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2021 (8) TMI 1185 - AT - Income TaxEligibility of exemption u/s 10B - Export of IT services from STP - AO observed that, assessee could not provide details of input software purchased for rendering IT enabled services as well as output software for IT enabled services rendered by the assessee. He also emphasized that the assessee could not submit any evidence regarding job work done from third parties. - CIT-A deleted the addition. HELD THAT - CIT(A) dealt with all the objections of the Assessing Officer of old service agreement, evidence in support of input software as well as output software, No. of employees, quantum of plant and machinery, difference in export figures reported in the return of income and softtex forms. The Learned DR could not rebut any of the factual finding of Ld. CIT(A). Assessee has been allowed deduction under section 10B of the Act on the same activity for assessment year 2003-04 to 2008-09. Even in assessment year subsequent to the present assessment year i.e. AY 2010-11 also, the assessee has been allowed the deduction under section 10B - No justified reason for not allowing the deduction only in the year under consideration by the Assessing Officer. In our opinion, there is no infirmity or error in the order of the Learned CIT(A) on the issue in dispute of deduction under section 10B - Decided against revenue.
Issues Involved:
1. Admissibility of additional evidence under Rule 46A of Income Tax Rules. 2. Merit of deduction claimed under section 10B of the Income-tax Act, 1961. Issue-Wise Detailed Analysis: 1. Admissibility of Additional Evidence under Rule 46A of Income Tax Rules: The Revenue contested the admissibility of additional evidence submitted by the assessee to the Commissioner of Income-tax (Appeals) [CIT(A)]. The Revenue argued that the Assessing Officer (AO) had provided sufficient opportunity to the assessee to submit the necessary documents, and there was no reasonable cause for the failure to do so during the assessment proceedings. The CIT(A) admitted the additional evidence based on the assessee's claim that he was out of India during the period when the AO requested the documents. The CIT(A) found that the assessee was out of the country from 12/07/2011 to 31/12/2011, which was when most of the documents were sought by the AO. The CIT(A) considered this a "sufficient cause" under Rule 46A(1)(b) and (c) of the Income Tax Rules, which allows for the admission of additional evidence if the appellant was prevented by sufficient cause from producing the evidence called upon by the AO. The Tribunal upheld the CIT(A)'s decision to admit the additional evidence, noting that there was no infirmity in the CIT(A)'s order as per the rules. The Tribunal dismissed the grounds raised by the Revenue regarding the admissibility of the additional evidence. 2. Merit of Deduction Claimed under Section 10B of the Income-tax Act, 1961: The Revenue also challenged the merit of the deduction claimed under section 10B, which pertains to the export of Information Technology (IT) enabled services. The AO had disallowed the deduction due to deficiencies in the documentation provided by the assessee. The CIT(A) meticulously addressed each objection raised by the AO: - Input and Output Software: The assessee provided details of input software licenses and submitted a compact disc showing the output software. The AO did not comment on the compact disc evidence regarding the output software. - Employee Details: The assessee clarified the discrepancy in the number of employees reported in the Annual Progress Report and provided details of all employees, including those engaged in data processing. - Computer Hardware Value: The assessee explained that the value represented the written-down value, not the actual cost, and cited relevant judicial precedents. - Export Turnover and IT Enabled Services: The assessee submitted annual and monthly returns filed with the Software Technology Parks of India (STPI), Foreign Inward Remittance Certificates (FIRC), and service agreements to substantiate the export turnover and the rendering of IT-enabled services. - Approval Validity: The assessee provided a renewal letter from STPI, valid until 31/03/2011, to counter the AO's claim about the expiry of the approval term. - Consistency Principle: The CIT(A) noted that the assessee had been consistently allowed the deduction under section 10B in previous and subsequent assessment years, and cited judicial precedents emphasizing the principle of consistency in tax matters. The Tribunal found no error in the CIT(A)'s detailed examination and acceptance of the assessee's evidence. The Tribunal also noted that the deduction under section 10B had been allowed in previous and subsequent years for similar activities, and there was no justified reason for disallowing it in the assessment year in question. Conclusion: The Tribunal dismissed the appeal filed by the Revenue, upholding the CIT(A)'s order to admit the additional evidence and allow the deduction under section 10B of the Income-tax Act, 1961. The Tribunal pronounced the order in the open court on 26th August 2021.
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