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2015 (9) TMI 287 - HC - Income TaxExamine the cross objections filed by the Assessee declined by ITAT - ITAT restored the order of the AO disallowing the claim made by the Assessee under Section 10B - ITAT declined to permit the Assessee to maintain the cross objections on the ground that since the Assessee had not urged the plea of being entitled to the benefit under Section 10 A before the CIT (A), it could not be permitted to urge such plea for the first time before the ITAT - Held that - The Court is of the view that ITAT was in error in declining to examine the cross objections filed by the Appellant Assessee. The powers of the ITAT while hearing appeals and cross objections have been explained by this Court in CIT v. Edward Keventer (Successors) Pvt. Ltd. (1979 (11) TMI 73 - DELHI High Court) wherein held he Tribunal, in deciding an appeal, is not confined to the grounds set forth in the memorandum of appeal or those which the appellant may urge with its leave. It can decide the appeal on any ground provided only that the affected party has an opportunity of being heard on that ground. Also see NTPC v. CIT (1996 (12) TMI 7 - SUPREME Court) as held reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. Consequently, the question framed is answered in the negative, i.e. in favour of the Assessee and against the Revenue. The impugned order dated 10th December 2014 of the ITAT to the extent that it declined to examine the Appellant Assessee s cross objections on merits is hereby set aside and restored to the file of the ITAT for consideration on merits - Decided in favour of assessee
Issues:
- Examination of Assessee's cross objections by ITAT. - Claim of deduction under Section 10B of the Act. - Certification for export-oriented unit (EOU) status. - Consideration of benefit under Section 10A. - Powers of ITAT in hearing appeals and cross objections. Examination of Assessee's Cross Objections: The High Court examined the case involving four appeals by the Appellant Assessee against the ITAT's order that declined to examine the Assessee's Cross Objections for the Assessment Years 2009-10 and 2008-09. The Court framed the question of whether the ITAT was correct in law in not examining the Assessee's cross objections. The Assessee, engaged in software development, had filed its return of income claiming deduction under Section 10B of the Act for profits from software export. The AO disallowed the claim, stating that certification as an EOU should be by the statutory Board. The Assessee's appeals were allowed by the CIT (A) based on a decision in a similar case. The Revenue filed appeals, leading to the ITAT's decision to disallow the claim under Section 10B. Claim of Deduction under Section 10B of the Act: The Assessee's claim for deduction under Section 10B was disallowed by the AO, contending that certification as an EOU should be by the statutory Board, not the Joint Director. The ITAT relied on a decision by the High Court that certification by the Board was mandatory for Section 10B benefits. The Assessee then filed cross objections before the ITAT, which were declined based on the Assessee not raising the plea of entitlement under Section 10A before the CIT (A). The High Court, citing relevant legal principles, held that the ITAT erred in not examining the cross objections filed by the Assessee. Certification for Export-Oriented Unit (EOU) Status: The certification of the Assessee as an EOU by the Joint Director was a key point in the case. The AO disallowed the claim under Section 10B, stating that certification should have been by the statutory Board. This issue led to a series of appeals and decisions, ultimately resulting in the ITAT's decision to disallow the claim, emphasizing the requirement of certification by the Board for availing Section 10B benefits. Consideration of Benefit under Section 10A: The Assessee sought clarification on availing the benefit under Section 10A after being denied Section 10B benefits. The High Court's order directed the ITAT to consider whether the Assessee was entitled to the benefit of Section 10A, even though it was not raised before the CIT (A). The Court emphasized that the ITAT should have examined the Assessee's cross objections, especially in light of the order passed in similar cases. Powers of ITAT in Hearing Appeals and Cross Objections: The High Court clarified the powers of the ITAT in hearing appeals and cross objections, citing relevant legal precedents. It emphasized that the ITAT should have considered the Assessee's cross objections, especially given the circumstances and the order passed by the Court in similar cases. The Court ruled in favor of the Assessee, setting aside the ITAT's decision and restoring the cross objections for consideration on merits.
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