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TMI Blog2014 (4) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which could not be confronted to the AO, neither during the assessment proceedings nor during the appellate proceedings - The issue is related to the reconcilement of the difference – thus, the matte is required to be remitted back to the AO for fresh adjudication – Decided in favour of Revenue. - ITA No.2339/Del/2010 - - - Dated:- 29-11-2013 - G D Agrawal Chandra Mohan Garg, JJ. For the Appellant : Shri Satpal Singh, Sr. DR For the Respondents : Shri Salil Kapoor Vikas Jain ORDER:- PER : Chandra Mohan Garg This appeal has been preferred by the revenue against the order of the Commissioner of Income Tax(A)-VIII, New Delhi dated 12.03.2010 in Appeal No. 181/09-10 for AY 2005-06. 2. Grounds no. 1 4 of the revenue are general in nature which need no adjudication. Remaining grounds read as under:- 2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the addition on account of deduction u/s 10B amounting to ₹ 5,88,28,278/-. 3. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the addition on account of TDS of ₹ 57,594/-. Ground no.2 3. Apropo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s 80HHE having been left to be determined by the Assessing Officer subject to the assessee s satisfying the prerequisite stipulated for the grant of such benefit under the said provision. In this case, the Hon ble High Court has held that a new unit is entitled for exemption u/s 10A of the Act if necessary preconditions mentioned in section 10A of the Act were satisfied. Their Lordships also held that alternatively the assessee could also claim deduction u/s 80HHE of the Act if an opportunity was provided to meet the conditions. 5. The counsel of the assessee also placed reliance on the judgment of Hon ble Punjab Haryana High Court in the case of C.I.T. vs Excel Softec Limited 219 CTR 405 (P H) wherein their lordships have held as under:- The initial year is the year in which the eligible undertaking begins to manufacture or produce articles or things or Computer Software. It is not disputed that the assessee unit fulfills all the conditions, as mentioned in sub section (2). In the present case, the assessee had started the development of Computer Software in the assessment year 1998-99 and was registered with the Software Technology Park with effect from 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer that the assessee shall be entitled for exemption u/s 10A of the Act for the year under consideration because the assessee was entitled to exemption in the year in which amendment introduced by Income Tax (2nd Amendment) Act, 1998 w.e.f. 1.4.1999 became effective operative and the assessee will be entitled for exemption for the extended period because the period of five years had not exhausted upto AY 1999-2000. On careful consideration of above rival contentions of both the parties, for the sake of clarity in our findings, we find it appropriate to reproduced the relevant observations and findings of the Commissioner of Income Tax(A) in the impugned order which read as under:- 3.1 Before coming to the grounds of appeal, it would be appropriate to decide the issue of additional evidence sought to be filed by the appellant company in the course of appellate proceedings. According to the appellant company, the contention of the Id. Assessing Officer that the undertaking of the appellant was not registered with the Board specified in Section 10B of the Act is not correct in as much as the undertaking was duly approved by the Secretariat for Industrial Approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. As stated earlier, the ld. assessing officer has rejected the claim of the appellant on the grounds that- a. the appellant company commenced its business during the previous year relevant to A. Y. 1992-93 and therefore, the period of 10 years prescribed u/s 10B of the Act was over by AY 2001-02. Hence, the appellant was not entitled for the deduction in the year under consideration, as the same fell beyond the prescribed period of 10 years. b. the appellant is not a newly established undertaking and therefore, was not eligible for deduction u/s 10B of the Act. c. the provisions of section 80 HHE(5) of the Act preclude the assessee from claiming deduction in respect of profits from exports of computer software under any other section for any other assessment year. d. the appellant co. is not registered with the board appointed by Central Govt. in exercise of powers conferred u/s 14 of the Industries (Development and Regulation) Act,1951. 3.3.1 However, as discussed earlier, the ld. counsel appearing on behalf of the appellant co. has one by one rebutted all the grounds taken by the ld. assessing officer for rejecting assessee's claim with necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that since the assessee started its business in FY 1991-92, the prescribed period of 10 years for the purposes of section 10B had come to an end by asstt. year 2001-02, as the year of commencement of business has nothing to do with the issue at hand. 3.3.3 Similarly, there is no justification in holding that the assessee company was established on 14.05.1991 and started its commercial activities from FY 1991-92 and therefore, was not a newly established undertaking. Here again, I find the assessing officer has failed to correctly appreciate the real import of 'newly established industrial undertaking' w.r.t. the provisions of section 10B of the Act. The said section envisages setting up of export oriented undertaking which is altogether different and distinct from setting up of normal commercial activities. As submitted by the ld. counsel for the appellant, 100% export oriented undertaking was established by the assessee company in FY 1997-98 for exporting of computer software, which has not been controverted by the AO. Rather, the AO himself has mentioned this fact in paras 4.1 and 4.2 of his order. Therefore, on this ground also the action of the AO is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee got approval as 100% EOU as per approval dated 27.01.1997. We further observe that in the impugned order, the Commissioner of Income Tax(A) has held that the Assessing Officer was completely in error in holding that since the assessee started its business in AY 1992-93, then the prescribed period of 10 years for the purpose of exemption u/s 10B of the Act had come to an end by AY 2001-02. We also observe that the said section 10B envisages setting up of export oriented undertaking which is altogether different and distinct from setting up of a normal commercial activity unit. The Assessing Officer has not controverted the fact that the assessee company established 100% EOU in FY 1997-98 for exporting of computer software and this fact has found place in the assessment order para 4.1 and 4.2. In view of above and in the light of decisions of Hon ble High Court of Delhi in the case of Legato Systems India Pvt. Ltd. and decisions of Hon ble Punjab Haryana High Court in the case of Excel Softech Ltd. (supra), we are of the firm opinion that the Commissioner of Income Tax(A) rightly granted relief to the assessee by directing the Assessing Officer to grant exemption u/s 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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