2013 (10) TMI 318 - HC - Income Tax

Exemption u/s 10A - Technical and infrastructure facilities - Held that - both the CIT(Appeals) and Tribunal have concurrently held in favour of the assessee-respondent, on the basis of cogent material and clinching evidences adduced before both these authorities and they have elaborately discussed the material evidence and satisfied themselves rightly and they have also recorded their sound reasonings for concluding as to why availability of the benefit to the assessee-respondent in terms of exemption under Section 10A of the Act was wrongly denied by the Assessing Officer. Predominantly, we find that on the basis of the factual matrix, both these authorities have held in favour of assessee. There is nothing contrary either in law or on facts emerge before us to lead us state that any of these findings are perverse and as such give rise to any substantial question of law - Decided against Revenue.

Summary

Issues:
Challenge to disallowance under Section 10A of the Income Tax Act for not meeting conditions; Applicability of Section 68 for treating income as unexplained cash credit.

Analysis:
The case involved a challenge to the disallowance under Section 10A of the Income Tax Act for the assessment year 2003-2004. The Assessing Officer disallowed the exemption claimed under Section 10A on the grounds of not satisfying the conditions laid under the Act. The assessee challenged this before CIT(Appeals), which upheld the claim. Subsequently, the Revenue challenged this before the ITAT, which also favored the assessee. The main question raised was whether the ITAT erred in deleting the disallowance and treating it as income under Section 68. The Tribunal and CIT(Appeals) both ruled in favor of the assessee, based on the evidence and material presented.

The Assessing Officer doubted the professional competence of the assessee in developing software and questioned the authenticity of the transactions. He rejected the claim under Section 10A, treating it as a bogus transaction and added the amount as unexplained cash credit under Section 68. However, the CIT(Appeals) noted the evidence provided, including bank certificates and agreements with STPI, and found no basis to consider the transactions as sham. The Assessing Officer's denial of Section 10A benefits was deemed unjustified.

The Tribunal concurred with the findings of CIT(Appeals) and noted that the assessee had exported the software, as evidenced by various documents. The Tribunal also highlighted that the revenue accepted the export in subsequent years, further supporting the assessee's claim. Both authorities extensively discussed the evidence and reasons for upholding the assessee's entitlement to the Section 10A exemption. The judgment concluded that there was no legal or factual basis to challenge the findings in favor of the assessee.

In summary, the tax appeal was dismissed as both the CIT(Appeals) and Tribunal had provided detailed and well-reasoned judgments in favor of the assessee, based on the evidence presented. The Assessing Officer's denial of the Section 10A benefit was found to be unjustified, and the transactions were deemed genuine, leading to the dismissal of the appeal.