ACIT Circle-1, Nagpur V. M/s Infospectrum India.Pvt.Ltd., Nagpur

ITA 82/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3153 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHARDHA NICHHAL
• Section: 143(3); 10B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 81/NAG/2012 / ASSESSMENT YEAR 2002-03 . / ITA NO. 82/NAG/2012 / ASSESSMENT YEAR 2008-09 ACIT, CIRCLE I, 5 TH FLOOR, MECL BUILDING SEMINARY HILLS, NAGPUR-440 006. VS. M/S. INFOSPECTRUM INDIA PVT. LTD., C/O. AURANGABADKAR & CO CHARTERED ACCOUNTANT, 2, SBI COLONY, AMRAVATI ROAD, NAGPUR-440 033. PAN: AABCC 3521 C ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY : SMT. SHARDHA NICHHAL ASSESSEE BY : NONE ! '#$ / DATE OF HEARING : 28-01-2013 %& ! '#$ / DATE OF PRONOUNCEMENT : 30-01-2013 '( / O R D E R PER RAJENDRA, AM FOLLOWING GROUNDS OF APPEAL HAVE BEEN FILED BY THE ASSESSING OFFICER (AO) AGAINST THE ORDERS DT. 13-12-2011 AND 14-12-2011 OF CIT(A)-I, NAGPUR. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHETH ER THE LEARNED CIT(A) IS CORRECT IN GRANTING RELIEF U/S 10A EVEN THOUGH THE CONDITIO N LAID DOWN IN SEC. 10A(5) THAT FORM NO. 56F HAS TO BE FILED ALONG WITH THE RETURN OF INCOME, HAS NOT BEEN FULFILLED? ITA NO. 81 & 82/NAG/2012 M/S. INFOSPECTRUM INDIA PVT. LTD 2 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN A CLAIM / EXEMPTION IS MADE FOR THE FIRST TIME DURING THE ASSESSMENT PROCEEDINGS WH ETHER THE LEARNED CIT(A) IS CORRECT IN DIRECTING THE AO TO ALLOW THE SAME IGNOR ING THE DECISION OF THE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. REPO RTED IN 284 ITR 323. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEAR NED CIT(A) ERRED IN CONCLUDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCT ION U/S 10A WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT SET UP ITS BUSINESS IN SEZ AS MANDATED U/S L0A(2)(I)(C) OF THE ACT. AS THE GROUNDS OF APPEAL AND THE ISSUES INVOLVED FO R BOTH THE ASSESSMENT YEARS (AYS) ARE COMMON, FOR THE SAKE OF CONVENIENCE , WE ARE DECIDING THE ISSUES BY COMMON ORDER. 2. ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF DEVE LOPMENT AND EXPORT OF SOFTWARE AND SALE OF SOFTWARE PRODUCTS. DETAILS OF RETURNS FILED DATES OF FILING OF RETURN, RETURNED INCOME, DATE OF ORDERS U/S. 143(3) /143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (ACT) AND ASSESSED INCOME CAN BE SUMM ARIZED AS UNDER: S.NO. DATE OF RETURN RETURNED INCOME DATE OF ORDERS U/S. 143(3) / 143(3) R.W.S. 147 OF THE ACT ASSESSED INCOME 1. (AY. 2002-03) 20-04-2009 1.02 LAKHS 31-12-2009 14.25 LAKHS 2. (AY. 2008 - 09) 30-09-2008 ( - ) 50.39 LAKHS 31 - 12 - 2010 1.67 CRORES FIRST, WE WOULD LIKE TO TAKE THE APPEAL NO. ITA 81/NAG/2012 AY. 2002-03: 3. IN THIS CASE, ASSESSEE-COMPANY HAD FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. IN ITS RETURN, ASSESSEE-COMPA NY HAD CLAIMED EXEMPTION IN RESPECT OF INCOME EARNED ON SOFTWARE EXPORT ETC., AS PER TH E PROVISIONS OF SECTION 10A OF THE ACT. ASSESSING OFFICER (AO) WAS OF THE OPINION THA T ASSESSEE WAS NOT ENTITLED TO THE EXEMPTION CLAIMED U/S. 10A OF THE ACT. AS THE ASSE SSEE HAD STARTED ITS PRODUCTION IN STPI, AO WAS OF THE OPINION THAT AS PER SECTION 10( A)(2)(I)(C) ONLY SEZ UNITS WERE ENTITLED FOR SUCH EXEMPTION. HE FURTHER HELD THAT SHARE REGISTER OF THE COMPANY, FOUND DURING THE SURVEY PROCEEDINGS IN DECEMBER 2009, WAS FOUND TAMPERED AT MANY PLACES. AO WAS OF THE OPINION THAT ASSESSEE HAS NO T FULFILLED THE CONDITIONS LAID DOWN BY SECTION 10A(9) OF THE ACT. FINALLY, HE DETERMIN ED THE TOTAL INCOME OF THE ASSESSEE AT RS. 14.25 LAKHS VIDE HIS ORDER DT. 31-12-2009, A S STATED EARLIER. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY (FAA). REFERRING TO THE ORDER PASSED BY HER FOR THE AY 200 7-08 VIDE ORDER NO. CIT(A)-I /315/09-10 DT. 27-07-2011 SHE ALLOWED THE APPEAL FI LED BY THE ASSESSEE. REFERRING TO THE DECISION OF THE TRIBUNAL DELIVERED IN THE ASSES SEES OWN CASE FOR THE AY 2006-07, IT WAS HELD BY THE FAA THAT ADDITIONS MADE BY THE A O IN SIMILAR CIRCUMSTANCES WERE NOT SUSTAINABLE. FAA HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE ISSUE HAS BEEN DECIDED IN ITS FAV OUR BY THE HONBLE TRIBUNAL. IT IS ITA NO. 81 & 82/NAG/2012 M/S. INFOSPECTRUM INDIA PVT. LTD 3 SEEN THAT FOR AY 2006-07 THE ISSUE BEFORE THE HONB LE TRIBUNAL WAS THAT THE ORIGINAL CLAIM HAD BEEN MADE U/S 10B AND LATER REVISED U/S 1 0A OF THE ACT. THE HONBLE TRIBUNAL HAS HELD THAT ALTHOUGH THE CLAIM FOR EXEMP TION U/S 10A WAS NOT MADE IN THE ORIGINAL RETURN AND THE CLAIM ORIGINALLY MADE WAS U /S 10B,ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 10A. THE HONBLE TRIBUNAL HAS U PHELD THE FINDINGS OF THE CIT(A) WHEREIN IT HAS BEEN HELD THAT THE CONDITIONS LAID DOWN IN PROVISIONS OF SECTION 10A HAVE BEEN FULFILLED. ACCORDING TO AO A UNIT COMME NCING PRODUCTION IN STPI AFTER 01-04-2000-01 IS NOT ELIGIBLE FOR EXEMPTION U/S 10A .IT IS ONLY AN UNDERTAKING WHICH IS LOCATED IN SEZ AND WHICH HAS COMMENCED AFTER 0L-04- 2000 WHICH WOULD BE ELIGIBLE.AS POINTED BY THE APPELLANT, THE NOTES ON CLAUSES TO FINANCE BILL 2000-01 AND CIRCULAR NO. 794 DT. 09-08-2000 CLEARIFIES THAT EXEMPTION U/S.10A IS AVAILABLE TO THOSE UNITS WHICH ARE SETUP IN STPI AS WELL. THIS I S MADE CLEAR FROM THE READING OF THE PROPOSED AMENDMENT IN THE FINANCE BILL ALONG WI TH FINANCE ACT 2000 AND THE CIRCULAR NO. 794 EXPLAINING THE PROVISIONS OF FINAN CE ACT. WHILE THE FINANCE BILL PROPOSED AN AMENDMENT TO PHASE OUT THE EXEMPTION BY RESTRICTING THE PROVISIONS OF SECTION 10A TO ONLY THOSE UNDERTAKING WHICH ARE SET UP BEFORE 01-04-2000, THE FINANCE ACT DID NOT INCLUDE THE SAME PROVISIONS AND IN FACT MADE AVAILABLE THE EXISTING BENEFIT TO THOSE UNDERTAKING WHICH COMMENCED AFTER 1 ST APRIL 2001 IN A SPECIAL ECONOMIC ZONE. IT IS ALSO TO BE NOTED THA T AS REGARDS TO SETTING UP OF A UNIT AN STPI THERE IS ONLY A CUT-OFF DATE BEYOND WHICH T HE UNDERTAKING SHOULD HAVE BEEN SET UP. THERE IS NO DATE PRESCRIBED BEFORE WHICH TH E UNIT SHOULD HAVE COMMENCED PRODUCTION. THE CIRCULAR EXPLAINING THE FINANCE AC T ALSO