2012 (11) TMI 382 - AT - Income Tax

Exemption u/s 10B of the Income Tax Act - assessee is a public limited company registered under the Companies Act engaged in the business of manufacturing and export of Telecom Transmission Equipments Held that - STPI registration granted to the assessee on 16.11.1998 is valid for allowing deduction to the assessee u/s 10B - in an earlier year i.e. assessment year 2004-05 the AO himself has allowed deduction u/s 10B to the assessee in a scrutiny assessment - assessee is eligible for deduction u/s 10B it cannot be denied in this subsequent year on the basis that the assessee is not an 100% EOU for the reason that necessary approval is not with the assessee - in favour of the assessee

Summary

Issues:
Appeal against the allowance of exemption u/s 10B of the Income Tax Act for multiple assessment years.

Analysis:
The appellant, a public limited company engaged in manufacturing and exporting Telecom Transmission Equipments, claimed exemption u/s 10B of the Income Tax Act for various assessment years. The Assessing Officer (AO) rejected the claim, stating that approval from Software Technology Park of India does not equate to approval from the Board appointed u/s 14 of the Industries (Development and Regulation) Act, 1951. The AO relied on a previous Tribunal decision for this conclusion. However, the Commissioner of Income Tax (Appeals) allowed the deduction, leading to the Department's appeals.

The Department contended that the CIT(A) erred in allowing the claim, as it contravened the statutory requirement of approval by the Board under the Industries Act. The Department argued that a specific Instruction cited by the CIT(A) was not applicable to section 10B, and the CIT(A) failed to consider the relevant legal provisions. The Department sought cancellation of the CIT(A)'s orders.

On the other hand, the assessee's counsel supported the CIT(A)'s decision and presented a previous Tribunal order in favor of the assessee. The Tribunal had held that registration by STPI for establishing a 100% Export Oriented Unit (EOU) under the Software Technology Park Scheme is valid for claiming deduction u/s 10B. The Tribunal emphasized consistency in applying the law and dismissed the revenue's appeal.

The Tribunal confirmed the CIT(A)'s orders, stating that the facts were similar to a previous assessment year where the assessee's eligibility for deduction u/s 10B was accepted. The Tribunal found no error in the CIT(A)'s decision and rejected the Department's appeals, upholding the allowance of exemption u/s 10B for the relevant assessment years.