Sensiple Software Solutions Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 600/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4112 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: G SEETHARAMAN
• Keywords: Revised return
• Section: 10B; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , , $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 600/MDS/2015 (IN M.P. NO. 337/MDS/2016) / ASSESSMENT YEARS : 2010-11 S ENSIPLE SOFTWARE SOLUTIONS PRIVATE LIMITED, NO. 43 FIRST AVENUE, ASHOK NAGAR, CHENNAI 600 083. [PAN: AAGCS 4619C] VS. DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(1), CHENNAI 600 034. ( / APPELLANT) ( / RESPONDENT) & ' / APPELLANT BY : SHRI. G. SEETHARAMAN, CA *+& ' / RESPONDENT BY : SHRI. PATHLAVATH PEERYA, CIT ' /DATE OF HEARING : 17.05.2017 ' /DATE OF PRONOUNCEMENT : 13.07.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED AN APPEAL IN ITA NO 600/MDS/201 5 AGAINST THE DENIAL OF DEDUCTION U/S. 10B/10A. SINCE, THE R ELATED GROUNDS WERE NOT :-2-: I.T.A. N0. 600/MDS/2015 CONSIDERED IN THE ORDER DATED 07.10.2016, THEY ARE DEALT AS UNDER IN TERMS OF THE ORDER OF MP. NO. 337/MDS/2016 DATED 23.03.2017. 2. THE ASSESSEE IN ITS RETURN CLAIMED DEDUCTION U/S . 10B. WHEN THE ASSESSING OFFICER POINTED OUT THAT THE ASSESSEE FAI LED TO OBTAIN THE APPROVAL FROM THE INTER MINISTERIAL STANDING COMMITTEE A PREREQ UISITE TO CLAIM A DEDUCTION U/S. 10B, THE ASSESSEE ALTERNATIVELY CLAIMED THAT 1 00% DEDUCTION MAY BE ALLOWED U/S. 10A CONTENDING THAT REGISTRATION WITH STPI WILL MAKE THE ASSESSEE AUTOMATICALLY ELIGIBLE U/S. 10A. HOWEVER, THE AO N OTICED THAT THE DEDUCTION U/S. 10A IS AVAILABLE TO AN UNIT WHICH IS REGISTERED UND ER SPECIAL ECONOMIC ZONE (SEZ) FOR MANUFACTURE OF THE THINGS/ARTICLES ON OR AFTER 01.04.2001. SINCE, THE ASSESSEE STARTED ITS BUSINESS IN A STPI AND NOT UND ER SEZ, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTIO N U/S. 10A. THE ASSESSEE FILED ITS OBJECTIONS BEFORE THE DRP, CHENNAI. THE DRP IN ITS ORDER IN F.NO. DRP/CHE/35/2014-15, DATED 19.12.2014 RELYING ON THE DELHI HIGH COURT HELD THAT APPROVAL GRANTED TO THE 100% EOU SET UP UNDER SOFTWARE TECHNOLOGY PARK SCHEME CANNOT BE DEEMED TO BE AN APPROVAL U/S. 10B. WITH REGARD TO THE ALTERNATE PLEA THAT IF ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 10B, THEN A DEDUCTION U/S. 10A MAY BE ALLOWED AS IT FULFILLED A LL THE REQUIREMENTS OF THE SECTION, THE DRP HELD THAT AS PER PROVISIONS OF SEC TION 10A, ONLY THOSE INDUSTRIAL UNDERTAKINGS WHICH ARE ESTABLISHED IN AN SEZ ON OR AFTER 01.04.2001 ARE ELIGIBLE FOR DEDUCTION. IN THIS CASE, THE ASSESSEES UNDERT AKING WAS REGISTERED UNDER STPI AND NOT UNDER SEZ. ACCORDINGLY, IT CONFIRMED THE STAND TAKEN BY THE AO. :-3-: I.T.A. N0. 