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Issues involved: Disallowance u/s. 10A of the Act for the assessment year 2005-06.
Summary: The appeal was filed by the assessee against the order of the ld. CIT(Appeals) regarding the disallowance u/s. 10A of the Act for the assessment year 2005-06. The main issue revolved around the disallowance u/s. 10A by the ld. Dy.CIT, which was upheld by the ld. CIT(Appeals). The ld. AO disallowed the deduction u/s. 10A for the A.Y. 2005-06 citing various reasons including the absence of the STPL certificate and no change in the assessee's business activities. The ld. CIT(Appeals) upheld the disallowance stating that the approval certificate by the STP was mandatory for claiming the deduction u/s. 10A. On appeal, the assessee argued that all necessary details, including the STP approval letter, were submitted to the revenue during assessment proceedings. The AR contended that the non-production of the STP approval letter was not highlighted by the AO or the CIT(A). The ITAT in a previous case had annulled a similar order by the CIT for the A.Y. 2004-05, supporting the deductibility u/s. 10A. The ld. DR supported the CIT(A) and argued that the ITAT did not assess the deductibility u/s. 10A in a previous order. However, upon reviewing the materials on record, the Tribunal found that the only issue was the absence of the STPI approval certificate. In the interest of justice, the Tribunal provided the assessee with another opportunity to produce the required certificate before the ld. AO for a determination on the entitlement to deduction u/s. 10A. The appeal of the assessee was allowed for statistical purposes. This judgment highlights the importance of complying with the necessary documentation requirements for claiming deductions u/s. 10A of the Income Tax Act and the significance of providing opportunities for the assessee to rectify any deficiencies in the documentation process.
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