Kern Communications Private Limited, Hyderabad V. Asst.CIT,Circle 2(1), Hyderabad

ITA 580/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6208 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2014
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Section: 115JB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 580/HYD/2014 ASSESSMENT YEAR: 2008-09 KERN COMMUNICATIONS PVT. LIMITED, SECUNDERABAD [PAN: AACCK4449G] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SAMUEL NAGADESI, AR FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEARING : 24-08-2016 DATE OF PRONOUNCEMENT : 14-09-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, HYDERABAD , DATED 26-09-2012, ON THE ISSUE OF CLAIM OF DEDUCTION U/S. 10A/10B OF THE INCOME TAX ACT [ACT]. 2. AT THE OUTSET, AS ASSESSEE FILED THE APPEAL ON 01-04 -2014 WITH THE DATE OF SERVICE OF ORDER OF LD. CIT(A) AS 05-12-2012, THE REGISTRY HAS REPORTED THE DELAY OF 422 (FOUR HUNDRED AND TWENTY TWO) DAYS IN FILING THE APPEAL. LATER, ASSESSEE FIL ED REVISED FORM I.T.A. NO. 580/HYD/2014 KERN COMMUNICATIONS PVT. LIMITED :- 2 -: 36 INDICATING THE DATE OF SERVICE AS 03-02-2014 AND SUBMITTED THAT THE ORDER WAS OBTAINED FROM THE OFFICE OF LD. CIT(A) ON THAT DATE. LD. DR CONFIRMED THE FACT. HENCE, THE APPEAL IS TREAT ED AS FILED IN- TIME. 3. BRIEFLY STATED, FACTS IN APPEAL ARE THAT ASSESSEE-CO MPANY IS IN THE BUSINESS OF SOFTWARE DESIGN AND SOFTWARE USABILI TY TESTING. IT FILED NIL INCOME CLAIMING DEDUCTION U/S. 10B OF THE A CT UNDER THE NORMAL PROVISIONS AND INCOME AT RS. 90,57,398/- U/S. 115JB OF THE ACT. ASSESSEE HAS A UNIT UNDER STPI SCHEME DULY A PPROVED AND CLAIMED EXEMPTION OF THE EXPORT PROCEEDS. HOWEV ER, ASSESSEE CLAIMED DEDUCTION U/S. 10B. DURING THE SCRUTINY PROC EEDINGS, IT FILED NECESSARY DETAILS SATISFYING THE CONDITIONS STA TED TO BE U/S. 10A. AO, HOWEVER, CONSIDERED THE SAME AGAINST CLAIM OF SECTION 10B AND DENIED THE BENEFIT. 4. BEFORE THE LD. CIT(A), ASSESSEE MADE THE CLAIM U/S . 10A IN THE GROUNDS. BUT THE LD. CIT(A) CONSIDERED THE CLAIM U/S. 10B ONLY AND CONFIRMED THE AOS ORDER. 5. ASSESSEE RAISED THE FOLLOWING GROUND IN THE APPEAL : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED COMMISSIONER ERRED IN LAW AND FACTS OF THE CASE IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING DEDUCTION OF THE INCOME DERIVED FROM THE EXPORT OF SOFTWARE WHOSE PROCEEDS ARE RECEIVED IN WITHIN THE STIPULATED TIME AND THE PROFITS OF WHICH ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 10A/ 10B OF THE INCOME-TAX ACT AS THE CASE MAY BE. AND STATED THAT THE LEARNED ASSESSING OFFICER OUGHT NOT TO DISALLOWED THE SAME ON FRIVOLOUS GROUNDS ON PURE TECHNICAL ISSUES. I.T.A. NO. 580/HYD/2014 KERN COMMUNICATIONS PVT. LIMITED :- 3 -: 6. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 10A, BUT WRONGLY CLAIMED TH E SAME IN THE RETURN OF INCOME U/S. 10B. NEITHER THE AO NOR THE CIT(A) HAS CONSIDERED THE CLAIM U/S. 10A, EVEN THOUGH THE CONDITI ONS U/S. 10A WERE SATISFIED. