2010 (9) TMI 1093 - AT - Income Tax

Summary

Issues involved: The judgment involves the issue of eligibility for claiming deduction u/s 10B of the Income Tax Act based on approval by the Board appointed by the Central Government u/s 14 of the Industries (Development and Regularisation) Act, 1951.

Summary:

Issue 1: Eligibility for deduction u/s 10B

The Revenue appealed against the CIT(A)'s order pertaining to the assessment year 2006-07, arguing that the assessee's business was not approved by the Board appointed by the Central Government as required for claiming deduction u/s 10B. The Tribunal considered a similar issue in the assessee's previous case and noted that the approval by the Software Technology Park (STP) was equivalent to approval by the Board for the purpose of claiming exemption u/s 10B. The Tribunal emphasized that the provision of s.10B should be construed liberally to promote exports of computer software/IT enabled services. As the assessee had obtained approval from STP Hyderabad as a 100% Export Oriented Unit (EOU), the Tribunal held that the assessee was eligible for exemption u/s 10B. Consequently, the appeal of the Revenue was dismissed, and the issue was decided in favor of the assessee.

This judgment clarifies that approval by the Software Technology Park (STP) for a unit as a 100% Export Oriented Unit (EOU) is considered equivalent to approval by the Board appointed by the Central Government for the purpose of claiming deduction u/s 10B of the Income Tax Act. The Tribunal emphasized the need to interpret provisions like s.10B liberally to promote the intended objectives of encouraging exports of computer software/IT enabled services.