Shri Tarun V. Shah, Baroda V. The CIT-I, Baroda

ITA 925/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85509 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Keywords: Opportunity of being heard; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 10B; 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 925 /AHD/20 1 4 A. Y. 200 9 - 10 SHRI TARUN V. SHAH, PROP . MP ADVISORS, 203 ALKAPURI ARCADE, B - WING, R .C. DUTT ROAD, BARODA. PAN: AJKPS 9542A VS COMMISSIONER OF INCOME TAX - I, BARODA . (APPELLANT) (RESPONDENT) REVENUE BY : SHRI VIMALENDU VERMA , CIT - D.R. ASSESSEE(S) BY : SHRI MILIN MEHTA , A.R. / DATE OF HEARING : 02 / 01 /201 5 / DATE OF PRONOUNCEMENT: 16 / 01 /201 5 / O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN A PPEAL FILED BY THE ASSESSEE ARISING FROM AN ORDER OF THE L EA RNED CIT - I, BARODA PASSED U/S .263 OF IT ACT DATED 2 1 . 0 2 .201 4. THE GROUND RAISED BEFORE US ARE REPRODUCED BELOW: 1. THE LEARNED COMMISSIONER OF THE INCOME TAX - 1, BARODA ('THE CIT') ERRED IN FACT AND IN LAW IN REVISING THE ASSESSMENT BY INVOKING POWERS U/S. 263 OF THE INCOME TAX ACT, 1961 ('THE ACT') WHICH WAS COMPLETED BY WAY OF A SSESSMENT MADE U/S 143(3) DESPITE THE FACT THAT THE CONDITIONS STIPULATED FOR INVOKING SUCH EXTRA - ORDINARY JURISDICTION WERE NOT SATISFIED. 2. THE LEARNED CIT ERRED IN FACT AND IN LAW IN SETTING ASIDE THE ASSESSMENT U/S. 143(3) AND DIRECTING THE AO TO FRAME FRESH ASSESSMENT. 3. THE LEARNED CIT ERRED IN FACT AND IN LAW IN NOT DROPPING THE PROCEEDINGS U/S. 263 DESPITE THE FACT THAT THE APPELLANT HAD DULY EXPLAINED THE ISSUES ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 2 - R AISED BY THE CIT AND HAD GIVEN FULL EXPLANATION WITH RESPECT TO THE ISSUES RAISED BY THE CIT. 4. THE LEARNED CIT ERRED IN FACT AND IN LAW IN DISALLOWING DEDUCTION U/S 10 B OF ACT AMOUNTING TO RS. 3,26,27,651/ - . 5. THE LEARNED CIT ERRED IN FACT AND IN LAW IN REJ ECTING THE ALTERNATE PLEA OF THE APPELLANT TO ALLOW THE DEDUCTION U/S. 10A OF THE ACT DESPITE THE FACT THAT ALL CONDITIONS MENTIONED IN SECTION 1OA HAS BEEN FULFILLED BY THE APPELLANT. 2. IN THIS CASE, AN ASSESSMENT WAS MADE U/S.143(3) DATED 17.11.2011. THE ASSESSEE IN INDIVIDUAL CAPACITY IS EARNING INCOME FROM DATA PROCESSING. FACTS OF THE CASE HAVE REVEALED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF INTERNET ENABLED SERVICES, MAINLY FOR DATA PROCESSING PERTAINING TO MEDICAL AND PHARMACEUT ICALS COMPANIES. A RETURN OF INCOME WAS FILED AT RS.10,38,260/ - , WHEREIN CLAIMED A DEDUCTION OF RS.3,26,27,651/ - U/S.10B OF IT ACT . T HE ASSESSMENT WAS COMPLETED ON THE SAME INCOME AS DECLARED BY THE ASSESSEE. IN THE ASSESSMENT