Secunderabad Software Services Pvt.Ltd., Hyderabad V. ITO, Ward-3(1), Hyderabad

ITA 750/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66237 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: S VENKATESWARA RAO
• Section: 143(3); 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 750/HYD/2012 ASSESSMENT YEAR: 2007-08 M/S SECUNDERABAD SOFTWARE SERVICES PVT. LTD., ... A PPELLANT SECUNDERABAD. (PAN AAGCS6603J) VS. INCOME TAX OFFICER, WARD-3(1), RESPONDENT HYDERABAD. APPELLANT BY : SHRI S. VENKATESWARA RAO RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 05/09/2012 DATE OF PRONOUNCEMENT : 14/09/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT-III, HYDERABAD DATED 16/03/2012, P ASSED U/S 263 OF THE ACT, FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE CIT IN HIS ORDER U/S 263 NOTED THAT THE ORDER PASSED BY THE AO U/S 143(3 ) DATED 03/12/2009 IS ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE FOR THE FOLLOWING REASONS: FOR THE FY 2006-07 RELEVANT TO AY 2007-08 THE ASSE SSEE COMPANY CLAIMED EXEMPTION OF CERTAIN INCOME U/S 10B OF THE ACT. BUT TO CLAIM EXEMPTION U/S 10B OF THE IT ACT, THE APPROVAL ITA NO. 750/HYD/12 SECUNDERABAD SOFTWARE SERVICES PVT. LTD. 2 FOR THE ASSESSEE COMPANY AS 100% EOU BY THE BOARD O F APPROVALS APPOINTED IN THIS BEHALF BY THE CENTRAL G OVERNMENT IN EXERCISE OF POWERS CONFERRED BY SECTION 14 OF IN DUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951) AND RULES MADE UNDER THE ACT, IS A PREREQUISITE. HOWEVE R, THE ASSESSEE HAS NOT FURNISHED THIS CERTIFICATE DURING THE ASSESSMENT PROCEEDINGS. HENCE AS PER EXPLANATION 2( IV) OF SECTION 10B THE ASSESSEE COMPANY IS NOT ENTITLED FO R THE SAID EXEMPTION. 3. THE CIT, THEREFORE, ASKED THE ASSESSEE VIDE SHOW CAUSE NOTICE U/S 263 DATED 20/07/2011 AS TO WHY THE ASSESSMENT ORDER PASSED SHOULD NOT BE REVISED ON THE ABOVE LINES. IN ITS RE PLY DATED 23/08/2011, THE ASSESSEE COMPANY STATED THAT IT IS A 100% EOU REGISTERED WITH STPI, HYDERABAD. AS PER THE COPY OF LETTER ISSUED BY THE DIRECTOR, SOFTWARE TECHNOLOGY PARKS OF INDIA (S TPI), HYDERABAD DATED 30/03/2000, THE ASSESSEE COMPANY WAS APPROVED AS A 100% EOU UNDER THE STPI SCHEME FOR THE DEVELOPMENT OF CO MPUTER SOFTWARE AT ITS PREMISES AT 10-3-44, EAST MAREDPALL Y, HYDERABAD 500 026. IT WAS FURTHER STATED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND, THEREFORE, TH E ASSESSEE CLAIMED AN AMOUNT OF RS. 1,05,14,391/- DERIVED FROM THIS UNIT AS DEDUCTION U/S 10B OF THE ACT. 4. ANOTHER CONTENTION OF THE ASSESSEE WAS THAT STPI IS AUTHORIZED TO RECOGNIZE THE UNITS AS 100% EOU AND ACCORDINGLY THE COMPANY CAN CLAIM BENEFITS UNDER THE RELEVANT PROVISIONS. I T FURTHER ARGUED THAT THE ITAT, HYDERABAD BENCH HELD THAT THE PERMIS SION GRANTED BY STP AND BY THE BOARD BOTH ARE ONE AND THE SAME. HEN CE, IT ARGUED ITA NO. 750/HYD/12 SECUNDERABAD SOFTWARE SERVICES PVT. LTD. 3 THAT IT IS ENTITLED TO CLAIM THE BENEFIT OF EXEMPTI ON AND PLEADED TO DROP THE PROCEEDINGS U/S 263. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AND REFERRING TO THE EXPLANATION 2(IV) TO SECTION 10B OF THE ACT, THE CIT HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT HE HAS FU LFILLED THE LEGAL OBLIGATIONS VIS--VIS ITS ELIGIBILITY FOR DEDUCTION U/S 10B OF THE ACT, WITH NECESSARY DOCUMENTATION AS REQUIRED IN ACCORDA NCE WITH THE PROVISIONS OF THE ACT AND ON MERITS ALSO IT CANNOT BE HELD THAT THE ASSESSEE HAS ACTUALLY DEVELOPED ANY SOFTWARE. THERE FORE, THE DEDUCTION CLAIMED U/S 10B OF THE ACT WAS DISALLOWED BY HIM. ACCORDINGLY, THE CIT DIRECTED TO REVISE THE ASSESSM ENT ORDER PASSED U/S 143(3) DATED 03/12/2009 BY DISALLOWING THE EXEM PTION CLAIMED U/S 10B OF RS. 1,05,14,391/- AND TO DETERMINE THE I NCOME ACCORDINGLY. 