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2011 (1) TMI 1275 - AT - Income TaxExemption u/s 10B OR u/s 10A - wrong claim by the assessee - technical mistake - Assessee is engaged in the business of software development - contention of the assessee is that the assessee is 100% EOU entitled for exemption u/s 10A and wrongly claimed the deduction u/s 10B and it was a technical mistake in claiming deduction u/s 10B - requirements of provisions of Section 10A fulfilled or not - HELD THAT - We are agreeing with the department that the condition for allowance of deduction u/s 10A and 10B are stood on different footing. However, the department cannot thrust upon the assessee to avail deduction u/s 10B only. If the assessee entitled for deduction u/s 10A instead of 10B, that claim required to be examined by the assessing officer in all fairness. The issue of allowance of deduction u/s 10A though assessee made a claim before the lower authorities has not examined by the assessing officer. In the facts and circumstances of the case, we are of the considered opinion that it shall be in the interest of justice to set aside the issue in the grounds of appeal of the assessee to the file of assessing officer with a direction to decide the issue in accordance with law The assessee appeal is allowed for statistical purpose.
Issues involved:
1. Denial of exemption u/s 10B of the IT Act. 2. Whether the assessing officer should have allowed the claim u/s 10A even though the claim had been made by the assessee u/s 10B. 3. Examination of the claim for deduction u/s 10A by the assessing officer. 4. Stay Application becoming infructuous due to setting aside of the issue in the appeal. Analysis: Issue 1: Denial of exemption u/s 10B The assessee appealed against the denial of exemption u/s 10B as it was noticed that the assessee was registered under the STPI scheme, not as a 100% EOU approved by the Board as required by law. The assessing officer denied the deduction u/s 10B based on this discrepancy. The assessee argued that the assessing officer should have advised to rectify the claim, citing past acceptance of similar claims. However, the department contended that the approval requirements for 10A and 10B are distinct, and the failure to obtain the correct approval is not a mere technical breach. The Tribunal held that the conditions for 10A and 10B deductions are different, and the assessing officer should have examined whether the assessee was entitled to deduction u/s 10A. Issue 2: Examination of claim for deduction u/s 10A The Tribunal found that the lower authorities did not examine the claim for deduction u/s 10A, despite the assessee's contention that it was entitled to it instead of 10B. The Tribunal directed the assessing officer to decide the issue of deduction u/s 10A in accordance with the law after providing a reasonable opportunity to the assessee and considering any evidence filed in support of the claim. Issue 3: Stay Application Since the Tribunal set aside the issue of deduction u/s 10A for fresh consideration, the Stay Application became infructuous and was dismissed. The assessee's appeal was allowed for statistical purposes. In conclusion, the Tribunal emphasized the need for a thorough examination of the specific deduction claimed by the assessee and directed the assessing officer to reconsider the eligibility for deduction u/s 10A. The decision highlighted the importance of adherence to statutory requirements and the duty of the assessing officer to fairly evaluate the claims made by the assessee.
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