2017 (5) TMI 1308 - AT - Income Tax

Exemption u/s 10A - Held that - After perusing the Tribunal s finding in assessee s own case for the assessment year 2006-07, as aforesaid, we are of the considered opinion, that the issue in dispute is squarely covered by the aforesaid decision of the ITAT in assessee s own case, and therefore, respectfully following the precedent, as aforesaid, we find that Ld. CIT(A) has rightly allowed the exemption u/s. 10A of the Act and passed a well reasoned order on the issue in dispute, which does not need any interference on our part - Decided in favour of assessee.

Summary

Issues:
Cross Appeals challenging the order dated 28/03/2012 by the Commissioner of Income Tax (Appeals)-XXI, New Delhi relating to assessment year 2007-08.

Revenue's Grounds:
1. The CIT(A) erred in holding that the assessee company was entitled to exemption u/s 10A of the Income Tax Act.
2. The CIT(A) erred in not appreciating that the assessee company had not produced or manufactured computer software for invoking provisions of section 10A.
3. The CIT(A) erred in deleting the addition made for sales promotion without considering its merits.
4. The CIT(A) erred in deleting the disallowance of misc. advance written off without proper assessment.
5. The CIT(A) erred in deleting the addition made for not deducting tax at source.
6. The CIT(A) erred in deleting the addition on account of excess depreciation.

Assessee's Grounds:
1. The CIT(A) erred in confirming the disallowance of sales promotion, client petty expenses, and client meeting expenses.
2. The CIT(A) erred in confirming the disallowance of miscellaneous advances written off and sundry balances written off.
3. The CIT(A) erred in confirming the disallowance under Section 40(a)(ia) of the Act.
4. The CIT(A) erred in not allowing depreciation @60% applicable to "computers and computer software."

Detailed Analysis:
The case involved cross appeals challenging the CIT(A)'s order for AY 2007-08. The Revenue disputed the allowance of exemption u/s 10A and various additions made, while the Assessee challenged disallowances of expenses and depreciation.

The Revenue contended that the assessee did not manufacture software for claiming 10A exemption. The AO assessed income significantly higher than declared due to this. However, the CIT(A) allowed the exemption based on relevant notifications and evidence of services provided, similar to a previous ITAT decision.

The Assessee argued against disallowances of various expenses and depreciation. The CIT(A) partly allowed the appeal based on relevant provisions and evidence submitted during proceedings.

The Tribunal upheld the CIT(A)'s decision, citing a previous ITAT decision in the assessee's favor for AY 2006-07. The Tribunal found the CIT(A)'s reasoning sound and dismissed the Revenue's appeal, upholding the exemption u/s 10A. Consequently, the Assessee's appeal became infructuous and was dismissed.

In conclusion, both appeals by the Revenue and Assessee were dismissed, with the Tribunal upholding the CIT(A)'s order granting exemption u/s 10A and dismissing the Revenue's contentions based on precedents and evidence presented during the proceedings.