ITO, New Delhi V. Sh. Vikas Sethi, New Delhi

ITA 6410/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3760 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Depreciation; Opportunity of being heard; Competent authority; Scheme of amalgamation
• Section: 10B; 6; 12; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO S . 6410/DEL/2015 A.YR. : 2010-11 INCOME TAX OFFICER, WARD 41(3), ROOM NO. 1710, E-2 BLOCK, CIVIC CENTRE, NEW DELHI 110 002 VS. SH. VIKAS SETHI, A-3/102, PASCHIM VIHAR, NEW DELHI 110 063 (PAN: ABAPS6364E) (ASSESSEE) (RESPONDENT) AND I.T.A. NO S . 6 411 /D EL/201 5 A.YR. : 2010-11 INCOME TAX OFFICER, WARD 41(3), ROOM NO. 1710, E-2 BLOCK, CIVIC CENTRE, NEW DELHI 110 002 VS. SH. KETAN SETHI, A-3/102, PASCHIM VIHAR, NEW DELHI 110 063 (PAN: AMGPS0769N) (ASSESSEE) (RESPONDENT) REVENUE BY : MS. ASHIMA NEB, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THESE APPEALS AGAINST THE RESP ECTIVE IMPUGNED ORDERS OF THE LD. CIT(A)-14, NEW DELHI RE LEVANT TO ASSESSMENT YEAR 2010-11 IN RESPECT OF DIFFERENT ASS ESSES. 2 2. SINCE THE ISSUES INVOLVED IN THESE APPEALS WERE I DENTICAL, HENCE, THE APPEALS WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, B Y DEALING WITH ITA NO. 6410/DEL/2015 (AY 2010-11). 3. THE GROUNDS RAISED IN THE REVENUES APPEAL BEIN G ITA NO. 6410/DEL/2015 (AY 2010-11) READ AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 62,25,691/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 10B OF THE I.T. ACT. 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE ALTERNATE CLAIM OF DEDUCTION U/S. 10A OF THE I.T. ACT OF RS. 62,25,691/- IGNORING THE INTENTION OF THE LEGISLATURE TO CREATE DIFFERENT SECTIONS I.E. 10A AND 10B, FOR CLAIM OF DIFFERENT DEDUCTIONS AND FURTHER IGNORING THE FACT THAT THE CONDITION FOR CLAIM OF DEDUCTION UNDER THESE TWO SECTIONS ARE DISTINGUISHABLE AND DIFFERENT. 3. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL. 4. THE GROUNDS RAISED IN THE REVENUES APPEAL BEING ITA NO. 6411/DEL/2015 (AY 2010-11) READ AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 36,90,731/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 10B OF THE I.T. ACT. 3 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE ALTERNATE CLAIM OF DEDUCTION U/S. 10A OF THE I.T. ACT OF RS. 36,90,731/- IGNORING THE INTENTION OF THE LEGISLATURE TO CREATE DIFFERENT SECTIONS I.E. 10A AND 10B, FOR CLAIM OF DIFFERENT DEDUCTIONS AND FURTHER IGNORING THE FACT THAT THE CONDITION FOR CLAIM OF DEDUCTION UNDER THESE TWO SECTIONS ARE DISTINGUISHABLE AND DIFFERENT. 3. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL. 5. AT THE TIME OF HEARING, LD. DR RELIED UPON THE ORDER OF THE AO. FIRST OF ALL, SHE DRAW OUR ATTENTION TOWARDS THE IMPU GNED ORDER ESPECIALLY THE FINDING OF THE LD. CIT(A) AT PAGE NO. 20 AND STATED THAT LD. CIT(A) HAS WRONGLY ALLOWED THE ALTERNATE CLAIM OF DEDUCTION U/S. 10A OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED AS THE ACT) OF RS. 62,25,691/- IGNORING THE INTENTION OF THE LEGISLATURE TO CREATE DIFFERENT SECTIONS I.E. 10A AND 10B OF THE ACT, F OR CLAIM OF DIFFERENT DEDUCTIONS AND FURTHER IGNORING THE FACT THA T THE CONDITIONS FOR CLAIM OF DEDUCTION UNDER THESE TWO SECTIONS ARE DISTINGUISHABLE. SHE FURTHER STATED THAT LD. CIT(A) HAS ERRED IN ALLOWIN G THE AFORESAID CLAIM WITHOUT APPRECIATING THE TOTALITY OF FACTS AND MERIT OF THE CASE AND WITHOUT GIVING PROPER JUSTIFICATION FOR THE FULFILLMENT OF THE CONDITIONS AS STIPULATED U/S. 10A OF THE ACT. SHE FU RTHER STATED THAT 4 LD. CIT(A) HAS OBTAINED THE REMAND REPORT FROM THE AO AND THE AO OBJECTED TO THE SAME, HOWEVER, THE LD. CIT(A) HAS IGNO RED THE SAME, WHICH IS CONTRARY TO THE PROVISIONS OF LAW AN D PROVES THAT THAT LD. CIT(A) IN A HURRY MANNER HAS PASSED THE NON- SPEAKING AND LACONIC ORDER. SHE FURTHER DRAW OUR ATTENTION TOWARDS THE ASSESSMENT ORDER PASSED BY THE AO ESPECIALLY THE FIND ING GIVEN AT PAGE NO. 5 WHEREIN THE AO HAS OBSERVED THAT ASSESSEE HAS NOT GIVEN ANY SUBMISSION OR DOCUMENTS OR ANY REVISED CO MPAUTION OF INCOME CLAIMING THE DEDUCTION U/S. 10A OF THE I.T. AC T IN SUPPORT OF ITS CLAIM THAT WHY THE DEDUCTION IF NOT ALLOWED U/S. 10B, MAY BE GIVEN U/S. 10A OF THE INCOME TAX ACT, 1961. SHE ALSO STATED THAT AO OBSERVED THAT WITH REGARD TO THE OTHER LETTER DATED 20 .3.2013 SUBMITTED BY THE AR OF THE ASSESSEE TO CONSIDER ITS CLA IM ACCORDING TO THE CIRCULAR NO. 01/2013 DATED 17.1.2013, THE A.R. HIMSELF SUBMITTED THAT THE ISSUE IN THE CIRCULAR WAS DIFFERENT BUT THE MOTIVE WAS SAME TO GRANT DEDUCTION U/S. 10B TO THE ASSESSEE. IN VIEW OF THE ABOVE, SHE REQUESTED THAT THE ISSUE IN DISPUTE REL ATING TO ALLOWING THE CLAIM U/S. 10A OF THE ACT BY THE LD. C IT(A) NEEDS TO BE SET ASIDE TO THE FILE OF THE AO WITH THE DIRECTIONS TO DEC IDE THE ISSUES IN DISPUTE AFRESH, AFTER CONSIDERING ALL THE E VIDENCES / DOCUMENTS AND GIVE PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 6. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTE R IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE I SSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THA T NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND A GAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT AP PEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 7. WE HAVE LD. DR AND PERUSED RECORDS, ESPECIALLY T HE ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING THE RELEVANT FINDING S OF THE AO AS WELL AS LD. CIT(A) AS UNDER:- AOS FINDING ON CONSIDERING THE JUDGMENTS OF THE HONBLE DELHI HIGH COURT DATED 17.9.2012 AND 04.01.2013 ALSO, IT IS FOUND THAT THE MODIFIED DECISION HAS BEEN REFERRED TO THE HONBLE ITAT TO ASCERTAIN THE CLAIM OF THE ASSESSEE THAT WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SECTION 10A AS CLAIMED. HENCE, 6 MODIFICATION NOT MEANS THAT THE DEDUCTION U/S. 10B OF THE I.T. ACT, 1961 BE ALLOWED. IN THIS CASE, THE ASSESSEE HAS NOT GIVEN ANY SUBMISSION OR DOCUMENTS OR ANY REVISED COMPUTATION