CONGRUENT SOLUTIONS P LTD. ,CHENNAI vs. ACIT CORPORATE CIRCLE 1(2) , CHENNAI

आदेश / O R D E R

ITA No. 1798/Mds/2017 :- 2 -:

Ld. Counsel for the assessee submitted that he was not 2. pressing grounds 2 & 3 assailing validity of the reopening done u/s.147 of the Act for the impugned assessment year.

As per the ld. Authorised Representative, original return was processed u/s.143(1) of the Act. Thereafter, as per the ld. Authorised Representative notice dated 27.03.2014 under section 148 of the Act to the assessee seeking to reopen the assessment. As per the ld. Authorised Representative reason for reopening was mentioned as allowance of deduction u/s.10B of the Act, when it was not eligible for such deduction. As per the ld. Assessing Officer, assessee was a unit registered with Software Technology Parks of India as a 100% EOU.

According to him, by virtue of Explanation 2(iv) of 10B of the Act deduction under that Section was available only where an undertaking was approved as 100% EOU by a Board appointed by the Central Government for this purpose under section 14 of the Industries (Development and Regulation) Act, 1951. As per the ld. Authorised Representative, assessee having recognized the above mistake, had in the return filed pursuant to notice u/s.148 of the Act, preferred a ITA No. 1798/Mds/2017 :- 3 -: claim u/s.10A of the Act. Further, as per the ld. Authorised Representative, assessee being a recognized STPI unit was eligible for deduction u/s.10A of the Act. However, as per the ld. Authorised Representative, ld. Assessing Officer in the reassessment refused to consider the claim preferred by the assessee u/s.10A of the Act, relying on a judgment of Hon’ble Apex Court in the case of Goetze (India) Ltd vs. CIT 284 ITR 323. As per the ld. Authorised Representative, the said judgment was not applicable since return filed by the assessee pursuant to the notice u/s.148 of the Act had to be considered as original return. According to him, though this was pointed out to the ld. Commissioner of Income Tax (Appeals), ld. Commissioner of Income Tax (Appeals) did not allow the claim.

Contention of the ld. Authorised Representative was that even if assessee was not entitled to relief u/s.10B of the Act, it ought have been granted deduction u/s.10A of the Act for which it was eligible.

According to him, ld. Commissioner of Income Tax (Appeals) had erroneously relied on the judgment of Apex Court in the case of CIT vs. Sun Engineering Works (P) Ltd, 198 ITR 297 for denying the claim preferred by the assessee. As per the ld. Authorised Representative, judgment of Apex Court in the case of Sun Engineering Works (P) Ltd (supra) applied only where there was an original assessment. In assessee’s case, the original return having been processed u/s.143(1)

ITA No. 1798/Mds/2017 :- 4 -: of the Act, as per the ld. Authorised Representative impugned assessment had to be considered as original assessment. In any case, according to him, by virtue of judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. Heartland KG Information Ltd, 359 ITR 0001, just for a reason that the Section under which the claim was preferred was incorrectly mentioned, such claim could not be disallowed.

Per contra, ld. Departmental Representative submitted that 4.

the ld. Commissioner of Income Tax (Appeals) had correctly relied on the judgment of Apex Court in the case Sun Engineering Works (P) Ltd (supra) and held that assessee could not take advantage of the reassessment proceedings for claiming a relief not claimed in the original return. Further, according to him, Co-ordinate Bench of the Tribunal in the case of Sella Synergy (India) Ltd vs. ACIT, 117 ITD 264 had considered a similar issue and held that deduction not originally claimed could not be claimed during a reassessment proceedings.

Reliance was also placed on the decision of Bangalore Bench of the Tribunal in the case of Karnataka State Co-operative Apex Bank Ltd vs. DICT, (2016) 46 ITR( Trib) 728.

claimed deduction u/s.10B of the Act and not under 10A of the Act.

It is not disputed by the Revenue that original return filed by the assessee, where it had claimed deduction u/s.10B of the Act, was never scrutinized but subjected only to a processing u/s.143(1) of the Act. It is also not disputed that assessee had preferred the claim u/s.10A of the Act and not under 10B, when it filed return a pursuant to notice u/s.148 of the Act. In my opinion when original return was only subject to a processing u/s.143(1) of the Act, the assessment done pursuant to a reassessment proceeding, initiated u/s.147 of the Act, has to be considered as the first assessment. There is no case for the Revenue that return filed by the assessee pursuant to notice u/s.148 of the Act, was beyond the time allowed to it sub section (1) thereof. In my opinion nothing stopped the assessee to make a claim u/s.10A of the Act in the return filed pursuant to notice u/s.148 of the Act. It is not akin to a case where an assessment was originally completed after scrutiny u/s.143(3) of the Act. Had it been so, assessee could not have made a fresh claim in the return filed pursuant to a reassessment notice issued u/s.148 of the Act. That apart, in my opinion, the claim made by the assessee u/s.10A of the Act cannot be treated as an entirely new claim, since the basis of the claim was profits earned by it from its STPI unit. It might be true that profits earned from STPI was not eligible for deduction u/s.10B of the ITA No. 1798/Mds/2017 :- 6 -:

Act. However, admittedly, such profit was eligible for deduction u/s.10A of the Act. Just because the assessee mentioned a wrong Section, in my opinion, it could not be deprived of a legislate claim for which it was otherwise eligible. In my opinion lower authorities erred in not considering correctness of the claim of deduction made by the ld. Assessing Officer u/s. 10B of the Act. Judgment of Apex Court in the case of Sun Engineering Works (P) Ltd (supra) relied on by the ld. Commissioner of Income Tax (Appeals), in my opinion has no applicability since the claim made by the assessee u/s.10A of the Act, cannot be considered as a fresh claim as the claim emanated from working of the same STPI unit on which it had earlier preferred a claim under section 10B of the Act. Thus, claim of the assessee cannot be considered as fresh one. In the circumstances of the case, I am of the opinion that the question whether assessee was eligible for claiming deduction u/s.10B of the Act ought have been considered on the merits of such claim. In taking this view, I rely on the judgment of Hon’ble Jurisdictional High Court in the case of Heartland KG Information Ltd (supra) where it was held as under at para 6:

‘’6. As far as the first question raised as regards the claim of the assessee originally made under section 10B of the Income-tax Act is concerned, we do not think, the said question can be answered in favour of the Revenue. A reading of the order of the Assessing Officer as well as the Commissioner of Income-tax (Appeals) shows that even though the assessee originally claimed relief under section 10B, it was cautious enough to make an alternative plea

ITA No. 1798/Mds/2017 :- 7 -: under section 10A in view of the fact that the assessee's vendor had the benefit under section 10A. It is not denied by the Revenue that the assessee had the whole business transferred to its favour and that the factum of transfer was also intimated to the Software Technology Park of India. Thus, as a software technology park, the assessee is entitled to place his claim under section 10A. In any event, even assuming for a moment, the assessee had not referred to the section correctly, the fact remains that if the claim could be favourably be considered under any of those special deduction provisions and on the conditions specified therein being satisfied, we do not think that there exists any justifiable ground for the Revenue to contend that the assessee shall not be entitled to have the benefit of section 10A’’. For the reasons mentioned above, I set aside the orders of the lower authorities and remit the issue regarding eligibility of the assessee for claiming deduction u/s.10A of the Act back to the file of the ld. Assessing Officer for consideration afresh in accordance with law.

In the result, appeal of the assessee is partly allowed for 6. statistical purposes.