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TMI Blog2019 (12) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2009-10 was received in the O/o Principal Commissioner of Income-tax on 23/02/2018. The Ld. DR submitted that as such, an appeal against the said order should have been filed on or before 24.04.2018. According to the Ld. DR , as per the said order, it was noticed that CIT(A) erred in holding that the assessee is eligible for alternate claim of deduction u/s. 10A of the Act. 2.1 It was submitted that the CIT(A) ought to have noted that section 10A(5) of the Income-tax Act stipulates that the deduction u/s. 10A shall not be admissible unless the assessee furnished Form No. 56F alongwith the return of income, by which the tax effect is Rs. 14,56,56,499/-. Hence, vide this order in C. No. 404/J/8/2018 dated 17/04/2018, the Principal Commissioner of Income-tax, Thiruvananthapuram had directed the Deputy Commissioner to file an appeal against the impugned order. It was submitted that as directed by the Principal Commissioner of Income-tax, Thiruvananthapuram, all the required documents were sent to the office of the Commissioner of Income-tax(DR) on 20/04/2018. It was submitted that inadvertently, both the tapals were delivered to the office of the Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India in the case of Goetze(India) Ltd. (284 ITR 323) wherein it was held that an additional claim for deduction not made in the return of income cannot be entertained otherwise than by filing a valid revised return. 4. The appeal filed by the Department, involving similar question is pending before the Hon'ble High Court of Kerala in the case of appellant for AY 2007- 08 and also in the following cases: (i) Q Burst Technologies Pvt. Ltd. - AYs 2008-09 and 2010-11 (ii) Paragon Biomedical India Pvt. Ltd. - AYs 2010-11 and 2011-12 5. The Ld. Commissioner of Income-tax(Appeals) has erred in deleting the disallowance of proportionate amount of interest relatable to the amounts diverted to the associate concerns based on the decision of Hon'ble ITAT in ITA No.02/Coch/2013 dated 20/03/2013 in the appellant's case for AY 2008- 09, stating that the issue involved for the year under consideration is also same and identical to each other. The CIT(A) ought to have noticed that the relief for AY 2008-09 was granted by ITAT on the specific finding that the appellant had not advanced fund to sister concerns during the previous year 2007-08. During the previous year 2008-09, relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Hon'ble ITAT, Cochin Bench in the case of CWP Taylor Vs DCIT for the Asst. Year 2004-05 in ITA No.695/Coch/2008 dated 28.07.2009 wherein it was held as follows: "We have heard rival submissions. No doubt, in the case of Goetze (India) Ltd. 284 ITR 323 the Apex Court held that an assessee could not make a claim for deduction before the Assessing Officer otherwise than by fling a revised return. Hon'ble Apex Court distinguished its own decision in the case of National Thermal Power Corporation Vs. CIT (Supra) by mentioning that the question there was regarding the power of the Tribunal u/s 254 of the Act to entertain, for the first time, a point of law, provided the facts on the basis of which the issue could be raised were there before the Tribunal. Their Lordships specifically held that its decision did not impinge the power of the Tribunal to entertain first time a point of law provided the facts on the basis of which the issue is raised is there on record. This decision of Hon'ble Apex Court is limited to the power of assessing authorities for considering a claim made by the assessee which was originally not there in the return". "In our opinion, though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee was covered by the provisions of section 10A(2)((b) since they got registered on 28.09.1999 and started business on 13.03.2000 at the Software Technology Park. Trivandrum and had been in the business of exporting computer software since then. According to the CIT(A) the Assessing Officer's observation in the remand report dated 17.11.2017 stating that "the assessee had commenced manufacturing or production on 13.10.2010 as per Form No.56F submitted but as per section 10A, the assessee can claim deduction u/s 10A 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. So, the assessee is eligible for 10A deduction only from AY 2010-11 and not for AY 2009-10, the year under consideration ", is factually incorrect since the same was an outcome of typographical error inadvertently committed by the assessee in Form No.56F filed on 17.02.2016, a copy of which was forwarded to the Assessing Officer while calling for remand report and no further action in this regard need be taken as the manufacture or production had rightly been started only on 13.03.2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued u/s 148 of the Act. Further, the CIT(A) observed that provisions regarding filing of audit report etc. had been declared directory but not mandatory and thereby, audit report etc. could be filed even during the course of assessment proceedings and appellate proceedings as well. The CIT(A) relied on the decision of the ITAT, Cochin Bench in the case of CWP Taylor vs. CIT supra, the decision of the Supreme Court in the case of Goetze India Ltd. supra is limited to the power of Assessing Officer only and does not affect the powers of the first appellate authority in entertaining the claim not been made before the Assessing officer by filing a valid return. 