TMI Blog2021 (2) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... with the case BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] The assessee is eligible to claim deduction under section 10B of the Act by virtue of being 100 % EOU approved by the STPI. Alternate claim u/s 10A - The assessee contented that condition prescribed under section 10A and 10B of the Act are more or less same and it fulfills all the conditions specified under section 10A of the Act. Thus it should be allowed exemption under section 10A of the Act if not allowed under section 10B of the Act. As such we note that the AO was allowed opportunity vide remand report to verify the fulfillment of the condition specified u/s 10A of the Act. But he restrained himself from making any comment as the same was already verified by him during assessment proceeding. From, this we safely assume that the all condition has been fully met by the assessee. Now the question arise that can the assessee be allowed exemption under section 10A alternatively where it has made claim under other section inadvertently? In our considered view the answer stand positive in view of the fact that the matter has come to various judicial authority wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Learned Commissioner of Income Tax(Appeals)-4, Vadodara, dated 20/03/2017 (in short Ld.CIT(A) ) arising in the matter of assessment order dated 31/12/2015 passed under s.143(3) rws 147 of the Income Tax Act, 1961 (here-in- after referred to as the Act ) relevant to the Assessment Year 2009-2010. 2. The revenue has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition made on account of disallowance of exemption u/s.10B amounting to ₹ 39,20,823/- of the I.T. Act, 1961 ignoring the fact that the assessee has flouted the basic prerequisite condition laid down for claiming due exemption u/s.10B of the I.T. Act regarding authority granting approval as a 100% export oriented undertaking. 2. The Ld.CIT(A) has passed the order without considering the decision of Hon'ble Apex Court in the case of Goetze(India), 2006 157 Taxmann 1(SC)/ 2006 284 ITR 323 (SC). 3. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. Relief claimed in appeal It is prayed that the order of the CIT(Appeals) be set aside and that of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Quality BPO Services Pvt. Ltd. vs. ACIT reported in (OSD) (2015_ 45 CCH 0187 (Ahd-Trib) where it was held that approval from STPI is sufficient enough to claim exemption under section 10B of the Act. The assessee alternatively contended that if exemption not allowed under section 10B of the Act then the same can be allowed under section 10A of the Act as it fulfils all the criteria to claim exemption. The assessee placed reliance on various judicial judgment in this respect. 6. The learned CIT (A) after considering the finding of the AO and assessee's submission was pleased to allow the claim of the assessee by observing that assessee's claim under section 10B of the Act was allowed in past. Further the assessee made alternate claim under section 10A of the Act by contending that it fulfills the conditions prescribed under both section i.e. 10A and 10B of the Act. But the AO remained silent on this issue. Thus in the circumstances where assessee fulfills the criteria of section 10A of the Act but inadvertently made claim under section 10B of the Act can't be prohibited from availing the benefit of section 10A of the Act as held by Ahmadabad tribunal in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail. In this respect we find support and guidance from the order of the Hon'ble Bombay High court in case of PCIT vs. Quest Investment Advisors (P) Ltd. reported in [2018] 409 ITR 545 [Bom] where it was held as under: The principle accepted by the revenue for 10 earlier years and 4 subsequent years to the assessment years 2007-08 and 2008-09 was that the entire expenditure is to be allowed against business income and no expenditure is to be allocated to capital gains. Once this principle was accepted and consistency applied and followed, the revenue was bound by it. Unless of course it wanted to change the practice without any change in law or change in facts therein, the basis for the change in practice should have been mentioned either in the assessment order or atleast pointed out to the Tribunal when it passed the impugned order. None of this has happened. In fact, all have proceeded on the basis that there is no change in the principle which has been consistency applied for the earlier assessment years and also for the subsequent assessment years. Therefore, the view of the Tribunal in allowing the respondent's appeal on the principle of consistency cannot in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch 10,2011 received on 17.03.2011 on the subject mentioned above and to inform that no approval/ratification of STPI approval is required from BOA formed by Ministry of Commerce by power conferred Asst. Year 2008-09 under section 14 of IDR Act, 1951. Inter-Ministerial Standing Committee for EHTPs and ESTPs (IMSC) is competent in grant approval for STPI unit to claim all benefits under 100% EOU Scheme as per Press Note 2 of 1993 (copy enclosed) . 