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TMI Blog2016 (9) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years. In this case, there is no dispute that assessee was eligible for deduction u/s 10A in earlier years. There is also no dispute that assessee has applied for renewal on STPI approval for the later five years which was however, not pursued. According to my understanding, assessee has made a claim of deduction on the strength of the provisions, even though it has accepted that the claim made cannot be substantiated in the absence of STPI approval. It may be assessee’s opinion and accepted the disallowance made in assessment proceedings. Mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars is not a ground for levying penalty especially when there is nothing on record to show that assessee has concealed any particulars or furnished any inaccurate particulars. Assessee simply made a claim u/s. 10A on the reason that having been eligible in earlier years, assessee would be allowed deduction in the impugned assessment year as well. This, in my view does not come into the purview as concealment of income or of furnishing of inaccurate particulars - Decided in favour of assessee - I.T.A. No. 278/HYD/2016 - - - Dated:- 30-6-2016 - Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, it has made an application to the Director of STPI for renewal of the STPI status. Assessee had already been granted the status of 100% EOU set up under the STP Scheme; ii. It was submitted that, as the company got registered under STP Scheme on 29-08-2003, it was eligible for deduction u/s. 10A from AY. 2004-05 onwards for a period of ten years. it was under the impression that once it becomes eligible to claim deduction u/s. 10A of the Act, it can continue to claim the same for ten years as per the provisions of Section 10A of the Act. Accordingly, it started claiming deductions u/s. 10A only from the current year as it did not earn any profits in the previous year; iii. It was further submitted by assessee that it has fulfilled the first condition of obtaining approval of Government through STPI as 100% EOU. Secondly, it obtained the sale proceeds by way of convertible foreign exchange, which is credited into the bank account held in Oriental Bank of Commerce, SD Road, Secunderabad. The bank had also given certificates of foreign inward remittance periodically which, of course are submitted separately; It relied on the following decisions: i. CIT Vs. Relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mention here that none of the case laws relied upon by the appellant are relevant to the facts of the case. Both parties reiterated the respective contentions on the issue. 6. Having considered the rival contentions and perusing the Paper Book, I am of the opinion that there is no scope for levy of penalty on the given facts of the case. As far as the provisions of Section 10A are concerned, the Sub-Section 1 of Section 10A allows the deduction for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to inform or produce such articles or things or computer software as the case may be. Subsection 1A however, has certain restrictions on quantum of deduction and rest of the provisions pertain to computation of quantum and restrictions placed, if the units are transferred etc. Nowhere in Section 10A, it is specified that the deduction is not eligible, if the STPI does not continue the approval beyond the five year period. On a complete reading of the provision, anybody will come to a conclusion that once deduction of Section 10A is allowed in the first year, on the basis of satisfying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the AG. The following observations made by the Hon'ble Apex Court in the aforesaid case of M/s Reliance Petro Products(supra) are relevant: 10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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