Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 464 - HC - Income TaxRevision u/s 263 - AO has granted deduction claimed under Section 10A of the Act -Tribunal upholding the jurisdictional validity of the revisionary proceedings initiated - Whether tribunal was right in law in concluding that in the absence of separate books of accounts being maintained for the 10A units, the deduction shall be computed based on the overall average profit margin of the appellant despite the provisions of Section 10A of the Act specifically provides for unit-wise computation of deduction? - HELD THAT:- We find there is no discussion and finding with regard to the exercise of jurisdiction under Section 263, which according to the assessee was without jurisdiction. Secondly, the issue whether it is mandatory for the assessee to maintain separate books of accounts was also not decided by the PCIT. If according to the PCIT, it is mandatory to maintain separate books of accounts, the alternate submission made by the assessee that they have maintained separate profit and loss account and the same was submitted to the Assessing Officer, who has considered the same and then completed the assessment, was not dealt with or discussed. To be noted that the Assessing Officer did not reject the profit and loss account submitted by the assessee, but undertook an exercise to rework the deduction, which was not challenged by the assessee. PCIT would state that the Assessing Officer has not made any enquiry. This finding is absolutely vague, as we find from the assessment order under Section 143(3) of the Act, the Assessing Officer did conduct an enquiry, called for details, the details were produced and thereafter, the assessment was completed. Therefore, the finding of the PCIT in that regard is erroneous, consequently, assumption of jurisdiction under Section 263 of the Act was not sustainable. The Tribunal while testing the correctness of the order passed by the PCIT has also not dealt with the issues, which were specifically pleaded by the assessee. Therefore, we are to necessarily hold that the order passed by the Tribunal is also erroneous. The CBDT by Circular No.1/2013, dated 17.01.2013, issued clarification on various issues, which were highlighted by the software industry and one such issue was, whether it is necessary to maintain separate books of account for eligible units claiming tax benefit under Sections 10A and 10B In terms of the above clarification, there is no requirement to maintain separate books of account. By Instruction No.17/2013 dated 19.11.2013, the Field Officers of the Department were advised to follow Circular No.1/2013 dated 17.01.2013, in letter and spirit. By Instruction No.3/2014, dated 14.03.2014, the Department Representatives and the Standing Counsel of the Department were directed to be informed about Circular No.1/2013, who appear for the Department before the Tribunal and the Court. The above circulars and instruction are binding on the Department and therefore, the conclusion of the PCIT that it is necessary to maintain separate books of account is not sustainable. See M/S. CAIRN INDIA LTD. VERSUS DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) [2017 (11) TMI 643 - MADRAS HIGH COURT] as held that Section 80IB does not mandate that for claiming deduction, separate books of accounts should be maintained. - we are of the clear view that the Tribunal committed an error in not interfering with the order passed by the PCIT. - Decided in favour of assessee.
|