ORDER , THE AO HAS MENTIONED T HAT THE AUDIT REPORT AND F ORM N O.56G WAS FILED. AT THIS JUNCTURE, IT IS ALSO WORTH TO MENTION THAT APART FROM THESE FEW OBSERVATIONS THE AO HAS NOT DISCUSSED ANYTHING IN THE ASSESSMENT ORDER PERTAINING TO THE CLAIM OF DEDUCTION U/S.10B OF IT ACT. RATHER, T HE IMPUGNED ASSESSMENT ORDER CAN BE SAID TO BE A CRYPTIC ORDER. LEARNED CIT(A) HA S HELD THAT THE SAID ORDER WAS AN ERRONEOUS ORDER AND THEREFORE ISSUED A SHOW CAUSE NOTICE AS UNDER: FROM THE ASSESSMENT RECORDS IF WAS NOTICED THAT THE ASSESSEE HAD COMMENCE D BUSINESS ON 07/08/2007 AND WAS GRANTED APPROVAL AS A 100 PERCENT EXPORT ORIENTED UNIT (EOU) BY THE DIRECTOR, SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI), GANDHINAGAR FOR COMPUTER SOFTWARE AND IT ENABLED SERVICES ON 07/08/2007. THE STPI IS A SOCIETY FORME D UNDER THE SOFTWARE TECHNOLOGY PARK SCHEME (STP) FOR GRANTING PERMISSIONS TO UNITS ENGAGED IN COMPUTER SOFTWARE AND ENABLED SERVICES. THE STPI WAS ADMINISTERED BY THE DEPARTMENT OF INFORMATION TECHNOLOGY, MINISTRY OF COMMUNICATION AND INFORMATION TECHNOLO GY, GOVT. OF INDIA. ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 3 - EXPLANATION 2(IV) TO SECTION 10 B OF THE ACT ENVISAGES DEDUCTION TO A 100% EOU APPROVED BY THE 'BOARD'. IN ASSESSEE'S CASE THE APPROVAL WAS NOT FOR AN 'UNDERTAKING BY THE BOARD AS ENVISAGED IN SECTION 10 B BUT FAR A 'UNIT' BY A SOCIETY. FURTHER, THE STPI UNIT IS APPROVED BY THE DIRECTOR OF STPI (WHICH IS A SOCIETY) UNDER THE MINISTRY OF COMMUNICATION AND INFORMATION TECHNOLOGY AND NOT BY DEVELOPMENT COMMISSIONER UNDER MINISTRY OF COMMERCE AND INDUSTRIES AS MENTIONED IN THE CBDT INSTRUCTIO N 09.03.2009, IN VIEW OF THE ABOVE FACTS, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 1 OB OF THE ACT, THUS, THERE WAS AN UNDERASSESSMENT DUE TO IRREGULAR DEDUCTION OFRS.3,26,27,651/ - UNDER SECTION 10B. 2.1 IN COMPLIANCE OF THE SHOW CAUSE NO TICE , THE ASSESSEE HAS FILED A DETAILED REPLY, ONLY RELEVANT PORTION S ARE REPRODUCED BELOW: THIS HAS REFERENCE TO SHOW CAUSE NOTICE ISSUED BY YOUR KIND OFFICE REGARDING PROCEEDING INITIATED U/S.263 OF THE INCOME - TAX ACT, 1961 (THE ACT ). WITH RESPECT T O THE SAME WE HAVE BEEN DIRECTED BY OUR AFORESAID CLIENT TO SUBMIT AS UNDER: 1. YOUR OFFICE HAS ISSUED NOTICE U/S.263 OF THE ACT STATING THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT DATED 17.11.2011 WAS ERRONEOUS IN SO FAR AS IT WAS PR EJUDICIAL TO THE INTEREST OF THE REVENUE. YOUR OFFICE HAS STATED THAT SINCE THE UNIT OF THE ASSESSEE IS APPROVED BY THE DIRECTOR OF STPI AND NOT BY THE DEVELOPMENT COMMISSIONER UNDER THE MINISTRY OF COMMERCE AND INDUSTRIES, THE DEDUCTION U/S. 10B OF RS.3,2 6,27,651/ - GRANTED BY THE AO IS IRREGULAR. YOUR OFFICE HAS THEREFORE ASKED US TO SUBMIT AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE ACT SHOULD NOT BE ENHANCED OR CANCELLED WITH A DIRECTION TO MAKE FRESH ASSESSMENT IN ACCORDANCE WI TH PROVISION OF SECTION 263 OF THE ACT. 2. IN THE ABOVE RESPECT WE SUBMIT THAT THE ORDER PASSED BY THE AO IS NOT ERRONEOUS AND ALSO NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ISSUE UNDER CONSIDERATION HAS ALREADY BEEN EXAMINED BY THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. FOR READY REFERENCE THE CHRONOLOGY OF EVENTS IN THE CASE OF THE ASSESSEE IS AS UNDER: EVENT DATE REGULAR ASSESSMENT U/S. 143(3) RETURN OF INCOME FILED U/S. 13911) ON 27.09.2009 NOTICE U/S. 143(2} ISSUED ON 24.03. 2010 REGULAR ASSESSMENT COMPLETED ON 1 7.1 1.20 11 ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 4 - 3. WE MOST RESPECTFULLY SUBMIT THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR REGULAR SCRUTINY U/S.143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD CALLED FOR VAR IOUS INFORMATION AND EXPLANATION BY ISSUING NOTICES U/S.142(1) OF THE ACT. WE INVITE YOUR KIND ATTENTION TO NOTICE ISSUED U/S.142(1) DATED 30.09.2011 WHEREIN THE AO, VIDE PARA NO.12, HAS SPECIFICALLY ASKED TO JUSTIFY THE CLAIM OF DEDUCTION U/S.10B OF THE A CT. IN RESPONSE TO THE SAME THE ASSESSEE VIDE PARA NO.12 READ WITH ANNEXURE - 7 OF SUBMISSION DATED 12.10.2011 HAS GIVEN JUSTIFICATION FOR CLAIM OF DEDUCTION AND ALSO SUBMITTED THE APPROVAL GRANTED BY STPI FOR AVAILABLE DEDUCTION UNDER THE ACT. THE ASSESSEE HAS ALSO INVITED THE REFERENCE TO THE ORDER OF YOUR OFFICE U/S.264 OF THE ACT DATED 17.01.2011 TO FURTHER JUSTIFY THE CLAIM OF SAID DEDUCTION. YOUR OFFICE MAY KINDLY NOTE THAT IN EARLIER YEARS AND ALSO IN SUBSEQUENT YEARS, THE DEDUCTION HAS BEEN ALLOWED IN REGULAR ASSESSMENT PROCEEDINGS U/S.10B OF THE ACT 8. HERE WE ALSO INVITE YOUR KIND ATTENTION TO THE DECISION OF HYDERABAD ITAT IN THE CASE OF VISU INTERNATIONAL LTD. (ITA NO.696/HYD/2011). COPY OF THE SAID ORDER IS ENCLOSED AS ANNEXURE - 1. IN THIS CASE ALSO THE PROCEEDINGS U/S.263 OF THE ACT WERE INITIATED TO DISALLOW THE DEDUCTION U/S.10B CLAIMED AND ALLOWED DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. THE TRIBUNAL VIDE PARA NO.14 OF ITS JUDGMENT HAS VERY CATEGORICALLY STATED THAT CIT IS NOT COR RECT IN ASSUMING THE DEDUCTION U/S.10 WHEN THE DEPARTMENT ALLOWED DEDUCTION IN BOTH IN THE EARLIER YEARS AS WELL AS IN THE SUBSEQUENT YEARS. ON CHANGE OF OPINION, THE CIT CANNOT ASSUME HIS JURISDICTION U/S. 263 OF THE ACT. WE SUBMIT THAT OUR CASE IS DIRECT LY COVERED BY THE ABOVE DECISION OF TRIBUNAL AND BY RELYING