2015 (6) TMI 435 - AT - Income Tax

Deduction under section 10A - whether CIT(A) was justified in not entertaining assessee s additional ground claiming exemption u/s 10A ? - Held that - There is no dispute that assessee is a 100% EOU and has exported software services to outside India, assessee s alternative claim u/s 10A requires to be considered. Since the exemption claimed u/s 10A was not raised before AO and though raised before the CIT(A), but, was not entertained by him, we consider it appropriate to remit the issue back to the file of AO for examining the same after considering all facts and materials on record and in accordance with the statutory provision. The assessee must be afforded a reasonable opportunity of being heard in the matter. - Decided in favour of assessee.

Summary

Issues:
1. Entitlement to exemption u/s 10B for a software services company.
2. Entitlement to exemption u/s 10A for the same company.

Entitlement to Exemption u/s 10B:
The appeal pertains to the denial of exemption u/s 10B for the assessment year 2009-10. The Assessing Officer (AO) rejected the claim as the company was not approved by the Interministerial Standing Committee as required by the law. The company had submitted approval from the Director, STPI, Hyderabad, which was deemed inadequate. The CIT(A) upheld the AO's decision. The appellant contended that even if not eligible for exemption u/s 10B, they should be eligible for deduction u/s 10A due to fulfilling conditions. The AR argued that the rejection based on lack of Form No. 56F submission was incorrect. The ITAT Hyderabad Bench referred to precedents and remitted the issue back to the AO for proper examination.

Entitlement to Exemption u/s 10A:
The company also raised an additional ground for exemption u/s 10A before the CIT(A), which was dismissed. The CIT(A) cited the requirement of filing a revised return for such claims, following the Goetz India Ltd. case. The AR argued that the restriction on fresh claims without a revised return applies only to proceedings before the AO. The ITAT referred to relevant case law and held that the CIT(A) erred in not entertaining the additional ground. The company's alternative claim u/s 10A was deemed valid, and the issue was remitted back to the AO for proper consideration, ensuring the company's right to be heard.

In conclusion, the appeal was partly allowed for statistical purposes, with the ITAT remitting the issues of exemption u/s 10B and 10A back to the AO for reevaluation in accordance with the law and after affording the appellant a reasonable opportunity to present their case.