STRENGTHENS THE CREDIBILITY TO THE APPELLANTS CONTENTION THAT THE BENEFIT OF S ECTION 10A HAS BEEN EXTENDED TO UNDERTAKING SET UP IN AN SEZ. IT IS THUS CLEAR THA T THERE WAS NO SPECIFIC SUNSET PROVISION FOR FTZ/EHTP OR STP UNIT AFTER 01-04-2001 . THE CLAUSE WHICH WAS CONTEMPLATED IN THE BILL TO PROVIDE FOR A SUNSET PR OVISION DID NOT FIGURE IN THE AMENDED SECTION SUBSTITUTED BY FINANCE ACT, 2000. THEREFORE THE INTERPRETATION OF THE AO THAT AS PER PROVISIONS OF SECTION 10A(2)(I) UNIT SET UP IN STPI AFTER 01-04- 2001 ARE NOT ELIGIBLE FOR EXEMPTION U/S. 10A IS ERR ONEOUS AND NOT SUSTAINABLE. 5. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUBMITT ED THAT NO CLAIM COULD BE MADE BY THE ASSESSEE IN RE-ASSESSMENT PROCEEDING S INITIATED U/S. 148 OF THE ACT, THAT FAA ERRED IN DIRECTING THE AO TO ALLOW THE CLA IM MADE U/S. 10A IGNORING THE DECISION OF THE HONBLE SUPREME COURT DELIVERED IN THE CASE OF GOETZE INDIA LTD., (284 ITR 323). AUTHORISED REPRESENTATIVE (AR) REL IED UPON THE ORDER OF THE FAA AND ORDERS PASSED BY THE TRIBUNAL FOR THE AY 2006-0 7. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL FOR THE AY 2006-07. FAA IN HER ORDER HAS NOT ONLY REFERRED TO THE ORDER OF THE TRI BUNAL, BUT ALSO DISCUSSED IN CIRCULAR NO. 794 DT. 09-08-2000 IN THIS REGARD. 7. WE ARE OF THE OPINION THAT ORDER OF THE FAA DOE NO T SUFFER FROM ANY LEGAL INFIRMITY. HENCE, GROUND NO1. DOES NOT NEED ANY IN TERFERENCE FROM OUR SIDE. 8. AS FAR AS VIOLATION OF SECTION 10(A)(9) OF THE ACT IS CONCERNED, IT IS FOUND THAT FAA HAD CALLED FOR A REMAND REPORT FROM AO IN THIS REGARD. IT HAS BEEN NOTED BY THE FAA THAT VIDE HIS REMAND REPORT DT. 04-03-2011, AO HIMSELF HAD SPECIFIED THAT THERE IS NO VIOLATION OF PROVISION OF SECTION 10(1) (9) OF THE ACT. AS THE AO IN THE REMAND REPORT HAS SUBMITTED TO THE FAA THAT ASSESSE E HAD NOT VIOLATED ANY OF THE PROVISIONS OF SECTION 10(9), WE ARE OF THE OPINION THAT THE SECOND ARGUMENT ADVANCED BY THE AO TO DIS-ALLOW THE EXEMPTION TO THE ASSESS EE WITHOUT ANY MERITS. FOLLOWING ITA NO. 81 & 82/NAG/2012 M/S. INFOSPECTRUM INDIA PVT. LTD 4 THE ORDER OF THE TRIBUNAL FOR THE AY 2006-07, WE DI SMISS THE GROUNDS FILED BY THE AO. AS A RESULT, APPEAL FILED BY THE AO FOR THE AY. 20 02-03 IS DISMISSED. ITA 82/NAG/2012 AY. 2008-09 : 9. AS THE FACTS AND CIRCUMSTANCES, ARGUMENTS AND SUBM ISSIONS OF THE CASE ARE SAME TO THE AY 2002-03, FOLLOWING THE SAME, WE DISM ISS GROUNDS FILED BY THE AO FOR THE AY 2008-09. AS A RESULT, APPEAL FILED BY THE AO FOR THE AY 200 8-09 STANDS DISMISSED. AS A RESULT, APPEAL NOS. 81/NAG/2012 (AY 2002-03) AND 82/NAG/2012 (AY 2008-09) FILED BY THE AO STAND DISMISSED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 30 TH DAY OF JANUARY, 2013 )* +,' - *-. / 30 # 2013 & '( %&0' 1 . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) ', / JUDICIAL MEMBER $ ', / ACCOUNTANT MEMBER )* MUMBAI, 1' DATE: 30 TH JANUARY, 2013 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE 0' ' //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT