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TMI Blog2018 (2) TMI 1993X X X X Extracts X X X X X X X X Extracts X X X X ..... e case are that the assessee is a subsidiary company of Smart Cube Ltd., U.K. and is a captive service provider rendering Information Technology Enabled Services to its Associated Enterprises (AE). For the Asstt. Year 2007-08 they have filed a return of income on 31.10.2007 declaring nil income after claiming deduction of Rs. 4,94,99,936/- u/s 10B of the Income-tax Act, 1961 ("The Act"). Return of income was processed u/s 143(1) of the Act accepting the claim of the assessee u/s 10B of the Act. However, stating that during the course of assessment proceedings for AY 2010-11 in the case of the assessee, it was noticed that the assessee had been claiming deduction u/s 10B of the Act despite the fact that the STPI, Noida from whom the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposing the stay application, while keeping the appeal pending, because the discussion on the merits of these two proceedings would be same and overlapping. Learned counsel on either side agreed for the same and argued the matter on merits of the appeal. Hence the Stay application has become infructuous. We, therefore, proceed to dispose of these two matters by way of this common order. 5. It is the argument of the learned AR that the claim u/s 10B of the Act in the original return that was filed u/s 139(1) of the Act well within time was accepted by not choosing the case for scrutiny and allowing it to be processed u/s 143(1) of the Act. However, when the asesssment was sought to be reopened, the learned AO was under legal obligation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for deduction u/s 10B of the Act for want of approval from the board appointed u/s 14 of the Industries (Development and Regulation ) Act, 1951 ("IDR Act") but not by the STPI authorities. He submitted that, however, in the review petition filed by the assessee in CM No.19897/2012, the Hon'ble High Court considered the request of the assessee and directed the AO to examine the claim of the allowability of deduction u/s 10A with respect to the STPI unit. He further submitted that similar are the facts and the direction of the Hon'ble jurisdictional High Court in the case of CIT vs Valiant Communications Ltd. ITA 2002/2010 and batch of cases wherein the Hon'ble High Court thought it fit that when once the deduction u/s 10B was not accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not that of the STPI authority, allowing deduction/exemption u/s 10B of the Act was bad and for such purpose he issued notice u/s 148 of the Act, in response to which the assessee filed a return of income on 1.5.2014 preferring claim u/s 10A of the Act. Both the learned AR and learned DR are placing reliance on the decision of the Hon'ble Apex Court in CIT vs. Sun Engineering Works P. Ltd., 198 ITR 297 (SC). Placing reliance on this decision learned DR argued that keeping in view the object and purpose of the proceedings u/s 147 of the Act, which are for the benefit of the revenue and not an assessee, the assessee cannot raise a claim u/s 10A of the Act in the return filed in response to the notice u/s 148 of the Act inasmuch as such a cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view the object and purpose of the proceedings under Section 147 of the Act which are for the benefit of the Revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to 'escaped income', and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings relating to the escaped assessment are accepted, still the allowance of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fairness consider the documents on the basis of the claim and ascertain whether they are proper and after verifying them, pass appropriate order as to whether the benefit of Section 10A can be granted." Almost similar was the finding of the Hon'ble jurisdictional High Court in the case Valiant Communications Ltd. (supra). 13. In the preceding paragraphs, while following the decisions of the Hon'ble High Court, we held that it is open to the assessee to put forth claim for non taxability of the escaped income in view of Section 10A of the Act, while respectfully following the decision of Hon'ble jurisdictional High Court in Regency Creations Ltd. and Valiant Communications Ltd.(supra), we deem it just and proper to direct the learned AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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