DEPUTY COMMISSIONER OF INCOME-TAX vs. AVESTA COMPUTERS PVT. LTD.,, PUNE

Both the appeals filed by Revenue on same issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, in order to adjudicate the issues, reference is being made to the facts and issues in ITA No.2070/PUN/2016, relating to assessment year 2007-08.

The Revenue in ITA No.2070/PUN/2016, relating to assessment year 2007-08 has raised the following grounds of appeal:- 1. The order of the Ld. Commissioner of Income-tax(Appeals) is contrary to the law and on facts and in the circumstances of the case. 2. The Ld. Commissioner of Income-tax(Appeals) erred on the facts and in the circumstances of the case and in law in allowing alternate claim of the assessee for deduction u/s 10A of the Act, once the Ld. CIT(A) had upheld the order of the Assessing officer in denying deduction u/s 10B. 3. The Ld. Commissioner of Income-tax(Appeals) erred on the facts and in the circumstances of the case and in law in allowing alternate claim of the assessee for deduction u/s 10A of the Act ignoring the provisions of section 80A (5) of the IT Act, 1961 which mandate that no deduction u/s 10A would be allowable unless so claimed by the assessee in the Return of Income. 4. The Ld. Commissioner of Income-tax(Appeals) erred on the facts and in the circumstances of the case and in law in allowing alternate claim of the assessee for deduction u/s 10A of the Act ignoring the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd vs CIT reported in 157 Taxmann 1, wherein it has been held that an assessee can amend a return filed by him for making a claim for deduction only by filing a revised return? 5. The Ld. Commissioner of Income-tax(Appeals) erred on the facts and in the circumstances of the case and in law in allowing alternate claim of the assessee for deduction u/s 10A of the Act ignoring decision of the Hon. SC in the case of CIT vs Shelly Products reported in 129 Taxmann 271 wherein it has been held that the assessing authority may grant relief to an assessee, if an assessee by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, which is clearly not established in this case. 6. On the facts & circumstance of the case, the learned Commissioner of Income-tax (Appeals), Pune grossly erred in ignoring the section 10A(5) of the Act as per which deduction u/s 10A cannot be allowed unless report of an accountant is furnished in prescribed Form No.56F

Though the Revenue has raised several grounds of appeal but the only issue raised is against order of CIT(A) in allowing alternate claim of assessee for deduction under section 10A of the Act.

The learned Authorized Representative for the assessee fairly pointed out that the issue raised in the present appeal is covered by the order of Tribunal in the case of Clarion Technologies Pvt. Ltd. Vs. DCIT in ITA No.116/PN/2014, relating to assessment year 2010-11, order dated 30.10.2014. He also pointed out that the CIT(A) has decided the issue in turn, relying on the said ratio laid down by the Tribunal.

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of Assessing Officer and stated that the assessee was not entitled to the alternate claim of deduction under section 10A

We have heard the rival contentions and perused the record. Briefly, in the facts of the case, the assessee was engaged in the business of development of computer software. In the return of income filed for the year under consideration, the assessee has claimed deduction under section 10B of the Act. The unit of assessee was registered with Directorate of Software Technology Park of India (STPI). The Assessing Officer was of the view that the assessee was not entitled to the said claim of deduction under section 10B of the Act as the requirement of section was that the assessee should be 100% Export Oriented Unit (EOU). Consequently, the said deduction claimed by assessee was denied and profits from the said business were brought to tax. The assessee during the course of assessment proceedings had furnished written submissions to the effect that in case deduction under section 10B of the Act is denied to the assessee then deduction under section 10A of the Act be allowed. The Assessing Officer denied the same also to the assessee. The CIT(A) allowed the claim of assessee in turn, relying on the decision of Pune Bench of Tribunal in the case of Clarion Technologies Pvt. Ltd. Vs. DCIT (supra).

We find that similar issue has been decided in series of cases by the Tribunal. The latest decision is in the case of case of Approva Systems Pvt. Ltd. Vs. DCIT in ITA No.1051/PUN/2015, relating to assessment year 2011-12, order dated 12.03.2018, wherein it was held as under:-

The issue arising in the present appeal is squarely covered by the decision of Pune Bench of Tribunal in Approva Systems Pvt. Ltd. Vs. DCIT (supra) and we hold that the assessee is entitled to the alternate claim of deduction under section 10A of the Act. The matter is set aside to the file of Assessing Officer for the limited purpose of computing the said deduction in accordance with law. There is no merit in the order of Assessing Officer in holding that the assessee is not entitled to the said deduction under section

Another issue which is raised by the Revenue vide grounds of appeal No.7 and 8, wherein the assessee was allowed the deduction under section 10A of the Act before setting off of brought forward losses and unabsorbed depreciation.

We find that this issue stands covered in favour of assessee by the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom) and the aforesaid deduction under section 10B of the Act is to be computed before adjusting brought forward unabsorbed losses / depreciation. The learned Departmental Representative for the Revenue has pointed out that the issue stands covered by the order of Hon'ble Supreme Court in the case of Himatasingike Seide Ltd. Vs. CIT reported in 286 ITR 255 (SC). However, it has been held by the Hon’ble Bombay High Court that the decision of Hon'ble Supreme Court in Himatasingike Seide Ltd. Vs. CIT (supra) is with relation to pre-amended provisions of section 10A of the Act. However, after the amendment it is not case of exemption but a case of deduction under section 10A of the Act, hence, the said proposition is not to be applied. The grounds of appeal No.7 and 8 raised by Revenue are thus, dismissed.

The facts and issues in ITA No.2071/PUN/2016 are identical to the facts and issues in ITA No.2070/PUN/2016 and our decision in ITA No.2070/PUN/2016 shall apply mutatis mutandis to ITA No.2071/PUN/2016.

In the result, both the appeals of Revenue are dismissed.