2022 (1) TMI 794 - HC - Income Tax

Exemption under Section 10B - Denial of exemption as assessee was not approved by the concerned statutory Board as Export Oriented Undertaking as is required in terms of clause IV of Explanation 2 of section 10 B - Tribunal allowed benefit holding assessee as 100% Export Oriented Undertaking - HELD THAT - Tribunal considered the submission on behalf of the assessee that CBDT has issued a clarification dated 9.3.2009 to the effect that power to grant approval under Section 14 of the Industrial (Development Regulation) Act, 1951 has been delegated to the Development Commissioner and the approval granted by the Development Commissioner shall be considered valid for the purpose of exemption under Section 10B Whether the assessee would be entitled to relief under Section 10A? - Tribunal pointed out the similarities between Section 10A and Section 10B of the Act and held that assessee is entitled for the benefit of deduction under Section 10A that the assessee has not claimed the same under that provision on law in the return of income. Further, the Tribunal rightly took note of the judgement of the Hon ble Supreme Court in the case of CIT VS. Mahalaxmi Sugar Mills Co. Ltd. 1986 (7) TMI 83 - SUPREME COURT wherein it was held that the duty cast on the Income Tax Officer to apply relevant provisions of the Act for the purpose of determining the true figure of the assessee s taxable income and the consequential tax liability. That the assessee failed to claim the benefit of a set off cannot relieve the income tax officer of his duty to apply Section 24 in an appropriate case. As rightly pointed out by the learned Counsel appearing for the respondent/assessee powers of the CIT(A) under Section 246A are wide enough to consider as to whether the assessee was entitled for the claim of deduction under Section 10A as well. Thus we find that a thorough factual exercise has been done by the CIT(A) which has been re-examined for its correctness by the Tribunal while affirming the findings of the CIT(A) qua, the relief granted under Section 10B of the Act. That apart we find with regard to the relief granted to the assessee under Section 10A of the act, the Tribunal rightly took note of the legal position and granted relief. Hence, we are satisfied that the order passed by the Tribunal is perfectly valid and does not call for any interference. - Decided against revenue.

Summary

Issues:
1. Exemption under Section 10B of the Income Tax Act for not being approved as an Export Oriented Undertaking.
2. Exemption under Section 10A of the Income Tax Act for not being approved as an Export Oriented Undertaking.
3. Treatment of the assessee as a 100% Export Oriented Undertaking without the required Certificate of Approval.

Analysis:

Issue 1:
The revenue challenged the Tribunal's decision to allow the benefit of exemption under Section 10B of the Income Tax Act to the assessee, despite not being approved as a 100% Export Oriented Undertaking. The assessing officer initially denied the exemption, leading to an appeal by the assessee to the CIT(A), who ruled in favor of the assessee. The Tribunal, after considering various approvals and documents submitted by the assessee, upheld the CIT(A)'s decision. The Tribunal noted agreements with the Central Government, green card issuance, and other relevant documents supporting the assessee's claim. Additionally, the Tribunal considered a clarification by the CBDT regarding approval under Section 14 of the Industrial (Development & Regulation) Act, 1951. Ultimately, the Tribunal affirmed the relief granted under Section 10B of the Act.

Issue 2:
Regarding the exemption under Section 10A of the Income Tax Act, the Tribunal analyzed the similarities between Sections 10A and 10B. It was noted that the assessee had not claimed the benefit under Section 10A in the return of income. Citing a Supreme Court judgment, the Tribunal emphasized the duty of the Income Tax Officer to apply relevant provisions for determining taxable income and tax liability. The Tribunal highlighted that the department cannot deny exemption based on the assessee's failure to claim it, as the objective is to ensure fair taxation without overburdening the assessee. The Tribunal concluded that the CIT(A) had the authority to consider the claim of deduction under Section 10A, and thus, the relief was rightfully granted under this section as well.

Conclusion:
The High Court upheld the Tribunal's decision, finding that a comprehensive factual examination had been conducted by the CIT(A) and re-evaluated by the Tribunal. The order granting relief under Sections 10B and 10A was deemed valid, with no grounds for interference. Consequently, the revenue's appeal was dismissed, and the substantial questions of law were answered against the revenue. The stay application was also dismissed accordingly.

*(T.S. SIVAGNANAM, J.)*
*(HIRANMAY BHATTACHARYYA, J.)*