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2015 (7) TMI 108 - ITAT BANGALORE

2015 (7) TMI 108 - ITAT BANGALORE - TMI - Exemption U/s 10B denied - assessee in its return of income had claimed deduction under Section 10B in respect of export of computer software in its STPI unit since it is registered as a 100% EOU exporting software products - whether the assessee is eligible for deduction under Section 10B of the Act in the absence of requisite approval from the Board of Approval ratifying the permission granted by the Development Commissioner? - Held that:- Admittedly, .....

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d in the case of Valiant Communications Ltd.,[2013 (1) TMI 734 - DELHI HIGH COURT] allowing the change of the alternate claim of that assessee to consider its eligibility deduction under Section 10A in place of 10B of the Act, squarely covers the issue in favour of the assessee.

We find that from a perusal of the orders of the authorities below, since this issue of the assessee's alternate claim for deduction under Section 10A of the Act has not been considered by them, we are of the .....

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) ORDER Per Shri Jason P. Boaz, AM. This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-I, Bangalore dt.31.7.2013 and order under Section 154 of the Income Tax Act, 1961 (in short 'the Act') for Assessment Year 2010-11. 2. The facts of the case, briefly, are as under :- 2.1 The assessee company, engaged in the business of software development exports, filed its return of income for Assessment Year 2010-11 on 5.10.2010 declaring income of .....

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.2 Aggrieved by the order of assessment for Assessment Year 2010-11 dt.30.11.2012, the assessee preferred an appeal before the CIT (Appeals) - I, Bangalore. The learned CIT (Appeals) dismissed the assessee's appeal by order dt.31.7.2013, wherein the learned CIT (Appeals) upheld the action of the Assessing Officer in denying the assessee's claim for deduction under Section 10B of the Act. Further, on a miscellaneous application by the assessee, seeking alternate claim of deduction under S .....

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.07.2013 and corrigendum dt.11.09.2013 is opposed to law and facts of the case. 2). The CIT(A) erred in not granting exemption U/s 10B of the Act even though the appellant had fulfilled all the conditions for exemption. 3). The CIT(A) erred in not appreciating the circular issued by Export Promotion Council for EOU & SEZ No.68, dt.14.05.2009 in proper perspective which clarified that the authority for approval subsequent to Board s circular dt.09.03.2009 is Development Commissioner under del .....

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xemption was allowed in the years earlier and it is only in the first year the allowance of claim to be substantiated. 7). The CIT(A) erred in not granting an opportunity to the appellant as specifically requested by the appellant vide misc. application dt.02.09.2013 which is opposed to the principle of natural justice. 8). The CIT(A) erred in not granting the alternative claim U/s 10A of the Act on technical grounds rather than dealing with the claim on merit without considering the Board circu .....

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cable to claim before the Assessing Officer and not before appellate authorities. 11). For these and other grounds that may be urged the appeal may kindly be allowed and Justice rendered." 4. The Grounds raised at S.Nos. 1 & 11 (supra), being general in nature, no adjudication is called for thereon. 5. Grounds at S.Nos.2 to 6 - Deduction u/s.10B of the Act. Grounds at S.Nos.7 to 10 - Deduction u/s.10A of the Act (Assessee's alternate claim) 5.1.1 The learned Authorised Representativ .....

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angalore that even after clarification on 14.05.2009 only the circular issued on 09.03.2009 is applicable has not appreciated the circular in proper perspective. The EOU circular which is subsequence to boards circular clarifying the difficulties in circular dt.09.03.2009 should be applicable. Hence, as per circular the approval granted by development commissioner is under delegated power of the board of approval. Hence, the assessing officer conclusion that the approval granted by Development C .....

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provides in clear terms that LOP/LOI issued to EOU/EHIP?STP?BTP units by concerned authority would be construed as an authorization for all purposes. Standard format for LOP for EOU units is given in APPENDIX 14-I-E to such handbook. Thus the words ,for all purposes ,imply that the approval given by STPI, being the concerned authority ,shall be deemed to be one meeting the purpose of approval under section10B of the ACT". Hence, denial of exemption when the appellant is eligible for exempt .....

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Income Tax (Appeals) - failed to grant opportunity as requested vide application dt.02.09.2013 : The appellant on receipt of Commissioner of Income Tax (Appeals) order dt.31.07.2013 on 02.09.2013 filed on application for not having considered the grounds raised in the appeal. The application specifically requested for personal hearing to present the case. The Commissioner of Income Tax (Appeals), without affording a opportunity disposed off the application on 11.09.2013 itself denying the claim .....

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und. The appellant filed a misc. application dt.02.09.2013 to consider the alternative ground and pass the order. The Commissioner of Income Tax (Appeals) in the order U/s 154, dt.07.09.2013 to his order dt.31.07.2013 dismissed the grounds on the following reason : "In the instant case Form No.56F has been filed on 30/07/2013 i.e., after completion of assessment. Moreover, originally deduction has been claimed u/s 10B of the Act and if claim deduction u/s 10A of the Act, the appellant shoul .....

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ppellant is not entitled to alternative claim U/s 10A of the Act. The appellant in the written submission relied on the board circular No.14(11-35) of 1955, dt.11.04.1955 wherein it was specifically mentioned that assessing officer not to take advantage of assessee s ignorance and / or mistake. The relevant portion of the circular which were reproduced in the submission at page 5 and also reproduced by the Commissioner of Income Tax (Appeals) which is as under : "The Appellant submits that .....