600/MDS/2015 AGGRIEVED, THE ASSESSEE FILED THIS APPEAL. THE AR SUBMITTED THAT IN ALL THE EARLIER YEARS DEDUCTION U/S. 10B WAS ALLOWED. WHEN THE ASS ESSING OFFICER PROPOSED NOT TO ALLOW THE DEDUCTION U/S. 10B, THEN THE ASSESSEE FILED AN AUDIT REPORT IN FORM NO. 56F ON 22.03.2012, WITHIN THE DUE DATE, WITH A REQUEST THAT RETURN ALREADY FILED MAY BE TREATED AS REVISED ONE AND SOUGHT OUR ATTENTION TO THE COPY OF THE LETTER FILED BEFORE THE AO ON 22.03.2012 WHICH WAS PLACED IN PAGE 146 TO 150 OF THE PAPER BOOK. THE RELEVANT SUBMISSION IS EXTRACT ED AS UNDER: THE ASSESSEE COMPANY IS A 100% EXPORT ORIENTED UN DERTAKING (EOU), ENGAGED IN THE BUSINESS OF EXPORT OF COMPUTE R SOFTWARE. THE ASSESSEE HAS BEEN REGISTERED AS A 100% EOU UND ER THE SOFTWARE TECHNOLOGY PARK SCHEME (STPI UNIT) OF THE GOVERNMENT OF INDIA, ISSUED GREEN CARD AND, THUS, ENTITLED TO ALL BENEFI TS UNDER THE SCHEME. THE ASSESSEE IS, THEREFORE, ELIGIBLE FOR EXEMPTION U/S. 10A/10B ON ITS INCOME EARNED FROM EXPORT OF COMPUTER SOFTWARE. BEING 100% EOU, ENGAGED IN THE BUSINESS OF EXPORT OF COMPUTER SOFTWARE, THE AUDIT REPORT IN FORM NO. 56G WAS FILE D ALONGWITH THE RETURN OF INCOME. IF, FOR ANY REASON, IT IS VIEWED THAT T HE ASSESSEE COMPANY IS ENTITLED TO CLAIM EXEMPTION U/S. 10A OF THE ACT, TH EN THE AUDIT REPORT SHALL BE IN FORM NO. 56F. WE, THEREFORE, AS A PRECAUTIONARY AND PROTECTIVE M EASURE, ENCLOSE THE AUDIT REPORT IN FORM NO 56F AND THE NIL INCOM E RETURNED WILL REMAIN THE SAME, SINCE THE AMOUNT OF EXEMPTION U/S. 10A/10 B WILL BE THE SAME. WE REQUEST THAT THE RETURN OF INCOME ALREADY FILED MAY PLEASE BE TREATED AS REVISED ACCORDINGLY. AND SUBMITTED THAT EVENTHOUGH THE AO, IN PRINCIPLE, ACCEPTED THAT IT IS ELIGIBLE FOR DEDUCTION U/S. 10A, DENIED THE CLAIM ON THE GROUND THAT THE REVISED RETURN WAS NOT FILED. THE AO, HAVING ACCEPTED THE AUDIT REPOR T IN FORM NO. 56F FOR CLAIM :-4-: I.T.A. N0. 600/MDS/2015 U/S. 10A, SHOULD HAVE GIVEN AN OPPORTUNITY TO FILE THE REVISED RETURN, BEFORE REJECTING THE SAME. THE DRP REJECTED THE CLAIM ON THE DIFFERENT GROUND THAT THE DEDUCTION U/S. 10A WOULD BE APPLICABLE ONLY IF ITS UNDERTAKING WAS ESTABLISHED IN SEZ, ON OR AFTER 01.04.2001. SINCE THE ASSESSEE WA S APPROVED UNDER STPI AND NOT UNDER SEZ, THE DRP HELD THAT IT WAS NOT ENTITLE D TO THE CLAIM U/S. 10A. THE AR FURTHER SUBMITTED THAT BY MAKING THE CLAIM U/S. 10A INSTEAD OF U/S. 10B, THE INCOME RETURNED OR THE AMOUNT OF DEDUCTION U/S. 1A WILL NOT VARY. FILING OF REVISED RETURN WOULD ARISE ONLY WHEN THE INCOME RET URNED ORIGINALLY IS REVISED BY ENHANCING OR REDUCING THE INCOME IN THE ORIGINAL RE TURN. THE AOS RELIANCE ON THE DECISION OF THE SUPREME COURT IN GOETZ INDIA LI MITED VS. CIT (284 ITR 323) WILL NOT APPLY SINCE, THERE IS NO VARIATION IN THE TOTAL INCOME. THE AO, IN ANY CASE, FAILED TO CONSIDER THAT WHILE FILING THE AUDI T REPORT IN FORM NO. 56F FOR CLAIMING DEDUCTION U/S. 10A, IT WAS SPECIFICALLY SU BMITTED THAT THE RETURN OF INCOME ALREADY FILED BE TREATED AS REVISED ACCORDIN GLY. THE AR PRAYED THAT THE CLAIM FOR DEDUCTION U/S. 10B OR 10A MAY BE ALLOWED. THE AR ALSO RELIED ON VARIOUS DECISIONS INCLUDING THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT-1 VS M/S. HEARTLAND KG INFORMATION, TC(A) NO. 6 25 OF 2009 DATED 19.08.2013. PER CONTRA, THE DR RELIED ON THE ORDERS OF THE AO AND THE DRP. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACT REMAINS THAT WHEN THE ASSESSING OFFICER PROPOSED THAT THE ASSESSEES CLAI M U/S. 10B CANNOT BE ENTERTAINED, IT FILED FORM NO. 56F FOR CLAIMING DED UCTION U/S. 10A WITHIN THE DUE DATE AND REQUESTED THE ASSESSING OFFICER TO TREAT I T AS THE REVISED RETURN. THE :-5-: I.T.A. N0. 600/MDS/2015 RELEVANT OBSERVATION OF THE JURISDICTIONAL HIGH COU RT FROM CIT-1 VS M/S. HEARTLAND KG INFORMATION, SUPRA IS EXTRACTED AS UND ER: 6. AS FAR AS THE FIRST QUESTION RAISED AS REGARDS THE CLAIM OF THE ASSESSEE ORIGINALLY MADE UNDER SECTION 10B OF T HE INCOME TAX ACT IS CONCERNED, WE DO NOT THINK, THE SAID QUESTION CAN B E ANSWERED IN FAVOUR OF THE REVENUE. A READING OF THE ORDER OF THE ASSESSI NG OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) SHOWS THAT EVE N THOUGH THE ASSESSEE ORIGINALLY CLAIMED RELIEF UNDER SECTION 10 B, IT WAS CAUTIOUS ENOUGH TO MAKE AN ALTERNATIVE PLEA UNDER SECTION 10A IN VI EW OF THE FACT THAT THE ASSESSEES VENDER HAD THE BENEFIT UNDER SECTION 10A . IT IS NOT DENIED BY THE REVENUE THAT THE ASSESSEE HAD THE WHOLE BUSINES S TRANSFERRED TO ITS FAVOUR AND THAT THE FACTUM OF TRANSFER WAS ALSO INT IMATED TO THE SOFTWARE TECHNOLOGY PARK OF INDIA. THUS, AS A SOFTWARE TECH NOLOGY PARK, THE ASSESSEE IS ENTITLED TO PLACE HIS CLAIM UNDER SECTI ON 10A. IN ANY EVENT, EVEN ASSUMING FOR A MOMENT, THE ASSESSEE HAD NOT RE FERRED TO THE SECTION CORRECTLY, THE FACT REMAINS THAT IF THE CLAIM COULD BE FAVOURABLY BE CONSIDERED UNDER ANY OF THOSE SPECIAL DEDUCTION PRO VISIONS AND ON THE CONDITIONS SPECIFIED THEREIN BEING SATISFIED, WE DO NOT THINK THAT THERE EXISTS ANY JUSTIFIABLE GROUND FOR THE REVENUE TO CO NTEND THAT THE ASSESSEE SHALL NOT BE ENTITLED TO HAVE THE BENEFIT OF SECTIO N 10A. 3.1 THE RELEVANT PORTION OF THE SUPREME COURTS DEC ISION IN THE CASE OF GOETZE (INDIA) LTD. VS CIT, 284 ITR 323 SC IS EXTRA CTED AS UNDER: THE DECISION IN QUESTION IS THAT THE POWER OF TRI BUNAL UNDER SECTION 254 OF THE INCOME TAX ACT, 1961, IS TO ENTE RTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHIC H THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN, IN THE CIRCUMSTAN CES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT T HE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGS ON THE :-6-: I.T.A. N0. 600/MDS/2015 POWER OF THE INCOME TAX APPELLATE TRIBUNAL UNDER SE CTION 254 OF THE INCOME TAX ACT, 1961. 4. IN ACCORDANCE WITH THE ABOVE RATIOS, THE AO & THE DRP SHOULD HAVE ENTERTAINED THE ALTERNATE CLAIM AND EXAMINED IT. S INCE, IT IS DONE SO, ON THE ABOVE FACTS AND CIRCUMSTANCES, WE ENTERTAIN THE CLA IM AND DIRECT THE ASSESSING OFFICER TO ALLOW THE ALTERNATE CLAIM OF DEDUCTION U /S. 10A, SUBJECT TO THE FULFILMENT OF ALL OTHERS CONDITIONS SPECIFIED U/S. 10A. 5. IN THE RESULT, THE GROUNDS RELATING TO DENIAL OF EXEMPTION U/S. 10A ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 13 TH DAY OF JULY, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 13 TH JULY, 2017 JPV ' *23 43 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3 * /DR 6. 7 /GF