ITO, WARD - 8(2), KOLKATA , KOLKATA vs. M/S. WIZARD ENTERPRISE PVT. LTD., , KOLKATA

आयकर अपील�य अधीकरण, �यायपीठ – “A” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “A” KOLKATA Before Shri J.Sudhakar Reddy, Accountant Member and Shri S.S.Godara, Judicial Member ITA No.292/Kol/2018 Assessment Year: 2011-12

Income Tax Officer, Ward- M/s Wizard Enterprise Pvt. बनाम 8(2), 5th Floor, Aayakar Ltd., 5F, Everest, 46/C, / Bhawan, P-7, Chowringhee V/s. Chowringhee Road, Square, Kolkata-69 Kolkata-700071 [PAN No.AAACW 2606 B] .. अपीलाथ� /Appellant ��यथ� /Respondent

Shri C.J. Singh, JCIT, SR-DR अपीलाथ� क� ओर से/By Appellant None ��यथ� क� ओर से/By Respondent 23-01-2019 सुनवाई क� तार�ख/Date of Hearing 28-02-2019 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- This Revenue’s appeal for assessment year 2011-12 arises against the Commissioner of Income Tax (Appeals)-5, Kolkata’s order dated 24.11.2017 passed in case No.1/CIT(A)-5/Wd-8(2)/14-15/16-17, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Case called twice none appears at the assessee’s behest. The registry has already sent the assessee an RPAD notice dated 11.12.2018 for today’s hearing. We therefore proceed ex parte against the assessee. The case is now taken up adjudication on merits.

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 2 2. The Revenue’s first three substantive grounds seeks to revive the Assessing Officer’s action disallowing assessee’s section 10A deduction claim of ₹1,19,78,405/- in assessment order as reversed in CIT’s order under challenge. 3. We find that instant issue of sec.10A deduction is no more res integra as this tribunal’s co-ordinate bench’s decision in assessee’s case itself for assessment years 2007-08 and 2008-09 has accepted its very claim vide its order dated 04.03.2016 vide following detailed discussion:- “11. We find from page 47-48 of the paper book regarding copy of the green card issued by the designated officer, Govt. of India, Deptt. Of Information Technology and Chairman, Inter-ministerial standing Committee on software technology park scheme vide green card number STPK/233/06 dated 16th Feb., 2006 as an unit approved under the STP scheme of the Govt. of India as 100% export oriented unit to carry out IT enabled services (call centre). It would be pertinent to reproduce the same herein below:- “ Sl No. 6047 Green Card No.STPK/233/06 Dated the February 16th 2006 SOFTWARE TECHNOLOGY PARK(STP) UNIT HAS BEEN APPROVED UNDER THE STP SCHEME OF THE GOVT. OF INDIA AS A 100% EXPORT ORIENTED UNIT FOR COMPUTER SOFTWARE. THIS UNIT IS ENTITLED TO TOP PRIORITY TREATMENT FROM ALL CONCERNED CENTRAL AND STATE GOVERNMENT DEPARTMENTS AND OTHER ORGANISATIONS IN ALL MATTERS RELATING TO THE PROJECT Sd/- DESIGNATED OFFICER FOR SECRETARY TO THE GOVT OF INDIA DEPARTMENT OF INFORMATION TECHNOLOGY AND CHAIRMAN, INTERMINISTERIAL STANDING COMMITTEEON SOFTWARE TECHNOLOGY PARK SCHEME.” 11.1 The above green card approval has to be understood in its true and fullest sense in the larger interest and purpose behind setting up a unit and the allied benefits it is likely to bring. These export benefits would automatically be eligible for deduction u/s. 10B of the Act. Otherwise, the purpose of granting the same for setting up a unit and registering with STP as 100% EOU status would get defeated. 12. We also find lot of force in the alternative argument made by the ld.AR that the assessee company being registered with STP is entitled for claiming deduction u/s. 10A of the Act. In this connection, the CBDT’s instruction no. 1/2006 dated 31-03-2006 assumes great significance. The same is reproduced herein below for better appraisal :- “ SECTIONS 10A AND 10B FREE TRADE ZONES / 100% EXPORT ORIENTED UNDERTAKINGS, EXEMPTION FOR NEW INDUSTRIAL UNDERTAKINGS IN [SECS.10A AND 10B]

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 3 Deduction to STPs - Instances have been brought to the notice of the Board that a large number of units registered/ approved by the Directors of the STPI are claiming deduction under section 10A whereas the STP scheme requires approval by the Inter-Ministerial Standing Committee of the Department of Electronics. Accordingly, the cases of such claimants have been reopened by the authorities. The matter has been examined in consultation with the officers of the Department of Information Technology (earlier, Department of Electronics). In view of the ambiguity in the legal status of the approval by Director of STPs, the Inter-Ministerial Standing Committee will meet to consider the approvals by Director of STPs issued in the past. Therefore, with a view to avoid infructuous demand raised in assessment and reassessment of assessees claiming deduction under section 10A, it has been decided that the claim of deduction under section 10A, shall not be denied to STP units only on the ground that the approval/registration to such units has been granted by the Directors of Software Technology Parks. However, it has to be ensured that all other conditions specified in section l0A are fully satisfied before allowing any such claim. In cases where assessments/reassessments have already been completed, and the claim under section 10A has been disallowed only on the ground that the approval to the STP has not been granted by the Inter-Ministerial Standing Committee in accordance with the Scheme, the demand so arising should be kept in abeyance until further orders.” 13. It is not in dispute that a call centre operation has been duly notified as IT enabled services and thereby eligible for deduction for 100% export oriented unit contemplated u/s. 10A/10B of the Act. 14. We also find from page 51 of the paper book containing a letter dt. 02-09-2011 addressed to the assessee by Software Technology Parks of India (STPI), Ministry of Communication & Information Technology, Dept of IT, Govt. of India, Kolkata regarding registration for setting up STP unit ( 100% Export Oriented Unit under STP scheme). The same is reproduced here in below for the sake of convenience:- “Software Technology Parks of India Ministry of Communication & Information Technology, Dept of IT, Govt. of India Plot No.5/1 DP Sector-V, Salt Lake, Kolkata-700 091 Ph: 91-33-2367-3598/99-2367 3798/99, Fax 91-33- 2367-3597 Email:infor@kol.stp.in/URLhttp://www.kol.stp.in To The Director Wizard Enterprises Pvt. Ltd. 5, Lake Avenue, Kolkata - 700026 SUB: YOUR STP UNIT APPROVAL RATIFICATION REG. REF: Your letter dt: 29.08.2011

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 4 Sir, With reference to above and discussions with your officials, the facts w.r.t, your STP unit registration is produced below: 1. Your unit 'Wizard Enterprises Pvt. Ltd.' is registered as a 100% Export Oriented Unit under STP scheme vide LOP no. STPK:DIR:441:2005-06:1548 dt: 10.01.2006 as per notification no. 33/(RE)(92-97 dt: 22.03.1994 read with subsequent amendments and EXIM Policy ( Foreign Trade Policy. 2. As per Para 6.26 of Foreign Trade Policy 2004-2009: 'In the case of units under EHTP /STP Schemes, necessary approval/ permission under relevant paragraphs of this Chapter shall be granted by the officer designated by the Ministry of Communication and Information Technology, Department of Information Technology instead of the Development Commissioner and by the Inter-Ministerial Standing Committee (IMSC) instead of BOA: 3. Approval of your unit is granted by Director, STPI as per powers delegated on him by the IMSC. Thanking you. Yours faithfully, Sd/- [Manjit Nayak] Officer- In -Charge Copy to: 1. The Director, STPI-Kolkata / Guwahati 15. It was also brought to our attention by the ld.AR that the Instruction (F.No.178/19/2008-IT-I) dated 9th March’ 2009 issued by CBDT clarifies that the power to grant approval u/s. 14 of industrial (Development & Regulations) Act, 1951 has been delegated to Development Commissioners and approval granted by the Development Commissioner shall be considered valid for the purpose of exemption u/s. 10B. It would be pertinent to note that in the instant case approval under the STP scheme is granted by the Designated Officer, Department of Information Technology and by the Inter- ministerial Standing Committee (IMSC). Hence, the approval granted under STP Scheme complies with all the requirements contemplated u/s. 10B of the Act when read with Industrial (Development & Regulations) Act, 1951, Foreign Trade Policy 2004-2009, Hand book of Procedures (Volume-I) & Appendix to the Handbook. We also find that the ld.AR further argued before us that to the best of his knowledge the order passed under similar circumstances by the ld.CIT(A)-II, Kolkata in the case of ARB Software (India) Ltd for the assessment year 2003-04 has not been appealed by the revenue before the tribunal. We find force in the case law as relied upon by the assessee on the decision of the co-ordinate bench of the ITAT Chandigarh (supra) in the case of Bebo Technologies P.Ltd Vs. JCIT (supra), wherein the Learned AO denied deduction u/s. 10B to the assessee on the ground that no approval was obtained from the Board appointed by the Central Govt. in exercise of power conferred by section 14 of Industrial (Development & Regulation) Act 1951 & Rules made under that Act. It was ultimately held in that case as under:-

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 5 “ 39. The Ld. DR for the Revenue before us has failed to point out any contrary evidence to the same. The Ld. counsel for the assessee drew our attention to the gazetted notification in this regard placed at page 16 of the paper book-II under which the powers had been given to consider the application for setting up of units under STP Scheme operated vide custom notification No. 138 and 140 dated 22.10.1991. The said committee was also empowered to consider the proposals for industrial license, foreign technical collaboration, agreement and import of .capital goods. The assessee has furnished the Registration under the Software Technology Park Scheme of India vide approval No. STPIM/PCMG/PSE/02/199-7492 dated 17.2.2003 registering the assessee as an 100% EOU. The copy of the said certificate is enclosed at pages 105 to 109 of the paper book alongwith the copy of the agreement entered into by the assessee company with STPI on 17.2.2003, a copy of which is enclosed at pages 111 to 113 of the paper book. In view of the above said evidence, upholding the order of CIT(A), we hold that the assessee is entitled to deduction u/s 10B of the Act as a 100% EOU on being registered with STPI. In the entirety of facts and circumstances of the case and in view of our observation in paras hereinabove, we uphold the order of CIT(A) in holding that the assessee is eligible to the exemption claimed u/s. 10B of the Act. Accordingly, ground No.2 raised by the revenue is thus dismissed.” 16. We also find glaring similarities between Section 10A and 10B of the Act as below:- Whether applies Whether applies Section 10A/ to Section 10B Relevant sub- Relevant sub- section, proviso or section, proviso explanation or explanation Proposition Sl.No. 1. Benefit of deduction for export of articles/ computer software Yes Yes Sub-section(1) Sub-section(1) 2. Benefit is available for a period of 10 consecutive A.Ys. beginning with the year in which undertaking begins to produce/manufacture such article/ Yes Yes computer software Sub-section(1) Sub-section(1) 3. Definition of “ computer software” is Yes exempted Yes exempted as Any product or service of the similar as per CBDT as per CBDT nature as may be notified by CBDT. Notification Notification CBDT vide Notification No.SO 890(E) Explanation (2) Explanation (2) dated 26.09.2000 has notified the list below Section10A below Section10A of Information Technology enabled products or services eligible for benefit of exemption “ Call Centre” activity figuring at item (ii) of the said list 4. Benefits under the provisions are Yes Yes

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 6 Not available w.e.f 01.04.2012 4th Proviso to 3rd Proviso to sub- sub-section (1) section (1) 5. Benefits available to the undertakings Yes Yes Located at Free Trade Zone, Electronic clause (i) of Sub-section (1) read Hardware Technology Park/software Sub-section(2) with Explanation 2(iv) Technology Park or Special Economic below Section 10B Zone or 100% export oriented under- takings. Note: STPs are nothing but 100% EOU as has been clarified by STPI vide Letter dated 05.09.2011 6. Undertaking claiming deduction should Yes Yes not be formed by the splitting up or Clause(ii)& Clause(ii)& (iii) of reconstruction of a business already in (iii) of Sub- Section (2) existence and/or is not formed by the Section (2) transfer to a new business of machinery or plant previously used for any purpose. 7. The provisions of sub-section(8) and sub- Yes Yes Section(10) of Section 80-IA apply in Sub-section(7) Sub-section(7) Relation to the undertakings. 8. Return of Income should be furnished within Yes Yes The due date specified in Section 139(1) and Sub-section(8) Sub-section(8) The return should be accompanied by a r.w FORM No.56F r.w FORM No.56G report of the Chartered Accountant 17. We find that the assessee is also entitled for benefit of deduction u/s. 10A of the Act in the facts and circumstances of the case, though the assessee had not claimed the same under that section in the return of income. In this regard, we would like to place reliance on the decision of the co-ordinate bench of the ITAT Mumbai in the case of ITO Vs. Accentia Technologies Limited in ITA No. 1871/Mum/2011 dated 08-05-2014, wherein it was held that : “6. Having regard to the circumstances of the case the learned CIT(A) called for a remand report. Upon obtaining the remand report he noticed the following undisputed facts i.e., (a) there is no dispute regarding the amount which is claimed as exempt under section 10A of the Act, (b) there is no dispute that the assessee is entitled to claim exemption under section 10A of the Act and all the criteria regarding the said claim has been met by the assessee, and (c) There is also no dispute regarding the fact that in the return of income the assessee claimed deduction of the amount admissible as deduction under section 10A by mentioning it as section 10B of the Act. Thus the only dispute that exists is whether the claim of the assessee regarding deduction under section 10A is allowable if the claim was made under section 10B in the return of income. “The learned CIT(A) observed that section 80A(5) is applicable only when the assessee fails to make a claim in his return of income for any deduction whereas in the instant case the assessee did make the claim though, because of a technical

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 7 error, the claim was made under section 10B instead of 10A. In his opinion, quoting of wrong section should not deprive the assessee from claiming deduction so long as the other conditions for making such claim are satisfied. He relied upon the circular issued by the CBDT dated 11.04.1955 wherein it was observed that it is the duty of the AO to guide the assessee with regard to eligibility to claim deduction; in the instant case when the assessee claimed deduction under section 10 B the AO ought to have guided the assessee with regard to eligibility to claim deduction under section 10A of the Act.” 18. We also find that the contents of audit report in form no. 56F and 56G together with the computation mechanism remains the same for claiming the deduction u/s. 10A/10B of the Act. It was argued alternatively by the ld.AR that the decision of the ld.AO is to educate the assessee of its rights and entitlements as per law and cannot take advantage of ignorance of assessee. In this regard, he cited the relevant extract of the decision of the Hon’ble Bombay High Court in the case of Sanchi Software & Solutions Pvt. Ltd Vs. CIT reported in (2012) 349 ITR 404 (Bom), wherein it was held as under:- “Income-tax Department cannot take advantage of the assessee’s mistakes in not claiming the exemption in the Income-tax Return and not deny him exemption. The entire object of administration of tax is to secure the revenue for the development of the country and not to charge the assessee more tax than that which is due and payable by the assessee.” 19. We find that the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. India Capacitors Ltd reported in 180 ITR 641 also supports this proposition. We further find that the alternative argument of the ld.AR has got lot of force as it may be appreciated that there was no mala fide intention on the part of the assessee in not claiming the deduction under the correct section. In fact, it could be appreciated that the assessee had only run the risks of not having been able to avail the benefit of justice and not gained anything by not claiming deduction under the correct section. The Hon’ble Supreme Court in the case of CIT Vs. Mahalaxmi Sugar Mills Co. Ltd reported in (1986) 160 ITR 920(SC) has observed as under:- "There is a duty cast on the Income-tax Officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee's taxable income and the consequential tax liability_ That the assessee fails to claim the benefit of a set-off cannot relieve the Income-tax Officer of his duty to apply section 24 in an appropriate case." Hence, we find that the above principle holds good and in the event it had been applied, the assessee would not have been deprived of justice and admitting the claim under correct section. 20. In view of above facts and circumstances and judicial precedents relied upon hereinabove, we hold that the assessee is entitled to claim the benefit of deduction under the provisions of section 10A as well as section 10B of the Act. Hence we find no infirmity in the impugned orders of the ld.CIT(A) in deleting the disallowance as made by the ld.AO on this issue. We uphold the impugned orders of the ld.CIT(A). Hence, the grounds raised by the department in both the appeals are dismissed.

ITA No.292/Kol/2018 Assessment Year 2011-12 ITO Wd-8(2), Kol. Vs M/s Wizard Enterprise Pvt. Ltd.. Page 8 21. In view of aforesaid facts and circumstances and judicial precedents as relied upon by the ld.AR before us, the grounds of cross objections as filed by the assessee before us are allowed.” 4. The Revenue is fair enough in not pin-pointing any distinction of facts or law during the course of hearing. We therefore adopt judicial consistency in the given facts and circumstances to uphold the CIT(A)’s direction treating the assessee to be eligible for sec. 10A deduction in issue. The Revenue’s former substantive ground is declined accordingly. 5. The Revenue’s second substantive grievance is that CIT(A) has erred in law and on facts in allowing loss of share trading amounting to ₹12,83,425/- and forward contracts amounting to ₹4,88,640/- in lower appellate proceedings. Learned Departmental Representative fails to dispute that the Assessing Officer’s assessment order had nowhere disallowed assessee’s impugned claim apart from computation portion. We conclude in these clinching factual backdrops Revenue cannot be held to be agitated against the CIT(A)’s action deleting the impugned disallowance for the said precise reason accordingly. This Revenue’s appeal is dismissed. 6. Order pronounced in open court on 28/02/2019 Sd/- Sd/- (लेखा सद&य) (�या(यक सद&य) (J.Sudhakar Reddy) (S.S.Godara) Accountant Member Judicial Member *Dkp-Sr.PS )दनांकः- 28/02/2019 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-ITO Ward, Ward-8(2), 5th Floor, Aayakar Bhawana, P-7 Chowringhee Square, Kolakta-69 2. ��यथ�/Respondent-M/s Wizard Enterprise Pvt. Ltd., 5F, Everest, 46/C, Chowringhee Road, Kolkataa-71 3. संबं,धत आयकर आयु-त / Concerned CIT 4. आयकर आयु-त- अपील / CIT (A) 5. .वभागीय �(त(न,ध, आयकर अपील�य अ,धकरण कोलकाता/DR, ITAT, Kolkata 6. गाड2 फाइल / Guard file. By order/आदेश से, /True Copy/ उप/सहायक पंजीकार आयकर अपील�य अ,धकरण, कोलकाता ।