2021 (10) TMI 562 - AT - Income Tax

Deduction u/s 10B and 10A - admission of additional evidence - Whether CIT(A) erred in allowing the claim of exemption after admitting fresh evidence, which was admitted without granting the AO any opportunity to examine it? - DR submitted deduction claimed by the assessee in the original return of income was only u/s. 10B of the Act and the deduction u/s. 10A of the Act cannot be considered - CIT(A) has granted s. 10A of the Act by observing that the assessee has substantiated the statutory conditions prescribed u/s. 10A of the Act are fulfilled - HELD THAT - We find that when the assessee has not filed any details in respect of the claim of deduction u/s. 10A of the Act before the A.O and the necessary documents which are filed only before Ld. CIT(A), the Ld. CIT(A) ought to have been called the remand report and thereafter, the eligibility for the assessee u/s. 10A of the Act has to be considered. CIT(A) without calling remand report and without giving an opportunity to the A.O a claim which is substantiated first time before the Ld. CIT(A) considered and allowed. In our opinion, the order passed by the Ld. CIT(A) is not correct. Therefore, we set aside the order passed by the Ld. CIT(A) and remit the issue back to the A.O to consider the eligibility of the assessee for deduction u/s. 10A of the Act afresh, denovo in accordance with law. Hence, the appeal filed by the Revenue is allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeals.
2. Eligibility for deduction under Section 10B of the Income Tax Act.
3. Eligibility for deduction under Section 10A of the Income Tax Act.
4. Procedural correctness of the Commissioner of Income Tax (Appeals) (CIT(A)) in allowing the deduction under Section 10A.

Issue-wise Detailed Analysis:

1. Condonation of Delay:
The Revenue filed appeals with a delay of 155 days for Assessment Year (AY) 2009-10 and 147 days for AY 2010-11. The delay was attributed to a combined appeal being mistakenly filed for both years. The Tribunal found that the delay was due to sufficient cause and not intentional. Consequently, the delay was condoned, and the appeals were admitted for adjudication.

2. Eligibility for Deduction under Section 10B:
The assessee, engaged in insurance claim processing, initially claimed a deduction under Section 10B, which pertains to 100% Export Oriented Units (EOU). The Assessing Officer (AO) reopened the case under Section 147, noting that the assessee did not have the required approval from the Development Commissioner, Special Economic Zone. Consequently, the AO disallowed the deduction under Section 10B. The CIT(A) upheld this disallowance, noting that the approval was still pending, thus rejecting the main plea for deduction under Section 10B.

3. Eligibility for Deduction under Section 10A:
During the reassessment proceedings, the assessee alternatively claimed a deduction under Section 10A, which also provides benefits to EOUs. The AO initially rejected this alternative claim, citing it as an afterthought and due to the lack of relevant documents. However, the CIT(A) allowed the deduction under Section 10A, based on documents like STPI approval and statutory Form No. 56G, which were claimed to have been filed before the AO. The CIT(A) relied on a precedent set by the ITAT in the case of ACIT vs. Severn Glocon (India) Pvt. Ltd., which allowed for the examination of Section 10A eligibility if Section 10B was not applicable.

4. Procedural Correctness of CIT(A):
The Revenue argued that the CIT(A) allowed the deduction under Section 10A without calling for a remand report from the AO, thus not providing an opportunity for the AO to examine the new evidence. The Tribunal agreed with the Revenue, stating that the CIT(A) should have called for a remand report and given the AO an opportunity to examine the documents submitted for the first time at the appellate stage. Therefore, the Tribunal set aside the CIT(A)’s order and remitted the issue back to the AO to reconsider the eligibility for deduction under Section 10A afresh and in accordance with the law.

Conclusion:
Both appeals filed by the Revenue were allowed for statistical purposes. The Tribunal directed the AO to re-examine the eligibility for deduction under Section 10A, considering all relevant documents and in accordance with the law. The decision emphasized the importance of procedural correctness and the necessity of providing the AO an opportunity to examine new evidence submitted at the appellate stage.