ANSH SYSTEMS PVT. LTD.,PUNE vs. INCOME-TAX OFFICER,

आदेश आदेश / ORDER आदेश आदेश

PER D. KARUNAKARA RAO, AM :

This is the appeal filed by the assessee against the order of CIT(A)-1, Pune, dated 30-08-2016 for the Assessment Year 2009-10.

“1. The Ld.CIT(A) erred in upholding the reassessment proceedings though the Ld AO had reopened the assessment made u/s.143(3) on 28- 11-2011 on the basis of same set of facts and merely on the basis of change of opinion. 2. Without prejudice to Ground No.1, the Ld.CIT(A) erred in holding that the assessee was entitled to deduction u/s.10A only in respect of profit earned between 01-01-2009 and 31-03-2009 and not for the entire year though there is no such provision in the Income Tax Act. 3. The appellant craves leave to revise, modify, alter or delete any of the above grounds or to add new Grounds of Appeal.”

and is engaged in the outsourcing of software development. Assessee

filed its return of income on 02-11-2009 declaring total income at Nil

and claimed deduction of Rs.47,32,885/- u/s.10B of the Act.

Assessment u/s.143(3) of the Act was made on 28-11-2011 determining

the income at Rs.3,94,861/-. Thereafter, the case was reopened

u/s.148 of the Act on 10-03-2014. During the assessment proceedings,

AO noticed that assessee failed to comply with the conditions specified

in section 10B of the Act. Further, the alternate claim made by the

assessee u/s.10A of the Act and the same was not considered

favourable as per the discussion given in Para No.5 of the assessment

order. Considering the fact that the alternate claim is raised for the

first time without filing the return of income, AO denied the alternate

claim of the assessee relying on the decision of Hon’ble Supreme Court

in the case of Goetze India Ltd. Vs. CIT 157 Taxmann 1 relied on by the

assessee. Eventually, the AO assessed the income of the assessee at

Rs.39,48,610/- vide his order u/s.143(3) r.w.s.147 of the Act, dated

27-03-2015. Contents of Para No.5.8 of the AO’s order are relevant and

the same are extracted below :

“5.8 In view of the above discussion the contention of the assessee hereby rejected and the case is decided as per the law. For claiming deduction u/s.10B of the Act, the assessee should be a 100% Export Oriented Unit (EOU) as specified under explanation 2(iv) below to the section 10B of the Act which defines a “hundred percent export oriented undertaking” as a undertaking so approved by the Board appointed in this behalf by the Central Government under section 14 of the Industries Development and Regulation Act, 1951. Subsequent to the delegation of this power by the Ministry of Commerce and Industries to the Development Commissioners, such approvals to 100% EOUs are now being granted by the Development Commissioners which are later ratified by the Board of Approval. However the assessee is not approved by Development Commissioner hence deduction under section 10B of the Act at Rs.47,32,885/- is hereby disallowed and added to the total income of the assessee. The undersigned is satisfied that the assessee has furnished inaccurate particulars of income and hence penalty proceedings u/s.271(1)(c) are separately initiated.”

the validity of reopening of the assessment on the basis of same set of

facts and on the basis of mere change of opinion and made elaborate

submissions. The CIT(A) called for comments of the AO. Assessee also

submitted the counter comments for the same. Para No.4 of the order

of CIT(A) contains the submissions of the assessee, comments of the AO

and the counter comments of the assessee. Eventually, the CIT(A) held

the reassessment made by the AO as valid. Further, assessee raised

the ground relating to allowability of claim of deduction u/s.10B of the

Act before the CIT(A). CIT(A) upheld the allowability of claim of

deduction u/s.10B of the Act. However, with regard to the alternate

claim of deduction made by the assessee u/s.10A of the Act, he

restricted the deduction to only 3 months, i.e. from 1-01-2009 to 31-03-

2009 (Date of STPI approval on 01-01-2009) relying on the decision of

Clarion Technologies Pvt. Ltd. Vs. DCIT – ITA No. 2554/PN/2012 &

connected appeals, dated 30-10-2014

the Tribunal with the grounds mentioned above.

submitted that assessee is located in the STPI unit. This is the first

year of claim of deduction u/s.10B of the Act. Bringing my attention to

page Nos. 46 and 47 of the paper book, Ld. Counsel submitted that the

same constitutes certificate of approval dated 01-01-2009 and the same

is valid upto 31-12-2013 (i.e. 4 years). Ld. Counsel explained the

significance of date of approval and submitted that approval is STPI

unit specific and the date of approval need not be taken as the cut off

date for the purpose of allowing the deduction u/s.10A/10B of the Act.

He also brought my attention to a case where approval was given to a

case which involves claim of deduction u/s.35(2AB) of the Act and also

brought my attention to the judgment of Delhi High Court in the case of

CIT Vs. Sundan Vikas (India) Ltd. 22 taxmann.com 19 (Del.) and

submitted that the cut off dates mentioned in the certificate issued by

Department of Scientific & Industrial Research is irrelevant. The claim

u/s.35(2AB) of the Act has to be allowed for the entire year and not on

proportionate basis. The said judgment has kept reliance to another

judgment of Gujarat High Court in the case of CIT Vs. Claris

Lifesciences Ltd. 174 Taxman 113 (Gujarat) which is again relevant for

the similar proposition that the cut off date mentioned in the certificate

issued by DSIR is of no relevant. Referring to these judgments, Ld.

Counsel for the assessee submitted that the deduction is to be allowed

to the assessee for the entire year and for the entire expenditure

incurred on Research & Design facilities.

decision of Coordinate Bench of the Tribunal in the assessee’ own case

in ITA No.185/PN/214, order dated 30-12-2015 for the A.Y. 2010-11

and submitted that the claim of the assessee was allowed in the

subsequent year. Thus, it is the case of the assessee that deduction

u/s.10A is allowable, in principle. The cut off date mentioned on the

certificate issued by STPI authorities is of no significance or relevance in

view of the above referred jugdments/decision.

proportionate deduction u/s.10A of the Act merely relying on the cut off

date appearing on the certificate issued by the STPI authorities. On

similar facts, the various judgments and the Tribunal in assessee’s own

case has decided the issue and held that the cut off date mentioned on

the certificates are of no relevance. Therefore, I am of the view that the

claim made by the assessee u/s.10A of the Act has to be allowed for the

entire year. In my view, the settled legal proposition delivered in the

context of claim of deduction u/s.35(2AB) of the Act holds good for the

purpose of claim of deduction u/s.10A of the Act as well. As such, the

Tribunal in assessee’s own case in ITA No.185/PN/2014, dated

30-12-2015 for the A.Y. 2010-11, has already held that, in principle,

the assessee is entitled to claim of deduction u/s.10A of the Act.

Accordingly, the grounds raised by the assessee are allowed.

Order pronounced on this 26th day of March, 2018.

Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 26th March, 2018. Satish

आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-1, Pune 3. आयकर आयु� / The CIT-1, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार

स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune