Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 4252 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-09-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
E
Assessment Year
2010-2011
Appeal Filed On
24-12-2014
Judgement Text
1 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCHES: E NEW DELHI ] BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER. I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. INCOME TAX OFFICER, M/S. OPK E SERVICES PVT. LTD., WARD : 19 (1), VS. C117, OKHLA INDUSTRIAL AREA, NEW DELHI. PHASEI, NEW DELHI 110 020. PAN : AAACO 8419 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PARVEEN JINDAL, C. A.; DEPARTMENT BY : MS. REKHA VIMAL, SR. D. R.; DATE OF HEARING : 25.09.2017 DATE OF PRONOUNCEMENT : 26.09.2017 O R D E R . PER BHAVNESH SAINI, J. M. : THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT (APPEALS)-XVI, DELHI, DATED 29 TH SEPTEMBER, 2014 FOR ASSESSMENT YEAR 2010-11, ON THE FOLLOWING GROUND :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 10A, RELYING ON CIRCULAR NO.1/2005 DATED 2 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. 6.01.2005 OF CBDT, NEW DELHI RELATING TO CLARIFICATION REGARDING TAX HOLIDAY IN CONTEXT OF SECTION 10B, THE RATIO OF THE CIRCULAR EQUALLY APPLIES TO SECTION 10A, AS THE ELIGIBILITY OF SECTION 10A AND 10B CANNOT APPLY TO AN UNDERTAKING WHILE GRANTING DEDUCTION UNDER SECTION 10A. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE COMPANY HAD CLAIMED DEDUCTION OF RS.53,05,949/- UNDER SECTION 10A OF THE INCOME TAX ACT. THE ASSESSEE ALSO SUBMITTED THAT IT HAS FULFILLED THE CONDITIONS ENVISAGED UNDER SECTION 10A OF THE I. T. ACT. THE ASSESSING OFFICER, HOWEVER, NOTED THAT SIMILAR DISALLOWANCES UNDER SECTION 10A HAVE BEEN MADE IN PRECEDING ASSESSMENT YEAR 2009-10. THEREFORE, THE AO DISALLOWED DEDUCTION UNDER SECTION 10A OF THE I. T. ACT, BECAUSE ONE OF CONDITION FOR ALLOWING DEDUCTION UNDER SECTION 10A IS NOT SATISFIED. 2.1 THE LEARNED CIT (APPEALS), CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, IN THE LIGHT OF HIS ORDER FOR PRECEDING ASSESSMENT YEAR 2009-10 ALLOWED THE CLAIM OF ASSESSEE, SUBJECT TO VERIFICATION BY THE ASSESSING OFFICER. THE FINDINGS OF THE LEARNED CIT (APPEALS) IN PARA 3.1 OF THE ORDER ARE REPRODUCED AS UNDER :- 3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE A/R OF THE APPELLANT COMPANY, THE FACTS OF THE CASE AS WELL AS THE FINDINGS OF THE A.O. GROUND NO. 1 OF APPEAL IS DIRECTED 3 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. AGAINST DISALLOWANCE OF DEDUCTION CLAIMED U/S 10A OF THE IT ACT. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF IT ENABLED SERVICES, DERIVES INCOME FROM BUSINESS OF 100% EXPORT ORIENTED UNIT AND CLAIMED DEDUCTION U/S 10A OF RS. 53,05,949/-. THE ASSESSEE COMPANY STARTED ITS OPERATION FROM LUDHIANA ON 7 TH JULY 2006 BUT APPLIED FOR CONVERSION FROM DTA UNIT TO STPI UNIT SUBSEQUENT TO THE START OF OPERATIONS. THE APPROVAL WAS GIVEN TO THE ASSESSEE VIDE STPI SANCTION LETTER DT. 07.04.2008. AO OBSERVED THAT THE ASSESSEE COMPANY HAD ALREADY COMMENCED MANUFACTURING EVEN BEFORE THE APPROVAL WAS GRANTED TO THE ASSESSEE COMPANY BY STPI. AO HELD THAT THE ASSESSEE COMPANY WAS REQUIRED TO SET UP A NEW UNIT AS PER THE CONDITIONS LAID OUT IN SEC 10A TO BE ELIGIBLE FOR DEDUCTION UNDER THE SECTION. AO WAS OF THE VIEW THAT CONDITION OF SEC 10A REQUIRED THAT AN UNDERTAKING HAS BEGAN OR BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE IN ANY STP. SINCE THE ASSESSEE COMPANY HAS ALREADY COMMENCED MANUFACTURING IN JULY 2006, BEFORE APPROVAL WAS GRANTED BY THE STPI, THEREFORE, THE AO HELD THAT 10A DEDUCTION IS NOT ALLOWABLE. ACCORDINGLY THE AO DISALLOWED THE CLAIM OF DEDUCTION U/S 1UA. IDENTICAL DISALLOWANCE WAS MADE BY THE AO IN AY 2009-10 WHICH WAS REVERSED BY ME IN APPEAL NO. A. NO. 327/ 11-12 DT. 29.01.2014 AND THE APPEAL WAS ALLOWED WITH DIRECTION TO THE AO AS UNDER :- 4.1.2 IN THIS REGARD CIRCULAR NO. 1/2005 DT. 06/01/2005 OF CBDT, NEW DELHI RELATING TO CLARIFICATION REGARDING TAX 4 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. HOLIDAY UNDER SECTION 10B OF THE INCOME-TAX ACT TO 100% EXPORT ORIENTED UNDERTAKING SAYS :- 4. THE MATTER HAS BEEN EXAMINED AND IT IS HEREBY CLARIFIED THAT AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA (DTA) AND DERIVING PROFIT FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT, WHICH IS SUBSEQUENTLY CONVERTED INTO A EOU, SHALL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE IT ACT, ON GETTING APPROVAL AS 100% EXPORT ORIENTED UNDERTAKING. IN SUCH A CASE, THE DEDUCTION SHALL BE AVAILABLE ONLY FROM THE YEAR IN WHICH IT HAS GOT THE APPROVAL AS 100% EOU AND SHALL BE AVAILABLE ONLY FOR THE REMAINING PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS, BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS A DTA UNIT. FURTHER, IN THE YEAR OF APPROVAL, THE DEDUCTION SHALL BE RESTRICTED TO THE PROFITS DERIVED FROM EXPORTS, FROM AND AFTER THE DATE OF APPROVAL OF THE DTA UNIT AS 100% EOU. MOREOVER, THE DEDUCTION TO SUCH UNITS IN ANY CASE WILL NOT BE AVAILABLE AFTER ASSESSMENT YEAR 2009-10. 4.1.3 ALTHOUGH THE ABOVE CIRCULAR IS IN THE CONTEXT OF SEC 10B, THE RATIO OF THE CIRCULAR EQUALLY APPLIES TO SEC 10A. IN THIS VIEW OF THE MATTER, I FIND SUPPORT FROM THE DECISIONS 5 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. IN THE CASE OF CIT VS. EXPERT OUTSOURCE PVT. LTD. [2010] 20 TAXMANN.COM 481 (KAR.), CIT V. MAXIM INDIA INTEGRATED CIRCUIT DESIGN PVT. LTD. (2011) 202 TAXMAN 365 (KAR), ACIT V. NAGESH CHUNDUR ITA NO. 83 AND 729/MDS/2011, ACIT V. E 4 E APPLICATION SERVICES PVT. LTD. ITA NO. 470 AND 471/BANG/2009 AND ITO V. IQURA TECHNOLOGIES PVT. LTD. ITA NO. 280-284 (BANG)/2009. FROM THE ABOVE CIRCULAR IT IS CLEAR THAT DEDUCTION SHALL BE AVAILABLE TO AN EXISTING UNIT EVEN IF IT WAS SET UP BEFORE IT GOT THE APPROVAL FROM STPI. HOWEVER, DEDUCTION SHALL BE AVAILABLE U/S 10A FROM THE YEAR IN WHICH THE UNIT HAS GOT THE APPROVAL FROM STPI AND SHALL BE AVAILABLE ONLY FOR THE REMAINING PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE. FURTHER, THAT DEDUCTION WILL NOT BE AVAILABLE AFTER THE ASSESSMENT YEAR 2009-10. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE UNIT STARTED ITS OPERATION FROM JULY 2006, AND APPROVAL WAS RECEIVED ON 07.04.2008 IN THE PREVIOUS YEAR RELEVANT TO AY 2009-10. IN VIEW OF THE ABOVE, THE DEDUCTION U/S 10A IS ALLOWABLE TO THE APPELLANT IN THE INSTANT AY 2009-10 PROVIDED IT FULFILLS THE REMAINING CONDITIONS OF SEC 10A. IT IS SEEN THAT NO FINDING IS GIVEN BY THE AO AS TO WHETHER THE UNIT OF THE APPELLANT FULFILLS THE REMAINING CONDITIONS OF SEC 10A. IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO VERIFY WHETHER REMAINING CONDITIONS OF SEC 10A ARE FULFILLED BY THE UNIT AND ALLOW THE DEDUCTION U/S 10A IF THE UNIT 6 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. FULFILLS THE REMAINING CONDITIONS OF SEC 10A. THE APPEAL IS ALLOWED IN THIS GROUND WITH DIRECTIONS TO THE AO. SINCE, THE FACTS AND CIRCUMSTANCES ARE IDENTICAL, THEREFORE, IT IS HELD THAT THE DEDUCTION U/S 10A IS ALLOWABLE TO THE APPELLANT PROVIDED IT FULFILLS THE REMAINING CONDITIONS OF SEC 10A. THE AO IS DIRECTED TO VERIFY WHETHER REMAINING CONDITIONS OF SEC 10A ARE FULFILLED BY THE UNIT AND ALLOW THE DEDUCTION U/S 10A IF THE UNIT FULFILLS THE REMAINING CONDITIONS OF SEC 10A. THE APPEAL IS ALLOWED IN THIS GROUND WITH DIRECTIONS TO THE AO. 2.2 THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE DEPARTMENTAL APPEAL IN ASSESSMENT YEAR 2009-10 HAD BEEN DISMISSED BY THE TRIBUNAL, BECAUSE OF LOW TAX EFFECT IN I. T. APPEAL NO. 2238/DEL/2014 DATED 29 TH AUGUST, 2017. HE HAS ALSO SUBMITTED THAT THE ASSESSING OFFICER IN THE ORDER UNDER SECTION 154/250 OF THE INCOME TAX ACT FOR ASSESSMENT YEAR UNDER APPEAL 2010-11 VIDE ORDER DATED 9 TH JUNE, 2016 AFTER VERIFYING THE FACTS ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE I. T. ACT AS PER DIRECTIONS OF THE LD. CIT (APPEALS). COPY OF THE ORDER IS PLACED ON RECORD. HE HAS ALSO SUBMITTED THAT ON THE IDENTICAL ISSUE, ITAT, DELHI BENCH E IN THE CASE OF INCOME TAX OFFICER VS. M/S ONS INTERACTIVE SOLUTIONS PVT. LTD. IN I. T. APPEAL NO. 7 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. 4084/DEL/2014 FOR ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 22 ND MARCH, 2017 DISMISSED THE DEPARTMENTAL APPEAL ON IDENTICAL ISSUE. COPY OF THE ORDER IS PLACED ON RECORD. HE HAS, THEREFORE, SUBMITTED THAT DEPARTMENTAL APPEAL HAS NO MERIT, BECAUSE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE LEARNED SR. D.R. RELIED UPON ORDER OF THE ASSESSING OFFICER, HOWEVER, SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 3. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES, IT IS CLEAR THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER IS THE ASSESSEE AS WELL AS IN THE CASE OF M/S. ONS INTERACTIVE SOLUTIONS PVT. LTD. (SUPRA). THE ASSESSING OFFICER DISALLOWED DEDUCTION UNDER SECTION 10A FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2009-10 ON IDENTICAL FACTS. THE LEARNED CIT (APPEALS) IN ASSESSMENT YEAR 2009-10 ALLOWED THE DEDUCTION UNDER SECTION 10A TO THE ASSESSEE, SUBJECT TO VERIFICATION OF THE CONDITIONS OF SECTION 10A BY THE AO. SIMILAR ORDER PASSED IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSING OFFICER IN VIEW OF DIRECTION OF THE LEARNED CIT (APPEALS) AND APPLICATION OF THE ASSESSEE UNDER SECTION 154 OF THE I. T. ACT VIDE ORDER DATED 9 TH JUNE, 2016 AFTER VERIFYING THE FACTS ALLOWED DEDUCTION UNDER SECTION 10A OF THE I. T. ACT TO THE ASSESSEE. THE DEPARTMENTAL APPEAL 8 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. FOR ASSESSMENT YEAR 2009-10 HAD ALREADY BEEN DISMISSED. SINCE THE ASSESSING OFFICER HAS ALREADY VERIFIED THE FACTS AND ALLOWED DEDUCTION UNDER SECTION 10A, THEREFORE, NO GRIEVANCE OF THE DEPARTMENT IS LEFT FOR CONSIDERATION. IT MAY ALSO BE NOTED THAT THE TRIBUNAL IN THE CASE OF M/S. ONS INTERACTIVE SOLUTIONS PVT. LTD. (SUPRA) ALSO DISMISSED THE DEPARTMENTAL APPEAL ON IDENTICAL ISSUE. THERE IS NO MERIT IN DEPARTMENTAL APPEAL AND THE SAME IS ACCORDINGLY DISMISSED. 4. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. 5 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON : 26 TH SEPTEMBER, 2017. SD/- SD/- ( L. P. SAHU ) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : THE 26 TH SEPTEMBER, 2017. *MEHTA* 9 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. COPY OF THE ORDER FORWARDED TO :- 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT (APPEALS); 5. DR, ITAT, ND. BY ORDER ASSISTANT REGISTRAR 10 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011. DATE DRAFT DICTATED ON 25.09.2017 DRAFT PLACED BEFORE AUTHOR 26.09.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. 11 I. T. APPEAL NO. 6976/DEL/2014 ASSESSMENT YEAR : 201011.
