2019 (11) TMI 461 - AT - Income Tax

Claim u/s. 10B - alternate claim for allowing deduction u/s.10A - HELD THAT - DRP s direction to the AO for carrying out a fresh examination of the claim of the assessee u/s.10A of the Act is in violation of the clear mandate of the provisions as discussed and hence cannot be countenanced. On our vacating such a direction, the position which would emerge is that the denial of the assessee s claim for deduction u/s 10B would attain finality but the alternate claim for allowing deduction u/s.10A, despite the DRP finding some merit in the same, would get jeopardised at the threshold even without verification, thereby causing irreparable prejudice to the assessee. It is pertinent to note that the ld. DRP itself found some merit in the contention of the assessee on the eligibility of claim u/s.10A, for which the relevant discussion has been made in Para Nos. 3.19 to 3.22. Albeit the DRP is not empowered to direct the AO to entertain and examine such a claim, but there are no fetters on its own powers to undertake such an exercise itself for ascertaining if the claim of the assessee is legally tenable. Under the given circumstances, we set-aside the impugned order and remit the matter to the DRP for adjudicating the issue itself without remitting the matter to the file of the AO.

Summary

Issues:
1. Time-barred appeal by the Revenue.
2. Disallowance of deduction u/s.10B.
3. Direction by the DRP to examine claim u/s.10A.
4. Jurisdiction of DRP to issue directions beyond its ambit.

Analysis:
1. The Revenue's appeal was found to be time-barred by 13 days, but the Tribunal condoned the delay upon being satisfied with the reasons provided by the Revenue. The appeal was admitted for hearing on merits.

2. The assessee had initially declared a total income of &8377; 56,99,014/- and claimed deduction u/s.10B of the Income-tax Act, 1961. However, the Assessing Officer (AO) disallowed the deduction u/s.10B amounting to &8377; 7,91,16,965/-. The Dispute Resolution Panel (DRP) upheld the AO's decision regarding this disallowance.

3. The DRP directed the AO to examine the alternate claim of the assessee for deduction u/s.10A, despite the Revenue being aggrieved by this direction. The Tribunal analyzed the scope of directions by the DRP under section 144C of the Act and found that the DRP had exceeded its authority by directing the AO to re-examine the claim u/s.10A.

4. The Tribunal determined that the DRP's direction for re-examination of the claim u/s.10A was in violation of the provisions of section 144C, as the DRP is not empowered to issue such directions. Despite finding merit in the assessee's claim for deduction u/s.10A, the Tribunal held that the DRP's direction was impermissible. The Tribunal set aside the order and remitted the matter back to the DRP for adjudication without involving the AO.

In conclusion, the Tribunal allowed both appeals for statistical purposes, emphasizing the necessity for adherence to the statutory provisions governing the jurisdiction and powers of the DRP in issuing directions related to tax assessments.