ITO, WD-2(3), KOLKATA, KOLKATA vs. M/S LAST PEAK DATA PVT. LTD., KOLKATA

1. This is an appeal by the revenue against the order dated 14.01.2016 of CIT(A)3, Kolkata relating to A.Y.2010-11.

The Assessee company was engaged in business of Data Processing, Software Development and business processing outsource. Assessee had unit at Salt Lake City, Kolkata that was registered with Software Technology Park (STPI), Kolkata as 100% Export Oriented Unit for computer software. Assessee was claiming exemption u/s.10B up to AY 2008-09. S.10B allowed deduction of profits and gains derived by hundred per cent export-oriented undertaking from export for articles or things or computer software for period of ten consecutive assessment years. While computing book profits u/s.115JB, Assessee reduced deduction claimed u/s. 10B.

In AY 2009-10, the Assessee claimed deduction u/s.10AA of the Act in respect of the profits of the STPI. The AO denied claim of Assessee regarding deduction u/s.10AA on several counts. The CIT(A) however reversed order of AO and the Tribunal upheld the order of CIT(A). It was thus held that the Assessee was STP unit M/s. Last Peak Data (P)Ltd. A.Y.2010-11 2 registered under STPI Scheme and was therefore an “Existing SEZ” and “Existing Unit” under SEZ Act. Therefore Assessee could claim benefits available to SEZ and that physical presence of “existing SEZ” or ‘Existing Unit’ in SEZ was not condition for allowing deduction u/s.10AA. It was also held that S.10AA was telescoped with earlier S. 10A, as that provision was excluded for application from AY 2006-07 for reason that S.10AA was made to continue to apply to remaining span of “left over” years of relief u/s.10A. Moreover, S. 4(1) of SEZ Act provide that existing SEZ unit should be deemed to have been notified and established in accordance with provisions of SEZ Act. Provisions of Special Economic Zones Act should apply to existing SEZ units. Apparently, it was undisputed position that the amalgamating company with the Assessee was enjoying STP unit status as it was in ITES and therefore there was no question of Assessee having been formed by splitting up or reconstruction of unit already in existence as Assessee was already existing unit. The Deduction u/s.10AA was claimed for period within 10 years contemplated by S. 10AA even after considering exemption already availed by Assessee. It was held that the amalgamating company with the Assessee had not availed S.10A deduction for period beyond 10 years before amalgamation with Assessee. Thus, very basis of application of S.10AA(4)(ii) & (iii) was held to be flawed. It was also held that non-furnishing of Form No.56F along with return of income was not mandatory. The Assessee was directed to file report in prescribed form for AO’s consideration. It was also held that Non-furnishing of Form No.3CEB report in respect of international Transaction which Assessee had with it’s AE in terms of S. 92, had nothing to do with allowing deduction u/s.10AA. It was also held that the AO, ought to have considered claim of Assessee for deduction u/s.10B, as made in original return of income. The AO had chosen to ignore same and sought to deny benefit of S.10AA alone which was made in the revised return of income. The Order of AO was silent on claim of Assessee u/s.10B. The Order of CIT(A) in so far as action in allowing deduction u/s.10AA was concerned, was upheld. M/s. Last Peak Data (P)Ltd. A.Y.2010-11 3

As far as computation of book profits u/s.115JB of the Act is concerned, it was held that the dispute between the revenue and Assessee was and was with regard to interpretation of provisions of S.115JB(6) in manner of computation of book profits. It was held that the method of computation of book profits was as provided by S.115JB (6) however laid down that income of SEZ should be excluded from profits as per profit and Loss account for purpose of computing “book-profits”. It was held that the revenue therefore erred in holding that Assessee was not unit in Special Economic Zone and therefore provisions of S.115JB (6) were not applicable. Hence, profits of S.10AA unit of Assessee should be excluded for purpose of computing book profits u/s.115JB from profit as per Profit and Loss account.

The decision of the Tribunal in Assessee’s case for AY 2009-10 is reported as ITO Vs. Last Peak Data (P) Ltd. In 155 ITD 1099 (Kolkata).

The AO followed the findings in AY 2009-10 and denied claim of the Assessee u/s.10AA of the Act for deduction and also refused to reduce the profits of Sec.10AA unit from the book profits u/s.115JB of the Act. The CIT(A) followed the decision of the Tribunal in AY 2009-10 and held in favour of the Assessee on both the issues.

Since the facts and circumstances and the basis of disallowance u/s.10AA of the Act and exclusion of profits of Sec.10AA unit for the purpose book profits u/s.115JB of the Act are identical, it was not disputed by the parties before us that the decision rendered by the Tribunal for AY 2009-10 will apply to AY 2010-11 also. Respectfully following the decisions of the Tribunal for A.Y.2009-10, we dismiss both the grounds raised

M/s. Last Peak Data (P)Ltd., D2, Rawdon Chambers, 11A Rawdon Street, Kolkata- 700017.