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TMI Blog2014 (10) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... ; "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the registration with STPI is not a pre-requisite for grant of deduction under Section 10B of the Income Tax Act?" 2. The brief facts are as follows: The respondent/assessee is a company engaged in software development. The assessee company was incorporated on 19.12.2003 and started business operations from January, 2004. The assessee prepared accounts for the period 19.12.2003 to 31.3.2005. For the first time, for the assessment year 2005-06, the assessee claimed deduction under Section 10B of the Income Tax Act and filed return of income declaring total income of Rs. 38,430/- on 19.10.2005. The said return was processed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found that the appellant is engaged in the manufacturing and export of computer software and has commenced hundred percent export of computer software during the A.Y.2005-06. 7.2. It will not be out of place here to mention that it is a settled proposition often reiterated by the Hon'ble Apex Court that in cases where two views are possible, the one favourable to the assessee should be adopted. C.I.T Vs.Podar Cements Ltd. and another 226 ITR 625 (SC) and Mysore Minerals Ltd. Vs. C.I.T 239 ITR 775 (SC) 7.3 In view of the above facts and in the circumstances of the case, it is held that the appellant has fulfilled all the conditions specified u/s 10B and has correctly claimed deduction under that section. The Assessing officer, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. The Tribunal also held "a claim which is allowed by the plain provisions of the Act cannot be restricted by imposing conditions which cannot be carried out" . The Tribunal also held that beneficial, promotional and incentive provisions like the provisions of Section 10B of Act, which was aimed at promoting software industry in India, should be liberally construed and should not be defeated on technical grounds. The Tribunal also held that from a reading of Section 10B of the Act, approval or registration under STPI have not been mandatory and the same could not be read in a different manner and the CBDT circulars are binding on the Department alone. 6. The Tribunal relying upon the decision of this Court reported in 215 ITR 136 (CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 10B of the Income Tax Act defines 100% EOU as one approved by the Board. The ten year period commences from the date of such approval. She further submits that when the STPI registration itself was beyond the financial year, the assessee is not entitled to the benefit of exemption prior to the date of approval and the assessee is entitled to the benefit of exemption from the next assessment year only. Also the circular of the CBDT is not contrary to the statute but it is only clarified the position. Hence, the order of the Tribunal is liable to be set aside and this appeal may be allowed. 9. Per contra, learned counsel appearing for the assessee submits that the asssessee had fulfilled the conditions prescribed under Section 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this section,- (i) ........ (ii) ........ (iii) ........ (iv) "hundred per cent export-oriented undertaking" means an undertaking which has been approved as a hun-dred per cent. export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act 12. A reading of the above provision makes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions. We hold that this finding of the Tribunal is totally contrary to Clause (iv) to Explanation (2) of Section 10B of the Income Tax Act. The Department, no doubt, clearly states that for the next assessment year the benefit would automatically flow. We do not find any justification to be swayed by the view of the Tribunal that the promotion of software industry should not be scuttled by technicalities. 14. We are also aware of the fact that the benefit granted under Section 10B is more in the nature of exemption, for which certain pre-requisite conditions, namely, approval by the appropriate Board, have to be complied with in the manner prescribed. Unless and until the assessee gets an approval in the manner prescribed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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