2022 (4) TMI 1070 - AT - Income Tax

Claim of deduction u/s.10A 10B - denial of claim as assessee company had not obtained further approval and ratification from Board in order to avail the exemption of income u/s.10B - HELD THAT - As in the case of the assessee, the green card by the Software Technology Park of India has been granted on 26.08.2005 recognizing the unit of the assessee as 100% EOU for Computer software. Therefore, the approval is in accordance with the provisions of section 10B. Hence, the assessee cannot be denied deduction u/s.10B on the ground that assessee has not got approval from Board appointed by the Central Government u/s 14 of Industrial (Development and Regulation) Act, 1951. We noted from the arguments of assessee that the assessee is a 100% export oriented company engaged in manufacture and export of Computer software. The unit of the assessee company has been approved under the STP scheme of the Government of India as a 100% Export Oriented Unit (EOU) for Computer software. The assessee has also been allotted the green card by the Software Technology Park of India. We are of the view that the Ld.CIT(A) has rightly allowed the claim of deduction u/s.10B of the Act as the alleged approval by Board, the powers have been delegated in regard to approval of 100% EOU to the Development Commissioner and accordingly, the assessee being a 100% EOU is approved by the Development Commissioner. We confirm the order of the Ld.CIT(A) and this issue of Revenue is dismissed. Alternate claim allowed by the Ld.CIT(A) on the claim of deduction u/s.10A of the Act. Since, the claim of deduction u/s.10B of the Act is allowed, we need not to adjudicate the alternate claim as adjudicated by the Ld.CIT(A), because, that has become academic. Thus, these two appeals filed by the Revenue are dismissed.

Summary

Issues involved:
- Claim of deduction u/s.10A & 10B of the Income Tax Act for AYs 2010-11 & 2011-12.

Detailed Analysis:

1. Claim of Deduction u/s.10B of the Income Tax Act:
- The Revenue appealed the order of the Ld.CIT(A) allowing the claim of deduction u/s.10B. The Revenue argued that the approval granted by the Development Commissioner needed ratification by the Board of Approval for the Export Oriented Unit (EOU) Scheme. The Ld.Counsel for the assessee contended that Circular No.68 issued by the Export Promotion Council clarified that approvals by Development Commissioners were deemed valid. The Ld.Counsel also argued that Circulars by the Department were not binding on the assessee. The Tribunal noted that the assessee was a 100% export-oriented company with a green card from the Software Technology Park of India, meeting the conditions for deduction u/s.10B. The Tribunal upheld the Ld.CIT(A)'s decision, dismissing the Revenue's appeal.

2. Alternate Claim of Deduction u/s.10A:
- Since the claim of deduction u/s.10B was allowed, the Tribunal did not adjudicate the alternate claim of deduction u/s.10A. The Tribunal dismissed the Revenue's appeals as the issue became academic.

3. Cross-Objections by the Assessee:
- The Cross-Objections supported the Ld.CIT(A)'s order. As the Tribunal decided in favor of the assessee regarding the claim of deduction u/s.10B, the issue of re-opening was left open and dismissed as infructuous. The Ld.Counsel for the assessee did not press the grounds in the Cross-Objections, leading to their dismissal as infructuous.

In conclusion, the Tribunal dismissed the appeals filed by the Revenue and the Cross-Objections filed by the assessee, upholding the Ld.CIT(A)'s decision on the claim of deduction u/s.10B. The judgment was pronounced on April 18, 2022, in Chennai.