OF INCOME CLAIMING THE DEDUCTION U/S. 10A OF THE I.T. ACT IN SUPPORT OF ITS CLAIM THAT WHY THE DEDUCTION IF NOT ALLOWED U/S. 10B, MAY BE GIVEN U/S. 10A OF THE INCOME TAX ACT, 1961. WITH REGARD TO THE CLAIM ACCORDING TO THE CIRCULAR NO. 01/2013 DATED 17.01.2013, THE A.R. HIMSELF SUBMITTED THAT THE ISSUE IN THE CIRCULAR WAS DIFFERENT BUT THE MOTIVE WAS SAME TO GRANT DEDUCTION U/S. 10B TO THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSIONS, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION, HENCE, THE SAME IS REJECTED. THE DEDUCTION CLAIMED U/S. 10B OF THE I.T. ACT, 1961 AT RS. 62,25,691/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 7 LD. CIT(A)S FINDING .IN VIEW OF THE ABOVE DISCUSSION RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE ITA NO. 1295/2008 IN THE CASE OF CIT VS. MANTEC CONSULTANTS (P) LTD. AND IN THE CASE OF CIT VS. REGENCY CREATION LTD. WHILE DENYING THE CLAIM OF EXEMPTION U/S. 10B OF THE APPELLANT THE HONBLE HIGH COURT MODIFIED ITS ORDER DATED 04.01.2013 WHEREIN IT HAS DIRECTED THE HONBLE ITAT TO EXAMINE WHETHER THE ASSESSEE IN THAT CASE WAS ENTITLED TO THE BENEFIT OF SECTION 10A OF THE ACT I AM OF THE OPINION THAT THE APPELLANT IS ENTITLED FOR THE ALTERNATIVE CLAIM OF EXEMPTION U/S. 10A OF THE ACT AS HE FULFILLS THE CONDITIONS PRESCRIBED U/S. 10A OF THE ACT. ACCORDINGLY, THE GROUNDS OF APPEAL ARE ALLOWED AND LD. AO IS DIRECTED TO ALLOW THE CLAIM OF EXEMPTION U/S. 10A OF THE ACT. HENCE, ALL THE ABOVE GROUNDS OF APPEAL ARE ALLOWED. 8 7.1 FOR THE SAKE OF CONVENIENCE, WE ARE ALSO REPROD UCING THE RELEVANT PROVISIONS OF SECTION 10A OF THE INCOME TAX ACT, 1961 AS UNDER:- 10A. SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED UNDERTAKINGS IN FREE TRADE ZONE, ETC.- (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE96A OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE : PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UNDERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITLED TO DEDUCTION REFERRED TO IN THIS SUB-SECTION ONLY FOR THE UNEXPIRED PERIOD OF THE AFORESAID TEN CONSECUTIVE ASSESSMENT YEARS : PROVIDED FURTHER THAT WHERE AN UNDERTAKING INITIALLY LOCATED IN ANY FREE TRADE ZONE OR EXPORT PROCESSING ZONE IS SUBSEQUENTLY LOCATED IN A SPECIAL ECONOMIC 9 ZONE BY REASON OF CONVERSION OF SUCH FREE TRADE ZONE OR EXPORT PROCESSING ZONE INTO A SPECIAL ECONOMIC ZONE, THE PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION SHALL BE RECKONED FROM THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGAN TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE IN SUCH FREE TRADE ZONE OR EXPORT PROCESSING ZONE : PROVIDED ALSO THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2003, THE DEDUCTION UNDER THIS SUB-SECTION SHALL BE NINETY PE R CENT OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE : PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED TO ANY UNDERTAKING FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2012 