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The Income tax Officer, Ward-4 (2) , Ahmedabad Versus KJWW Engineering India Pvt. Ltd.

2017 (1) TMI 1336 - ITAT AHMEDABAD

Levy of penalty u/s .271(1)(c) - Complete disallowance u/s 10B deduction - Held that:- The case file already indicates that the assessee has been granted an STPI registration on 18.02.2009. Learned CIT(A) has thus held it entitled for the impugned deduction w.e.f. the said date on proportionate basis. We afforded adequate opportunity of hearing to both the parties. The Revenue fails in disputing assessee’s above certification w.e.f. 18.02.2009 so as to deny it Section 10B deduction relief. The l .....

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ade in the course of assessment was factually incorrect as the assessee’s certification stood proved w.e.f. 18.02.2009 (supra) as concluded in the above quantum proceedings. We thus observe that the learned CIT(A) has rightly quoted hon’ble apex court’s decision in a Reliance Petroproducts case [2010 (3) TMI 80 - SUPREME COURT] to conclude that the assessee’s bonafides are very much in order and each and every disallowance/addition made in the course of quantum proceedings does not necessarily r .....

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A)-VIII, Ahmedabad s order dated 30.01.2014 in appeal no. CIT(A)- VIII/ACIT/R.4/23/12-13, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short the Act . Its latter appeal emanates from the very CIT(A) s order of the same date reversing Assessing Officer s action imposing penalty of ₹ 24,93,500/- u/s.271(1)(c) of the Act. 2. We come to quantum cases first. The Revenue s former appeal challenges correctness of the CIT(A) s order inter alia condoning delay of 134 days in filing of .....

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ny is in knowledge process outsourcing business. It filed return on 29.09.2009 stating income of ₹ 76,06,815/- followed by its revised return dated 22.03.2011 declaring nil income. It claimed Section 10B deduction to the tune of ₹ 80,69,579/- of the Act. The Assessing Officer sought for necessary details for the said purpose. The assessee s Authorized Representative appears to have submitted on its behalf on 14.12.2011 that the assessee had not been accorded an STPI unit certificatio .....

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send the necessary records to its Authorized Representative at Ahmedabad because of over sight mistake and inadvertence. Its case accordingly was that it could only do the needful after realizing its above mistake. The assessee stated to have forwarded all necessary details and file its appeal after delay of 134 days. The CIT(A) treated it as a case of bonafide mistake to admit assessee s appeal for adjudication on merits. 5. The assessee thereafter filed additional submissions/evidence in the l .....

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hen on 15.12.2011. It thus sought to make out a case of admission of above additional evidence. The CIT(A) sought for remand report. The same came on 06.12.2013. The Assessing Officer first of all stated that he had granted all necessary opportunities to the assessee in order to produce the relevant details of Section 10B deduction claim and therefore, there was no violation of natural justice principles in his assessment order. We notice as page 14 of the order that the Assessing Officer himsel .....

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the appellant. The issue in brief is that the appellant is engaged in the business of Knowledge Process Outsourcing. It filed a return claiming the deduction under section 10 B of the Act. During the course of scrutiny the AR of the appellant informed the AO that it was not registered with STPI, which was mandatory for claiming the deduction. Accordingly the AO disallowed the deduction claimed by the appellant. The appellant later on discovered that it was registered with STPI with effect from .....

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rom the date from which it has been registered with STPI. I have carefully considered the submission given by the appellant regarding the new evidence and also the report of the AO. It is noted that the certificate was there with the appellant since February 2009 but due to ignorance of the Chartered Accountant during the course of assessment proceedings it could not be submitted before the AO. The evidence which has now been produced by the appellant is contemporary and there is no attempt to b .....

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icy and Promotion, Ministry of Commerce and industry of Software Technology Park held on 20/01/2010. The appellant has earned all its income from export and the export proceeds have been received in foreign exchange during the prescribed time. It is also submitted relevant certificate from a chartered accountant in form 56G, which is prescribed as per the provisions of section 10 B. Therefore, the appellant company satisfies ail the conditions related to grant of deduction under section 10 B and .....

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6/02/2009 and was accorded registration on 18/02/2009. The basic condition of claim of deduction is the registration with STPI and since the appellant was registered by STPI on 18/02/2009 the deduction would be available from that date, Accordingly if is held that the deduction under section 10 B would be available from the date from which it has been registered with the STPI that is 18/ 02/2009. The AO is Accordingly directed to work out the proportionate profit on the basis of receipts of busi .....

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sues of furnishing the report along with the return for claiming the deduction. On consideration of totality of the circumstances and the issue involved it is noted that the appellant has otherwise fulfilled ail the requirements of allowance of claim under section 10 B. The only disqualification for making the claim is the non furnishing of form 56G with the return. The report of the chartered accountant form 56G, that has been given by the appellant during the course of appellate proceedings, i .....

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t on the basis of figures available with the appellant the report of the chartered accountant is only a tool to verify the correctness of the claim. In the present case the appellant has correctly mentioned the figures of export and accordingly has claimed the deduction. The report submitted by the chartered accountant also verifies the quantum of claim made by the appellant. It would also be useful to refer to the Gist of the decisions which have been relied by the appellant in the written subm .....

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s and the intention of the Legislature, held that (a) the certificate / audit report only affirms the statement contained in the balance-sheet and income-expenditure account; the assessing officer can rely on the certificate / audit report for allowing the benefit of exemption; this is procedural matter for the purpose of enabling the assessing officer to complete the assessment on the basis of the certificate of the auditor without even asking the assesses to furnish supporting documents in sup .....

