9911796707
TMI Blog2010 (4) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is in contravention of the statutory requirement contained in Explanation 2(iv) of section 10B which stipulates a mandatory condition that a hundred per cent export oriented undertaking means an undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951)and the rules made under the Act. 3. The Ld CIT(A) has erred in law and on facts in placing reliance on Instructions No.1/2006 (copy enclosed) which has no bearing on Section 10B and which in fact has been issued for the purposes of Explanation 9(vii) of section 10A in order to clarify as to what would man a STP for the purposes of that section. The very subject of the said instruction read with it contents, makes abundantly clear the object, scope and purpose of the said instruction. It in no way, modifies obviates or amends the requirements of Explanation 2(iv) of section 10B for the purposes of an 100% EOU. 4. The ld CIT(A) has also erred in law in ignoring the direct authorities of Hyderabad Tribunal of Infotech Enterprises Ltd. v. JCIT (85 ITD 325), which has underlined the mandatory nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducing computer software on or after 1.4.1994. Being aggrieved, the assessee carried the matter in appeal before Ld CIT(A) who has decided the issue regarding allowing of deduction u/s 10B in favour of the assessee and the revenue is in appeal against the order of Ld CIT(A). 4. Ld DR of the revenue supported the assessment order. It is submitted by him that since there is no approval from Board as required as per Explanation 2(iv) to section 10B, deduction is not allowable to the assessee u/s 10B. Ld counsel of the assessee relied upon the order of the Ld CIT(A). It is submitted by him that on pages 124-126 of the paper book is the approval granted by Dy. Director (Tech), Software Technology Park of India. It is also submitted that in assessment year 2004-05, the assessment was completed by the Assessing Officer u/s 143(3) and such assessment order is available on pages 213 of the paper book and in that year, the returned income of the assessee was accepted by the Assessing Officer. It is also submitted that computation of income for that year i.e. assessment year 2004-05 is available on page No.193 of the paper book and as per the same, in that year, the assessee has claimed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablished hundred per cent export oriented undetaking. Section 10 was inserted by the Finance Act, 1988 w.e.f. 1.4.1989 and later on it was amended from time to time. According to this provision, any profits and gains derived by an assessee from a hundred per cent export oriented undertaking shall not be included in the total income of the assessee. As provided in clause (2) of section 10B, the exemption is available to undertakings which fulfill all the following conditions namely:- i) It manufactures or produces any article or thing; ii) In relation to an undertaking which begins to manufacture or produce any article or thing on or after the Ist day of April, 1994, its exports of such articles and things are not less than seventy five per cent of the total sales thereof during the previous year; iii) It is not formed by the splitting up, or the reconstruction, of a business already in existence. Provided that this condition shall not apply in respect of any undertaking which is formed as a result of re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B in the circumstances and withinthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme, para 2.3.; of the aforesaid notification provides that the scheme is administered by the Department of Electronics, Govt. of India, through Directors of respective STPs which form part of the STPI, a society established by the Department of Electronics and registered under the Sociieties Registration Act, 1860. An application in the prescribed format for establishing a STP unit5 may be submitted to the Chief Executive of STP Complex along with the details of the software project. Such application will be considered by an Inter Ministerial Standing Committee constituted under the Chairmanship of Secretary, Department of Electronics Copy of registration Copy of registration papers of the appellant filed before the Assessing Officer clearly shows that STPI is duly authorized authority on behalf of Inter Ministerial Standing Committee to grant registration of the units under the scheme of STPI. Copy of clarification obtained from STPI in this connection has also been perused. It shows that the registration has been granted by Director, STPI on behalf of Inter Ministerial Standing Committee. The CBDT has issued instruction No.1/2006 dated 31.3.2006 on this issue that benefit u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case of the appellant since same was rendered prior to Instruction No.1 dated 31.3.2006 issued by CBDT and Minutes of Industrial Ministerial Communication vide letter dated 23.3.2006 issued by the Ministry of Communication and Technologies as stated above. In fact in that case as has now been placed on record in above mentioned paras by the appellant, no specific clarification had also9 been placed on record. It is thus submitted that aforesaid decision was rendered without various instructions and guidelines issued by the Ministry of Commerce and Ministry of Communication. In fact, as stated above, notification issued by Ministry of Commerce specifically states that even under section 14 of the IDRA, EOU which do not fall under the automatic route shall only apply to the Board. However, the appellant falls under automatic route as evident from para 5 of the industrial policy, there was no specific approval required from Board and in fact, the approval of the Development Commissioner itself was an approval of the Board in terms of Explanation 2(4) of section 10B of the Act. The concerned judgment relied upon by the Assessing Officer of Hon'ble Hyderabad ITAT came prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case and respectfully following this Tribunal decision, we hold that the STIP registration granted to the assessee on 16.11.1998 is valid for allowing deduction to the assessee u/s 10B and hence we do not find any reason to interfere in the order of the Ld CIT(A) on this issue. We would also like to point out that in an earlier year i.e. assessment year 2004-05, the Assessing Officer himself has allowed deduction u/s 10B to the assessee in a scrutiny assessment. It is also not brought on record by the revenue that this order is revised u/s 263 or reopened u/s 147. Under these facts, we feel that having decided in assessment year 2004-05 that the assessee is eligible for deduction u/s 10B, it cannot be denied in this subsequent year on the basis that the assessee is not an 100% EOU for the reason that necessary approval is not with the assessee. This is against the rule of consistency. For this reason also, we decline to interfere in the order of Ld CIT(A). 8. In the result, the appeal of the revenue is dismissed. 9. Now, we take up the cross objection of the assessee. 10. The ground raised by the assessee in the cross objection read as under:- "In the alternativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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