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2021 (2) TMI 1265 - AT - Income TaxDeduction u/s 10B - scope of approval by the STPI - HELD THAT - The principle accepted by the revenue for 10 earlier years and 4 subsequent years to the assessment years 2007-08 and 2008-09 was that the entire expenditure is to be allowed against business income and no expenditure is to be allocated to capital gains. Once this principle was accepted and consistency applied and followed, the revenue was bound by it. Unless of course it wanted to change the practice without any change in law or change in facts therein, the basis for the change in practice should have been mentioned either in the assessment order or atleast pointed out to the Tribunal when it passed the impugned order. None of this has happened - all have proceeded on the basis that there is no change in the principle which has been consistency applied for the earlier assessment years and also for the subsequent assessment years. Therefore, the view of the Tribunal in allowing the respondent's appeal on the principle of consistency cannot in the present facts be faulted with, as it is in accord with the case BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA 2006 (3) TMI 1 - SUPREME COURT The assessee is eligible to claim deduction under section 10B of the Act by virtue of being 100 % EOU approved by the STPI. Alternate claim u/s 10A - The assessee contented that condition prescribed under section 10A and 10B of the Act are more or less same and it fulfills all the conditions specified under section 10A of the Act. Thus it should be allowed exemption under section 10A of the Act if not allowed under section 10B of the Act. As such we note that the AO was allowed opportunity vide remand report to verify the fulfillment of the condition specified u/s 10A of the Act. But he restrained himself from making any comment as the same was already verified by him during assessment proceeding. From, this we safely assume that the all condition has been fully met by the assessee. Now the question arise that can the assessee be allowed exemption under section 10A alternatively where it has made claim under other section inadvertently? In our considered view the answer stand positive in view of the fact that the matter has come to various judicial authority wherein it has held that a valid claim of the assessee cannot be deprived merely because, the assessee has not made such claim in return of income filed under section 139. Accordingly we direct the AO to delete the addition made by him. Hence ground of appeal of the Revenue is dismissed. Validity of reopening of assessment u/s 147 - HELD THAT - The Provisions of Section 147 of the Act, authorizes the AO, if he has reasons to believe that the income has escaped assessment, to assess or reassess the income escaped from assessment. Now to form the reasons to believe for the escapement of income, AO first, should be in possession of some /fresh new material which was previously not available with him viz a viz it impacts the aspect, that there is some undisclosed income. We note that all the materials used by the AO in the initiation of reassessment proceedings were available before him during the assessment proceedings and after application of his mind the AO framed the assessment under section 143(3) of the Act vide order dated 01-12-2011. Therefore, the same cannot be used for initiating the proceedings under Section 147 - As such there has to be some new/fresh information on record, which requires a fresh examination. When there is no change in the facts and circumstances of case, the power to re-open u/s. 147/148 cannot be exercised, since at the time of initial assessment a view was formed on the available facts, and the same cannot be re-viewed again. Our case was duly assessed for A.Y. 2009-10 by the ld.A.O and assessment order u/s.143(3) of the Act was passed dated 01.12.2011. Deduction under section 10B was allowed in the original assessment after enquiry. Now the assessee has been served with notice u/s.147 of the Act stating that the deduction u/s 10B was not allowable. The reassessment proceedings initiated on this ground are not valid - Thus, the action u/s.147 of the Act for A.Y. 2009-10 is not legal. - Decided in favour of assessee.
Issues Involved:
1. Deletion of disallowance of exemption under section 10B of the Income Tax Act. 2. Validity of reassessment proceedings under section 147 of the Income Tax Act. Detailed Analysis: Issue 1: Deletion of disallowance of exemption under section 10B of the Income Tax Act The Revenue appealed against the deletion of the disallowance of exemption under section 10B amounting to ?39,20,823/- by the CIT(A). The Assessing Officer (AO) had rejected the assessee's claim for exemption under section 10B on the grounds that the assessee did not have the necessary approval from the Board as defined under section 14 of the Industries Development & Regulation Act or from the Development Commissioner under the Ministry of Commerce and Industry. The CIT(A) allowed the assessee's appeal, noting that the assessee had been claiming and receiving this exemption since the Assessment Year (AY) 2000-01, and the AO had allowed it in previous years. The CIT(A) held that the assessee fulfilled all conditions under sections 10A and 10B and that the AO had not addressed the alternative claim under section 10A. The CIT(A) referenced the Ahmedabad ITAT decision in the case of Quality BPO Services Pvt. Ltd., which held that approval from the Software Technology Parks of India (STPI) is sufficient for claiming exemption under section 10B. The Tribunal upheld the CIT(A)'s decision, emphasizing the principle of consistency. It noted that the AO had allowed the exemption in previous years and there was no change in facts or law to justify a different decision. The Tribunal also referenced judicial precedents supporting the principle of consistency, including the Bombay High Court's decision in PCIT vs. Quest Investment Advisors (P) Ltd. Additionally, the Tribunal acknowledged the alternative claim under section 10A, noting that the conditions under sections 10A and 10B are similar, and the AO had not disputed the fulfillment of conditions under section 10A. The Tribunal cited the case of Tarun V Shah, which supports allowing a valid claim even if initially claimed under a different section. Issue 2: Validity of reassessment proceedings under section 147 of the Income Tax Act The assessee challenged the reassessment proceedings initiated under section 147, arguing that the AO had already examined and allowed the exemption under section 10B during the original assessment under section 143(3). The reassessment was based on the same facts, which constitutes a change of opinion, not permissible under the law. The CIT(A) upheld the reassessment, referencing cases like Anusandhan Investments Ltd. vs. DOT and P.V.S. Beedies (P.) Ltd. vs. CIT, which allowed reassessment based on fresh material or internal audit reports. The CIT(A) argued that the AO had not formed an opinion on the allowability of deduction under section 10A during the original assessment. The Tribunal, however, found that the reassessment was not based on any new tangible material but on the same records available during the original assessment. It emphasized that for reassessment under section 147, there must be new information impacting the assessment, which was not the case here. The Tribunal also noted that the reassessment was initiated beyond four years from the end of the relevant AY without any finding that the assessee failed to disclose material facts, which is mandatory under the proviso to section 147. Consequently, the Tribunal allowed the assessee's challenge under rule 27 of ITAT rules, holding that the reassessment proceedings were invalid. Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decision to delete the disallowance under section 10B. It also allowed the assessee's challenge to the validity of the reassessment proceedings under section 147.
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