Deputy Commisioner of Income tax, Bangalore V. M/s Informatics Ltd, Bangalore

MA 64/BANG/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3371 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G P REDDY
• Keywords: Opportunity of being heard; Additional evidence
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER M.P. NO.64/BANG/2015 [IN ITA NO.1504/BANG/2013] ASSESSMENT YEAR : 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1), BANGALORE. VS. M/S. INFORMATICS (INDIA) LTD., NO.194, R.V. ROAD, BASAVANGUDI, BANGALORE 560 004. PAN : AAACI 3561K APPLICANT RESPONDENT APPLICANT BY : SHRI G.P. REDDY, CIT(DR) RESPONDENT BY : SHRI NARENDRA SHARMA, ADVOCATE DATE OF HEARING : 07.08.2015 DATE OF PRONOUNCEMENT : 14.08.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS A MISCELLANEOUS PETITION FILED BY THE REV ENUE PRAYING FOR RECTIFICATION OF CERTAIN APPARENT ERRORS IN THE ORD ER DATED 16.04.2014 PASSED BY THIS TRIBUNAL IN THE AFORESAID APPEAL. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF DISTRIBUTION OF JOURNALS, CD ROM, DATA BASES AND ELECTRONIC DATA . THE ASSESSEE ALSO MP NO.64/BANG/2015 PAGE 2 OF 6 SET UP A STP UNIT FOR EXPORT OF CONTENT DEVELOPMENT SERVICES. THE ASSESSEE HAS AN APPROVAL FOR SETTING UP OF STP UNIT AND THAT APPROVAL WAS ORIGINALLY GRANTED ON 24.3.2000 AND EXTENDED FOR A PERIOD OF 5 YEARS FROM 4.10.2005 AND FURTHER EXTENDED FOR A PERIOD OF 5 YE ARS FROM 10.4.2010. 3. FOR THE A.Y. 2009-10, THE ASSESSEE FILED A RETUR N OF INCOME IN WHICH THE ASSESSEE CLAIMED DEDUCTION U/S. 10B OF THE ACT OF A SUM OF RS.1,10,71,914 IN RESPECT OF EXPORT OF COMPUTER SOF TWARE IN ITS STP UNIT SET UP AND APPROVED BY THE STPI AUTHORITIES. THE REQU IRED REPORT OF AN AUDITOR AS REQUIRED UNDER FORM. 56F R.W. RULE 16E OF THE RU LES WAS FILED BY THE ASSESSEE. A COPY OF THE REPORT IS AT PAGES 38 TO 4 0 OF THE ASSESSEES PAPERBOOK (PB). THOUGH AT PAGE 38, THE REPORT IS S AID TO BE ONE U/S. 10B OF THE ACT, ANNEXURE-A OF THE REPORT IN COL. 16 REF ERS TO SECTION 10A OF THE ACT. IN COL. 5 OF ANNEXURE-A, THE NATURE OF BUSINE SS OF UNDERTAKING IS STATED TO BE 100% EOU/IT ENABLED SERVICES. THERE I S NO DIFFERENCE BETWEEN DEDUCTION U/S. 10A AND 10B OF THE ACT AS IN BOTH THE SECTIONS, THE CONDITION IS THAT THE PROFITS & GAINS SHOULD BE DER IVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE. THE DIFFERENCE IS THAT SECTION 10B APPLIES TO 100% EOU WHILE SECTION 10A IS APPLICABLE TO UNIT S REGISTERED WITH STPI. 4. THE AO WAS OF THE VIEW THAT THE SERVICES RENDER ED BY THE ASSESSEE WERE IN THE NATURE OF PROVIDING TECHNICAL SERVICES TO CLIENTS NOT ELIGIBLE FOR EXEMPTION U/S 10(B) OF THE IT ACT. THE AO CAME TO T HE CONCLUSION THAT THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF MANUFAC TURE OR PRODUCTION OF MP NO.64/BANG/2015 PAGE 3 OF 6 ARTICLE OR THINGS OR COMPUTER SOFTWARE. HE ACCORDI NGLY REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 10B OF THE ACT. 5. THE ASSESSEE RAISED AN ADDITIONAL GROUND OF APP EAL BEFORE THE CIT(A) IN WHICH THE ASSESSEE SUBMITTED THAT IN THE EVENT OF CLAIM OF THE ASSESSEE NOT BEING CONSIDERED U/S. 10B OF THE ACT, THEN THE CLAIM MAY BE CONSIDERED U/S. 10A OF THE ACT. WITH REGARD TO THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 10A OF THE ACT, THE ASS ESSEE HAD FILED BEFORE THE CIT(A) A REPORT OF THE AUDITOR IN FORM 56F R.W. RULE 16D OF THE I.T. RULES, 1962, IN WHICH THE CLAIM FOR DEDUCTION U/S. 10A WAS MADE. ON THE ABOVE CLAIM OF THE ASSESSEE, THE CIT(A) HELD THAT D EDUCTION U/S. 10A OF THE ACT CAN BE ALLOWED ONLY WHEN THE REPORT IN THE PRES CRIBED FROM IS FILED ALONG WITH THE RETURN OF INCOME. HE HELD THAT