2011 (1) TMI 1361 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case are the denial of exemption in respect of export profits under section 10A(2)(i)(b) of the Income Tax Act, incorrect citation of section 10B instead of section 10A, rejection of additional grounds raised by the assessee, and the failure to entertain the claim of exemption under section 10A.

Denial of Exemption under Section 10A:
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2007-08, challenging the denial of exemption in respect of export profits under section 10A(2)(i)(b) of the IT Act. The counsel for the assessee argued that there was a technical mistake in claiming deduction under section 10B instead of section 10A, which led to the denial of the exemption. The assessee also raised an additional ground of appeal before the CIT(A), which was not admitted. The Tribunal found that the issue raised by the assessee in the additional ground of appeal was crucial and should have been considered. The Tribunal set aside the issue to the Assessing Officer for a fresh decision, directing to provide a reasonable opportunity to the assessee to substantiate its claim for deduction under section 10A.

Incorrect Citation of Section 10B:
The Departmental Representative contended that the conditions for deduction under sections 10A and 10B are substantially different, and approval from different authorities is required for each section. He cited the decision of the Hyderabad Bench of the Tribunal in Infotech Enterprises Ltd. v/s. JCIT to support the Revenue's stance. The Departmental Representative argued that the additional ground raised by the assessee was rightly rejected by the CIT(A) as no valid reason was provided for not including it in the original appeal memo.

Rejection of Additional Grounds:
The assessee raised an additional ground of appeal asserting eligibility for exemption under section 10A, even though it was not explicitly claimed. The Tribunal found that the CIT(A) erred in rejecting this additional ground, as it was fundamental to the matter at hand. The Tribunal emphasized that the issue of deduction under section 10A had not been addressed by any Revenue authority, necessitating a fresh consideration by the Assessing Officer.

Failure to Entertain Claim under Section 10A:
The CIT(A) failed to entertain the claim specifically made under section 10A of the IT Act in the original grounds of appeal. The Tribunal noted that the decision of the AP High Court in the case of CIT v/s. Gangappa Cables Private Limited was not considered by the CIT(A), indicating an oversight in adjudicating the claim for exemption under section 10A.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes and directed the Assessing Officer to reevaluate the issue of exemption under section 10A in accordance with the law, providing the assessee with a fair opportunity to present its case.