2015 (8) TMI 1428 - AT - Income Tax

Revision u/s 263 - Claim of exemption u/s 10A - Held that - Admittedly the facts remain that the AO has passed the original assessment order u/s 143(3) on 30.11.2012 allowing the claim of exemption u/s 10A of the Act. The circular of CBDT is of 16.7.2013. The decision of the jurisdiction High Court of Karnataka in the case of Yokogawa India Ltd. 2011 (8) TMI 845 - Karnataka High Court . Following the decision of the jurisdiction High Court cannot be held to make the order of assessment erroneous or prejudicial to the interest of the Revenue. Further on identical grounds the co-ordinate bench of this Tribunal in the case of M/s. Safran Aerospace India Pvt. Ltd. 2015 (1) TMI 773 - ITAT BANGALORE has also held the issue in favour of the Assessee upholding the principles applied by the AO in the course of the original assessment in his order u/s 143(3) dt. 30.11.2012. Therefore the order passed by the AO is by following one of the two possible views and same cannot be held to be erroneous which calls for invocation of the powers of the Principal Commissioner of Income Tax u/s 263 of the Act. In the circumstances the order passed u/s 263 by the Principal Commissioner of Income Tax stands set aside.

Summary

Issues:
Appeal against order of Principal Commissioner of Income Tax regarding exemption u/s 10A of the Act for A.Y 2010-11.

Analysis:
The appeal was filed by the Assessee against the order of the Principal Commissioner of Income Tax regarding the claim of exemption u/s 10A of the Act for the assessment year 2010-11. The Assessee, a domestic company engaged in data processing, had initially claimed the exemption u/s 10A, which was accepted by the Assessing Officer (AO) in the original assessment order u/s 143(3) dated 30.11.2012. However, the Principal Commissioner of Income Tax found the assessment order to be erroneous and prejudicial to the Revenue's interest as the CBDT circular of 16.7.2013 had not been followed by the AO. The issue revolved around the interpretation of provisions u/s 10A/10AA/10B/10BA of the Income-tax Act, with discrepancies in interpretation by different High Courts and the department's officers.

The Assessee argued that the AO had correctly applied the principles laid down by the jurisdiction High Court of Karnataka in a specific case, which allowed the Assessee's claim of exemption u/s 10A. The Assessee relied on a decision of the Panaji Bench of the Tribunal, which supported the Assessee's position based on the High Court's judgment. The Assessee contended that the order passed by the Principal Commissioner of Income Tax u/s 263 was erroneous as it contradicted the High Court's decision and the AO's application of the law.

In response, the ld. DR supported the order of the Principal Commissioner of Income Tax, emphasizing the need for uniform interpretation and application of the relevant provisions. However, the Tribunal noted that the AO had followed the decision of the jurisdiction High Court of Karnataka while passing the original assessment order, which was dated prior to the CBDT circular in question. The Tribunal highlighted the debatable nature of the issue and the existence of conflicting interpretations among different High Courts and departmental officers.

After considering the submissions, the Tribunal concluded that the AO's order was based on one of the two possible views, consistent with the jurisdiction High Court's decision, and therefore, could not be deemed erroneous. The Tribunal also referenced a previous case where a co-ordinate bench upheld the principles applied by the AO. Consequently, the Tribunal allowed the Assessee's appeal, setting aside the order passed by the Principal Commissioner of Income Tax u/s 263.

In summary, the Tribunal's decision favored the Assessee, emphasizing the importance of following the jurisdiction High Court's decision and recognizing the debatable nature of the issue surrounding the interpretation of provisions u/s 10A/10AA/10B/10BA of the Income-tax Act.