2015 (10) TMI 488 - HC - Income Tax

Eligibility for exemption under Section 10A - Assessee is engaged in the business of software related services such as software design and development - Held that - As rightly noted by the ITAT itself, this is not a case where any new claim for deduction under Section 10A of the Act has been made by the Assessee. This claim had been made in the original return itself. It is only the figure of profit that was changed in the revised computation as a result of wrongly showing a receipt in USDs without converting it into rupees. The ITAT has, in fact, remitted the matter back to the file of the AO to compute the deduction in accordance with law. The Court does not see any prejudice being caused to the Revenue as a result of the above directions. It is consistent with the law explained by this Court in the above decisions after considering the effect of the decision of the Supreme Court in Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court). Consequently, as regards the issue of the deduction under Section 10A of the Act, the Court declines to frame a question. - Decided against the Revenue Entitlement of the Assessee to the deduction under Section 80HHE - Assessee has established a Shared Service Centre ( SSC ) at Gurgaon for rendering information technology related services and business process management services for which it claimed deduction under Section 80 HHE - According to the AO, no deduction under Section 10A would be allowed to the Assessee either for the same or any subsequent assessment year since it had claimed deduction under Section 80HHE of the Act in AY 2000-01. - CIT (A) reversed the order of the AO and restored the matter to the file of the AO with the direction to allow the exemption under Section 10A also confirmed by ITAT - Held that - The decisions of this Court in Commissioner of Income Tax v. Interra Software India (P) Ltd. (2010 (12) TMI 142 - DELHI HIGH COURT), Commissioner of Income-tax v. Damco Solutions (P) Ltd. 2010 (10) TMI 592 - DELHI HIGH COURT and Commissioner of Income Tax v. EDS Electronics Data Systems (India) (P) Ltd. (2012 (11) TMI 586 - DELHI HIGH COURT) answer the question in favour of the Assessee and against the Revenue. These decisions explain that the making of a claim under Section 80HHE of the Act in one assessment year will not preclude an Assessee from claiming the benefit under Section 10A of the Act in respect of the same unit in a succeeding assessment year. It was explained that the purpose of the Section 80HHE(5) of the Act was to avoid double benefit but that would not mean that if for a particular assessment year the Assessee wants to claim a benefit only under Section 10A of the Act and not Section 80HHE, that would be denied to the Assessee. - Decided against the Revenue

Summary

Issues:
1. Condonation of delay in re-filing the appeals.
2. Incorrect cause title in the memorandum of appeal.
3. Eligibility of the Assessee for exemptions under Section 10A and deduction under Section 80HHE of the Income Tax Act, 1961.

Issue 1 - Condonation of delay:
The High Court of Delhi condoned the delay in re-filing the appeals, as stated in the applications, and disposed of the respective applications.

Issue 2 - Incorrect cause title:
The cause title in the memorandum of appeal was noted to be incorrect by the Revenue's counsel, and it was directed to be corrected to read as "Pr. Commissioner of Income Tax versus E-Funds International India Private Limited" for both appeals.

Issue 3 - Eligibility for exemptions and deductions:
The Assessee, engaged in software services, claimed exemption under Section 10A for the Software Development Centre in Chennai and deduction under Section 80HHE for the Shared Service Centre in Gurgaon. The Assessing Officer disallowed the exemption under Section 10A due to losses at the Chennai unit and questioned the deduction under Section 80HHE for Gurgaon unit. The Assessee filed a revised computation, correcting errors in revenue classification and claimed deductions. The AO rejected the revised computation, citing failure to file a revised return within the stipulated time. The CIT (A) upheld the AO's decision. However, the ITAT allowed the Assessee's plea, noting corrections in the computation without making new claims. The High Court, citing various decisions, held that corrections in the computation did not require a revised return if no new claims were made, and directed the AO to compute deductions accordingly. The Court declined to frame questions on the deduction under Section 10A and entitlement to deductions under Section 80HHE, upholding the ITAT's decision and dismissing the appeals.

In conclusion, the High Court of Delhi addressed the issues of delay condonation, cause title correction, and the Assessee's eligibility for exemptions and deductions under the Income Tax Act, providing a detailed analysis and citing relevant legal precedents to support its decision.