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Income Tax Appellate Tribunal, ‘D’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO]
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-7, Chennai (‘CIT(A)’ for short) dated 14.03.2019 for the Assessment Year (AY) 2009-2010.
ITA No.1661/2019 :- 2 -:
The Revenue raised the following grounds of appeal: 2.
‘’1. The order of the Ld. CIT(A) is contrary to law, facts and circumstances of the case.
2.1 The CIT(A) erred in allowing the appeal of the assessee by relying on the jurisdictional High Court order in the case of CIT Vs. Heartland KG Information Ltd., without appreciating the fact that the decision was regarding misquotation of section for claiming deduction where the conditions for claim under correct section are satisfied, whereas in the assessee’s case, the conditions specified in section 1OA/ 10B have not been satisfied at all.
2.2. The CIT(A) failed to appreciate that on an appeal filed by the assessee against the original order, the then CIT(A) had decided that the assessee was not eligible for claiming deduction u/s 10B since the green card issued by JDC, MEPZ-SEZ with effect from 23.03.20 10, produced as approval for 100% EOU was not applicable for the A.Y.2009-10.
3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the AO restored’’.
The brief facts of the case are as under:
The Respondent- assessee namely M/s. Wayne Burt Petrochemical Pvt. Ltd, is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing and exporting of hydraulic cylinders and its components. The return of income for the AY 2009-10 was filed on 28.09.2009 disclosing loss of Rs. 5,84,60,278/-. Against the said return
ITA No.1661/2019 :- 3 -: of income, the assessment was completed by the Assessing Officer vide order dated 22.01.2014 passed u/s.143(3) r/w s. 92CA of the Income Tax Act, 1961 (in short ‘the Act’) denying exemption u/s.10B of the Act on the ground that assessee had not obtained necessary approval from the prescribed board u/s.14 of the Industries (Development Regulation) Act, 1951. Being aggrieved by the denial of exemption u/s.10B of the Act, an appeal was preferred before the ld. CIT(A), who confirmed the action of the Assessing Officer. The matter was carried further before this Tribunal, the Tribunal in & 2604/Mds/2014 for assessment years 2008-09 and 2009- 2010, vide order dated 16.09.2015 was pleased to remit back to the file of the Assessing Officer for de novo consideration, of alternative claim for deduction u/s.10A of the Act keeping in view the judgments of Hon’ble Delhi High Court in the cases of Regency Creations Ltd, 27 Taxmann.Com 322 and CIT vs.Tehnovate E Solutions P. Ltd 354 ITR
Further, the Tribunal had categorically held that assessee company was not entitled for deduction u/s.10B of the Act.
Pursuant to the order of this Tribunal, fresh assessment order was passed by the Assessing Officer vide order dated 07.12.2016 u/s.143(3) r.w.s. 254 of the Act denying exemption u/s.10B of the Act as well as 10A of the Act. The Assessing Officer denied the claim
ITA No.1661/2019 :- 4 -: u/s.10A of the Act on the ground that prescribed form No.56FF as per Rule 16DD was not filed.
Being aggrieved, assessee preferred an appeal before the ld. 5.
CIT(A) who vide impugned order allowed the claim for deduction u/s.10B of the Act placing reliance on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. Heartland K.G.
Information Ltd (2013) 359 ITR 0001.
Being aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us in the present appeal. The ld. Departmental Representative submitted that the ld. CIT(A) had seriously fell in error in applying the ratio decision of Jurisdictional High Court in the case of Heartland K.G. Information Ltd (supra), to the facts of the present case, in as much as, the eligibility of deduction u/s.10B of the Act was not called in question. It is further submitted that the issue of allowability of claim u/s.10B of the Act was not alive, as in the earlier proceedings, the Tribunal had categorically held that assessee is not entitled for deduction u/s.10B of the Act. The only issue alive before the Assessing Officer is with regard to the eligibility of claim u/s.10A of the Act. It is further contended that there was no positive profits
ITA No.1661/2019 :- 5 -: available before making an addition u/s.92CA (3) of the Act which can be claimed as deduction u/s.10A or 10B of the Act.
On the other hand, the ld. Authorised Representative placed reliance on the order of the ld. CIT(A).
We heard the rival submissions and perused the material on record. In the earlier round of proceedings, the Tribunal had remanded the matter back to the file of the Assessing Officer for the purpose of verification, whether or not assessee is entitled for deduction u/s.10A of the Act. No other issue was alive before the Assessing Officer. The Assessing Officer had categorically held that the assessee is not eligible to claim deduction u/s.10A of the Act as the assessee had not complied with the conditions stipulated such as filing form No.56FF. However, the ld. CIT(A) placing reliance on the decision of Hon’ble Jurisdictional High Court in the case of Heartland K.G. Information Ltd (supra) had directed the Assessing Officer to allow the claim of deduction u/s.10B of the Act. The issue of allowability of claim u/s.10B of the Act is neither alive nor it is permissible, as it amounts to overruling the decision of the Tribunal, by CIT(Appeals). Thus, the ld. CIT(A) had seriously fell in error in directing the Assessing Officer to allow the claim for deduction of provision u/s.10B of the Act. Further, it is an admitted position that ITA No.1661/2019 :- 6 -:
before making addition on account of Arm’s Length Price adjustment u/s.92CA(3), there was be no profit available which can be claimed as deduction u/s.10B or 10A of the Act. The provisions of Sub Section (4) of Section 92CA of the Act specifically provides that addition made u/s.92CA(3) of the Act is not eligible profits for deduction neither u/s.10A nor u/s.10B of the Act. The ld. CIT(A) in the flagrant ignorance of the plain provisions of the Act allowed the claim for deduction u/s.10B of the Act. Therefore, we reverse the order of the ld. CIT(A) and allow the appeal filed by the Revenue.
In the result, the appeal filed by the Revenue stands allowed.
Order pronounced on 1st day of January, 2020, at Chennai.