UPON THE SAME WE REQUEST YOUR OFFICE TO DROP THE PROCEEDINGS U/S.263 OF THE ACT. 11. YOUR OFFICE HAS STATED THAT THE DEDUCTION U/S.10B IS NOT AVAILABLE TO THE ASSESSEE SINCE THE APPROVAL OF 10 0% EOU HAS BEEN GRANTED BY DIRECTOR, STPI, GANDHINAGAR AND NOT BY THE DEVELOPMENT COMMISSIONER AS MENTIONED IN CBDT INSTRUCTION NO.09.03.2009. IN THIS RESPECT WE SUBMIT THAT THE HYDERABAD TRIBUNALS IN THE CASE OF REGENCY CREATIONS LTD. (ITA NOS.69/2008 AND 783/2009) AND M/S. VALIANT COMMUNICATION ITA 2002/2010 ASSESSMENT YEAR 2005 - 06; ITA 438 TO 441/2012 ASSESSMENT YEARS 2003 - 04, 2004 - 05, 2006 - 07 AND 2007 - 08) HAS HELD THAT THE UNIT REGISTERED UNDER STPI IS ELIGIBLE TO CLAIM DEDUCTION U/S.10B OF THE ACT. BY RELYING UPON THE SAME WE REQUEST YOUR OFFICE TO ALLOW THE DEDUCTION U/S.10B OF THE ACT. SUCH VIEW IS ALSO TAKEN IN THE CASE OF M/S. SECUNDERABAD SOFTWARE SERVICE PVT. LTD. (ITA NO.1501/HYD/2011). WE THEREFORE SUBMIT THAT THERE NO ERROR ON THE PART OF T HE AO TO ALLOW THE DEDUCTION U/S.10B OF THE ACT. 12. WITHOUT PREJUDICE TO THE ABOVE WE BROUGHT TO YOUR KIND NOTICE THAT THE ASSESSEE HAS CLAIMED THE SAID DEDUCTION U/S.10B OF THE ACT IN THE RETURN OF INCOME. THE ASSESSEE HAS GOT APPROVAL AS 100% EXPORT OR IENTED UNIT UNDER THE SPTI SCHEME IN RESPECT OF ITS UNIT. A COPY OF THE APPROVAL LETTER IS ENCLOSED AS ANNEXURE - 2 OF THE SAID SUBMISSION. SINCE THE ASSESSEE HAS GOT APPROVAL AS 100% EOU IT WAS OF THE VIEW THAT IT IS ENTITLED TO CLAIM THE ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 5 - DEDUCTION U/S.10B OF THE ACT. SUCH A VIEW IS ALSO TAKEN BY DELHI ITAT IN THE CASES OF REGENCY CREATION & M/S. VALIANT COMMUNICATION LTD. WHEREIN IT WAS HELD THAT 100% EOU UNIT REGISTERED IN STPI CAN CLAIM DEDUCTION U/S.10B OF THE ACT. SUCH VIEW IS ALSO TAKEN BY HYDERABAD IT AT IN THE CASE OF M/S. SECUNDERABAD SOFTWARE SERVICES PVT. LTD. (ITA NO.1501/HYD/2011). COPY OF THESE DECISIONS IS ENCLOSED AS ANNEXURE - 2A. 13. IT IS SUBMITTED THAT THE DEDUCTION U/S.10A AND 10B ARE PARI MATERIAL AND DEDUCTION U/S.10B APPLIES TO CASES WHE RE THE ASSESSEE HAS AN UNDERTAKING WHICH IS A 100% EOU AND IS APPROVED BY THE DESIGNATED AUTHORITY. HOWEVER, IN CASE THE DEDUCTION U/S. 10A IS APPLICABLE IN CASE OF UNIT WHICH IS REGISTERED WITH THE SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI) SCHEME. THE ASS ESSEE S UNIT BEING THE ONE WHICH IS REGISTERED WITH THE STPI, IT IS ENTITLED TO THE DEDUCTION U/S.10A AND THIS SUBMISSION IS FOR THE PURPOSE OF MAKING SUCH CLAIM. HOWEVER, IT IS NEEDLESS TO MENTION THAT THE PROVISIONS OF SECTION 10A AND 10B ARE PARI MATERI AL THE SAME AND THE CONDITIONS TO BE FULFILLED UNDER BOTH THE SECTIONS