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2021 (9) TMI 187 - AT - Income TaxDeduction u/s 10A - return of income declaring fringe benefit tax (FBT) at concessional rate of 5% on expenditure on conveyance, hotel and boarding facilities - HELD THAT - The present proceedings is out of fringe benefit tax. The assessee had claimed concessional rate of tax at 5% on certain expenditure stating its activities constitute ITES as specified in CBDT Notification. The assessee had claimed deduction u/s 10A of the I.T.Act on the ground that the activities of the assessee constitute ITES, and hence, it is a ITES undertaking, eligible for deduction u/s 10A of the I.T.Act. The Assessing Officer disallowed the claim of deduction u/s 10A of the I.T.Act on the ground that the activities of the assessee does not constitute ITES. On appeal, the CIT(A) held the activities of the assessee constitute ITES and assessee was eligible for deduction u/s 10A. The activities of the assessee are in the nature of ITES and is eligible for deduction u/s 10A of the I.T.Act, the issue whether the activities of the assessee constitute ITES has attained finality. Accordingly, the concessional rate of FBT at 5% claimed by the assessee also stands upheld. Appeal filed by the assessee is allowed.
Issues:
Eligibility of deduction u/s 10A of the I.T.Act for an ITES company and the claim for concessional rate of fringe benefit tax (FBT) at 5%. Analysis: The case involved a company claiming a concessional rate of 5% FBT on expenditure, stating it is an ITES company eligible for deduction u/s 10A of the I.T.Act. The Assessing Officer initially disallowed the deduction, but the CIT(A) and ITAT later held in favor of the company. The Revenue appealed to the High Court, which upheld the decision, confirming the company's eligibility for deduction u/s 10A. The High Court's judgment clarified that the company's activities, including content development and data processing, qualified for the deduction under Section 10A. This ruling established the finality of the company's ITES status and entitlement to the concessional FBT rate. The Tribunal, in its analysis, emphasized the specific activities of the company, such as mobile added value services, content development, and data processing, aligning with the definition of ITES as per CBDT Notification. The Tribunal referenced past judgments and legislative intent to support the company's eligibility for deduction u/s 10A. The High Court's decision in a related case further reinforced the company's position as an ITES undertaking, thereby upholding the concessional FBT rate claimed by the company. In conclusion, the Tribunal allowed the company's appeal, considering the finality established by the High Court regarding the company's ITES status and eligibility for deduction u/s 10A. The Tribunal's decision aligned with the legal interpretations and precedents, leading to the acceptance of the concessional FBT rate claimed by the company.
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