ADMISSIBLE AS PER ENTITLEMENT. II) YOU SHALL UNDERTAKE TO EXPORT THE ENTIRE PRODUC TION (100%) EXCLUDING REJECTS NOT EXCEEDING 5 (FIVE) PER CENT AND THE DTA SALES AS PER ENTITLEMENT FOR A PERIOD O F 5 (FIVE) YEARS. FOR THIS PURPOSE, YOU WILL FURNISH THE REQU ISITE LEGAL AGREEMENT. AFTER THE EXPORT OBLIGATION PERIOD IS O VER THE UNIT SHALL BE ALLOWED TO PRODUCE FOR DOMESTIC MARKE T IN THE LIGHT OF INDUSTRIAL POLICY IN FORCE AT THE TIME IN RELATION TO MANUFACTURE OF ITEMS RESERVED FOR SMALL SCALE SECTO R AND SECTORAL POLICY PREVAILING AT THAT POINT OF TIME. III) THE DTA (DOMESTIC TARIFF AREA) SALE ENTITLEMEN T SHALL BE IN ACCORDANCE WITH THE NOTIFICATION NO.42(N-B)92 -97 DATED 14/09/92 ISSUED BY MINISTRY OF COMMERCE. IV) IN CASE EXTERNAL COMMERCIAL BORROWING IS RESORT ED TO YOU SHALL OBTAIN NECESSARY PERMISSION FROM MINISTRY OF FINANCE (D/O ECO. AFFAIRS), GOVERNMENT OF INDIA. V) IT IS NOTED THAT YOU REQUIRE IMPORTED CAPITAL GO ODS WORTH RS.120.00 LACS (US$2.86 LACS) AT PRESENT FOR THE PROJECT. YOU ARE ADVISED TO SEND THE LIST OF CAPIT AL GOODS PROPOSED TO BE IMPORTED DULY SIGNED, TO THE DESIGNA TED OFFICER OF STPI-NOIDA. VI) EXPORT TURNOVER OF RS.4560.00 LACS (US$108.57 L ACS) IN 5 YEARS IS ANTICIPATED ACCORDING TO YOUR PROJECT IONS. ITA-2706/D/2008 AND OTHERS 10 VII) IMPORT OF SECOND HAND CAPITAL GOODS SHALL BE PERMITTED IN ACCORDANCE WITH IMPORT EXPORT POLICY. VIII) SEPARATE ACCOUNTS SHALL BE MAINTAINED FOR EHT P UNITS. IX) THE UNIT SHALL BE CUSTOM BONDED. 15. THE ASSESSEE HAS CLAIMED TO HAVE FILED THE ABOV E LETTER BEFORE THE ASSESSING OFFICER. HOWEVER, WE FIND THAT THIS LETTER HAS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER. IN OUR OPINION, THE MATTER NEEDS RE-EXAMINATION IN THE LIG HT OF THE ABOVE LETTER ISSUED BY THE GOVERNMENT OF INDIA WHEREIN TH E ASSESSEE WAS PERMITTED TO CONVERT ITS DTA UNIT INTO EHTP UNIT. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW ON THI S POINT AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO RE-EXAMINE THE ASSESSEES ELIGIBILITY FOR DEDUCTION UNDER SECTION 10A IN THE LIGHT OF ABOVE LETTER OF THE GOVERNMENT OF INDIA. 16. THE THIRD GROUND RAISED BY THE ASSESSING OFFICE R WAS AGAINST THE NON-RECEIPT OF SALE PROCEEDS IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA. THE ASSESSEE HAD CONTENDED THAT ALL THE SALE PROCEE DS WERE RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE AND ASSESSEE HAD DU LY FURNISHED THE EVIDENCE IN THIS REGARD. THE AUDITORS CERTIFICATE WAS ALSO FURNISHED CERTIFYING THESE DETAILS. HOWEVER, AS WE ARE SETTI NG ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATIO N OF ASSESSEES CLAIM UNDER SECTION 10A AFRESH IN THE LIGHT OF LETTER OF ELECTRONICS HARDWARE TECHNOLOGY PARK SECRETARIAT, IN OUR OPINION, IT WOU LD MEET THE ENDS OF JUSTICE IF THE ASSESSING OFFICER IS DIRECTED TO EXA MINE THIS ASPECT ALSO. WE DIRECT ACCORDINGLY. NEEDLESS TO MENTION THAT TH E ASSESSING OFFICER WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE WHILE GIVING EFFECT TO THIS ORDER. ITA-2706/D/2008 AND OTHERS 11 17. SINCE THE FACTS IN ALL THE OTHER YEARS ARE IDEN TICAL TO THAT OF AY 2005-06, FOR THE DETAILED DISCUSSION ABOVE, THE ORD ERS OF AUTHORITIES BELOW IN THOSE YEARS ARE ALSO SET ASIDE AND THE ASS ESSING OFFICER IS DIRECTED TO RE-EXAMINE THE ASSESSEES CLAIM UNDER S ECTION 10A. 18. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE D EEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2014. SD/- SD/- ( (( (H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 27.06.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME T AX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -17(1), NEW DELHI. 17(1), NEW DELHI. 17(1), NEW DELHI. 17(1), NEW DELHI. 2. RESPONDENT : M/S VALLIANT COMMUNICATIONS LIMITE D, M/S VALLIANT COMMUNICATIONS LIMITED, M/S VALLIANT COMMUNICATIONS LIMITED, M/S VALLIANT COMMUNICATIONS LIMITED, 71/1, SHIVAJI MARG, NEW DELHI 71/1, SHIVAJI MARG, NEW DELHI 71/1, SHIVAJI MARG, NEW DELHI 71/1, SHIVAJI MARG, NEW DELHI 110 015. 110 015. 110 015. 110 015. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR