TMI Blog2016 (9) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... the director, Software Technology Parks of India (STPI) and had been claiming deduction u/s. 10B from the year 2001 - AO disallow the entire claim of deduction made by the assessee by holding that for claiming such deduction, the approval ought to have been taken from the Central government through the appropriate authority constituted u/s. 14 of the Industries (Development and Regulations) Act, 1951 as against the Director, STPI - HELD THAT:- As decided in Regency Creations Ltd [ 2012 (9) TMI 627 - DELHI HIGH COURT ] there is no notification or official document suggesting that either the Inter Ministerial Committee, or any other officer or agency was nominated to perform the duties of the Board (constituted u/s. 14 of the IDR Act), for purpose of approvals u/s. 10-B. Though the considerations which apply for granting approval u/s. 10-A and 10-B may to an extent, overlap, yet the deliberate segregation of these two benefits by the statute reflects Parliamentary intention that to qualify for benefit under either, the specific procedure enacted for that purpose has to be followed. There is nothing in any of the Circulars or instructions relied on by the Tribunal in all the orders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A), Trivandrum dated 02/01/2015 for AY 2007-08. The assessee has raised Cross Objection in C.O. No.01/Coch/2016 against the Revenue s appeal for the A.Y. 2007-08. 2. The brief facts of the case are that the assessee is a company and is engaged in the business of providing software development services to various affiliate companies. The assessee filed its return of income for AY 2007-08 on 31/10/2007 declaring an income of ₹ 49,62,070/-. The case of the assessee was selected for scrutiny by issuance of notice u/s. 143(2) of the Act and vide order dated 10/11/2009, the assessment was made by making an addition of ₹ 4,87,707/-. Pursuant thereof, vide notice dated 29/05/2012 u/s. 148 of the Act, reassessment proceedings were initiated against the assessee. The assessee challenged the said notice by filing objections before the Assessing Officer. However, the same were disposed of and the proceedings were continued. The said proceedings were completed by an order dated 31/03/2013 and the Assessing Officer made the following additions to the income already assessed vide order dated 10/11/2009:- 1. Unbilled Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in passing the impugned order by not accepting the disclosures in paragraph 1.7 to Audited financial Statements relevant to AY 2007-08 and submissions made by the assessee in connection with the unbilled revenue. 1.3 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in passing the impugned order by not passing a reasoned order specifying the grounds on which the CIT(A) refused to accept the detailed submissions tabled by the Company with respect to the unbilled revenue disclosed in the financials relevant to AY 2007-08. 2. Consequential Reliefs 2.1 The learned ACIT has erred in initiating penalty proceeding u/s. 271(1)(c) of the Act on account of the adjustments proposed in the impugned assessment order u/s. 143(3) read with section 147 of the Act. 3. Others 3.1 The appellant craves leave to add to or alter, by deletion, substitution or otherwise, the above grounds of appeal, at any time before or during the hearing of the appeal. 4.1 The assessee has also raised additional grounds of appeal: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee of ₹ 1,97,49,30,133/- for AY 2007-08. It is asserted by the Ld. AR that the difference in the opening and closing of unbilled revenue i.e. ₹ 7,93,47,506/- added to the total income of the assessee would result in taxing the unbilled revenue twice and therefore, the said addition is liable to be deleted. 6. The Ld. DR on the other hand has relied upon the orders passed by the Assessing Officer and Ld. CIT(A) on this issue. 7. During the assessment proceedings, the Assessing Officer rejected the explanation given by the assessee in view of the fact that the unbilled revenue was not shown as sundry debtors in the balance sheet. The Ld. CIT(A) dismissed the ground raised by the assessee as there was no evidence in support of the contention that the unbilled revenue amount was included in the total revenue of the company. 8. We have heard the rival submissions and perused the facts of the case. We are not in agreement with the contentions raised by the assessee. The assessee has failed to furnish any evidence during the assessment stage and at the appellate stage to substantiate the fact that the unbilled revenue has been included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 14 of IDAR Act, 1951. The pre-conditions that govern units set up under STP scheme are different from those that govern the units set up as 100 per cent EOUs and so approved by the Board. Some conditions may undoubtedly overlap yet, criteria, such as fulfillment of the employment criteria, foreign exchange, etc. are not common. 14. The Inter-Ministerial Standing Committee set up for granting licences under STP scheme is also appointed by the Central Government in exercise of powers conferred u/s. 14 of IDAR Act. However, the question is whether that part of the Board s function (u/s. 14 IDR Act) to grant approval under u/s. 10-B also stands delegated. The assessees submit that the Inter-Ministerial Standing Committee has been replaced by the Board on the basis of the contents of para 2 of the notification of the Ministry of Commerce dt. 22nd march, 1994, is unpersuasive. That notification states that for the purpose of paras 111 to 117 of Chapter IX of the Export and Import Policy (1992-97), Board of Approval shall be substituted by the Inter-Ministerial Standing Committee. Paras 111 to 117 of Chapter-DC of import and Export Policy (1992-97) do not deal with that asp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer or agency was nominated to perform the duties of the Board (constituted u/s. 14 of the IDR Act), for purpose of approvals u/s. 10-B. Though the considerations which apply for granting approval u/s. 10-A and 10-B may to an extent, overlap, yet the deliberate segregation of these two benefits by the statute reflects Parliamentary intention that to qualify for benefit under either, the specific procedure enacted for that purpose has to be followed. There is nothing in any of the Circulars or instructions relied on by the Tribunal in all the orders, implying that approval for purposes of an STP also entitled the unit to a benefit u/s. 10-B. The orders of the Tribunal are consequently erroneous, and its reasoning, unsupportable. 18. In the light of the above discussion, the question of law framed is answered in favour of the revenue and against the assessee; the appeals are therefore allowed. 12. The issue is squarely covered against the assessee in the aforesaid case. The contention of the assessee that principle of consistency ought to have been followed is not acceptable to us in the present facts. We cannot lose sight of the fact that the correct income of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the following Cross Objections to the grounds of appeal raised by the Department. 1. Deduction of bonus paid to employees u/s. 43B of the Act. 1.1. On the facts and in the circumstances of the case and in law, as upheld by the learned CIT(A), Trivandrum, the Respondent is eligible for deduction of ₹ 1,17,47,167. 1.2. Without prejudice to the above on the facts and in the circumstances of the case and in law, in case of disallowance of such bonus u/s. 43B of the Act, any cascading effect to the profits of the Company, will be eligible for tax holiday benefit available to the Respondent u/s. 10A or 10B, as the case may be under the normal provisions of the Act. 2. Others 2.1 The Respondent craves leave to add to or atler, by deletion, substitution or otherwise, the above ground of cross-objections, at any time before or during the hearing of the appeal. 17. The facts of the case would reveal that the assessee had claimed deduction u/s. 10B of the Act. The said deduction was disallowed by the Assessing Officer and the order was confirmed by the Ld. CIT(A). The assessee, as an alternative, claimed a deduction u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also verified the facts relating to the compliance of all the conditions prescribed u/s. 10A of the Act (In para 3,6,8 for A.Y. 2008-09 and in para 3,5,8 for A.Y. 2010-11). Based on the verification of facts, the CIT(A) directed the Assessing Officer to allow deduction u/s. 10A of the Act. The following judgment of the Hon ble Delhi High Court and orders of the ITAT have held that when deduction u/s. 10B is denied, it is the duty of the revenue to examine whether the alternative claim of deduction u/s. 10A can be granted on facts and circumstances of the case: i) Fast Booking (I) Pvt. Ltd. vs. DCIT in I.T.A. 334/2013 (Judgment dated 2.9.2015)(Delhi High Court judgment) ii) M/s. Device Driven (India) P. Ltd. (I.T.A. No. 282/Coch/2013 (order dt. 29.11.2013) iii) Cronos Consulting India P Ltd. vs. ACIT (I.T.A. No. 105/Coch/2014 (order dt. 6.6.2014). 9. Further we notice that the Assessing Officer, in the remand report has not stated that the assessee has not satisfied the conditions precedent to claim deduction u/s. 10A of the Act. The Assessing Officer has only raised a technical objection namely, the assessee is not entitled deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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