2018 (6) TMI 1761 - AT - Income Tax

Denial of the benefit of deduction u/s 10A - Whether approval of the Director, STPI, was sufficient and conclusive evidence to be eligible to claim deduction u/s 10A ? - HELD THAT - Since the facts forming the basis for the addition made for all these years are similar, in view of the decision of the Hon ble Apex Court in the case of Radha Saomi Satsang 1991 (11) TMI 2 - SUPREME COURT the Department has to take a consistent view, in the absence of any compelling reasons. On a reading of the record and the orders for all these years, we do not find any compelling reasons to depart from the view taken by the learned AO in the orders dated 29.3.2016 for the AYs 2003-04 to 2007-08.We, therefore, hold the issue in favour of the assessee and direct the learned AO to allow deduction u/s 10A .

Summary

Issues:
1. Disallowance of deduction u/s 10B of the Income-tax Act for the Asstt. Year 2009-10.
2. Disallowance of deduction u/s 10A of the Act.
3. Consideration of additional ground for the claim of deduction u/s 10A of the Act.

Analysis:

Issue 1: Disallowance of deduction u/s 10B of the Income-tax Act for the Asstt. Year 2009-10:
The appellant filed the return of income for the Asstt. Year 2009-10, declaring a taxable income. The Assessing Officer (AO) observed that the appellant had claimed deduction u/s 10B of the Act during the year under consideration. The AO noted that the claim of deduction u/s 10B for earlier years was rejected but was later allowed by the CIT(A) and upheld by ITAT and the High Court. However, based on Instruction No.1 dated 31.3.2006, the AO rejected the claim of the appellant u/s 10B. Additionally, the claim for deduction u/s 10A was also not accepted, resulting in the addition of a sum to the appellant's income. The CIT(A) dismissed the appeal challenging the disallowance of deduction u/s 10B, leading to the appellant's appeal before ITAT.

Issue 2: Disallowance of deduction u/s 10A of the Act:
The appellant sought permission to raise an additional ground for the claim of deduction u/s 10A, which was allowed. The High Court remanded the matter for assessment years 2003-04 to 2008-09 to ITAT. Subsequently, ITAT set aside the orders and directed the AO to reexamine the claim of deduction u/s 10A. The AO, after reexamination, allowed the claim of deduction u/s 10A for those years. The Tribunal considered the reasons for denial of the benefit of deduction u/s 10A by the AO and held that the matter required re-consideration, remanding it to the AO. The AO, in light of the Tribunal's order and relevant instructions, accepted the claim of deduction u/s 10A for all the years in question.

Issue 3: Consideration of additional ground for the claim of deduction u/s 10A of the Act:
The Tribunal, after analyzing the consistent facts across the years and the absence of compelling reasons to depart from the view taken by the AO, held in favor of the appellant. The Tribunal directed the AO to allow the deduction u/s 10A of the Act and allowed the additional ground raised by the appellant. Consequently, the appeal of the appellant was partly allowed.

In conclusion, the ITAT's judgment favored the appellant regarding the disallowance of deductions u/s 10B and u/s 10A, directing the AO to allow the deduction u/s 10A based on consistent views and lack of compelling reasons to depart from previous decisions.