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Before: Shri Sanjay Arora & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai, dated 08.03.2016 relevant to the assessment year 2011-12. The only effective ground raised by the assessee is that the ld. CIT(A) erred in confirming disallowance of deduction under section 10A of the Income Tax Act, 1961 [“Act” in short].
Brief facts of the case are that the assessee filed her return of income for the relevant assessment year on 30.09.2011 admitting an income of ₹.5,23,785/-. The return filed by the assessee was processed under section 143(1) of the Act on 08.11.2011. Subsequently, the case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued and served on the assessee on 04.08.2012. After considering the details furnished by the assessee, the assessment under section 143(3) of the Act was completed by assessing total income of the assessee at ₹.71,32,943/-.
The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee, the ld. CIT(A) has observed that in the assessee’s case, the STPI itself has submitted that approval expired on 22.11.2010 and no application for renewal/exit was made and moreover, no quarterly reports/Annual Performance Reports were filed within stipulated time. By agreeing the detailed reasoning given by the Assessing Officer as to how the assessee is not eligible for deduction under section 10A of the Act, the ld. CIT(A) confirmed the disallowance made under section 10A of the Act and dismissed the appeal of the assessee.
On being aggrieved, the assessee is in appeal before the Tribunal and the ld. Counsel for the assessee reiterated the submissions as made before the authorities below and prayed for allowance of exemption under section 10A of the Act. On the other hand, the ld. DR strongly supported the orders of authorities below.
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. As emanates from the assessment order, the assessee’s unit M/. Rithwik Softex is a 100% EOU registered under the Software Technology Park Scheme (STP). The assessee received gross receipts of ₹.1,77,85,480/- (realized value) from M/s. Sindia Soft of Singapore towards data conversion charges relevant for the assessment year 2011-12 and admitted net profit of ₹.78,52,690/- and claimed the entire amount as exempt under section 10A of the Act. The assessee was asked to file copy of the Annual Performance Report submitted to the STP. However, the assessee has not furnished the same. When the assessee claims exemption under section 10A of the Act, then the onus lies on the assessee to prove its claim. Further, the STP was requested to furnish copy of the Annual Performance Report of the assessee. However, the STP informed the Assessing Officer that the assessee has not filed the Annual Performance Report for the year 2010-11 (financial year) and moreover it was also intimated that the Letter of Permission (LOP) has expired on 22.11.2010 and the unit M/s. Rithwik Softex have not submitted any renewal or exit application. Since the assessee has not fulfilled the mandatory conditions insisted by the STPI in order to get the exemption under section 10A of the Act, the claim of exemption under section 10A of the Act at ₹.78,52,690/- was disallowed and added with the total income of the assessee.
In response to the letter issued dated 05.03.2014 under section 133(6) of the Act, the Software Technology Park of India, has clarified as under: “M/s. Rithwik Softex, the unit was approved as a 100% EOU under the STPI Scheme vide letter No. STPIC/GI396/2005-09/2035 dated 23.11.2005. The LOP has expired on 22.11.2010 and the unit has not submitted any renewal or exit application. M/s. Rithwik Softex have not submitted the annual report for the year 2010-11. It is seen from our records that the unit has submitted export declaration forms i.e., softex forms only for the years 06-07 and 07-08 and the same has been certified.”
In this case, the rejection of benefit under section 10A of the Act is not on the basis of procedural lapses, but, the assessee failed to fulfil the mandatory requirements insisted by the STPI in order to get the exemption under section 10A of the Act. Once, the STPI declares that the LOP has expired on 22.11.2010 and the unit has not submitted any renewal or exit application, the assessee’s unit M/s. Rithwik Softex is no more 100% EOU registered and approved by the STPI. Under the above facts and circumstances, we are of the considered opinion that the Assessing Officer rightly held that the three bills raised after 22.11.2010 for aggregate value of ₹.1,01,84,027/- i.e., 57% of invoice values after the expiry of the LOP and as such 57% of exemption claimed of the assessee under section 10A of the Act is disallowable and accordingly disallowed and added to the total income of the assessee, which was confirmed by the ld. CIT(A). Thus, we find no infirmity in the order of the ld. CIT(A) and accordingly, the ground raised by the assessee is dismissed.
In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 13th October, 2017 at Chennai.