AND SUBSEQUENT YEARS. (1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB- SECTION (1), THE DEDUCTION, IN COMPUTING THE TOTAL INCOME OF AN UNDERTAKING, WHICH BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DURING THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2003, IN ANY SPECIAL ECONOMIC ZONE, SHALL BE, 10 (I) HUNDRED PER CENT OF PROFITS AND GAINS DERIVED FROM THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF FIVE CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, AND THEREAFTER, FIFTY PER CENT OF SUCH PROFI TS AND GAINS FOR FURTHER TWO CONSECUTIVE ASSESSMENT YEARS, AND THEREAFTER; (II) FOR THE NEXT THREE CONSECUTIVE ASSESSMENT YEARS, SO MUCH OF THE AMOUNT NOT EXCEEDING FIFTY PER CENT OF THE PROFIT AS IS DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE PREVIOUS YEAR IN RESPECT OF WHICH THE DEDUCTION IS TO BE ALLOWED AND CREDITED TO A RESERVE ACCOUNT (TO BE CALLED THE SPECIAL ECONOMIC ZONE RE-INVESTMENT ALLOWANCE RESERVE ACCOUNT) TO BE CREATED AND UTILISED FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE IN THE MANNER LAID DOWN IN SUB-SECTION (1B) : PROVIDED THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED TO AN ASSESSEE WHO DOES NOT FURNISH A RETURN OF HIS INCOME ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139. (1B) THE DEDUCTION UNDER CLAUSE (II) OF SUB-SECTION (1A) SHALL BE ALLOWED ONLY IF THE FOLLOWING CONDITI ONS ARE FULFILLED, NAMELY: 11 (A) THE AMOUNT CREDITED TO THE SPECIAL ECONOMIC ZONE RE-INVESTMENT ALLOWANCE RESERVE ACCOUNT IS TO BE UTILISED (I) FOR THE PURPOSES OF ACQUIRING NEW MACHINERY OR PLANT WHICH IS FIRST PUT TO USE BEFORE THE EXPIRY OF A PERIOD OF THREE YEARS NEXT FOLLOWING THE PREVIOUS YEAR IN WHICH THE RESERVE WAS CREATED; AND (II) UNTIL THE ACQUISITION OF NEW MACHINERY OR PLANT AS AFORESAID, FOR THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING OTHER THAN FOR DISTRIBUTION BY WAY OF DIVIDENDS OR PROFITS OR FOR REMITTANCE OUTSIDE INDIA AS PROFITS OR FOR THE CREATION OF ANY ASSET OUTSIDE INDIA; (B) THE PARTICULARS, AS MAY BE PRESCRIBED IN THIS BEHALF, HAVE BEEN FURNISHED BY THE ASSESSEE IN RESPECT OF NEW MACHINERY OR PLANT ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH PLANT OR MACHINERY WAS FIRST PUT TO USE. (1C) WHERE ANY AMOUNT CREDITED TO THE SPECIAL ECONOMIC ZONE RE-INVESTMENT ALLOWANCE RESERVE ACCOUNT UNDER CLAUSE (II) OF SUB-SECTION (1A), (A) HAS BEEN UTILISED FOR ANY PURPOSE OTHER THAN THOSE REFERRED TO IN SUB-SECTION (1B), THE AMOUNT SO UTILISED; OR (B) HAS NOT BEEN UTILISED BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN SUB-CLAUSE (I) OF CLAUSE (A) OF 12 SUB-SECTION (1B), THE AMOUNT NOT SO UTILISED, SHALL BE DEEMED TO BE THE PROFITS, (I) IN A CASE REFERRED TO IN CLAUSE (A), IN THE YEA R IN WHICH THE AMOUNT WAS SO UTILISED; OR (II) IN A CASE REFERRED TO IN CLAUSE (B), IN THE YEA R IMMEDIATELY FOLLOWING THE PERIOD OF THREE YEARS SPECIFIED IN SUB-CLAUSE (I) OF CLAUSE (A) OF SUB- SECTION (1B), AND SHALL BE CHARGED TO TAX ACCORDINGLY. (2) THIS SECTION APPLIES TO ANY UNDERTAKING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (I) IT HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR (A) COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1981, IN ANY FREE TRADE ZONE; OR (B) COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1994, IN ANY ELECTRONIC HARDWARE TECHNOLOGY PARK, OR, AS THE CASE MAY BE, SOFTWARE TECHNOLOGY PARK; (C) COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2001 IN ANY SPECIAL ECONOMIC ZONE; (II) IT IS NOT FORMED BY THE SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : 13 PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF ANY UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKINGS AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (III) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION.THE PROVISIONS OF EXPLANATION 1 AND EXPLANATION 2 TO SUB-SECTION (2) OF SECTION 80-I SHALL APPLY FOR THE PURPOSES OF CLAUSE (III) OF THIS SUB-SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUSE (II) OF THAT SUB-SECTION. (3) THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR, WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. EXPLANATION 1.FOR THE PURPOSES OF THIS SUB- SECTION, THE EXPRESSION COMPETENT AUTHORITY 14 MEANS THE RESERVE BANK OF INDIA OR SUCH OTHER AUTHORITY AS IS AUTHORISED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE. EXPLANATION 2.THE SALE PROCEEDS REFERRED TO IN THIS SUB-SECTION SHALL BE DEEMED TO HAVE BEEN RECEIVED IN INDIA WHERE SUCH SALE PROCEEDS ARE CREDITED TO A SEPARATE ACCOUNT MAINTAINED FOR THE PURPOSE BY THE ASSESSEE WITH ANY BANK OUTSIDE INDIA WITH THE APPROVAL OF THE RESERVE BANK OF INDIA. (4) FOR THE PURPOSES OF SUB-SECTIONS (1) AND (1A), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. (5) THE DEDUCTION UNDER THIS SECTION SHALL NOT BE ADMISSIBLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR AFTER THE 1ST DAY OF APRIL, 2001, UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FORM6, ALONGWITH THE RETURN OF INCOME, THE REPORT OF AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288, CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. 15 (6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE LAST OF THE RELEVANT ASSESSMENT YEARS, OR OF ANY PREVIOUS YEAR, RELEVANT TO ANY SUBSEQUENT ASSESSMENT YEAR, (I) SECTION 32, SECTION 32A, SECTION 33, SECTION 35 AND CLAUSE (IX) OF SUB-SECTION (1) OF SECTION 36 SHA LL APPLY AS IF EVERY ALLOWANCE OR DEDUCTION REFERRED T O THEREIN AND RELATING TO OR ALLOWABLE FOR ANY OF THE RELEVANT ASSESSMENT YEARS ENDING BEFORE THE 1ST DAY OF APRIL, 2001, IN RELATION TO ANY BUILDING, MACHINERY, PLANT OR FURNITURE USED FOR THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING IN THE PREVIOUS YEAR RELEVANT TO SUCH ASSESSMENT YEAR OR ANY EXPENDITURE INCURRED FOR THE PURPOSES OF SUCH BUSINESS IN SUCH PREVIOUS YEAR HAD BEEN GIVEN FULL EFFECT TO