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE ORDERS OF THE AUTHORITIES, WE ARE OF THE OPINION THAT A O AND CIT(A) HAS NOT CONSIDERED THE CLAIM UNDER THE CORRECT SECTION . EVEN THOUGH ASSESSEE CLAIMED U/S. 10B IN THE RETURN OF INCO ME DURING THE ASSESSMENT YEAR PROCEEDINGS, AS CAN BE SEEN FROM THE ORDER AND DURING THE APPELLATE PROCEEDINGS, THE CLAIM IS R EVISED TO SECTION 10A AND SUBMITTED NECESSARY DETAILS FULFILLING THE CONDITIONS U/S. 10A. WE ARE SURPRISED TO NOTE THAT THE AUTHORITIES HAVE NOT CONSIDERED THE CLAIM IN CORRECT PERSPECTIVE. IT IS THE DUTY OF THE AO TO EDUCATE THE ASSESSEE, IF THERE IS A CLAIM UNDER A WRONG SECTION, BUT ELIGIBLE UNDER A DIFFERENT SECTION. IT WAS HELD THAT IF FROM THE FACTS INVESTIGATED AT THE TIME OF ASSESSMENT, IT EMERGES THAT ASSESSEE IS ENTITLED TO A PARTICULAR RELIEF PROVIDED IN THE LAW, IT IS OBLIGATORY ON THE PART OF THE AO TO DRAW ATTENTION OF THE ASSESSEE TO THE LAWFUL RELIEF OR DEDUCTION, ALTHOUGH ASSESSEE DID NOT CLAIM IT. [CHOKSI METAL REFINERY VS. CIT (107 ITR 63) (GUJ) & NATHMAL BANKATLAL PARIKH & CO., VS. CIT (122 ITR 168) (AP-FB )]. BOARD AS EARLY AS 1955 IN CIRCULAR NO. 14 (XI-35) OF 1955 DT. APRIL, 11, 1955 HAS ADVISED THE AUTHORITIES TO CONSIDER THE CLAIM AS PE R THE STATUTORY PROVISIONS AND ONE SHOULD NOT REJECT ON TECHNI CALITIES. THE SAID BOARD CIRCULAR IS AS UNDER: OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR D UTIES TO ASSIST A TAXPAYER I.T.A. NO. 580/HYD/2014 KERN COMMUNICATIONS PVT. LIMITED :- 4 -: IN EVERY REASONABLE WAY PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SH OULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTI CULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT; FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM T HE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY FOR CLAIMIN G REFUNDS AND RELIEFS RESTS WITH THE ASSESSEE ON WHOM IT IS IMPOSED BY TH E LAW, OFFICERS SHOULD: A. DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO W HICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAIM FOR SOME REASON OR OTHER; B. FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO TH EIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED F OR CLAIMING REFUNDS AND RELIEFS. EVEN THE LD. CIT(A) WHO HAS COTERMINOUS POWERS WITH TH AT OF AO SHOULD HAVE ALLOWED THE CLAIM WHEN SPECIFICALLY RAIS ED IN THE GROUND. THE AUTHORITIES SHOULD HAVE EXAMINED THE CLAI M U/S. 10A. SINCE THE ISSUE WAS NOT EXAMINED BY AO, WE ARE OF THE OPINION THAT AO SHOULD EXAMINE THE ELIGIBILITY U/S. 10A AND IF AS SESSEE SATISFIES THE CONDITIONS THERE IN, THE CLAIM OF DEDUCTION SHOULD BE ALLOWED U/S. 10A. WITH THESE DIRECTIONS, THE ORDERS OF AO/CI T(A) ON THIS ISSUE ARE SET ASIDE AND THE MATTER IS RESTORED TO THE FI LE OF AO TO EXAMINE AND ALLOW THE CLAIM AS PER LAW AND FACTS. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2016 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 14 TH SEPTEMBER, 2016 TNMM I.T.A. NO. 580/HYD/2014 KERN COMMUNICATIONS PVT. LIMITED :- 5 -: COPY TO : 1. KERN COMMUNICATIONS PVT. LIMITED, C/O. SAMUEL NAGADESI, CHARTERED ACCOUNTANT, 408, SRI RAMAKRISHN A TOWERS, BESIDES IMAGE HOSPITALS, AMEERPET, HYDERABA D. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(1 ), HYDERABAD. 3. CIT(APPEALS)-III, HYDERABAD 4. CIT-II, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.