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Income Tax Appellate Tribunal, D Bench, Mumbai
Before: Shri R.C. Sharma & Shri Ram Lal NegiShri Moni Jain
O R D E R
Per R.C. Sharma, AM
This appeal has been filed by the assessee against the order of the CIT(A)-16, Mumbai dated 13.01.2016 for A.Y. 2009-10 in the matter of order passed under Section 143(3) r.w.s. 90A of the Income Tax Act, 1961 (hereinafter “the Act”).
The only grievance of the assessee relates to disallowance of its claim under Section 10A of the Act. The assessee is also aggrieved for the disallowance of various expenses while computing business income, which is eligible for exemption under Section 10A of the Act. 3. At the outset the learned A.R. placed on record the order of the Tribunal for A.Y. 2010-11, wherein the issue was decided in favour of the assessee. We have carefully gone through the order of the Tribunal for A.Y.
M/s. Candor India P. Ltd. 2010-11 dated 21st June, 2017 wherein similar claim under Section 10A of the Act was allowed by the Tribunal after having observed as under: - “3. After hearing both the parties and on perusal of the record filed before us, we find that the ld. CIT(A) has passed very detailed and reasoned order citing the figures and facts which was wrongly appreciated by the AO and thus reached a wrong conclusion. From the facts before us we find that the assessee is engaged in the business of export business and fulfilled all the necessary conditions for claiming exemption u/s 10A of the Act. The assessee has received foreign currency proceedings within six month at the end of the financial year as required under the provisions of section 10A(3) and filed audit report under section 56F in support of his claim of exemption u/s 10A. Moreover, STPI has acknowledged and certified the work performed by the assessee and also employed requisite staff. The STPI has also certified that the assessee commenced its operation and started export from financial year 2008-09. In view of the facts, we find that the ld.CIT(A) has given reasoned findings on the issue which in our view required no interference on our part. As regard the contention of the AO that the sales made to M/ Viraj Profiles Limited, the same were not qualify for export exemption, the ld. CIT(A) clearly held that as per exim policy the salese to 100% EOU is also considered as export sales and exemption should not be denied. Under these facts and circumstances of the case, we are inclined to uphold the order of ld. CIT(A) on allowing the claim the exemption u/s 10A of the Act by dismissing the appeal of the Revenue on this issue.”
We have heard the rival contentions and perused the record. We have carefully gone through the order of Tribunal as quoted above. From the record we found that the assessee has set up an eligible unit in Software Technology Park of India at Prabhadevi and is engaged in the business of rendering software implementation services at the client's server according to their requirements. Assessee claimed exemption under Section 10A amounting to Rs.32,81,529/-. The AO disallowed the said exemption on the pretext that no unit was established by the assessee since the said area was not a Free trade zone. He also relied upon the letter of STPI dated 11.01.2012. The AO held that assessee has violated the provisions of STPI guidelines and also it has made sales to an Indian entity which is 100% EOU and such sales cannot be said to be export. AO also disallowed various claims of expenses. CIT(A) confirmed the finding of the AO.
M/s. Candor India P. Ltd.
It is clear from the order of the ITAT that the assessee is eligible for claim of exemption under Section 10A of the Act to the extent of 100% EOU holding that sales of EOU is deemed export. Before the lower authorities assessee has submitted the registration certificate dated 02.12.2008 issued by STPI for commencement of the said unit. Further, STPI in its letter to AO dated 28.06.2012, has duly stated that assessee has commenced its operation and the unit is exporting since FY 2008-09. Further, the assessee has duly submitted the audit report in prescribed format, details of exports made, FIRC copies to show the receipt of foreign currency within time limit to show eligibility for exemption u/s 10A.
In view of the above, respectfully following the order of the ITAT in assessee’s own case de do not see any merit in disallowing the claim of the assessee under Section 10A of the Act.
So far as grounds taken by assessee for disallowance of various expenses are concerned, we observe that such disallowance of expenses will increase the profit of eligible unit which is exempt u/s.10A. Our view is supported by the decision of Hon’ble Bombay High Court in the case of Jems Plus Jewellery India Ltd., 233 CTR 24. From the record we also found that extension of exemption u/s.10A was allowed by CIT(A) on the disallowance made in AY 2010-11 and the same has been accepted by department by not filing an appeal against the same.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 10th October, 2018.