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Board of Direct Tax had issued a circular vide No. 14(11-35) of 1955 directing Assessing Officer not to take advantage of assessee s ignorance and /or mistake. The relevant Portion of the above Circular is as under: "3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the claiming of any securing any reliefs and in this regard the officers should take ini .....

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y appear to be clearly entitled but which they have omitted to claim for some reason or other; b. freely advise them when approached by them so to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. Therefore the above Circular should always be borne in mind by the officers of the respondent-revenue while administering the said Act. It is submitted that the Circulars are applicable and it is binding in nature on department. The Petitioner places r .....

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hold anything contrary to what was held in the previous judgment to the effect that even if a claim is not made before the assessing officer, it can be made before appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge of the power of the Tr .....

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y of those special deduction provisions and on the conditions specified for the Revenue to contend that the assessee shall not be entitled to have the benefit of Section 10A". Hence, the denial of exemption U/s10A of the Act made before the Commissioner of Income Tax (Appeals) relying on the decision of Hon ble Supreme Court in the case of Goetze India Ltd. V/s CIT is not correct. Apart from the above exemption made in the return U/s 10B was denied both by the assessing officer and Commissi .....

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Tax Act. It had urged that the supporting materials disclose that there was STP clearance / approval under Section 10A and that such approval was sufficient to entitle it to the benefit of Section 10B. By judgment, this Court nagatived the plea with regard to the approval vis-a-vis Section 10B and has ruled that separate regime exists. The applicant contends that the Commissioner of Income Tax (Appeals) and Tribunal had, in the present case, not gone into the merits of the alternative claim for .....

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alter hearing both parties". Hence, based on the above decision which had been relied on by the Assessing Officer and Commissioner of Income Tax (Appeals) which was later modified on C/M application before the Hon ble Delhi High Court set aside to tribunal to allow alterative claim U/s 10A, the appellant is eligible for deduction U/s 10A which was claimed before Commissioner of Income Tax (Appeals) may kindly be allowed." 5.1.2 In addition to the above, the learned Authorised Represent .....

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e under Section 10B of the Act was allowed. According to the learned Authorised Representative, the assessee had wrongly claimed the deduction under Section 10B of the Act instead of under Section 10A of the Act. The learned Authorised Representative submitted that even in the cases of CIT V Regency Creations Ltd. / Valiant Communications Ltd. (2013) 353 ITR 26 (Delhi), wherein the Assessing Officer had denied the assessee's claim for deduction under Section 10B of the Act which was upheld b .....

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of a coordinate bench of this Tribunal in the case of ANSR Sources India Pvt. Ltd. in ITA No.562/Bang/2013 dt.13.11.2013. It was submitted that in the cited case, one of issues that arose for consideration was whether the assessee could be permitted to change its claim for deduction from section 10B to section 10A of the Act. In that case the assessee had initially made a claim for deduction under Section 10A of the Act; which however in the statement of computation of income was mentioned as de .....

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gistered as a 100% EOU under the STPI Scheme, the assessee in that case, as has been done in the case on hand, made an alternate claim for deduction under Section 10A of the Act before the CIT (Appeals). The co-ordinate bench of this Tribunal examined the above claim and found that the ITAT, Chennai Bench in the case of ITO V Heartland K.G. Information Ltd. (2010) 131 TTJ 216 (Chennai) had dealt an alternative claim situation and had held that revenue was bound to examine the eligibility of the .....

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examination in accordance with law. 5.2 Per contra, the learned Departmental Representative supported and relied on the decisions of the orders of the authorities below. 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited and placed reliance upon. 5.3.2 The facts of the matter, as emanate from the record are that, in the period relevant to Assessment Year 2010-11 the assessee in its return of income ha .....

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in Section 10B of the Act. The Assessing Officer after examining the assessee's submissions and the material on record held at para 3.16 of the order of assessment that the assessee is not eligible for deduction under Section 10B of the Act; the relevant findings being extracted hereunder :- "3.16 Therefore based on all the above, it is seen that the assessee ought to have complied with all the conditions given under Section 10B before it had claimed the exemption under Section 10B. It .....

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ssessing Officer and contended that the Assessing Officer action in denying the assessee's claim for deduction under Section 10B of the Act was not correct. In appellate proceedings before the learned CIT(A), the assessee raised the additional ground of appeal that in the event of the assessee's claim for deduction under Section 10B of the Act was rejected, then alternatively, the assessee's claim for deduction under Section 10A of the Act be considered and in this context also filed .....

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9.2013, on a Miscellaneous Application filed by the assessee, rejecting the assessee's alternate claim for allowing deduction under Section 10A of the Act, holding as under at para 8 thereof :- "8. In the instant case Form No.56F has been filed on 30.7.2013 i.e. after completion of assessment. Moreover, originally deduction has been claimed under Section 10B of the Act and if claim deduction under Section 10A of the Act, the appellant should have filed revised return of income within pe .....

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of the Act in the absence of requisite approval from the Board of Approval ratifying the permission granted by the Development Commissioner. Admittedly, the assessee had not obtained the required approval envisaged under Section 10B of the Act. The assessee's alternate claim raised in appellate proceedings before the learned CIT(A) was that it be allowed deduction under Section 10A of the Act, for which it had the required approvals, which was not accepted. With regard to the question as to .....

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n is extracted hereunder :- "The applicant contends that the CIT (Appeals) and the Tribunal 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 the CIT (Appeals) as well as that of the Tribunal in 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 und .....

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