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2016 (5) TMI 1327 - AT - Income TaxDouble disallowance u/s 10A - additional evidence filled - Held that - All the documents are on the record of governmental authorities and are not new. These documents would enable the A.O. to take a just and correct decision on the claim of the assessee. These evidences go to the root of the matter. The assessee claims that the A.O. has erroneously made a double disallowance u/s 10A of the Act. This is ground no.4 of the assessee. It was mutually agreed that this ground against the alleged double disallowance should be set aside to the file of the A.O. for verification. As we are setting aside this claim for verification, we deem it fit and proper to direct the A.O. to consider all these evidences placed before us in the set aside proceedings. In any event we are of the considered opinion that the additional evidences filed by the company under Rule 29 of the ITAT Rules should be admitted in the interest of justice. These evidences go to the root of the matter and the assessee has demonstrated that it was because of not being properly guided by a Counsel that it did not file the documents earlier. In this case anyhow the issue of deduction u/s 10 A is being sent back to the A.O. for verification. Hence we are of the opinion that on these facts the A.O. has to consider the claim in all its aspects afresh, without being constrained by the order of the ITAT for the A.Y. 2002-03 Depreciation on the value of purchase of UPS, Printers, Batteries etc - Held that - The assessee has claimed depreciation at the rate of 60% on thevalue of purchase of UPS, Printers, Batteries etc. The A.O. allowed only 15% depreciation. The Ld.CIT(A) has not adjudicated the issue. As we set aside the matter to the file of A.O., with the direction that the Jurisdictional High Court judgement on the issue be considered and the matter be disposed of in accordance with law.
Issues Involved:
1. Eligibility of the assessee for deduction under section 10A of the Income Tax Act, 1961. 2. The applicability of section 10A(9) of the Income Tax Act, 1961. 3. Admission of additional evidence under Rule 29 of the Appellate Tribunal Rules, 1963. 4. Rate of depreciation on computers and related equipment. Detailed Analysis: 1. Eligibility for Deduction under Section 10A: The primary issue revolves around the assessee's eligibility to claim deduction under section 10A of the Income Tax Act for the Assessment Year (A.Y.) 2001-02. The assessee, a company involved in the development and sale of software products, claimed deduction under section 10A after initially claiming it under section 80HHE. The Assessing Officer (A.O.) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected the claim, which was upheld by the ITAT for A.Y. 2002-03. However, the assessee argued that even if the unit was converted from a domestic unit to an STPI unit, it would still be eligible for deduction under section 10A for the unexpired period of 10 years starting from A.Y. 1996-97, as per CBDT Circular No.1 of 2005. 2. Applicability of Section 10A(9): The A.O. denied the deduction under section 10A, citing section 10A(9), which restricts the deduction if there is a change in shareholding. However, this provision was omitted from the statute from A.Y. 2004-05. The Tribunal noted that the omission of a statutory provision should be treated as if it never existed, referencing the Karnataka High Court's decision in CIT vs. G.E. Thermometrics Ltd. and the Bombay High Court's decision in Zycas Infotech P. Ltd. Thus, section 10A(9) would not apply to the assessee for A.Y. 2001-02. 3. Admission of Additional Evidence: The assessee sought to admit additional evidence under Rule 29 of the ITAT Rules, arguing that crucial documents were not presented earlier due to improper guidance. The Tribunal admitted the additional evidence, emphasizing the necessity for a just and correct decision. The Tribunal directed the A.O. to consider these documents afresh, independent of the ITAT's decision for A.Y. 2002-03, in line with the principles laid down by the Delhi High Court in CIT vs. Text Hundred Industries Ltd. and CIT vs. Virgin Securities & Credits P. Ltd. 4. Rate of Depreciation: The assessee claimed a 60% depreciation rate on UPS, printers, batteries, etc., which the A.O. allowed only at 15%. The CIT(A) did not adjudicate this issue. The Tribunal directed the A.O. to reconsider the depreciation rate in light of the jurisdictional High Court's judgment. Conclusion: The Tribunal partly allowed the appeal for A.Y. 2001-02, granting the assessee eligibility for deduction under section 10A and rejecting the applicability of section 10A(9). For A.Y. 2007-08, the Tribunal allowed the appeal for statistical purposes, admitting additional evidence and setting aside the matter for fresh adjudication. The rate of depreciation issue was also remanded to the A.O. for reconsideration. The order was pronounced on 03rd May, 2016.
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