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ate authority has the power to accept the audit report and direct the AO to redo the assessment. In the case of Monarch Foods (P.) Ltd. vs. ACIT 86 Taxman 126 (Ahd.), Return of Income was filed on 29/12/89 declaring total income at Nil after settingoff unabsorbed loss of earlier years. However, as a result of order passed for the immediate preceding year, the loss was absorbed in that immediate preceding year only. As a result of which, the income of the year under consideration was assessed at .....

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ee had not furnished audit report in Form No. 10CCAC alonwith return of income, deduction u/s 80HHC cannot be allowed. The Hon'ble Tribunal, after following the decisions of various high court including the Gujarat High Court decision in the case of Gujarat Oil & Allied Industries and Calcutta High Court in the case of Hardeodas Agarwalla Trust held that the requirement of furnishing of audit report alongwith the return of income cannot be regarded as mandatory requirement and the furnis .....

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venue was that since this Form from the auditor was tendered by the assessee at a date much later than the filing of return, the assessee lost its right of claiming the benefit. Hon'ble High Court followed earlier decision in the case of Hardeodas Agarwalla Trust. The law reiterated that the audit report can be furnished even after filing of return of income and it will be sufficient compliance if the same is furnished before the authority examining the claim. In the case of CIT vs. Valli Co .....

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the assessee claimed deduction u/s 80HHC based on the audit report by filing Form No.10CCAC before the CIT(A). However, the Tribunal allowed the appeal and directed the assessing officer to examine the issue after considering the audit report in Form No.10CCAC, The Madras High Court taking into cognizance of various authorities confirmed the finding of the Tribunal and in substance held that merely on account of technical reason of non-furnishing of audit report along with R01, deduction cannot .....

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pany was registered with STPI Authority. The AO is directed accordingly. This leaves both the parties aggrieved to the extent indicated in their respective pleadings. The Revenue s case seeks to challenge the lower appellate order condoning delay, admitting additional evidence on assessee s pretext thereby holding it partly entitled for the impugned deduction claimed. The assessee s cross objection however pleads that the CIT(A) ought to have granted it entire deduction relief then that in part .....

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ue to over sight and inadvertence. There is no material before us to dispute all these solemn averments. Be that as it may, the assessee has sufficiently proved its bonafides that the above stated delay was neither intentional nor deliberate. We thus conclude the CIT(A) to have rightly condoned the above stated delay in assessee s appeal. The Revenue s first substantive argument is accordingly rejected. 7. We now deal with Revenue s second argument that the CIT(A) has erred in admitting assessee .....

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see duly proved by way of additional evidence that the STPI certification stood granted on 18.02.2009 by way of a communication of ratification from the STPI, Gandhinagar vide letter dated 09.07.2013 i.e. during the pendency of the lower appellate proceedings. The Revenue fails to rebut this clinching factual position. We accordingly observe that the learned CIT(A) had rightly admitted assessee s additional evidence. And more so when the Assessing Officer himself did not dispute all these facts .....

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e case file already indicates that the assessee has been granted an STPI registration on 18.02.2009. Learned CIT(A) has thus held it entitled for the impugned deduction w.e.f. the said date on proportionate basis. We afforded adequate opportunity of hearing to both the parties. The Revenue fails in disputing assessee s above certification w.e.f. 18.02.2009 so as to deny it Section 10B deduction relief. The latter party has also not been able to repel the CIT(A) s conclusion holding it entitled f .....

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ing Officer vide order dated 22.06.2012 qua the above quantum disallowance of Section 10B deduction as dealt with in preceding paragraph. The Assessing Officer levied the impugned penalty by terming assessee s deduction claim to be a false one lacking bonafides. He heavily relied upon quantum developments to impose the penalty in question. 10. The CIT(A) reverses Assessing Officer s action as under: The remaining grounds of appeal are interlinked and are in respect of levy of penalty of ₹ .....

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laimed by the appellant. The appellant later on discovered that it was registered with STPI with effect from 18/02/2009. If accordingly filed an appeal against the assessment order, bringing the correct facts on record and reiterated the claim of deduction under section 10 B. In the meantime the AO proceeded with the penalty proceedings and imposed the penalty of concealment. It was held by the AO that the appellant knew that it was not entitled for the deduction and claimed the deduction despit .....

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ings has been provided under various provisions of the Act such as 10 A/10 BA/80HHC, and the deduction is allowed from the year in which the operation of export has been started. It has also placed reliance on certain judgements in which it was held that the deduction could be allowed for the whole year irrespective of the date of approval. After considering all the facts it is observed that the appellant-had a certificate of registration with STPI with it during the course of assessment proceed .....

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ale or business which has been done by the appellant during the year. Alt the proceeds of sale have also been received in the foreign currency. The appellant had also furnished all the relevant certificates regarding receipt of export proceeds during the course of assessment proceedings. The conditions for claim of deduction under section 10 B have also been satisfied. It has also produced a certificate showing that the approval was rectified by the interministerial committee also. Therefore, th .....

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ire year as the registration was granted during the year. It is noted from the language of section 10B that the deduction is available to 100% export-oriented undertaking from the export of articles or things or computer software for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or thing or computer software, as the case' may be. It is noted that the appellant had .....

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irement and not mandatory. Accordingly the claim of deduction under section 10 B has been allowed from the date of registration. In view of the above discussion and considering the totality of facts and circumstances it is seen that the appellant made the misrepresentation regarding claim under section 10B as the chartered accountant who was representing the case of the appellant before the AO made a wrong statement that there was no certificate of registration with STPI. It Is also noted that t .....

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