ARE ALSO IDENTICAL. IN FACT, THE CERTIFICATE TO BE OBTAINED FOR GETTING EITHER OF THE DEDUCTION IS IDENTICAL AND THEREFORE THE DEDUCTION CAN BE CLAIMED ALTERNATIVELY UNDER SECTION 10A O R 10B OF THE ACT. 3. HOWEVER, LEARNED COMMISSIONER WAS NOT CONVINCED AND IN HIS OPINION THE AO HAS NOT DISCUSSED THE PROVISIONS PRESCRIBED FOR GRANTING DEDUCTION U/S.10B OF IT ACT. ACCORDING TO CIT , THE AO HAS NOT VERIFIED THE APPROVAL OF STPI AND WITHOU T APPLYING HIS MIND PASSED THE IMPUGNED ORDER. THE AO HAD FAILED TO CONSIDER THE FACT THAT THE STPI IS A SOCIETY AND NOT THE BOARD; THEREFORE, THE APPROVAL AS OBTAINED BY THE ASSESSEE WAS NOT SUFFICIENT FOR THE PURPOSE OF GRANTING DEDUCTION U/S.10B OF IT ACT. LEARNED COMMISSIONER HAS ALSO HELD THAT THERE WAS NO FORCE IN THE ALTERNATE CLAIM OF THE ASSESSEE THAT THE DEDUCTION U/S.10A IS AVAILABLE TO THE ASSESSEE. IN HIS OPINION , THE ARGUMENT THAT SECTION 10A AND 10B ARE PARI MATERIA WAS A FLAWED ARGUMENT AND THE LEGISLATURE HAS NOT ENACTED A SUPERFLUOUS SECTION. HE HAS DIRECTED THE AO TO DISALLOW THE CLAIM OF DEDUCTION U/S.10B. THE CONCLUDING PARAGRAPH OF THE ORDER IS AS UNDER: 4.3. THE ALTERNATIVE ARGUMENTS OF THE ASSESSEE THAT PROVISION OF SECTION 10A AND 10B ARE IDENTICAL AND, THEREFORE, IF IT IS NOT ELIGIBLE FOR DEDUCTION U/S 10B THEN IT SHOULD BE ALLOWED DEDUCTION U/S 10A. SUCH CONTENTION OF THE ASSESSEE IS ONLY STATED TO BE REJECTED. THE ARGUMENT THAT PROVISIONS OF ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 6 - SECTION 10A AND 10B ARE IDENTICAL AND THAT THE ASSESSEE CAN CLAIM DEDUCTION UNDER EITHER OF THE TWO SECTIONS IS A FLAWED ARGUMENT AS IT WOULD THAT ONE OF THE SECTIONS IS SUPERFLUOUS. IT IS NOT OPEN FOR ANYONE TO SAY THAT LEGISLATURE HAS MADE A REDUNDANT PROVISION. IN FACT SIMILAR ARGUMENTS WAS MADE IN THE CASE OF M/S . REGENCY CREATIONS LTD., WHEREIN THE HON'BLE HIGH COURT HELD THAT THOUGH THE CONSIDERATIONS WHICH APPLY FOR GRANTING APPROVAL U/S . 10A AND 10B MAY TO AN EXTENT OVERLAP, YET THE DELIBERATE SEGREGATION OF THESE TWO BENEFITS BY THEIR STATUTE REFLECTS PARLIAMENTARY INTENTION THAT TO QUALIFY FOR THE BENEFIT UNDER EITHER, THE SPECIFIC PROCEDURE ENACTED FOR THAT PURPOSE IS TO BE FOLLOWED. THERE IS NOTHING IN ANY OF THE CIRCULARS OR INSTRUCTIONS RELIED IN THAT CASE BY THE TRIBUNAL IMPLYING THAT APPROVAL FOR PURPOSES OF AN STP ALSO ENTITLES THE UNIT TO BENEFIT U/S . 10B. ACCORDINGLY, IT IS HELD THAT THIS CONTENTION OF THE ASSESSEE IS ALSO WITHOUT ANY MERIT. 4.4. IN VIEW OF THE ABOVE LEGAL AND FACTUAL POSITION , THE ORDER PASSED BY THE ASSESSIN G OFFICER DATED 17 - 11 - 2012 IS HEREBY SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO PASS A FRESH ORDER BY DISALLOWING THE CLAIM U/S . 