2016 (1) TMI 356 - AT - Income Tax

Disallowance of deduction u/s 10B - CIT(A) allowed the claim - Held that - Automatic route is available to the units which are having investment less than 100 millions as is the case of the assessee therefore the approval by the Director of STPI is sufficient to claim the deduction u/s 10B of the Act. Even the green card is issued by the designated officer on behalf of the Secretary Govt. Of India Ministry of Information Technology and Chairman Inter Ministerial Standing Committee. It is also noted that for A.Y. 2008-09 the claim of the assessee identically was allowed and the claimed deduction was granted u/s 10B of the Act. This factual matrix was not controverted by the Revenue. In view of this factual position unless and until contrary facts are brought to our notice the department is not expected to deny the claimed deduction. We further observe that in the absence of rectification from IMSC no green card can be issued by the designated officer. It is just like a single window system and to avoid constrains to the assessee and further to mitigate the hardship for the development of software such type of facilities are provided to entrepreneurs therefore we find no infirmity in the conclusion drawn in the impugned order. The order of the ld. First Appellate Authority is affirmed resulting into dismissal of appeal of the Revenue. - Decided against revenue

Summary

Issues:
- Disallowance of deduction u/s 10B of the Income Tax Act, 1961

Analysis:

1. Disallowed Deduction u/s 10B:
The Revenue challenged the impugned order of the ld. First Appellate Authority, Mumbai, regarding the disallowance of deduction u/s 10B of the Act. The Revenue contended that the assessee did not have the necessary approval from the prescribed authority as required by CBDT for claiming the deduction. The assessee, engaged in software development, argued that the approval of the unit registered in STP/ESTP was granted by the designated Officer from the Ministry of Communication & Technology, which was sufficient for claiming the deduction. The Assessing Officer disallowed the deduction, stating that the green card issued was merely a concession and not an approval required for u/s 10B. The First Appellate Authority granted the deduction to the assessee, leading to the Revenue's appeal before the Tribunal.

2. Tribunal's Analysis:
The Tribunal analyzed the facts, submissions, and evidence presented. The Tribunal noted that the assessee provided necessary details like STP registration, green card, and software export agreement with STPI to the Assessing Officer. Additional evidence in the form of Circulars and notifications was submitted before the First Appellate Authority. The Tribunal observed that the approval by the Director of STPI was sufficient for claiming the deduction u/s 10B, especially since the unit's investment was below the specified threshold. The Tribunal highlighted that for the previous assessment year, the deduction was allowed to the assessee without any dispute from the Revenue. Referring to a High Court decision, the Tribunal emphasized that unless there were contrary facts, the department could not deny the claimed deduction. The Tribunal upheld the First Appellate Authority's decision, dismissing the Revenue's appeal.

3. Cross Objection Dismissal:
The cross objection by the assessee was not pressed by their counsel during the proceedings, leading to its dismissal. Consequently, both the appeal of the Revenue and the cross objection of the assessee were dismissed by the Tribunal. The decision was pronounced in the open court in the presence of representatives from both sides on 19/10/2015.

This detailed analysis of the legal judgment highlights the key arguments, findings, and conclusions related to the disallowance of deduction u/s 10B of the Income Tax Act, 1961, providing a comprehensive overview of the Tribunal's decision.