6. AGGRIEVED BY THE ORDER OF THE CIT, THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE ACTION OF THE CIT IN DIRE CTING THE DISALLOWANCE OF EXEMPTION OF RS. 1,05,14,391/- CLAI MED U/S 10B OF THE ACT. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S. VENKATESWARA RAO CANVASSED THAT THE ISSUE IN DISPUT E IS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH IN ASSE SSEES OWN CASE FOR AY 2005-06, IN ITA NO. 1501/HYD/2011(REVENUES APPEAL) VIDE ORDER DATED 10/04/2012. A COPY OF THE SAID ORDER HA S BEEN FILED ON RECORD. THE LEARNED D.R. SHRI V. SRINIVAS AGREED WI TH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. ITA NO. 750/HYD/12 SECUNDERABAD SOFTWARE SERVICES PVT. LTD. 4 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE COORDINAT E BENCH IN ASSESSEES OWN CASE FOR AY 2005-06, WHEREIN THE BEN CH HELD AS UNDER:- WE HEARD THE PARTIES AND PERUSED THE IMPUGNED ORDER S OF THE LOWER AUTHORITIES. THE ONLY QUESTION THAT CLINCHES THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER FOR BECOMING ELI GIBLE TO THE DEDUCTION U/S 10B OF THE ACT, WHETHER IT IS ENOUGH IF THE ASSESSEE IS REGISTERED WITH SOFTWARE TECHNOLOGY PAR K OF INDIA AS A 100% EOU OR IT IS ALSO NECESSARY FOR THE ASSES SEE TO HAVE THE APPROVAL OF THE BOARD CONSTITUTED BY THE CENTRA L GOVERNMENT U/S 14 OF THE INDUSTRIES (DEVELOPMENT AN D REGULATION)ACT, 1951. THE CIT(A) HAS DECIDED THIS I SSUE IN FAVOUR OF THE ASSESSEE, AND HELD THE ASSESSEE AS EL IGIBLE FOR DEDUCTION U/S 10B OF THE ACT, FOLLOWING THE DECISIO NS OF THE CO- ORDINATE BENCHES OF THE TRIBUNAL IN THE FOLLOWING C ASES: A) VSN MAKRO TECHNOLOGY P. LTD. VS. ACIT (ITA NO. 1057/HYD/2010) DATED 13/01/2011, WHEREIN THE STILL EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF INF OTECH ENTERPRISES LTD. (SUPRA) RELIED BY THE AO IN THE IM PUGNED ASSESSMENT ORDER HAS BEEN CONSIDERED AND THE SAME H AS BEEN HELD TO BE INAPPLICABLE AS THE SAME HAS BEEN RENDERED PRIOR TO ISSUANCE OF INSTRUCTION NO. 1, DA TED 31/03/2006 BY THE CBDT AND LETTER DATED 23/03/2006 ISSUED BY THE MINISTRY OF COMMUNICATIONS AND TECHNOLOGIES. B) DCIT VS. VALLIANT COMMUNICATION LTD. (ITA NO. 2706/DEL/2008 DATED 23/04/2010) (2010-TIOL-452-ITAT - DEL), WHEREIN THE STILL EARLIER DECISION OF THE DEL HI BENCH IN THE CASE F ITO VS. REGENCY CREATIONS LTD. (ITA N O. 4006/DEL/2006) DATED 13/04/2006 HAS BEEN FOLLOWED. C) SMT. K SUDHA RANI VS. ITO (ITA NO. 1750/HYD/2008 DT. 30/10/2009. CONSISTENT WITH THE VIEW TAKEN BY VARIOUS BENCH OF THE TRIBUNAL, INCLUDING THE BENCHES AT HYDERABAD, IN S IMILAR MATTERS, WE HOLD THAT THE ASSESSEE, HAVING BEEN REG ISTERED WITH THE STPI, IS ENTITLED FOR DEDUCTION UNDER SECT ION 10B OF THE ACT. IN THAT VIEW OF THE MATTER, WE FIND NO INF IRMITY IN THE ITA NO. 750/HYD/12 SECUNDERABAD SOFTWARE SERVICES PVT. LTD. 5 IMPUGNED ORDER OF THE CIT(A), WHICH IS ACCORDINGLY CONFIRMED AND THE GROUNDS OF THE REVENUE ARE REJECTED. 9. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THAT OF AY 2005-06 IN ASSESSEES OWN CASE, RESPECTFULLY FOLLOW ING THE ORDER OF THE ITAT IN THAT YEAR, WE SET ASIDE THE ORDER OF TH E CIT AND RESTORE THE ORDER OF THE AO PASSED U/S 143(3) DATED 03/12/2 009 ALLOWING THE ASSESSEES CLAIM OF EXEMPTION OF RS. 1,05,14,39 1/- U/S 10B OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 14/09/2012. SD/- SD/- ( CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 14 TH SEPTEMBER, 2012. KV COPY TO:- 1) SECUNDERABAD SOFTWARE SERVICES PVT. LTD., C/O SIRIVELLA VENKATESWARA RAO, C.A. 1-7-6, MIG-50, APIIC COLONY, NEAR VASUNDRA COLLEGE, ECIL X ROADS, HYDERABAD 500 062., 2) ITO, WARD 3(10, HYDERABAD, 3) THE CIT-III, HYDERABAD 4) ADDL. CIT, RANGE-3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D.