2015 (12) TMI 1792 - AT - Income Tax

Reopening of assessment u/s 147 - Disallowance of deduction u/s 10A - assessee s business of medical consulting services to pharmaceutical companies does not come under the services eligible for deduction u/s 10A/10B - HELD THAT - Assessee-company produced the work orders from New Zealand and Switzerland companies who have entered into agreements on certain terms and conditions in compliance of laws of both the countries and also furnished the invoices made in foreign currency in respect of work orders for specified period. AO, for assessment year 2011-12 has recorded the statement of the Director and acquainted with working procedure. Even after recording the statement, the Assessing Officer applies his own working system and overlooked evidential material produced in the assessment proceedings and judicial decisions of the Tribunal in the case of Accurum India P Ltd (2009 (11) TMI 550 - ITAT MADRAS-A). CIT(A) has examined the quality of evidence available on record vis- -vis the explanations made by the assessee, and therefore, we do not see any reason to interfere with the order of the CIT(A). Accordingly, we uphold the CIT(A) s order on this issue and dismiss the grounds of appeal raised by the Revenue.

Summary

Issues:
Disallowance of deduction u/s 10A of the Income-tax Act.

Analysis:
The case involved appeals by the Revenue against the Commissioner of Income-tax (Appeals)-V, Chennai's order for assessment years 2009-10, 2010-11, and 2011-12. The main issue was the disallowance of deduction u/s 10A of the Act. The appeals were heard together due to a common issue. The Revenue sought condonation for a one-day delay in filing the appeals, which was granted. The facts of the case revolved around an assessee-company registered with STPI for software development services. The Assessing Officer reopened the assessment, questioning the eligibility of the company's services for deduction u/s 10A. The company's nature of business involved processing medical information for foreign clients, which was crucial for the case.

In the assessment proceedings, the company provided various documents and explanations to support its claim for deduction u/s 10A. The Assessing Officer, however, rejected the claim based on a CBDT Circular and his interpretation of the company's operations. The CIT(A) examined the technical aspects and legal precedents and concluded in favor of the assessee, directing the deletion of the addition. The Revenue, aggrieved by the CIT(A)'s order, appealed to the Tribunal, arguing that the company's activities did not align with the services specified in the CBDT Circular.

After considering the submissions, evidence, and legal decisions, the Tribunal upheld the CIT(A)'s order. The Tribunal emphasized that the company's data processing services qualified for deduction u/s 10A, citing relevant legal precedents and the nature of the company's operations. The Tribunal found no reason to interfere with the CIT(A)'s decision and dismissed the Revenue's appeals. The judgment was pronounced on December 30, 2015, in Chennai.

This detailed analysis highlights the key legal and factual aspects of the judgment, focusing on the disallowance of deduction u/s 10A of the Income-tax Act and the subsequent proceedings before the CIT(A) and the Tribunal.