5.6 The CIT(A) referred to the letter of the representative dated 22.02.2016 explaining how the assessee had fulfilled all the conditions contemplated u/s 10A of the Act and satisfied that the assessee is eligible for deduction. The conditions contemplated u/s 10A were complied with as follows: Sub-section 1 100% deduction is allowed for a ten (10) consecutive assessment years on profits earned from export of computer software from the year in which the unit begins to manufacture computer software, subject to conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of the Delhi High Court in the case of CIT vs Technovate E Solutions P Ltd reported in 354 ITR 110 wherein it was held as follows: " That the Central Board of Direct Taxes in Instruction No.l of 2006, dated March 31, 2006, clarified that the claim of deduction under section 10A should not be denied to the software technology park units only on the ground that the approval / registration to such units had been granted by the Directors of the Software Technology Parks of India. In the instruction, the Board also made a reference to the Inter-Ministerial communication dated March 23, 2006, issued by the Secretary, Ministry of Communications and Technologies to the effect that the approvals issued by the directors of the Software Technology Parks of India had the authority of the Inter-Ministerial Standing Committee and that all approvals granted by the directors of the Software Technology Parks of India were, therefore, deemed to be valid. The position was also clear from a letter dated May 6, 2009, issued by the Board to the Joint Secretary, Ministry of Commerce and Industry wherein a distinction had been drawn between the provisions of sections 10A and 10B and in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal exercising its power under Section 254 of the Act which obliged the Tribunal to consider appeal and pass such orders thereon as it thinks fit. It was this power of the Tribunal which considered by the Apex Court in National Thermal Power Co. Ltd.'s case (supra) which held that the Tribunal is only required to consider the questions of law arising from the facts which are on record, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Even if the contention raised by the learned Senior Counsel for the revenue that the power conferred on the appellants under Section 263 only authorised him to examine whether the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the revenue, that restriction of power cannot affect the powers of the Tribunal which is bound to exercise under Section 254 of the Act. In such a situation, having regard to the language of Section 254 and as interpreted by the Apex Court in National Thermal Power Co. Ltd.'s case (supra), we do not see any reason to think that the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The fifth ground is with regard to disallowance of interest on diverted fund. 12. The facts of the case are that the during the course of assessment proceedings, the Assessing Officer had noticed that the assesses had given interest free advances to its associate concerns namely Toons Animation India (,P) Ltd and UST Global Information Technology Parks (P) Ltd without charging interest thereon. The Assessing Officer further noticed that the assessee had availed interest bearing loans to the tune of Rs. 60.51 cr and paid interest of Rs. 7.40 cr thereon during the year under consideration. He took the view that the assessee had diverted interest bearing funds to its associate concerns for non business purposes that too without charging interest. The assessee objected to the inference drawn by the assessing authority and also submitted that it is eligible for deduction u/s 10B of the Act. However, the Assessing Officer by placing reliance on the decision of the jurisdictional High Court of Kerala in the case of CIT vs. V I Baby & Co (254 ITR 248) disallowed proportionate amount of interest relatable to the amounts diverted to the associate concerns. The disallowance worked out i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion rendered by the Hon'ble jurisdictional High Court in the case of V.I. Baby and Co., referred supra. The Ld D.R also placed heavy reliance on the above said decision rendered by the Hon'ble jurisdictional High Court. We have carefully gone through the said decision and notice that the assessee therein was a partnership firm and the withdrawals made by its partners resulted in converting the Capital balances into "debit balances". There should not be any doubt that the debit balance in the capital account indicates drawing of funds from out of loan and other creditors account. Under that set of facts, the withdrawals made by the partners of the firm were considered as diversion of funds in the case of V.I. Baby (supra). However, in the instant case, the assessee has shown that it was having "Reserves and Surplus", more than the amount advanced to the sister concerns. Accordingly, in our view, the facts prevailing in the case of V.I Baby & Co (supra) is totally different from the facts prevailing in the instant case and accordingly, in our view, the decision rendered in the case of V.I. Baby (referred supra) by the jurisdictional High Court shall not apply to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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