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Hitech Outsourcing Services Versus PR. Commissioner of Income Tax - 3

Reassessment u/s 147 - Business of export of Back Office and computer software - claimed deduction u/s 10B - AO disallowing 100% dedcution u/s 10B stating that assessee had not fulfilled the requirement of being a 100% export oriented undertaking - Held That:- the assessee's claim of deduction under section 10B of the Act was examined minutely by the Assessing Officer. The assessee pointed out that it enjoyed certification under STPI. If the Assessing Officer was of the opinion that such certifi .....

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necessary facts. - Reassessment order set aside - Decided in favor of assessee. - Special Civil Application No. 12767 of 2017 - Dated:- 4-9-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Petitioner : MR B S SOPARKAR, ADVOCATE For The Respondent : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged an order dated 9.3.2017 passed by the Commissioner of Incometax, Ahmedabad, rejecting the petitioner's revision pet .....

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raised several questions with respect to the petitioner's claim of deduction under section 10B of the Act, in respect to which the petitioner had replied under an undated communication (AnnexureB) as under: 2. Documents relevant with the STPI and Cochin SEZ, Kakkanad, Cochin 1. Complete copy of certificate issued by vide STPI Registration Letter no. STPG/EXIM/S/GC/HE/LOP-PP/367/ 5830 Dated : 8th January 2002 2. SEZ letter No : 9/19/2003/IL/CSEZ/8098 Dated : 16th December 2003 3. Copy of docu .....

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oceeds received in India after 6 months from the end of previous year in convertible foreign exchange As per the various guidelines issued by DBDT it is very much clear that under section 10A. 10B and 10BA allowed and Assessing Officer amend the order within a period of 4 years from the end of the previous year and allow the deduction. Looking to the above guidelines and facts of our case their was few bills where the payment received after 30th September, 2007 but the said payments were receive .....

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elevant portion of which reads as under : 8. Deduction Allowable u/s 10B The assessee has claimed deduction u/s 10B of the Income Tax Act @ 100% of profit on its export turn over. During the assessment proceeding it is noticed that the realized of the some export transaction, having amount of ₹ 2,45,418/have not received with in the six month from the end of the financial year. Accordingly, the revised working of the allowable deduction is as under : Export turnover claimed as reduced late .....

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: In this case the assessee filed return of income for the above assessment year on 30/10/2007 declaring total income of ₹ 98,630/after claiming the deduction u/s. 10B of the Act of ₹ 5,12,42,970/in respect of its Ahmedabad unit of ₹ 4,67,32,162/and Cochin unit of ₹ 45,10,808/. The said return was processed u/s. 143(1) of the Act on 12/02/2009. Order u/s. 143(3) of the Act was passed on 02/06/2010 determining the income of the assessee at ₹ 76,72,050/which includes .....

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al income. For the AY 200708, the assessee claimed the deduction u/s 10B of the Act for an amount of ₹ 5,12,42,970/as a newly established hundred per cent export oriented undertaking. Clause(iv) of Explanation 2 for the purpose of section 10B of the Act states as to hundred per cent export oriented undertaking as under : iv) 'hundred per cent exportoriented undertaking' means an undertaking which has been approved as a hundred per cent exportoriented undertaking by the Board appoin .....

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s made under that Act. Therefore, the assessee is not qualified for deduction under the provisions of section 10B of the Act as this provisions is applicable to newly established hundred per cent export oriented undertakings approved by the Board as stated above. Hence the deduction as claimed by the assessee u/s. 10B of the Act of ₹ 5,12,42,970/is not allowable as not eligible. 4. I have therefore reason to believe that the income of the assessee of atleast ₹ 5,12,42,970/has escaped .....

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such objections of the petitioner, the Assessing Officer passed a fresh order of assessment on 25.3.2015 disallowing the petitioner's claim of deduction under section 10B of the Act on the ground that the assessee had not fulfilled the requirement of being a 100% exportoriented undertaking since it did not enjoy the approval by the Board appointed by the Central Government under the Industries (Development and Regulation) Act, 1961. 6. The petitioner challenged the order of assessment before .....

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ons. The notice for reopening was issued beyond a period of four years from the end of relevant assessment year. There was no failure on part of the assessee to disclose truly and fully all material facts. The Assessing Officer had no additional or external material to enable him to reopen the assessment. Notice of reopening which was issued beyond a period of four years from the end of relevant assessment year was therefore, bad in law. During the original scrutiny assessment, the entire claim .....

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including having received the sale proceeds from the foreign buyers in convertible foreign exchange within a period of six months from the end of financial year. It was after such scrutiny that the Assessing Officer passed the order of assessment on 16.12.2009 under which he made a limited disallowance in the claim of deduction under section 10B of the Act to the extent the assessee failed to receive foreign exchange remittance within the prescribed period. It was thereafter not open for the Ass .....

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r to disturb the claim in the later year. 8. On the other hand, learned counsel Shri Nitin Mehta for the department opposed the petition contending that the assessee did not disclose during the original assessment proceedings that he did not enjoy approval of the Board appointed by the Government of India. Certification by STPI was not a substitute for such approval. Assessing Officer during the original assessment had not examined this aspect. Reopening of the assessment was therefore, valid. T .....

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t facts are that the assessment for the assessment year 20072008 was completed after scrutiny. The notice for reopening of such assessment came to be issued beyond a period of four years from the end of assessment year in question. 10. In this context we have noticed that the Assessing Officer in th original assessment proceedings had examined the assessee's claim of deduction under section 10B of the Act. It is not as if such claim went unnoticed or unscrutinized. He wanted to be specific a .....

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ere made within six months from the end of the financial year. After such scrutiny, the Assessing Officer passed the original order of assessment in which he did not reject the claim of deduction under section 10B of the Act. In fact, he accepted the claim substantially making minor disallowance to the extent the assessee had not received foreign exchange payment within the prescribed period. 11. It can thus be seen that the assessee's claim of deduction under section 10B of the Act was exam .....

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