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TMI Blog2018 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 declaring Nil income which was processed u/s 143(1) of the Act. The Assessing Officer (AO) found that the assessee had claimed the deduction u/s 10B amounting to Rs. 74,28,858/- and the same is not admissible for the impugned assessment year, as per proviso to section 10B(1) of the Act, which reads as under : "Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April [2012] and subsequent years." The AO observed that deduction u/s 10B is not allowable for the assessment year beginning from the 1st day of April 2012 relevant to the A.Y 2012-13. There was also clarification from the Board vide Circular No.1/2005 towards allowability of deduction u/s 10B(1) of the Act. Hence, the AO issued a letter to the assessee calling for it's explanation as to why the deduction claimed u/s 10B should not be disallowed. 5. In response to the notice, the assessee filed explanation, stating that there was a mistake in claiming the deduction u/s 10B. Instead of claiming the deduction u/s 10AA of the Act, the assessee claimed the deduction u/s 10B of the Act in the Income Tax Return. The assessee further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we extract para No.4.3 of the Ld.CIT(A)'s order which reads as under : "4.3. I have considered the information available on record. It is seen that the assessee had claimed deduction u/s 10B(1) of the Act, though such deduction was not available from A.Y.2012-13 onwards. When this was pointed out and a show cause notice issued, the assessee had made alternative claim u/s 10AA of the Act. It was contended that its business activity was carried from some other unit and not in regard to the unit in respect of which sec.10B deduction was claimed. It is seen that the assessee had made totally opposite claim which is not permissible. Hence, the disallowance made by the AO is upheld." 7. Against the order of the Ld.CIT(A), the assessee is in appeal before us. During the appeal hearing, the Ld.AR argued that the assessee filed the return of income and claimed the deduction u/s 10B of the Act till the previous year relevant to the assessment year 2011-12, since, the assessee was carrying on operations of export of software from Mangalagiri Chambers, Siripuram, Visakhapatnam which was eligible for deduction u/s 10B. Accordingly the deduction was claimed deduction u/s 10B for the A.Y. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 10AA of the Act. While filing the return of income, the assessee filed audit report in Form 56G for claiming deduction u/s 10B of the Act. Subsequently, when the AO has called for the details, the assessee realized the mistake and submitted before the AO that the correct claim is deduction u/s 10AA but not u/s 10B of the Act. The assessee also furnished the relevant documents in support of the establishment of new unit in VSEZ and clarified that the entire business was done in the new unit at Rushikonda, the SEZ unit and eligible for deduction u/s 10AA. The assessee also submitted audit report u/s 56F of the Act which required to be furnished along with the return of income. The Ld.AR submitted before the AO as well as before the Ld.CIT(A) that the unit located at Mangalagiri Chambers is not in operation during the financial year 2011-12 relevant to the assessment year 2012-13 and the entire business turnover, profit declaration in the return of income was related to the unit located in the VSEZ at Rushikonda, Visakhapatnam. The AO disallowed the claim of the assessee only on technical reasons for not filing the form No.56F,the audit report along with the return of income. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is only an alternate claim and the same is correct claim made by the assessee. The fact that the assessee has carried on the business from the SEZ unit was not disputed by the AO. The AO also did not dispute the fact that the profit was related to the new unit established in the VSEZ. The assessee has filed audit report which is placed at page No.34 and 35 of the paper book, according to which the entire profit and the turnover was related to the unit located in VSEZ, Rushikonda. Hence, we are of the considered view that merely because of the technical reasons the justice should not suffer. In the subsequent assessment years, on the same facts, the AO has allowed the deduction u/s 10A of the Act. The Ld.CIT(A) also confirmed the addition misdirecting himself that the assessee has made the opposite claim. In fact, there was no opposite claim made by the assessee and it was only an alternate claim. Similar issue of alternate claim u/s 10A has come up before the Coordinate Bench of ITAT Pune in the case of Approva Systems (P) Ltd., (2018) 92 taxmann.com82 (Pune-Trib) and the coordinate bench held that the assessee is entitled to claim deduction u/s 10A on additional income offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present appeal before us is identical and following the same parity of reasoning, we direct the Assessing Officer to verifythe claim of deduction under section 10A of the Act in the case of assessee and decide the same in line with directions in assessment years 2009-10 and 201011. The Assessing Officer shall afford reasonable opportunity of hearing to the assessee and decide the issue in line with the issue being decided in assessment year 2009-10 in the order giving effect to the order of Tribunal dated 03.03.2017." Therefore, we do not find any reason to sustain the order of the Ld.CIT(A) and the same is set aside and the addition made by the AO is deleted. The appeal of the assessee on this ground is allowed. 9. Ground No.5 and 6 are related to the disallowance of expenditure u/s 14A of the Act. The AO found that the assessee has made investments towards share capital in various companies i.e. Interpro Global Pte, CosaGmnH and Cosa B V to the extent of Rs. 8,25,71,682/-. The assessee also claimed the interest expenses of Rs. 89,69,627/- on account of the borrowings, therefore, the AO applied the Rule 8D of IT Rules and disallowed the sum of Rs. 30,78,288/- u/s 14 A of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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