DCIT, Bangalore V. M/s BAeHAL Software Ltd., Bangalore

ITA 630/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0637 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 15-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Keywords: Principle of natural justice; Additional evidence; Procedural lapse; Revised return
• Section: 143(3); 10B

Judgement Text

ITA NO.630/B/09 1 IN THE INCOME TAX APPELLATE TRIBUNA L, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI AKBER BASHA, A.M ITA NOS.630/BANG/2009 (ASSESSMENT YEAR 2004-05) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(2), BANGALORE. - APPELLANT VS M/S BAEHAL SOFTWARE LTD., AIRPORT LANE, HAL ESTATE, BANGALORE-17. - RESPONDENT APPELLANT BY : SHRI JASON P BOAZ RESPONDENT BY : NONE ORDER PER AKBER BASHA : THIS APPEAL BY REVENUE IS AGAINST THE ORDER OF LE ARNED CIT(A)-I, BANGALORE DATED 25TH MARCH, 2009 DIRECTIN G THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80HHE OF T HE ACT BY ALLOWING THE APPEAL OF THE ASSESSEE AGAINST THE ORD ER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE ACT. 2. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND EXPORT O F SOFTWARE AND SERVICES AND WAS A JOINT VENTURE COMPANY BETWEEN M/S HINDUSTAN ITA NO.630/B/09 2 AERONAUTICS LTD. AND M/S BRITISH AEROSPACE. THE AS SESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASST. YEAR 2004-0 5 ON 28TH OCTOBER, 2004 DECLARING A TOTAL INCOME OF RS.1,76,2 3,866/- CLAIMING A DEDUCTION U/S 10B OF THE I T ACT FOR AN AMOUNT OF RS.1,67,55,293/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 29TH DECEMBER, 2006 BY THE ASSESSING OFFICER ASSESSI NG ITS TOTAL INCOME AT RS.3,43,79,159/- BY DENYING THE DEDUCTION C LAIMED U/S 10B OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 10B FOR THE ASST. YEAR 2004-05 AS IT H AD COMMENCED PRODUCTION DURING THE AY 1993-94 AND THE TEN YEAR HO LIDAY PERIOD WAS LAPSED IN AY 2003-04 ITSELF. 3. AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APP EAL BEFORE THE CIT(A). THE ASSESSEE ADMITTED BEFORE T HE CIT(A) THAT THE ASSESSEE COMPANY IS INELIGIBLE TO CLAIM EXE MPTION U/S 10B IN VIEW OF THE LAPSE OF 10 ASST. YEARS BUT INSTEAD C LAIMED THE BENEFIT OF DEDUCTION U/S 80HHE FOR THE ASST. YEAR 20 04-05 FOR THE FIRST TIME. IT APPEARS THAT THE ASSESSEE COMPA NY FILED NECESSARY EVIDENCES SUCH AS AUDIT REPORT IN FORM 10C CAF AS PRESCRIBED U/S 80HHE(4) AS WELL AS A CERTIFICATE DU LY CERTIFIED BY ITS AUDITORS THAT THE ASSESSEE COMPANY HAD REALIZED THE ENTIRE CONSIDERATION TOWARDS EXPORTS IN CONVERTIBLE FOREIG N EXCHANGE WITHIN THE STIPULATED PERIOD AS CONTEMPLATED BY THE PROVISIONS OF SECTION 80HHE(2). SINCE THIS BEING ADDITIONAL EVID ENCE, THE CIT(A) FORWARDED THIS ADDITIONAL EVIDENCE TO THE FILE OF T HE ASSESSING ITA NO.630/B/09 3 OFFICER AND CALLED FOR A REMAND REPORT, SPECIFICALL Y ON THE ISSUE REGARDING THE ASSESSEE'S ELIGIBILITY FOR DEDUCTION U /S 80HHE IN ACCORDANCE WITH THE PROVISIONS OF RULE 46A OF THE I T RULES. 4. IN THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER ON 27TH FEBRUARY, 2009, THE ASSESSING OFFICE R SUGGESTED THAT THE ASSESSEE'S FRESH CLAIM FOR DEDUCTION U/S 8 0HHE BE DISALLOWED FOR THE FOLLOWING REASONS:- 'THE CLAIM MADE BY THE ASSESSEE U/S 10B WAS DENIED DURING THE ASSESSMENT DUE TO THE FACT THAT THE PROVISO TO SEC.10B(3) DOES NOT PERMIT THE ASSESSEE TO CLAIM THE DEDUCTION BEYOND AY 2003-04. THE CLAIM WAS HOWEVER NOT MADE BY THE ASSESSEE U/S 80HHE OF THE ACT EVEN DURING THE ASSESSMENT PROCEEDINGS, WHEN THE ADMISSIBILITY OF CLAIM U/S 10B WAS QUESTIONED BY THE AO. MOREOVER (AS IN PARA NO.4 OF THE ASSESSMENT ORDER), THE CLAIM OF THE ASSESSEE WAS DISALLOWED EVEN IN THE EARLIER AYS. THE ASSESSEE WAS AWARE THAT HIS CLAIM AT THE ASSESSMENT STAGE IS BEING DISALLOWED. IT WOULD HAVE MADE THE ALTERNATIVE PLEA CLAIM AT THE ASSESSMENT STAGE IS BEING DISALLOWED. IT WOULD HAVE MADE THE ALTERNATIVE PLEA OF THE CLAIM U/S 80HHE AT THE TIME OF FILING R/I ITSELF. AS PER THE PROVISIONS OF SUB-SEC.