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2021 (6) TMI 214 - AT - Income TaxDisallowance of deduction u/s.10B - assessee failed to adduce necessary evidence to the effect that the approval granted by the Development Commissioner of STPI was ratified by the board of approval for EOU scheme and since this is a crucial requirement envisaged under section 10 B of the Act, he, accordingly, disallowed the entire claim of deduction under section 10B - entitlement of the assessee to make a request to consider the case under section 10A of the Act instead of section 10B - HELD THAT - In view of the similarity of the facts and we find it just and proper to accept the contention of the assessee in the light of the additions referred to above and set aside the impugned order and remand the issue to the file of the learned Assessing Officer with a direction to the examine the claim of the assessee u/s 10A of the Act. We accordingly, set aside the impugned order and remand the issue to the file of the learned AO to comply with the above observations. We find it is not necessary to adjudicate the grievance of the assessee in respect of the requirements of section 10B (3) and also the invocation of section 10B (7) read with section 80IA . Assessee is free to raise all the contentions before the assessing officer and the AO, while considering the contentions of the assessee in the light of the above additions, is free to take a fresh view on this aspect Appeal of the assessee is allowed for statistical purpose.
Issues Involved:
1. Disallowance of deduction under section 10B of the Income Tax Act, 1961. 2. Alternative claim for deduction under section 10A of the Income Tax Act, 1961. 3. Compliance with approval requirements under section 10B. 4. Invocation of section 10B(7) read with section 80IA(10) of the Act. Detailed Analysis: 1. Disallowance of Deduction under Section 10B: The learned Assessing Officer (AO) disallowed the assessee's claim for deduction under section 10B of the Income Tax Act, 1961, on the grounds that the assessee failed to provide necessary evidence that the approval granted by the Development Commissioner of the Software Technology Park of India (STPI) was ratified by the Board of Approval for the EOU scheme, which is a crucial requirement under section 10B. Additionally, the AO noted that the assessee did not furnish documentary evidence for foreign inward remittance certificates, making the claim untenable and reducing the export turnover to ?4,39,59,107/-. 2. Alternative Claim for Deduction under Section 10A: The assessee, aggrieved by the disallowance, initially challenged the denial of the benefit under section 10B but later sought an alternative plea to allow deduction under section 10A, arguing that the provisions of section 10A are parimateria with section 10B concerning undertakings registered and approved by STPI. The Tribunal considered this alternative claim in light of the Delhi High Court's decision in the case of Regency Creations Ltd, which directed the Tribunal to consider claims under section 10A when eligibility under section 10B was not met due to approval criteria. 3. Compliance with Approval Requirements under Section 10B: The Tribunal acknowledged the Delhi High Court's ruling in Regency Creations Ltd, which held that approval from the Director of STPI needs ratification by the Board specified in Explanation 2(iv) to section 10B for it to be valid. The Tribunal noted that the assessee's case failed to meet this requirement, and thus, the grounds related to section 10B were decided against the assessee. 4. Invocation of Section 10B(7) Read with Section 80IA(10): The AO invoked section 10B(7) read with section 80IA(10) concerning transactions with a related party, M/s Avalon Information Systems Private Limited. However, since the Tribunal decided to remand the case to the AO for consideration under section 10A, it found it unnecessary to adjudicate on the requirements of section 10B(3) and the invocation of section 10B(7) read with section 80IA. Conclusion: The Tribunal set aside the impugned order and remanded the issue to the AO to examine the claim under section 10A, in line with the Delhi High Court's observations and decisions in similar cases. The AO was directed to consider the assessee's contentions afresh, and the appeal was allowed for statistical purposes. Order Pronouncement: The order was pronounced in the open court on 04/06/2021.
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