8. In view of the above, we find the grievance of the assessee to be justified and it is accepted as such. We hold that the assessee is entitled to claim of deduction u/s 10B of the Act. In view of the above and in the light of the above judgments, we safely hold that the assessee is eligible to claim deduction under section 10B of the Act by virtue of being 100 % EOU approved by the STPI. 11.3 Without prejudice to the above, we also note that the assessee has also made alternate claim under section 10A of the Act before authorities below. The assessee contented that condition prescribed under section 10A and 10B of the Act are more or less same and it fulfills all the conditions specified under section 10A of the Act. Thus it sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147 of the Act by contending that during the assessment proceedings under section 143(3) of the Act its claim under section 10B of the Act was allowed after necessary enquiry by the AO. Hence reopening of assessment on the basis of claim on which AO has already applied his mind represents mere change of opinion which is not permissible under the law. However the AO rejected the contention of the assessee by holding that as per explanation 1 to section 147(1) of the Act that mere production of books of account before AO is not sufficient to hold that assessee has fully disclosed material fact. Further it was due diligence of the AO that he found on subsequent verification that the assessee is not possessing necessary approval to claim exemption under section 10B of the Act. Thus by virtue explanation 2 to section 147 of the Act the AO is empowered to reopen the assessment. 14. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the validity assessment framed under section 147 of the Act by observing as under: The present case is more similar to the judgment in the case of Anusandhan Investments Ltd. v. DOT [2006] 287 1TR 482 (Bom.). The issue there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout making any application in writing. The learned AR in support of his contention relied on the judgment of Hon'ble Gujarat High Court in the case of PCIT vs. Sun Pharmaceuticals reported in 86 taxmann.com 148. 16.1 On the basis of above contention the learned AR further submitted that the reopening of the case for the year under consideration was not based on any new tangible material which came notice of the AO suggesting that income of the assessee has escaped assessment. As such the AO after necessary verification during the assessment proceeding under section 143(3) of the Act allowed the claim under section 10B vide order dated 01-12-2012. The only reason to reopen is stated to that the AO subsequently found that the assessee does not possess valid approval as provided under section 10B of the Act for claiming deduction. For this purpose the learned AR drew attention on page 34 of the paper book where reasons recorded by the AO for initiating the proceedings under section 147 of the Act were placed. 16.2 The learned AR further contended that the opening in the present case has been initiated beyond the period of 4 year from the end of relevant assessment year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has reasons to believe that the income has escaped assessment, to assess or reassess the income escaped from assessment. Now to form the reasons to believe for the escapement of income, the AO first, should be in possession of some /fresh new material which was previously not available with him viz a viz it impacts the aspect, that there is some undisclosed income. 18.4 Now the question comes what is fresh material. It refers the material which comes to the AO from the outside. Meaning thereby, information which was not available on record at the time of making the assessment and the assessment is completed initially, without taking into consideration the alleged information. Such information, can be called as new information, which requires fresh investigation/observation. 18.5 In the light of the above discussion, we proceed to adjudicate the issue on hand. For this purpose we refer to the reasons recorded by the AO for initiating the proceedings under Section 147/148 of the Act which are reproduced herein below: On verification of the case records for A.Y. 2009-10, it is noticed that the assessee has claimed deduction of ₹ 39,20,823/- under section 10B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reproduced as under: Further, it may please be noted that our case was duly assessed for A.Y. 2009-10 by the ld.A.O and assessment order u/s.143(3) of the Act was passed dated 01.12.2011. Deduction under section 10B was allowed in the original assessment after enquiry. Now the assessee has been served with notice u/s.147 of the Act stating that the deduction u/s 10B was not allowable. The reassessment proceedings initiated on this ground are not valid reliance is placed in the case of Techspan India P Ltd. V. ITO (2006) 283 ITR 212 (Del) Siemens Information System Ltd. V. ACIT (2007) 295 ITR 333 (Bom). Thus, the action u/s.147 of the Act for A.Y. 2009-10 is not legal. Thus from the above it is inferred that the assessee has not agreed before the AO for the initiation of proceedings under section 147 of the Act as alleged by the learned CIT (A) in his order as discussed above. 18.9 In view of the above and after considering the facts in totality the ground of appeal of the assessee raised in terms of rules 27 of ITAT rules is allowed. 19. In the combined result, the appeal filed by the Revenue is dismissed and the ground raised by the assessee in rule 27 of ITAT Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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