CENOSPHERE INDIA PVT LTD.,CHENNAI vs. ACIT, CHENNAI

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ITA 1094/CHNY/2014Status: DisposedITAT Chennai30 September 2016AY 2006-075 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's submission that the Board constituted under the IDAR Act rectified the approval decision. Therefore, the matter was remitted back to the Assessing Officer for re-examination.

What were the facts?

The assessee claimed deduction under Section 10B of the Income-tax Act. The Assessing Officer disallowed the claim as the assessee converted an existing DTA unit into an EOU, and the undertaking was in existence prior to the claimed first year of operation. The CIT(Appeals) confirmed the disallowance.

What were the issues?

Whether the disallowance of Section 10B deduction was justified when the assessee claimed rectification of approval by the Board.

Which sections of the Income-tax Act were involved?

Section 10B

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE

For Respondent: Shri Shiva Srinivas, JCIT
Hearing: 02.08.2016Pronounced: 30.09.2016

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – II, Chennai, dated 31.01.2014 and pertains to assessment year 2006-07.

2.

The only issue arises for consideration is with regard to disallowance of claim made by the assessee under Section 10B of the Income-tax Act, 1961.

3.

Dr. Anita Sumanth, the Ld.counsel for the assessee, submitted that the Assessing Officer disallowed the claim of the assessee under Section 10B of the Act on the ground that the Export Oriented Unit was not approved by the Board appointed by Central Government. In fact, according to the Ld. counsel, the Assessing Officer as well as the CIT(Appeals) placed reliance on the judgment of Delhi High Court in CIT v. Regency Creations Ltd. (2012) 27 taxmann.com 322. According to the Ld. counsel, initially, the approval was granted by the Development Commissioner and subsequently it was rectified by the Board. Therefore, the Ld.counsel submitted that the matter may be remitted back to the file of the Assessing Officer to re-examine the matter in the light of the rectification by the Board.

4.

We have heard Shri Shiva Srinivas, the Ld. Departmental Representative also. As rightly submitted by the Ld.counsel for the assessee, the Assessing Officer disallowed the claim of the assessee under Section 10B of the Act. A bare reading of the assessment order shows that the Assessing Officer found that the assessee converted its existing DTA unit into Export Oriented Unit.

The Assessing Officer has also found that the industrial undertaking was in existence since 21.05.1998. However, in the audit report, the assessee indicated that the first year of operation is assessment year 2005-06. In view of this factual situation, the Assessing Officer disallowed the claim of the assessee.

5.

On appeal by the assessee, the CIT(Appeals) observed that there was no material to suggest that Inter-Ministerial Committee or other agency nominated to perform the duties of the Board constituted under Section 14 of the IDAR Act granted approval.

Therefore, by placing reliance on the judgment of Delhi High Court in Regency Creations Ltd. (supra), the CIT(Appeals) confirmed the order of the Assessing Officer.

6.

Now the Ld.counsel for the assessee claims that the Board constituted under IDAR Act rectified the decision of Development Commissioner, therefore, the matter needs to be reconsidered by the Assessing Officer. We find some force in the submission of the Ld.counsel for the assessee. When the assessee claims that the Board constituted under Section 14 of the IDAR Act rectified the decision of approval granted by the Development Commissioner, the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the authorities below are set aside and the issue deduction under Section 10B of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re- examine the issue afresh in the light of the material that may be filed by the assessee and thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee.

7.

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

Order pronounced on 30th September, 2016 at Chennai.

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