2016 (4) TMI 818 - AT - Income Tax

Disallowance of deduction under sec. 10B - Held that - Departmental Representative could not point out any specific mistake in the order of the Commissioner of Income Tax (Appeals). Further, no material was brought on record by the Revenue to controvert the finding of the Commissioner of Income Tax (Appeals) that deduction under sec. 10B was all along allowed to the assessee since Assessment Year 2006-07 in an assessment completed under sec. 143(3) of the Act. We are alive to the fact that in income tax assessment, principles of res-judicata are not applicable, but in the income tax proceedings consistency maintained on any issue, which has been decided and the decision should not be altered without there being change in the facts requiring it to do so. Hence, we find no infirmity in the order of the Commissioner of Income Tax (Appeals), which is confirmed and the ground of appeal of the Revenue is dismissed. - Decided in favour of assessee Whether the assessee did not fulfill the conditions laid down in the provisions of sec. 10B(2)(i) & 10B(3) of the Act? - Held that - Commissioner of Income Tax (Appeals) after considering the submissions of the assessee as well as remand report received from the Assessing Officer under sec. 250(4) of the Act wherein the Assessing Officer verified the date of receipts and opined that the sale proceeds of the computer software has been brought by the assessee within the extended period of 12 months by the Reserve Bank of India and hence, is includible in the deduction allowable under sec. 10B of the Act, allowed the appeal of the assessee. No error could be pointed out in the finding of the Commissioner of Income Tax (Appeals) by the Departmental Representative - Decided in favour of assessee

Summary

Issues:
1. Disallowance of deduction under sec. 10B of the Act due to lack of generic names of principal products.
2. Disallowance of deduction under sec. 10B of the Act for failure to bring sale proceeds of computer software within the specified time frame.

Issue 1: Disallowance of deduction under sec. 10B for lack of generic names:
The Revenue appealed against the deletion of disallowance of deduction under sec. 10B by the Commissioner of Income Tax (Appeals). The Revenue argued that each assessment year is distinct, and the principle of res-judicata does not apply. The Assessing Officer disallowed the deduction as the assessee failed to provide generic names of three principal products with item code numbers. However, the Commissioner of Income Tax (Appeals) allowed the appeal, stating that the appellant fulfilled all conditions for claiming the deduction since the first assessment year in 2006-07. The Commissioner held that the issue was consistent across assessment years, and no new material was presented to suggest a change in the appellant's activities. The ITAT upheld the Commissioner's decision, emphasizing the importance of maintaining consistency in decisions unless there are factual changes necessitating a different outcome.

Issue 2: Disallowance of deduction under sec. 10B for late receipt of sale proceeds:
The Revenue contested the deletion of disallowance of deduction under sec. 10B amounting to a specific sum due to the late receipt of sale proceeds of computer software. The Assessing Officer disallowed the deduction as the sale proceeds were not brought within the prescribed time frame. The assessee argued that the Reserve Bank of India extended the time limit to 12 months, and the sale proceeds were received within this period. The Commissioner of Income Tax (Appeals) considered the submissions and the Assessing Officer's report, which verified the timely receipt of sale proceeds. Consequently, the Commissioner allowed the deduction, finding no grounds for disallowance. The ITAT upheld this decision, noting that the sale proceeds were received within the extended period specified by the Reserve Bank of India, making them eligible for deduction under sec. 10B.

In both issues, the ITAT upheld the decisions of the Commissioner of Income Tax (Appeals), emphasizing the importance of consistency in tax assessments and the fulfillment of statutory conditions for claiming deductions under sec. 10B of the Income Tax Act.