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TMI Blog2015 (4) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... ast 5 to 7 years, or even 10 years, it did not claim such benefit would not preclude it from availing it in the assessment year in question. What the appellant cannot resile from is the existence of a given set of facts which it has not challenged earlier. However, if, based on the same set of facts, it now seeks to claim deduction under Section 10A which it had foregone earlier, the appellant’s claim must be allowed, provided, of course, the requirements of Section 10A are satisfied. Therefore, in the instant case, in the event that the appellant establishes that the 31 units constitute separate undertakings for the purposes of Section 10A, it would be entitled to the claims made in the revised return. - Decided in favour of assessee. New units claimed to be separate undertakings for the purposes for Section 10A - Held that:- since the deduction under Section 10A is available to each undertaking, and given the concurrent finding of fact of lower authorities wherein they have held the material on record to be insufficient to treat each of the 31 units as separate undertakings, this Court holds that no interference on this issue is warranted. Consequently, it is held that the 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, the appellant filed its revised return of income on 30.03.2007, where deduction under section 10A of the Act was enhanced to ₹ 2,75,57,24,990/-. The assessee now sought to treat 31 undertakings registered with STPI under 13 mother licenses as independent undertakings eligible for the said deduction, separately and individually. The return of income was accordingly, revised showing income from business or profession at ₹ 2,58,77,95,991/- and claiming deduction under section 10A of the Act at ₹ 2,75,57,24,990/-, resulting in loss from business or profession of ₹ 16,79,29,000/-. The assessee had filed certificates in Form 56F in support of its claim of deduction under Section 10A of the Act, claimed in original as well as in the revised return. In the original return the assessee had claimed deduction under Section 10A only in respect of 13 units and in the revised return number of units eligible for the benefits under section 10A was increased from 13 to 31 and separate Form 56F was filed for each of these 31 units. 4. The Assessing officer ( AO ) in the assessment order dated 26.12.2008 for the relevant assessment year, disallowed the aforesaid additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears the appellant did not compute the deduction under section 10A of the Act by considering these 31 units as separate undertakings and instead computed deduction under that section on the basis of 13 STPI licenses, does not, in law, operate as an estoppel. It could not, said counsel prevent the appellant from correctly computing and claiming deduction under the said section in the relevant previous year by treating each of 31 units as a separate and independent undertaking. Reliance is placed on this Court s decision in CIT v. Bharat General Reinsurance, 81 ITR 303 for the proposition that an assessee can anytime resile from an incorrect position already taken in return of income. Further, the appellant has cited CIT vs Natraj Stationery Products (P) Ltd, 312 ITR 22 (Delhi HC), CIT v. Laxmi Metal Industries, 236 ITR 130 (Allahabad HC), CIT v. Seeyan Plywoods, 190 ITR 564 (Kerala HC), CIT v. Satellite Engineering Ltd, 113 ITR 208 (Gujarat HC) to contend that even if the assessee was to make a claim of deduction for the first time in a year subsequent to the initial assessment year, the claim could not be dismissed as a belated one. 8. Learned senior counsel submits that deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of fresh capital, having separate identifiable work force, etc., and fully satisfied the tests laid down in Textile Machinery Corporation Ltd. (supra). 11. It is highlighted by the assessee that to demonstrate that requisite conditions to claim deduction under section 10A of the Act are satisfied by each of the 31 undertakings, it (the appellant) had placed on record evidence, inter alia, in the form of application to the STPI authority, approval of the STPI authority, lease deed for new premises, list of additions of plant and machinery and list of imported plant and equipment made available by the customer(s) supported with necessary evidence, custom bond register, number of employees, organizational hierarchy chart, audited profit and loss account and Form 56F, etc., for each of the 31 undertakings which clearly demonstrated that each of the units were set up independently in their own right. 12. It is submitted that each software development center which the assessee owns is and has always been treated as a separate undertaking. Reference was made to the assessment order issued for assessment year 1999-2000, wherein reference to each of the fifteen (15) undertakings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tarting point for the discussion is the Supreme Court s decision in CIT v. C.Parakh Co. (supra), where the Court held that the assessee s treatment of a claim would not be determinative of the treatment that it ought to be given under the provisions of the statute. The Court noted: On the question of the admissibility of the deduction of ₹ 1,23,719 the contention of the appellant is that as the respondent had itself split up the commission of ₹ 3,12,699 paid to the managing agents, and the appropriated ₹ 1,23,719 thereof to the profits earned at Karachi and had debited the same with it, it was not entitled to go back upon it. and claim the amount as a deduction against the Indian profits. We do not see any force in this contention.Whether the respondent is entitled to a particular deduction or not will depend on the provision of law relating thereto, and not on the view which it might take of its rights, and consequently, if the whole of the commission is under the law liable to be deducted against the Indian profits, the respondent cannot be estopped from claiming the benefit of such deduction, by reason of the fact that it erroneously allocated a part of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on period notwithstanding that all other conditions of section 80J stand satisfied. It has to be borne in mind that the provisions under consideration are relating to exemption and are, therefore, to be construed liberally. It is the settled rule of interpretation of statutes that expressions used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statute and which effectuates the object of the legislation At the cost of repetition it may be observed that according to the scheme of section 80J, the benefit contemplated under section 80J is permissible independently for each year of exemption, whether or not the exemption was availed of in the preceding or the succeeding assessment year falling within the period of exemption. Similarly, the Uttarakhand High Court in CIT v. Enron Expat Services, 327 ITR 626, relied upon this Court s decision in Bharat General Insurance (supra) and ruled that the fact that the assessee had offered to pay tax in previous years under Section 44BB of the Act cannot operate as an estoppel against it. 20. The impugned judgment erred in holding that the assessment would be guided by the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate undertaking and that there 31 distinct undertakings, has submitted that there are separate lease deeds for each premise, separate STPI approval documents, and separate Customs Bond certificates, and has relied upon application to the STPI authority and approval of the STPI authority. Further, the appellant has contended that it has maintained separate books of accounts. However, the AO and the ITAT rejected the appellant s contentions and held that there was no material on record to establish that the appellant had treated the 31 units as distinct undertakings. The AO, in this regard, noted in its draft assessment order dated 26.12.2008 as follows: As mentioned in the STPI regulations above, a unit to be registered under an approved STPI has to be granted a license by the respective STPL After having granted a license, the unit gets registered and is permitted to commence operations, Thereafter, the unit is permitted to expand its area of operation by seeking permission for expansion, At the time of seeking the permission for expansion, it is logical that the assessee will have to execute lease deeds for separate premises and will also have to approach the customs au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate capital investment: No record of profits has been shown by the assessee from the year of inception thus clearly showing that the so called separate units did not exist prior to the current Assessment Year. No evidence has been provided that the new units were engaged in executing jobs which were distinct from the original units. Hence it is reasonable to assume that the so called new units were carrying out the same jobs as the original units. 23. These observations of the AO were upheld by the ITAT and based on the material available on record, it did not find any infirmity in the AO‟s finding. The appellant had urged before the ITAT that each software development Centre owned by it is and always had been treated as a separate undertaking. For this, it relied upon the assessment order for 1999-2000, where reference to the 15 undertakings was been made by the AO. The ITAT rejected this contention after having examined the contents of the assessment order. Facially, the assessment order for the assessment year 1999-00, as extracted by the ITAT in the impugned judgment, indicates that contrary to the assessee s submission, unit-wise break-up of profits was ..... 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