2015 (10) TMI 795 - AT - Income Tax

Eligibility of deduction u/s.10A - Held that - From perusal of the orders of the authorities below, we find that it is not the delay in filing of the return alone which has made the assessee ineligible to claim deduction u/s.10A. The assessee has not been able to comply with other conditions as laid down in the section to be eligible to claim deduction. The assessee was not able to furnish a copy of special audit report in the prescribed form; No evidence was brought to show that the export proceeds were received in India in convertible foreign exchange within the specified time, no evidence was brought on record to show that assessee was rendering services from STPI unit. Although the assessee has submitted before the CIT(Appeals) that Form No.56F was filed along with the manual return of income, however, the CIT(Appeals) has cast serious aspersions on the veracity of Audit Report filed along the alleged manual return. There are conditions in the date of receiving payments and date of signing of the report. Since the assessee has failed to comply with the provisions of section, we are of the considered opinion that the assessee is not eligible for claiming deduction u/s.10A of the Act. Accordingly, this appeal of the assessee is dismissed.

Summary

Issues:
1. Eligibility of the assessee to claim deduction u/s.10A for AY 2006-07.
2. Disallowance of channel distribution expenses for AY 2006-07.
3. Appeal against ex-parte order of CIT(Appeals) for AYs 2007-08 & 2008-09.

Analysis:

Issue 1:
The assessee contested the disallowance of deduction u/s.10A for AY 2006-07. The Assessing Officer found the assessee ineligible due to various reasons, including non-filing of special audit report, failure to show receipt of export proceeds in foreign exchange, lack of STPI registration certificate, and delay in filing the return. The CIT(Appeals) upheld the decision. The Tribunal noted discrepancies in the filing of manual return and e-return by the assessee. Additionally, the assessee failed to provide necessary evidence and comply with statutory conditions for claiming the deduction. Consequently, the Tribunal dismissed the appeal, ruling the assessee ineligible for deduction u/s.10A.

Issue 2:
Regarding the disallowance of channel distribution expenses for AY 2006-07, the Assessing Officer found that the assessee did not deduct tax at source on these expenses and failed to furnish details of the parties involved. Consequently, the expenses were disallowed under section 40a(ia) of the Act. The Tribunal considered the submissions but did not address this issue specifically in the judgment.

Issue 3:
For AYs 2007-08 & 2008-09, the assessee appealed against the ex-parte order of the CIT(Appeals), which dismissed the appeals for non-prosecution. The Tribunal remitted both files back to the CIT(Appeals) for a decision on merits, emphasizing a fair opportunity of hearing for the assessee. The appeals for these years were allowed for statistical purposes, ensuring due process and justice in the proceedings.

In conclusion, the Tribunal dismissed the appeal for AY 2006-07 due to the assessee's failure to meet statutory requirements for deduction u/s.10A. The issue of disallowed channel distribution expenses was not specifically addressed. For AYs 2007-08 & 2008-09, the Tribunal directed a reevaluation by the CIT(Appeals to ensure proper consideration of the assessee's appeals.