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2016 (9) TMI 387 - AT - Income TaxEligibility to claim deduction under section 10B - whether the assessee is eligible to claim deduction under section 10B of the Act for the assessment year 2011-12 since the assessee got the approval from STPL for setting up of 100% EOU on 07.10.2010 and signed the agreement with STPL on 18.11.2010? - Held that - Consedring the case of ITO v. Cat Labs Pvt. Ltd 2014 (2) TMI 1247 - ITAT PUNE wherein, it is apparent that the overwhelming view of various Benches of the Tribunals have been discussed and arrived at a conclusion to treat the approval granted by the STPI to be enough for the fulfillment of condition prescribed in section 10B of the Act for approval of the EOU unit under section 14 of Industries (Development & Regulation) Act, 1951. Therefore, we are of the opinion that the benefit cannot be denied to the assessee despite the fact that the section 10B of the Act specifically talks of only registration under section 14 of Industries (Development & Regulation) Act, 1951. Thus we set aside the order passed by the ld. PCIT and hold that the Assessing Officer has rightly allowed deduction under section 10B of the Act. - Decided in favour of assessee.
Issues Involved:
1. Eligibility of the assessee to claim deduction under section 10B of the Income Tax Act, 1961. 2. Validity of the approval from STPI for setting up a 100% Export Oriented Unit (EOU). 3. Assessment order being erroneous and prejudicial to the interest of Revenue. Detailed Analysis: Issue 1: Eligibility of the Assessee to Claim Deduction under Section 10B of the Income Tax Act, 1961 The primary issue for adjudication was whether the assessee was eligible to claim deduction under section 10B of the Act for the assessment year 2011-12. The assessee had received approval from the Software Technology Parks of India (STPI) for setting up a 100% Export Oriented Unit (EOU) on 07.10.2010 and signed the agreement with STPI on 18.11.2010. The Principal Commissioner of Income Tax (PCIT) contended that the assessee was not eligible for the deduction for services rendered before November 2010, as the approval and agreement were finalized only later. However, the Tribunal, referencing the Pune Benches of the Tribunal in the case of ITO v. Cat Labs Pvt. Ltd., concluded that the approval granted by the STPI was sufficient for the fulfillment of conditions prescribed in section 10B. Hence, the assessee was deemed eligible for the deduction under section 10B. Issue 2: Validity of the Approval from STPI for Setting up a 100% Export Oriented Unit (EOU) The PCIT argued that the assessee did not receive approval from the Board appointed by the Central Government as required under section 14 of the Industries (Development & Regulation) Act, 1951, and hence could not be defined as a 100% EOU eligible for exemption under section 10B. The Tribunal, however, referenced various decisions, including the Pune Benches of the Tribunal and CBDT Instruction No. 1/2006, which clarified that the approval from STPI should be considered sufficient for the purpose of section 10B. Therefore, the Tribunal concluded that the approval from STPI was valid and the assessee’s claim for deduction under section 10B could not be denied on this ground. Issue 3: Assessment Order Being Erroneous and Prejudicial to the Interest of Revenue The PCIT had issued a notice under section 263 of the Act, stating that the assessment order was erroneous and prejudicial to the interest of Revenue because the deduction under section 10B was wrongly allowed. The Tribunal, after considering the submissions and relevant case laws, held that the Assessing Officer had rightly allowed the deduction under section 10B. Consequently, the order passed by the PCIT was set aside. Conclusion: The Tribunal set aside the order passed by the PCIT and held that the Assessing Officer had rightly allowed the deduction under section 10B of the Act. The alternative plea raised by the assessee for allowing the claim of deduction under section 10A of the Act was deemed infructuous and did not warrant adjudication. The appeal filed by the assessee was partly allowed. Order Pronounced: The order was pronounced on the 27th July, 2016 at Chennai.
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