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2011 (4) TMI 621 - AT - Income TaxDeduction u/s 10A - The assessee company is registered as a 100% Export Oriented Unit (EOU) for manufacture and export of computer software for export purposes - The assessee being eligible for 100% tax holiday u/s 10A of the Income Tax Act, 1961, has exercised this option not to claim this exemption for this year in accordance with provision of Section 10A(7)of the Act - It is thus clear that it cannot be said that the assessee had opted not to take the benefit of Section 10A of the Act - On the contrary, it was specifically mentioned that the assessee was eligible for 100% tax holidays period under Section 10A of the Act but in the year in question since there were losses, the assessee was not claiming the exemption in that particular year - Moreover, when the assessee has been given this benefit in some of the years of the same tax holiday period, there is no reason to deny the assessee benefit in these three assessment years - Thus, decided in favour of assessee.
Issues Involved:
1. Allowability of deduction under Section 10A of the Income Tax Act, 1961. 2. The jurisdiction and powers of the CIT(A) to direct the Assessing Officer to re-examine issues post the amendment effective from 1.6.2001. Issue-wise Detailed Analysis: 1. Allowability of Deduction under Section 10A: The primary issue revolves around the assessee's eligibility for deduction under Section 10A of the Income Tax Act, 1961, which pertains to tax exemptions for units operating within Software Technology Parks of India (STPI). The assessee, a company engaged in software development and export, had its units in Noida and Bangalore registered with STPI. The Assessing Officer (AO) denied the deduction under Section 10A, citing that the assessee had exercised an option in the Assessment Year (AY) 2000-01 under Section 10A(8) to not claim the exemption, which supposedly precluded the assessee from claiming the deduction in subsequent years. The CIT(A) overturned the AO's decision, referencing the Tribunal's earlier decision which clarified that the declaration under Section 10A(8) is applicable only for the specific year in which it is made. The Tribunal had previously ruled that the option exercised in AY 2000-01 did not affect the assessee's eligibility for subsequent years, provided all other requisites for Section 10A were met. This precedent was upheld by the Hon'ble Delhi High Court, which dismissed the revenue's appeal, affirming that the assessee was entitled to the deduction for the years in question since no declaration was made for those years. 2. Jurisdiction and Powers of the CIT(A): The second issue concerns the CIT(A)'s authority to direct the AO to re-examine issues post the amendment effective from 1.6.2001, which curtailed the CIT(A)'s powers to set aside issues decided in scrutiny assessments. The CIT(A) directed the AO to re-examine the deduction claim under Section 10A in light of the Tribunal's directions from earlier years. The revenue argued that this direction was beyond the CIT(A)'s powers post the amendment. The Tribunal, however, upheld the CIT(A)'s decision, stating that the issue was already covered by the Tribunal's earlier decision and subsequently affirmed by the Hon'ble Delhi High Court. The Tribunal directed the AO to examine the eligibility for Section 10A deduction for the relevant assessment year, ensuring compliance with all requisites of Section 10A, while noting that Section 80HHE was not applicable for the AY 2005-06. Conclusion: The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s order to re-examine the deduction claim under Section 10A, in accordance with the Tribunal's and High Court's earlier decisions. The Tribunal emphasized that the declaration under Section 10A(8) for AY 2000-01 did not preclude the assessee from claiming deductions in subsequent years, provided all other conditions were met. The decision was pronounced in the open court on 8.4.2011.
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