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2018 (2) TMI 505 - AT - Income TaxDisallowance of deduction claimed u/s. 10B - CIT-A allowing the alternate claim of deduction u/s. 10A - Held that - CIT(A) in his impugned order has wrongly allowed the alternate claim of deduction u/s. 10A by totally ignoring the intention of the legislature to create different sections i.e. 10A and 10B, for claim of different deductions and further ignoring the fact that the conditions for claim of deduction under these two sections are distinguishable. CIT(A) s action in allowing the aforesaid claim is without appreciating the totality of facts and merit of the case and without giving proper justification for the fulfillment of the conditions as stipulated u/s. 10A. CIT(A) has obtained the Remand Report from the AO and the AO objected to the same, but Ld. CIT(A) has ignored the objections raised by the AO, which is contrary to the provisions of law and proves that Ld. CIT(A) in a hurry manner has passed the nonspeaking and laconic order. It is true that requirement of stating reasons for judicial orders necessarily does not mean a very detailed or lengthy order, but there should be some reasoning recorded by the lower Authority for granting relief to the assessee. We are unable to find any infirmity in the arguments advanced on behalf of the Department, that no reasons have been recorded for allowing the claim of the assessee, this legal infirmity has, in fact, prejudicially affected the case of the assessee before us. Hence, we are unable to sustain the order of the Ld. CIT(A) and for the afore-recorded reasons, we set aside the impugned order and remit back the issues in dispute to the file of the AO with the direction to decide the issues in dispute afresh - Decided in favour of revenue for statistical purposes.
Issues Involved:
1. Deletion of addition made by AO on account of disallowance of deduction claimed u/s. 10B of the I.T. Act. 2. Allowing alternate claim of deduction u/s. 10A of the I.T. Act by CIT(A). 3. Procedural and evidentiary issues related to the fulfillment of conditions for deductions under sections 10A and 10B. Issue 1: Deletion of Addition Made by AO on Account of Disallowance of Deduction Claimed u/s. 10B of the I.T. Act The Revenue contended that the CIT(A) erred in deleting the addition made by the AO, who had disallowed the deduction claimed under section 10B of the Income Tax Act. The AO's findings indicated that the assessee did not provide sufficient documentation or revised computations to support the claim for deduction under section 10B. The AO also noted that the assessee's submission was inconsistent with the circular referenced, which aimed to grant deductions under section 10B. Issue 2: Allowing Alternate Claim of Deduction u/s. 10A of the I.T. Act by CIT(A) The CIT(A) allowed the alternate claim of deduction under section 10A, which the Revenue argued was incorrect. The Revenue's position was that sections 10A and 10B were created for different deductions with distinguishable conditions. The CIT(A) referenced decisions from the Hon'ble Jurisdictional High Court of Delhi, which directed the ITAT to examine if the assessee was entitled to benefits under section 10A. However, the Revenue asserted that the CIT(A) did not adequately justify how the conditions under section 10A were met. Issue 3: Procedural and Evidentiary Issues Related to Fulfillment of Conditions for Deductions under Sections 10A and 10B The Revenue highlighted procedural lapses and lack of proper evidence in granting the deduction under section 10A. The CIT(A) obtained a remand report from the AO, who objected to the allowance of the claim, but these objections were ignored. The CIT(A) was criticized for passing a "non-speaking and laconic order" without proper justification. The ITAT found merit in the Revenue's argument that the CIT(A) did not record reasons for granting relief, which prejudicially affected the case. Judgment: The ITAT decided that the CIT(A) had wrongly allowed the alternate claim of deduction under section 10A by ignoring legislative intent and the distinguishable conditions for sections 10A and 10B. The ITAT noted that the CIT(A) did not appreciate the totality of facts and merit of the case and failed to provide proper justification for the fulfillment of conditions under section 10A. The ITAT also emphasized the need for the lower authority to record reasons for judicial orders. The ITAT set aside the impugned order and remitted the issues back to the AO for fresh consideration. The AO was directed to decide the issues in accordance with the law, after giving adequate opportunity of being heard and considering all relevant documents and evidences. The assessee was also directed to furnish all necessary documents to substantiate the claim under section 10A. In conclusion, both Revenue Appeals (ITA No. 6410/Del/2015 and ITA No. 6411/Del/2015) were allowed for statistical purposes, and the matters were remitted to the AO for fresh adjudication.
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