2010 (10) TMI 592 - HC - Income Tax

Deduction u/s 10A alongwith deduction u/s 80HHE - The only embargo was not to give relief under both the provisions - In case the exemption under section 10A cannot be allowed for the reasons of not satisfying the requisites, the claim of deduction under section 80HHE shall be allowed after providing opportunity to meet the requisite - Tribunal in the case of CIT v. Legato Systems India (P.) Ltd. 2004 -TMI - 65228 - ITAT DELHI - Held that the benefit on exemption under section 10A of the ITAT Act, 1961 would be admissible to the assessee in that particular year - - in the present case, the Income-tax Appellate Tribunal has observed that CIT(A) has recorded its findings holding that conditions prescribed under section 10A of the Act have been duly complied with by the assessee and therefore, there was no reason for denying the directions given in the said case - Appeal is dismissed

Summary

Issues:
Interpretation of provisions of section 80HHE and section 10A of the Income-tax Act for claiming benefits in a particular assessment year.

Analysis:
The assessee had previously claimed benefits under section 80HHE of the Income-tax Act but switched to claiming benefits under section 10A for the assessment year 2001-02. The Assessing Officer denied this switch, citing sub-section (5) of section 80HHE, which he interpreted as not allowing such a change and only permitting the continuation of benefits under section 80HHE. However, the CIT(A) disagreed, stating that the purpose of sub-section (5) was to prevent double benefits and did not prohibit an assessee from choosing relief under section 10A for a specific assessment year as long as benefits under both provisions were not claimed simultaneously.

The Department appealed to the Income-tax Appellate Tribunal, which upheld the CIT(A)'s decision. The Tribunal referred to a previous case, CIT v. Legato Systems India, where the provisions of section 80HHE and section 10A were extensively discussed, and the interpretation of sub-section (5) of section 80HHE was clarified. The Tribunal's decision was based on the finding that the assessee was not an old unit and, therefore, entitled to exemption under section 10A.

Subsequently, the Department appealed the Tribunal's decision in the Legato Systems India case, but the appeal was dismissed. The Tribunal's order was upheld, emphasizing that the Assessing Officer should determine whether the assessee met the eligibility conditions for claiming benefits under section 10A before granting such benefits. The Court concurred with the Tribunal's interpretation of the provisions, affirming that the assessee was eligible for exemption under section 10A for the relevant year, provided all conditions were met.

In the present case, the Tribunal found that the conditions under section 10A were met by the assessee, and there was no justification for denying the benefits. The Court, in line with its previous decision, concluded that no substantial question of law arose, and therefore, dismissed the appeal.