PRINCIPAL COMMISSIONER OF INCCOME TAX - 2 vs. MEDNAUTIX OUTSOURCING PVT. LTD.

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TAXAP/411/2018HC GujaratGJHC24011291201830 April 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that since the approval from the Board of Approval was produced before it, and in view of such approval, the assessee qualified for the deduction under Section 10B of the Income-tax Act, 1961. The Tribunal found no reason to interfere with the assessee's claim for deduction under Section 10B, given the belated approval. The reasoning was that the approval, though belated, was eventually granted and produced, satisfying the condition for the deduction. The ratio decidendi is that if the statutory condition for a deduction is met, even if the supporting documentation is produced belatedly before the appellate authority, the deduction should be allowed, provided the delay was not attributable to the assessee's fault. The operative direction was that the appeals filed by the Revenue were dismissed.

What were the facts?

The Revenue has filed these appeals challenging a common judgment of the Income Tax Appellate Tribunal (ITAT) dated September 5, 2017. The dispute pertains to the assessment year 2010-2011. The assessee, Mednautix Outsourcing Pvt. Ltd., claimed a deduction of Rs. 97.65 lakhs under Section 10B of the Income-tax Act, 1961. The Assessing Officer disallowed this claim for want of approval from the Board of Approval for EOU registration. The CIT(A) upheld the disallowance but granted partial relief under Section 10A. Both the assessee and the Revenue filed cross-appeals before the ITAT. Before the ITAT, the assessee produced a belated approval from the Board of Approval, arguing that the delay was beyond its control. The ITAT accepted this contention and granted the deduction under Section 10B.

What were the issues?

1. Whether the Income Tax Appellate Tribunal committed an error in accepting the assessee’s claim of deduction under Section 10B of the Income-tax Act, 1961, when the approval from the Board of Approval was produced belatedly before the Tribunal? Assessee's Contention: The assessee contended that the belated approval from the Board of Approval was not within its control and that it should be granted the deduction under Section 10B. The assessee relied on the fact that the approval was eventually granted. Revenue's Contention: The Revenue argued that the ITAT erred in accepting the assessee's claim for deduction under Section 10B, implying that the belated production of approval should not have led to the allowance of the deduction.

Which sections of the Income-tax Act were involved?

Section 10B,Section 10A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Ahmedabad dated 5th September 2017 [“the Tribunal” for short].

C/TAXAP/411/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 411 of 2018 With R/TAX APPEAL No. 412 of 2018 ============================================================= PRINCIPAL COMMISSIONER OF INCOME TAX - 2 Versus MEDNAUTIX OUTSOURCING PVT. LTD ============================================================= Appearance : Mr M.R BHATT, Sr Advocate with Mrs MAUNA M BHATT, Advocate for the PETITIONER ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 30th April 2018

COMMON ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) These Appeals are filed by the Revenue challenging the common judgment of the Income Tax Appellate Tribunal, Ahmedabad dated 5th September 2017 [“the Tribunal” for short]. The question framed by the revenue does not bring out the correct controversy, however, we have gathered from the documents on record and counsel for the revenue that the question arising in these appeals is - “Whether the Income Tax Appellate Tribunal committed an error in accepting the assessee’s claim of deduction under Section 10B of the Income-tax Act, 1961 ?” Page 1 of 2

C/TAXAP/411/2018 ORDER This question arises in the following background. For the assessment year 2010-2011, the assessee had filed return of income in which the assessee had claimed deduction of Rs. 97.65 lakhs [rounded off] under Section 10B of the Income-tax Act, 1961 [“the Act” for short]. The Assessing Officer did not accept such a claim since the assessee failed to produce the approval granted by the Board of Approval for registration as a EOU. In appeal, CIT [A] did not disturb this finding, but held that the assessee did qualify for deduction under Section 10A of the Act, and accordingly, granted partial relief. Both the sides were aggrieved by this order of CIT [A] which gave rise to two cross appeals before the Tribunal. Before the Tribunal, the assessee produced belated approval granted by the Board and contended that it was not within the control of the assessee when such approval may be granted. The Tribunal accepted assessee’s contention and granted deduction under Section 10B of the Act. In view of the fact that approval was produced before the Tribunal, even the Tribunal, in view of such approval has granted deduction under Section 10B of the Act, we see no reason to interfere. Tax Appeals are dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 2 of 2

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