FOR THAT ASSESSMENT YEAR ITSELF AND ACCORDINGLY SUB-SECTION (2) OF SECTION 32, CLAUSE (I I) OF SUB-SECTION (3) OF SECTION 32A, CLAUSE (II) OF S UB- SECTION (2) OF SECTION 33, SUB-SECTION (4) OF SECTION 35 OR THE SECOND PROVISO TO CLAUSE (IX) OF SUB- SECTION (1) OF SECTION 36, AS THE CASE MAY BE, SHALL NOT APPLY IN RELATION TO ANY SUCH ALLOWANCE OR DEDUCTION; (II) NO LOSS REFERRED TO IN SUB-SECTION (1) OF SECTIO N 72 OR SUB-SECTION (1) OR SUB-SECTION (3) OF SECTION 16 74, IN SO FAR AS SUCH LOSS RELATES TO THE BUSINESS OF THE UNDERTAKING, SHALL BE CARRIED FORWARD OR SET OFF WHERE SUCH LOSS RELATES TO ANY OF THE RELEVANT ASSESSMENT YEARS ENDING BEFORE THE 1ST DAY OF APRIL, 2001; (III) NO DEDUCTION SHALL BE ALLOWED UNDER SECTION 80HH OR SECTION 80HHA OR SECTION 80-I OR SECTION 80-IA OR SECTION 80-IB IN RELATION TO THE PROFITS AND GAINS OF THE UNDERTAKING; AND (IV) IN COMPUTING THE DEPRECIATION ALLOWANCE UNDER SECTION 32, THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING SHALL BE COMPUTED AS IF THE ASSESSEE HAD CLAIMED AND BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF DEPRECIATION FOR EACH OF TH E RELEVANT ASSESSMENT YEAR. (7) THE PROVISIONS OF SUB-SECTION (8) AND SUB- SECTION (10) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE UNDERTAKING REFERRED T O IN THIS SECTION AS THEY APPLY FOR THE PURPOSES OF THE UNDERTAKING REFERRED TO IN SECTION 80-IA. (7A) WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO THE DEDUCTION UNDER THIS SECTION IS TRANSFERRED, BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION, TO ANOTHER INDIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER, 17 (A) NO DEDUCTION SHALL BE ADMISSIBLE UNDER THIS SECTION TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIOUS YEAR IN WHICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND (B) THE PROVISIONS OF THIS SECTION SHALL, AS FAR AS MAY BE, APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. (7B) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY UNDERTAKING, BEING A UNIT REFERRED TO IN CLAUSE (ZC) OF SECTION 2 OF THE SPECIAL ECONOMIC ZONES ACT, 2005, WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2006 IN ANY SPECIAL ECONOMIC ZONE. (8) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOREGOING PROVISIONS OF THIS SECTION, WHERE THE ASSESSEE, BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139, FURNISHES TO THE ASSESSING OFFICER A DECLARATIO N IN WRITING THAT THE PROVISIONS OF THIS SECTION MAY NOT BE MADE APPLICABLE TO HIM, THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO HIM FOR ANY OF THE RELEVANT ASSESSMENT YEARS. (9) [OMITTED BY THE FINANCE ACT, 2003, W.E.F. 1-4- 2004.] 