2017 (5) TMI 1264 - AT - Income Tax

Disallowance u/s.10A - Held that - Respectfully following the judgment of Hon. Jurisdictional High Court in the case of Saurashtra Cement & Chemicals Indus. Ltd. (1979 (2) TMI 21 - GUJARAT High Court ) and the assessee favoring decision of the Co-ordinate Bench in previous Asst. Years and also in the light of the facts that assessee has fulfilled all the eligibility criteria for claiming exemption u/s 10A of the Act - Decided in favour of assessee.

Issues Involved:
1. Deletion of addition made on account of disallowance under section 10A of the Income Tax Act, 1961.
2. Whether the order of the Commissioner of Income Tax (Appeals) [CIT(A)] should be upheld or the Assessing Officer's (AO) order should be restored.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made on Account of Disallowance under Section 10A of the Act:

The Revenue challenged the order of the CIT(A) which deleted an addition of ?90,22,677/- made by the AO under section 10A of the Income Tax Act, 1961. The AO had disallowed the deduction claimed by the assessee, a private limited company engaged in computer software development, on the grounds that the claim was not substantiated properly. The AO followed the consistent view of his predecessor without pointing out any specific mistake in the calculation of the claim.

The CIT(A) deleted the disallowance, noting that the assessee had been claiming deductions under section 10B from assessment years 2002-03 to 2007-08, which were allowed by the ITAT. From assessment year 2008-09 onwards, the assessee started claiming deductions under section 10A, which is specifically meant for newly established undertakings in free trade zones. The CIT(A) found that the assessee had fulfilled all the conditions required for the deduction under section 10A, including filing the necessary form 56F.

The Tribunal observed that the issue was already covered in favor of the assessee by the decision of the Coordinate Bench in the assessee's own case for assessment years 2008-09 and 2009-10. The Tribunal noted that the AO had not brought any new evidence or pointed out any defects in the fulfillment of conditions under section 10A by the assessee. The Tribunal upheld the CIT(A)'s order, confirming that the assessee had rightly claimed the deduction under section 10A.

2. Whether the Order of CIT(A) Should Be Upheld or the AO's Order Should Be Restored:

The Tribunal reviewed the CIT(A)'s detailed analysis, which included a thorough examination of the assessee's compliance with the conditions for claiming deductions under sections 10A and 10B. The CIT(A) admitted additional grounds raised by the assessee, which were legal and bona fide in nature, and found that the claims under section 10A were valid.

The CIT(A) rejected the AO's objections regarding the filing of the prescribed forms and the timing of the claims, stating that the assessee had consistently claimed deductions since the commencement of its business. The CIT(A) also referenced judicial precedents, including the judgment of the Honorable Gujarat High Court in the case of Saurashtra Cement & Chemicals Industries Ltd., which supported the assessee's position.

The Tribunal, after considering the rival contentions and perusing the records, found no reason to interfere with the CIT(A)'s order. The Tribunal noted that the Departmental Representative could not controvert the facts or the legal precedents cited by the CIT(A). Consequently, the Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal.

Conclusion:

The Tribunal upheld the CIT(A)'s order, confirming that the assessee had rightly claimed the deduction under section 10A of the Act. The appeal of the Revenue was dismissed, and the Tribunal found no reason to interfere with the CIT(A)'s decision. The other grounds raised by the Revenue were deemed general in nature and required no adjudication. The order was pronounced on 8th May 2017 at Ahmedabad.

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