CHAIN SYS (INDIA) PVT. LTD.,CHENNAI vs. DCIT, CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -5, Chennai, dated 17.02.2017 and pertains to assessment year 2006-07.

Shri G. Baskar, the Ld.counsel for the assessee, submitted that the assessee claimed deduction under Section 10B of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. counsel, the Assessing Officer found that the assessee is not eligible for deduction under Section 10B of the Act. While challenging the order of the Assessing Officer before the CIT(Appeals), according to the Ld. counsel, the assessee made alternative claim under Section 10A of the Act. The CIT(Appeals) rejected the claim of the assessee on the ground that the alternative claim of deduction under Section 10A of the Act was not made in the return of income. According to the Ld. counsel, when the assessee is eligible for deduction under Section 10A of the Act, nothing wrong in examining the claim of the assessee if the conditions were otherwise satisfied. Moreover, the Apex Court found that the power of this Tribunal is not impugn to admit additional grounds. According to the Ld. counsel, the matter may be remitted back to the file of the Assessing Officer for reconsideration.

On the contrary, Ms. S. Vijayaprabha, the Ld. Departmental Representative, submitted that the assessee cannot make any fresh claim after reopening of assessment as held by the Apex Court in the case of CIT v. Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297.

We have considered the rival submissions on either side and perused the relevant material available on record. The assessment was reopened only for the purpose of re-examining the claim of the assessee under Section 10B of the Act. When the Assessing Officer examined the claim under Section 10B of the Act, the assessee made alternative claim under Section 10A of the Act before the CIT(Appeals) in respect of the very same income. This Tribunal is of the considered opinion that when the issue of exemption under Section 10B of the Act was examined by the Assessing Officer in the reopened assessment, in respect of the very same income, the assessee can make alternative claim under Section 10A of the Act. Therefore, the judgment of Apex Court in Sun Engineering Works Pvt. Ltd. (supra) supports the case of the assessee.

When the assessee claims exemption under Section 10B of the Act in the return of income and it was rejected after reopening of assessment, the alternative claim made by the assessee under Section 10A of the Act needs to be examined, hence, the matter has to be remitted back to the file of the Assessing Officer. Accordingly, the orders of both the authorities below are set aside and the alternative claim of deduction under Section 10A of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.