TMI Blog2015 (1) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... th March, 2009. Due to these reasons, we hereby hold that the order passed u/s.263 of IT Act is an order sustainable in the eyes of law. We uphold the order u/s.263 for a limited purpose that the claim of deduction u/s.10B was 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. According 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 circumstances when this legal argument was raised before him. According 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 hereby modify the directions of 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 thereupon pass an appropriate assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order pertaining to the claim of deduction u/s.10B of IT Act. Rather, the impugned assessment order can be said to be a cryptic order. Learned CIT(A) has 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 commenced 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 formed 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 Technology, Govt. of India. Explanation 2(iv) to section 10B 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 10B but far a unit by a Society. Further, the STPI unit is approved by the Director of STPI (which is a society) under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer had called for various 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 Act. 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 assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applies to cases where 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 Assessee 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 material 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 or 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 without 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 approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails in respect 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 furnished. 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 on different issue because the claim was disallowed by the AO on the ground that there was a restructuring of the business hence held by the AO that the new entity did not fulfill the conditions for grant of exemption u/s.10B of IT Act. However, when the issue was discussed before learned Commissioner-I, Baroda, while passing order u/s.264 dated 19.1.2011 he has directed to allow the exemption u/s.10B but not beyond the period of 31.03.2012. 4.1 Be that as it was, now before us learned AR has filed two orders of Hon ble Delhi High Court one in the case of Regency Creation Ltd. (ITA 69/2008) order dated 30th of November, 2012 (CM No.19897/12) wherein it was held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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 exemption; 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 first 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 ₹ 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, Explanation 2(iv) of IT Act by the AO. Facts have revealed that the assessee was granted approval as 100% export oriented unit (EOU) by the Director of the So ..... X X X X Extracts X X X X X X X X Extracts X X X X
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