2014 (2) TMI 884 - AT - Income Tax

Claim of deduction u/s 10B - Alternative deduction u/s 10A - Assessee is running the business of software development and export is a 100% Exported Oriented Unit Held that - The assessee has not been approved as a 100% EOU by the Board appointed in this behalf by the Central Government in exercise of powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 and rules made there under - The assessee having not fulfilled this pre-condition as provided under explanation-2 (iv) of section 10B, it is not entitled to avail deduction u/s 10B of the Act. Deduction u/s 10A of the Act Held that - For the entitlement for deduction u/s 10A as such no approval of the Board is necessary - The only requirement for claiming exemption u/s 10A of the Act is the assessee is required to submit a certificate from the auditor in form 56F as per section 10A(5) of the IT Act read with Rule 16D of Income-tax Rules - the contention of the assessee is accepted that there was no occasion on his part to submit the auditor s certificate in Form 56F before the CIT (A) - Form 56F submitted is allowed as an additional evidence the matter remitted back to the AO for fresh adjudication Decided in favour of Revenue.

Summary

Issues:
Appeal against CIT (A)'s order allowing deduction u/s 10B of the Act.

Analysis:
The appeal pertains to the allowance of deduction u/s 10B of the Act by the CIT (A) for the assessment year 2009-10. The Revenue's grievance was that the assessee's claim of deduction was not valid as the assessee had not been approved as a 100% Export Oriented Unit (EOU) by the Board appointed by the Central Government as per the Industries (Development and Regulation) Act, 1951. The Assessing Officer disallowed the deduction claimed u/s 10A of the Act, citing non-fulfillment of requirements. However, the CIT (A) allowed the deduction u/s 10B based on decisions of the Income-tax Appellate Tribunal, Delhi Bench, and Hyderabad Bench, holding that registration with Software Technology Park of India (STPI) entitles a 100% EOU for deduction u/s 10B.

The Department contended that registration with STPI cannot substitute the approval by the Board as required under the Act for availing deduction u/s 10B. The assessee, on the other hand, argued that it was eligible for deduction u/s 10A and submitted a certificate from the Auditor in Form 56F as additional evidence. The Tribunal noted that the assessee had not been approved as a 100% EOU by the Board, a prerequisite for claiming deduction u/s 10B. However, for deduction u/s 10A, only submission of the auditor's certificate in Form 56F was required, which the assessee had not done earlier due to the CIT (A)'s inclination towards allowing deduction u/s 10B. The matter was remitted back to the Assessing Officer for a decision on the deduction u/s 10A after considering the additional evidence.

The Tribunal dismissed the assessee's cross objection related to non-consideration of the deduction u/s 10A claim by the CIT (A) based on a previous decision. The Department's appeal was treated as allowed for statistical purposes, and the assessee's cross objection was dismissed as redundant. The judgment was pronounced on 04-01-2013.