THE SAID FORM WAS NOT FILED ALONG WITH THE RETURN OF INCOME OR BEFORE THE COMPL ETION OF THE ASSESSMENT, HENCE THE SAME CANNOT BE ENTERTAINED. THE CIT(A) F URTHER HELD THAT IT IS NOT POSSIBLE TO SHIFT THE CLAIM OF DEDUCTION FROM 1 0B TO 10A OF THE ACT. 6. THE TRIBUNAL HELD AS FOLLOWS:- 22. ADMITTEDLY THE ASSESSEE DID NOT HAVE THE REQU IRED APPROVAL AS ENVISAGED U/S.10B OF THE ACT. THE ASSE SSEE HOWEVER CLAIMS IT HAS THE REQUIRED APPROVAL FOR ALLOWING DE DUCTION U/S.10A OF THE ACT. WITH REGARD TO THE QUESTION AS TO WHETHER THE ASSESSEE CAN BE ALLOWED TO SHIFT THE CLAIM FOR DEDU CTION FROM SECTION 10B TO SECTION 10A OF THE ACT, WE HAVE ALRE ADY SEEN THAT IN THE PAST THE ASSESSEE HAD BEEN CLAIMING DEDUCTIO N U/S. 10A OF THE ACT. IN OUR VIEW, THE DECISION RENDERED BY THE ITAT BANGALORE BENCH IN THE CASE OF ANSR SOURCE INDIA PVT. LTD. (SUPRA) , SQUARELY COVERS THE ISSUE AND THE CLAIM OF THE AS SESSEE MP NO.64/BANG/2015 PAGE 4 OF 6 SHOULD BE DIRECTED TO BE EXAMINED IN THE LIGHT OF T HE PROVISIONS OF SECTION 10A OF THE ACT AND FOR THIS PURPOSE THE REP ORT OF THE AUDITOR IN FORM 56F OF THE ACT FILED BEFORE THE CIT (A) IS ADMITTED AS ADDITIONAL EVIDENCE. WE ARE OF THE VIE W THAT, IN THE INTEREST OF JUSTICE, THE ISSUE SHOULD BE DIRECTED T O BE EXAMINED BY THE ASSESSING OFFICER AFRESH U/S. 10A OF THE ACT IN THE LIGHT OF THE OBSERVATIONS MADE BY US IN THE EARLIER PART OF THIS ORDER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPE ALS) AND REMAND THE ISSUE TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.10A OF THE ACT. THE ASSESSING OFFICER WILL DECIDE THE ISSUE AFRESH AFTE R AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD. 7. IN THIS MISCELLANEOUS PETITION THE REVENUE HAS P OINTED OUT THAT THE TRIBUNAL, IN COMING TO THE ABOVE CONCLUSION, HAS PR OCEEDED ON THE BASIS OF ITS FINDING IN PARA-4 OF ITS ORDER THAT THE CLAIM F OR DEDUCTION U/S.10A OF THE ACT HAS BEEN EXAMINED AND ALLOWED BY THE AO IN THE PAST AFTER DETAILED SCRUTINY FOR AYS 2001-02 TO 2008-09. ACCORDING TO THE REVENUE THE AFORESAID OBSERVATIONS ARE INCORRECT. THE REVENUE HAS POINTED OUT THAT ONLY IN AYS 2003-04 & 2005-06, CLAIM OF THE ASSESSE E U/S.10B WAS ALLOWED AFTER DETAILED SCRUTINY. THE REVENUE THERE FORE HAS PRAYED FOR REVIEW OF THE ORDER PASSED BY THE TRIBUNAL. THE RE VENUE HAS ALSO POINTED OUT THAT IN PARA-22 OF THE ORDER OF THE TRIBUNAL, T HE CONCLUSIONS OF THE TRIBUNAL ARE ONLY BASED ON THE PAST SCRUTINY ASSESS MENT AND THEREFORE THE ORDER HAS TO BE RECTIFIED. 8. WE HAVE HEARD THE LEARNED DR WHO REITERATED THE STAND OF THE REVENUE AS CONTAINED IN THE M.P. THE LEARNED COUN SEL FOR THE ASSESSEE COULD NOT DISPUTE THE STAND OF THE REVENUE THAT ONL Y FOR AYS 2003-04 & MP NO.64/BANG/2015 PAGE 5 OF 6 2005-06, THE AO ALLOWED DEDUCTION U/S.10B OF THE AC T, AFTER SCRUTINY. TO THIS EXTENT, OBSERVATIONS IN PARA-4 OF THE TRIBUNAL ORDER WILL STAND MODIFIED TO THE EXTENT THAT INSTEAD OF REFERENCE TO SCRUTINY ASSESSMENT FOR ASSESSMENT YEARS 2001-02 TO 2008-09 ; THE SAME WILL BE READ AS REFERENCE ONLY TO ASSESSMENT YEARS 2003-04 AND 2005-06 . HOWEVER, WE MAKE IT CLEAR THAT THE AFORESAID CHANGE WILL NOT HAVE ANY IMPACT ON THE ULTIMATE CONCLUSIONS OF THE TRIBUNAL AND THE SAME W ILL HOLD GOOD. 9. WE THEREFORE ALLOW THE MISCELLANEOUS PETITION TO THE LIMITED EXTENT STATED ABOVE. 10. IN THE RESULT, THE M.P. IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF AUGUST , 2015 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 14 TH AUGUST , 2015 . /D S/ MP NO.64/BANG/2015 PAGE 6 OF 6 COPY TO: 1. APPLIC ANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/ SENIOR PRIVATE SECRETARY ITAT, BANGALORE.