18 (9A) [OMITTED BY THE FINANCE ACT, 2003, W.E.F. 1-4- 2004.] EXPLANATION 1. [OMITTED BY THE FINANCE ACT, 2003, W.E.F. 1-4-2004.] EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, (I) COMPUTER SOFTWARE MEANS (A) ANY COMPUTER PROGRAMME RECORDED ON ANY DISC, TAPE, PERFORATED MEDIA OR OTHER INFORMATION STORAGE DEVICE; OR (B) ANY CUSTOMIZED ELECTRONIC DATA OR ANY PRODUCT OR SERVICE OF SIMILAR NATURE, AS MAY BE NOTIFIED14 B Y THE BOARD, WHICH IS TRANSMITTED OR EXPORTED FROM INDIA TO ANY PLACE OUTSIDE INDIA BY ANY MEANS; (II) CONVERTIBLE FOREIGN EXCHANGE MEANS FOREIGN EXCHANGE WHICH IS FOR THE TIME BEING TREATED BY THE RESERVE BANK OF INDIA AS CONVERTIBLE FOREIGN EXCHANGE FOR THE PURPOSES OF THE FOREIGN EXCHANGE REGULATION ACT, 1973 (46 OF 1973), AND ANY RULES MADE THEREUNDER OR ANY OTHER CORRESPONDING LAW FOR THE TIME BEING IN FORCE; (III) ELECTRONIC HARDWARE TECHNOLOGY PARK MEANS ANY PARK SET UP IN ACCORDANCE WITH THE ELECTRONIC HARDWARE TECHNOLOGY PARK (EHTP) SCHEME NOTIFIED BY THE GOVERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; 19 (IV) EXPORT TURNOVER MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKING] OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB-SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA; (V) FREE TRADE ZONE MEANS THE KANDLA FREE TRADE ZONE AND THE SANTACRUZ ELECTRONICS EXPORT PROCESSING ZONE AND INCLUDES ANY OTHER FREE TRADE ZONE WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE,SPECIFY FOR THE PURPOSES OF THIS SECTION; (VI) RELEVANT ASSESSMENT YEAR MEANS ANY ASSESSMENT YEAR FALLING WITHIN A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS REFERRED TO IN THIS SECTION; 20 (VII) SOFTWARE TECHNOLOGY PARK MEANS ANY PARK SET UP IN ACCORDANCE WITH THE SOFTWARE TECHNOLOGY PARK SCHEME NOTIFIED18 BY THE GOVERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; (VIII) SPECIAL ECONOMIC ZONE MEANS A ZONE WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY AS A SPECIAL ECONOMIC ZONE FOR THE PURPOSES OF THIS SECTION. EXPLANATION 3.FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE PROFITS AND GAINS DERIVED FROM ON SITE DEVELOPMENT OF COMPUTER SOFTWARE (INCLUDING SERVICES FOR DEVELOPMENT OF SOFTWARE) OUTSIDE INDIA SHALL BE DEEMED TO BE THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF COMPUTER SOFTWARE OUTSIDE INDIA. EXPLANATION 4.FOR THE PURPOSES OF THIS SECTION, MANUFACTURE OR PRODUCE SHALL INCLUDE THE CUTTING AND POLISHING OF PRECIOUS AND SEMI-PRECIOUS STONES. 7.2 AFTER PERUSING THE AFORESAID FINDINGS AS WELL AS THE PROVISIONS OF SECTION 10A OF THE ACT, WE FIND THAT LD. CIT(A) IN HIS IMPUGNED ORDER HAS WRONGLY ALLOWED THE ALTERNATE CLAIM OF DEDUCTION U/S. 10A OF THE I.T. ACT OF RS. 62,25,691/- BY TOTALLY IGNORING THE I NTENTION OF THE 21 LEGISLATURE TO CREATE DIFFERENT SECTIONS I.E. 10A AND 1 0B, FOR CLAIM OF DIFFERENT DEDUCTIONS AND FURTHER IGNORING THE FACT THA T THE CONDITIONS FOR CLAIM OF DEDUCTION UNDER THESE TWO SECTIONS ARE DISTINGUISHABLE. WE FURTHER NOTE THAT LD. CIT(A)S ACTION IN ALLOWING TH E AFORESAID CLAIM IS WITHOUT APPRECIATING THE TOTALITY OF FACTS AND MERIT OF THE CASE AND WITHOUT GIVING PROPER JUSTIFICATION FOR THE FULFILLMENT OF THE CONDITIONS AS STIPULATED U/S. 10A OF THE ACT. WE ALS O NOTE THAT LD. CIT(A) HAS OBTAINED THE REMAND REPORT FROM THE AO AND THE AO OBJECTED TO THE SAME, BUT LD. CIT(A) HAS IGNORED THE OB JECTIONS RAISED BY THE AO, WHICH IS CONTRARY TO THE PROVISIONS OF LAW AND PROVES THAT LD. CIT(A) IN A HURRY MANNER HAS PASSED THE NON- SPEAKING AND LACONIC ORDER. WE FURTHER NOTE THAT AO WHILE PASSING THE ASSESSMENT ORDER HAS OBSERVED THAT ASSESSEE HAS N OT GIVEN ANY SUBMISSION OR DOCUMENTS OR ANY REVISED COMPUTATION O F INCOME CLAIMING THE DEDUCTION U/S. 10A OF THE I.T. ACT IN SUP PORT OF ITS CLAIM THAT WHY THE DEDUCTION IF NOT ALLOWED U/S. 10B OF THE ACT, MAY BE GIVEN U/S. 10A OF THE INCOME TAX ACT, 1961. WE FURTHE R NOTE THAT AO FURTHER OBSERVED THAT WITH REGARD TO THE LETTER DATED 20.3.2013 SUBMITTED BY THE AR OF THE ASSESSEE TO CONSIDER ITS CLA IM ACCORDING TO THE CIRCULAR NO. 01/2013 DATED 17.1.2013, THE A.R. OF THE ASSESSEE HIMSELF SUBMITTED THAT THE ISSUE IN THE CIRCUL AR WAS DIFFERENT BUT THE MOTIVE WAS SAME TO GRANT DEDUCTION U/S. 10B TO 22 THE ASSESSEE, WHICH IS CONTRARY TO LAW AND ITSELF ESTA BLISH THAT LD. CIT(A) HAS PASSED THE NON-SPEAKING AND LACONIC ORDER . IN OUR VIEW, IT IS TRUE THAT REQUIREMENT OF STATING REASONS FOR JUDI CIAL ORDERS NECESSARILY DOES NOT MEAN A VERY DETAILED OR LENGTHY O RDER, BUT THERE SHOULD BE SOME REASONING RECORDED BY THE LOWER AUTHORITY FOR GRANTING RELIEF TO THE ASSESSEE. IN VIEW OF THE ABO VE, WE ARE UNABLE TO FIND ANY INFIRMITY IN THE ARGUMENTS ADVANCED ON BEH ALF OF THE DEPARTMENT, THAT NO REASONS HAVE BEEN RECORDED FOR A LLOWING THE CLAIM OF THE ASSESSEE, THIS LEGAL INFIRMITY HAS, IN FACT, PREJUDICIALLY AFFECTED THE CASE OF THE ASSESSEE BEFORE US. HENCE, WE ARE UNABLE TO SUSTAIN THE ORDER OF THE LD. CIT(A) AND FOR THE AFORE -RECORDED REASONS, WE SET ASIDE THE IMPUGNED ORDER AND REMIT BA CK THE ISSUES IN DISPUTE TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE ISSUES IN DISPUTE AFRESH, IN ACCORDANCE WITH LAW, AFTER GIV ING ADEQUATE OPPORTUNITY OF BEING HEARD AND AFTER CONSIDERING THE RELEVANT PROVISIONS OF THE ACT ALONGWITH THE DOCUMENTS / EVID ENCES FILED BY THE ASSESSEE. ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE EVIDENCES AND DOCUMENTS BEFORE THE AO TO SUBSTANTIATE HIS CLAI M U/S. 10A OF THE ACT. IN THE RESULT, THE ITA NO. 6410/DEL/2015 (AY 2010-11) STANDS ALLOWED FOR STATISTICAL PURPOSES. 8. WITH REGARD TO ITA NO. 6411/DEL/2015 (AY 2010-11 ) IS CONCERNED, FOLLOWING THE CONSISTENT VIEW AS TAKEN IN AY 2010-11 IN 23 ITA NO. 6410/DEL/2015 IN THE CASE OF ITO VS. VIKAS S ETHI, AS AFORESAID, THE GROUNDS RAISED IN ITA NO. 6411/DEL/2 015 (AY 2010- 11) ALSO STAND REMITTED TO THE FILE OF THE AO WITH THE S IMILAR DIRECTIONS AS GIVEN IN ASSESSMENT YEAR 2010-11 IN IT A NO. 6410/DEL/2015, AS AFORESAID. 9. IN THE RESULT, BOTH THE REVENUE APPEALS ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 05/02/2018. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 05/02/2018 COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 24