10B OF THE ACT. HE IS ALSO DIRECTED TO EXAMINE THE CASE OF THE ASSESSEE FOR OTHER Y EARS AND INITIATE PROCEEDINGS FOR EXA MINING THE CLAIM AFTER GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD IN THOSE YEARS. 4. FROM THE SIDE OF THE APPELLANT, LEARNED AR, MR. MILIN MEHTA A PPEARED AND INFORMED THAT IN COMPLIANCE OF NOTICE THE ASSESSEE HA S FURNISHED THE RELEVANT DETAILS IN RESP ECT OF CLAIM OF DEDUCTION U/S.10B OF IT ACT. HE HAS ALSO PLEADED THAT IN THE PAST THIS CLAIM OF DEDUCTION WAS REGULARLY ALLOWED BY THE REVENUE DEPARTMENT. A YEAR - WISE DETAILS OF CLAIM OF DEDUCTION U/S.10B AS ALLOWED VIDE SEVERAL ASSESSMENTS HAVE BEEN F URNI SHED. RATHER , HE HAS ALSO INFORMED THAT IN A.Y.2008 - 09 THE CLAIM WAS DISALLOWED BY THE AO BUT VIDE AN ORDER U/S.264 OF IT ACT THE LEARNED CIT HAS ALLOWED THE CLAIM. AT THIS JUNCTURE, IT IS WORTH TO MENTION THAT THE SAID ORDER PASSED U/S.264 OF IT ACT WAS O N DIFFERENT ISSUE BECAUSE THE CLAIM WAS DISALLOWED BY THE AO ON THE GROUND THAT THERE WAS A RE STRUCTURING OF THE BUSINESS HENCE HELD BY THE AO THAT THE NEW ENTITY D ID NOT FULFILL THE CONDITIONS FOR GRANT OF EXEMPTION U/S.10B OF IT ACT. HOWEVER, WHEN THE IS SUE WAS DISCUSSED BEFORE LEARNED ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 7 - COMMISSIONER - I, BARODA, WHILE PASSING ORDER U/S.264 DATED 19.1.2011 HE HAS DIRECTED TO ALLOW THE EXEMPTION U/S.10B BUT NO T BEYOND THE PERIOD OF 31.03.2012. 4.1 BE THAT AS IT WAS, NOW BEFORE US LEARNED AR HAS FILED TWO ORDE RS OF HON BLE DELHI HIGH COURT ONE IN THE CASE OF REGENCY CREATION LTD. (ITA 69/2008) ORDER DATED 30 TH OF NOVEMBER, 2012 (CM NO.19897/12) WHEREIN IT WAS HELD AS UNDER: WE HAVE CAREFULLY CONSIDERED THE RECORDS AND SUBMISSION IT APPEARS THAT HE ASSESSEE HAD CLAIMED THE BENEFIT OF SECTION 10 - B ON THE BASIS OF THE PROVISIONS WHICH PERTAINS TO SECTION 10 - A. THEREFORE, AO MUST IN FAIRNESS CONSIDER THE DOCUMENTS ON THE BASIS OF THE CLAIM AND ASCERTAIN WHETHER THEY ARE PROPER AND AFTER VERIFYING THEM, PASS APPROPR IATE ORDER AS TO WHETHER THE BENEFIT OF SECTION 10 - A CAN BE GRANTED. 4.2 IN ANOTHER ORDER, NAMELY, VALIANT COMMUNICATIONS LTD. ( ITA 2002/ 20 10 ) ORDER DATED 4 TH JANUARY, 2013 WHEREIN IT WAS HELD AS UNDER: THE APPLICANT CONTENDS THAT THE CIT(A) AND THE TRI BUNAL HAD, IN THE PRESENT CASE, NOT GONE INTO THE MERITS OF THE ALTERNATIVE CLAIM FOR ENTITLEMENT UNDER SECTION 10A. THIS FACT IS APPARENT FROM A READING OF THE ORDER OF CIT(A) AS WELL AS THAT OF THE TRIBUNAL INTO THE ORDER IMPUGNED. IN THE CIRCUMSTANCES, THE TRIBUNAL SHALL CONSIDER THE RELEVANT DOCUMENTS ON THE BASIS OF THE CLAIMS AND ASCERTAIN WHETHER THE APPLICANT IS ENTITLED TO THE BENEFIT OF SECTION 10A, AS CLAIMED. THE JUDGMENT AND ORDER OF THIS COURT DATED 17.09.2012 IS ACCORDINGLY MODIFIED; THE TRIB UNAL SHALL PROCEED TO PASS APPROPRIATE ORDERS AFTER HEARING BOTH PARTIES. 4.3 WITH THIS BACKGROUND, LEARNED AR HAS SUBMITTED BEFORE US IN A WRITTEN SUBMISSION AS UNDER: HOWEVER, THE APPELLANT HAS NO OBJECTION IF THE ORDER U/S.263 IS UPHELD, IF THE ITAT CONSIDERS IT APPROPRIATE TO ISSUE DIRECTIONS TO THE AO TO CONSIDER THE ALLOWABILITY OF DEDUCTION U/S.10A OF THE ACT. THE AO MAY PLEASE TO DIRECT THAT THE CLAIM OF THE ASSESSEE U/S. 10A BE NOT DISALLOWED MERELY ON THE GROUND THAT THE ASSESSEE HAD NOT MADE C LAIM FOR THE SAME DURING THE ORIGINAL ASSESSMENT AND THE CHARTERED ACCOUNTANT S CERTIFICATE IN FORM NO.56F WAS NOT FILED. IT IS SUBMITTED THAT SINCE THE DEDUCTION WAS CONSISTENTLY ALLOWED FOR THE EARLIER YEARS U/S.10B, THERE WAS NO REASON FOR THE ASSESSEE TO MAKE ALTERNATE CLAIM ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 8 - FOR DEDUCTION U/S.10A. FURTHER, FOR CLAIMING DEDUCTION U/S.10B, THE ASSESSEE HAD ALREADY SUBMITTED CHARTERED ACCOUNTANT S CERTIFICATE IN FORM NO.56G, WHICH IS PARI MATERIA THE SAME AS FORM NO.56F. 5. ON THE OTHER HAND, FROM THE SI DE OF THE REVENUE, LEARNED CIT - D.R., MR. VIMALENDU VERMA HAS ARGUED THAT THE QUESTION WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION U/S.10A OR U/S.10B CAN ONLY BE CONSIDERED DURING QUANTUM PROCEEDINGS. AS FAR AS THE ISSUE BEFORE THIS TRIBUNAL IS CONCERNED, IT IS TO BE DECIDED THAT WHETHER THE ORDER U/S.263 PASSED BY LEARNED COMMISSIONER WAS A SUSTAINABLE ORDER IN THE EYES OF LAW. HE HAS PLEADED THAT SINCE THE AO HAS NOT DISCUSSED THE RELEVANT PROVISION OF SECTION 10B AND ERRONEOUSLY GRANTED THE EX EMPTION; THEREFORE, THE LEARNED COMMISSIONER WAS JUSTIFIED IN QUASHING THAT ORDER. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE ALSO PERUSED THE COMPILATION FILED BEFORE US IN THE LIGHT OF THE ORDERS OF THE REVENUE AUTHORITIES. AS FAR AS THE FI RST PLANK OF ARGUMENT OF LEARNED SR.D.R. IS CONCERNED , WE FIND FORCE THAT IN A SITUATION WHEN THE ADMITTED FACTUAL POSITION WAS THAT THE ORDER OF THE AO WAS A CRYPTIC ORDER WITHOUT CONSIDERING THE SUBSTANTIAL CLAIM OF EXEMPTION U/S.10B OF RS. 3,26,27,651/ - THEN IN OUR HUMBLE OPINION SUCH AN ORDER CAN BE REVIEWED BY LEARNED COMMISSIONER U/S.263 OF IT ACT. ALTHOUGH CERTAIN NOTICES U/S.143(2)/142(1) WERE ISSUED BUT WE HAVE FOUND THAT THE ISSUE WAS NOT EXAMINED IN THE LIGHT OF THE PROVISIONS OF SECTION 10B, EXPL ANATION 2(IV) OF IT ACT BY THE AO . FACTS HAVE REVEALED THAT THE A SSESSEE WAS GRANTED APPROVAL AS 1 00% EXPORT ORIENTED UNIT (EOU) BY THE DIRECTOR O F THE SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI) GANDHINAGAR FOR IT ENABLED SERVICES. LEARNED COMMISSIONER HAS THEREFORE RAISED OBJECTION THAT STPI WAS NOT COMPETENT TO GRANT SUCH ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 9 - APPROVAL BEING SIMPLY A S OCIETY AND THE APPROVAL WAS REQUIRED TO BE GRANTED BY D EVELOPMENT C OMMISSIONER UNDER MINISTRY OF CHEMICALS AND INDUSTRY AS PRESCRIBED IN ONE OF THE CBDT INSTRUCTI ON DATED 9 TH MARCH, 2009. DUE TO THESE REASON S , WE HEREBY HOLD THAT THE ORDER PASSED U/S.263 OF IT ACT IS AN ORDER SUSTAINABLE IN THE EYES OF LAW. 7. HOWEVER, WE UPHOLD THE ORDER U/S.263 FOR A LIMITED PURPOSE THAT THE CLAIM OF DEDUCTION U/S.10B W AS ALLOWED BY AO WITHOUT PROPER INVESTIGATION. BUT SIMULTANEOUSLY WE ARE ALSO OF THE VIEW THAT LEARNED COMMISSIONER HAS EXCEEDED THE JURISDICTION BY UNILATERALLY DIRECTING THE AO TO PASS A FRESH ORDER BY DISALLOWING THE CLAIM U/S.10B OF IT ACT. ACCORDIN G TO US, LEARNED COMMISSIONER COULD HAVE EXAMINED BOTH THE ASPECTS OF THE ISSUE THAT WHETHER THE ASSESSEE IS ENTITLED FOR THE EXEMPTION AS PRESCRIBED U/S.10A OF IT ACT, ESPECIALLY UNDER THE CIRCUMSTANCE S WHEN THIS LEGAL ARGUMENT WAS RAISED BEFORE HIM. ACCO RDING TO US, LEARNED COMMISSIONER COULD HAVE REFERRED THE ISSUE OF ALTERNATE CLAIM OF EXEMPTION U/S.10A BACK TO THE AO TO BE DECIDED AFRESH AFTER CONSIDERING THE PROVISIONS OF THE ACT IN THE LIGHT OF THE EVIDENCES FILED. WE HAVE FORM ED THIS OPINION ON THE BASIS OF THE TWO JUDGMENTS PRONOUNCED BY HON BLE DELHI HIGH COURT IN THE CASE OF VALIANT COMMUNICATIONS LTD. (SUPRA) AND REGENCY CREATION LTD. (SUPRA), RELEVANT PORTIONS ALREADY REPRODUCED ABOVE. IN THESE TWO CASES HON BLE COURT WAS OF THE VIEW THAT IN ALL FAIRNESS IF THE ASSESSEE HAS CLAIMED A BENEFIT U/S.10B BUT IT PERTAINED TO SECTION 10A THEN THE AO SHOULD PASS AN APPROPRIATE ORDER AS TO WHETHER THE BENEFIT U/S.10A COULD BE GRANTED AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE PROVIS IONS OF THE ACT. RESPECTFULLY FOLLOWING THE DECISIONS, WE HEREBY MODIFY THE DIRECTIONS OF ITA NO. 925 /AHD/201 4 SHRI TARUN V. SHAH VS. CIT - I, BARODA FOR A.Y. 200 9 - 10 - 10 - LEARNED COMMISSIONER THAT INSTEAD OF DISALLOWING THE CLAIM OF DEDUCTION U/S.10B, THE AO IS HEREBY DIRECTED TO EXAMINE THE ALTERNATE LEGAL CLAIM OF THE ASSESSEE AND TH EREUPON PASS AN APPROPRIATE ASSESSMENT ORDER. RESULTANTLY, THE GROUNDS RAISED BY THE ASSESSEE ARE HEREBY PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS DIRECTED ABOVE. SD/ - SD/ - (ANIL CHATURVEDI ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16 / 01 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD