SENSIPLE SOFTWARE SOLUTIONS PRIVATE LIMITED,CHENNAI vs. DCIT, CHENNAI

आदेश /O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

DRP/CHE/35/2014-15, dated 19.12.2014 relying on the Delhi High Court held that approval granted to the 100% EOU set up under Software Technology Park Scheme cannot be deemed to be an approval u/s. 10B. With regard to the alternate plea that if assessee is not eligible for deduction u/s. 10B, then a deduction u/s. 10A may be allowed as it fulfilled all the requirements of the section, the DRP held that as per provisions of section 10A, only those industrial undertakings which are established in an SEZ on or after 01.04.2001 are eligible for deduction. In this case, the assessee’s undertaking was registered under STPI and not under SEZ. Accordingly, it confirmed the stand taken by the AO.

:-3-: I.T.A. N0. 600/Mds/2015 Aggrieved, the assessee filed this appeal. The AR submitted that in all the earlier years deduction u/s. 10B was allowed. When the Assessing Officer proposed not to allow the deduction u/s. 10B, then the assessee filed an audit report in Form No. 56F on 22.03.2012, within the due date, with a request that return already filed may be treated as revised one and sought our attention to the copy of the letter filed before the AO on 22.03.2012 which was placed in Page 146 to 150 of the paper book. The relevant submission is extracted as under:

“The assessee Company is a 100% Export Oriented Undertaking (EOU), engaged in the business of export of Computer Software. The assessee has been registered as a 100% EOU under the Software Technology Park Scheme (STPI Unit) of the Government of India, issued Green Card and, thus, entitled to all benefits under the scheme. The assessee is, therefore, eligible for exemption u/s. 10A/10B on its income earned from export of Computer Software. Being 100% EOU, engaged in the business of Export of Computer Software, the Audit Report in Form No. 56G was filed alongwith the Return of Income. If, for any reason, it is viewed that the assessee Company is entitled to claim exemption u/s. 10A of the Act, then the Audit Report shall be in Form No. 56F. We, therefore, as a precautionary and protective measure, enclose the Audit Report in Form No 56F and the “NIL” Income Returned will remain the same, since the amount of exemption u/s. 10A/10B will be the same. We request that the Return of Income already filed may please be treated as revised accordingly.” and submitted that eventhough the AO, in principle, accepted that it is eligible for deduction u/s. 10A, denied the claim on the ground that the revised return was not filed. The AO, having accepted the Audit Report in Form No. 56F for claim

:-4-: I.T.A. N0. 600/Mds/2015 u/s. 10A, should have given an opportunity to file the revised return, before rejecting the same. The DRP rejected the claim on the different ground that the deduction u/s. 10A would be applicable only if its Undertaking was established in SEZ, on or after 01.04.2001. Since the assessee was approved under STPI and not under SEZ, the DRP held that it was not entitled to the claim u/s. 10A. The AR further submitted that by making the claim u/s. 10A instead of u/s. 10B, the income returned or the amount of deduction u/s. 1A will not vary. Filing of revised return would arise only when the income returned originally is revised by enhancing or reducing the income in the original return. The AO’s reliance on the decision of the Supreme Court in Goetz India Limited Vs. CIT (284 ITR 323) will not apply since, there is no variation in the total income. The AO, in any case, failed to consider that while filing the Audit Report in Form No. 56F for claiming deduction u/s. 10A, it was specifically submitted that the return of income already filed be treated as revised accordingly. The AR prayed that the claim for deduction u/s. 10B or 10A may be allowed. The AR also relied on various decisions including the Jurisdictional High Court decision in the case of CIT-1 Vs M/s. Heartland Kg Information, TC(A) No. 625 of 2009 dated 19.08.2013. Per contra, the DR relied on the orders of the AO and the DRP.

Heartland Kg Information, supra is extracted as under:

“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 under section 10A in view of the fact that the assessee’s vender 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.”

3.1 The relevant portion of the Supreme Court’s decision in the case of Goetze (India) Ltd. Vs CIT, 284 ITR 323 SC is extracted as under:

“The decision in question is that the power of Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return, In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impings on the :-6-: I.T.A. N0. 600/Mds/2015 power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961.”

Order pronounced on Thursday, the 13th day of July, 2017 at Chennai.