2018 (3) TMI 1025 - AT - Income Tax

Validity of the reopening done u/s.147 - eligibility of the assessee for claiming deduction u/s.10A - Held that - The claim made by the assessee u/s.10A of the Act cannot be treated as an entirely new claim, since the basis of the claim was profits earned by it from its STPI unit. It might be true that profits earned from STPI was not eligible for deduction u/s.10B of the Act. However, admittedly, such profit was eligible for deduction u/s.10A of the Act. Just because the assessee mentioned a wrong Section, in my opinion, it could not be deprived of a legislate claim for which it was otherwise eligible. In my opinion lower authorities erred in not considering correctness of the claim of deduction made by the ld. Assessing Officer u/s. 10B of the Act Since the claim made by the assessee u/s.10A of the Act, cannot be considered as a fresh claim as the claim emanated from working of the same STPI unit on which it had earlier preferred a claim under section 10B of the Act. Thus, claim of the assessee cannot be considered as fresh one. The question whether assessee was eligible for claiming deduction u/s.10B of the Act ought have been considered on the merits of such claim - set aside the orders of the lower authorities and remit the issue regarding eligibility of the assessee for claiming deduction u/s.10A of the Act back to the file of the ld. Assessing Officer for consideration afresh - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Validity of reopening assessment under section 147 of the Income Tax Act.
2. Eligibility of the assessee for claiming deduction under section 10A of the Income Tax Act.

Analysis:

Issue 1: Validity of reopening assessment under section 147 of the Income Tax Act
The appellant did not press grounds challenging the validity of the reassessment under section 147. The authorized representative argued that the original return was processed under section 143(1) of the Act, and the notice for reopening was issued under section 148, mentioning the disallowance of deduction under section 10B. The appellant then filed a return claiming deduction under section 10A, which the Assessing Officer refused to consider. The authorized representative contended that the reassessment should be treated as the original assessment, and the claim under section 10A should be allowed. The Departmental Representative, however, relied on a judgment and previous tribunal decisions to support the denial of the claim. The Tribunal held that the appellant was entitled to claim deduction under section 10A in the reassessment proceeding, as the original return was not scrutinized, and the claim was based on profits from the same unit for which deduction was initially claimed under section 10B.

Issue 2: Eligibility of the assessee for claiming deduction under section 10A of the Income Tax Act
The Departmental Representative argued that the appellant could not claim a relief not originally sought in the return. However, the Tribunal disagreed, stating that the claim under section 10A was not entirely new but based on the same profits from the STPI unit. The Tribunal emphasized that the appellant should not be deprived of a legitimate claim due to a technical error in mentioning the section. Citing a jurisdictional High Court judgment, the Tribunal held that the appellant's eligibility for deduction under section 10B should have been considered on its merits. The Tribunal set aside the lower authorities' orders and remitted the issue of eligibility for claiming deduction under section 10A back to the Assessing Officer for fresh consideration.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, emphasizing the importance of considering the merits of the appellant's claim for deduction under section 10A and rectifying technical errors in the assessment process.