(4) OF SEC.80HHE, THE ASSESSEE SHOULD FURNISH THE FORM NO.10CCAF ALONG WITH THE R/I. THIS IS PREREQUISITE CONDITION FOR ALLOWING THE CLAIM. THE REQUEST THAT THE PRESCRIBED FORM WILL ITA NO.630/B/09 4 BE SUBMITTED NOW IS NOT TENABLE UNDER THE PROVISIONS OF SEC.80HH'. 5. AFTER ELABORATE DISCUSSION IN HIS ORDER, THE CI T(A) ALLOWED THE CLAIM OF THE ASSESSEE HOLDING THAT THE ASSESSEE FURNISHED THE REQUISITE PROOF FOR CLAIMING DEDUCTIO N U/S 80HHE AT THE APPELLATE STAGE AND THE ASSESSING OFFICER IN HI S REMAND REPORT, APART FROM POINTING OUT A PROCEDURAL LAPSE, THE ASS ESSING OFFICER FAILED TO FURNISH ANY SPECIFIC COMMENTS ON THE ASSES SEE'S ELIGIBILITY PER SE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A ), THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR SUBMITTED THAT SINCE THE CLAIM U /S 80HHE MADE BY THE ASSESSEE BEFORE THE CIT(A) FOR THE FIRST TIME BY FURNISHING ADDITIONAL EVIDENCE, THE MATTER MAY BE RESTORED BACK ON THE FILE OF THE ASSESSING OFFICER TO FIND OUT TH E ELIGIBILITY CRITERIA FOR CLAIMING DEDUCTION U/S 80HHE. 7. NONE APPEARED ON BEHALF OF THE ASSESSEE. 8. WE HAVE PERUSED THE RECORDS. WE FIND FROM THE O RDER OF THE CIT(A) THAT THE ASSESSING OFFICER IN HIS REM AND REPORT NOT MADE ANY SPECIFIC COMMENTS ON THE ASSESSEE'S ELIGIBI LITY FOR DEDUCTION U/S 80HHE INSPITE OF CIT(A) SOUGHT AO'S C OMMENTS SPECIFICALLY ON THE ISSUE REGARDING THE ASSESSEE'S E LIGIBILITY FOR DEDUCTION U/S 80HHE. IT APPEARS FROM THE CIT(A)'S ORDER THAT ITA NO.630/B/09 5 THE ASSESSEE HAS FILED REQUISITE EVIDENCE SUCH AS A UDIT REPORT AND CERTIFICATE FROM THE C.A. THAT THE ASSESSEE HAD REA LIZED THE ENTIRE CONSIDERATION TOWARDS EXPORTS IN CONVERTIBLE FOREIG N EXCHANGE WITHIN THE STIPULATED PERIOD AS CONTEMPLATED BY THE PROVISIONS OF SECTION 80HHE(2) OF THE ACT AND ALSO IT IS WELL SET TLED LAW THAT THE PURPOSE OF ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH THE LAW AND THE ASSESSING OFFICER WAS DUTY BOUN D TO GRANT ALL DEDUCTIONS AND EXEMPTIONS TO WHICH AN ASSESSEE WAS ENTITLED TO EVEN WHEN NOT CLAIMED IN HIS RETURN OF INCOME IN OR DER TO ARRIVE AT THE CORRECT TAX LIABILITY. OUR VIEW IS SUPPORTED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL T HERMAL POWER CORPORATION LTD. V CIT 229 ITR 383. THE CASE LAW R ELIED UPON BY THE REVENUE IN THE WRITTEN SUBMISSION IS IN THE CAS E OF GOETZE (INDIA) LTD. V CIT 284 ITR 323. IN THAT CASE, RESTR ICTION TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN, AND DID NOT IMPI NGE ON THE POWER OF THE APPELLATE TRIBUNAL U/S 254 OF THE INCO ME TAX ACT. HENCE, IT IS NOT APPLICABLE TO THE CASE UNDER CONSI DERATION. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT FILING OF AUDIT REPORT U/S 10CCAF ALONG WITH THE RETURN OF INCOME I S MERELY A PROCEDURAL REQUIREMENT AND ONLY DIRECTORY IN NATURE AND THE ASSESSEE IS WELL WITHIN ITS RIGHT TO CLAIM FRESH DE DUCTION AT THE APPELLATE STAGE. KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, WE ITA NO.630/B/09 6 DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE FIRST A PPELLATE AUTHORITY AND WE CONFIRM HIS ORDERS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON 20TH NOVEMBER, 2009 . SD/- SD/- (GEORGE GEORGE K) (AKBER BASHA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED :20/11/2009 COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. MSP/17/11/ BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.