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TMI Blog2018 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted that he was in Mumbai from July, 2014 and had received the order of the CIT u/s 263 of the Income Tax Act, 1961 (hereinafter called as 'the Act') through his auditor on 31.3.2015 and after signing he had sent the appeal papers to the Accountant of the firm. The accountant of the firm had forgotten to hand over the documents to the Chartered Accountant and meanwhile he left the job of the assessee firm without handing over the appeal papers to the incumbent Accountant. The Managing partner was under the bonafide belief that appeal was filed in time. Meanwhile, the Managing Partner stated to have left to Singapore and thereafter he was busy in travelling in search of new assignments. Subsequently, he got the new assignment based at USA and he had to travel to USA on 29.4.2016 to get acquainted with the requirement of new clients and he returned to India in the first week of July, 2016 and by surprise, he had received the order passed by the A.O. giving effect to the revision order u/s 263 of the Act on 19.7.2016, then only he came to know that the assessee has not preferred the appeal against order u/s 263 of the Act. After coming to know that the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had claimed exemption of Rs. 53,07,039/- u/s 10B of the Act for the A.Y.2008-09. For the A.Y2010-11 the assessee has claimed the exemption of Rs. 88,80,362/- u/s 10B and the assessment was completed under section143(3) of the act dated 17/12/2012. 6. The assessee is engaged in the business of computer software and registered with the Software Technology Park of India (STPI), Duvvada, Visakhapatnam. The A.O. has called for the explanation of the assessee as to why the exemption claimed by the assessee u/s 10B of the Act should not be disallowed and requested the assessee to produce information with regard to the satisfaction of the conditions laid down for granting deduction u/s 10B of the Act as well as the approval from the board for allowing the exemption u/s 10B. The assessee had replied to the A.O., and the same is extracted as under: "On verification of Profit and loss account and computation it is noticed that the assessee has claimed exemption U/s 10B of Rs. 53,07,039,According to the provisions of section lOB, for claiming exemption under this section the assessee should obtain statutory approval from Board of Approval" appointed by Government of India. In this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Processing; (ix) Legal Databases; (x) Medical Transcription; (xi) Payroll; (xii) Remote Maintenance; (xiii) Revenue Accounting; (xiv) Support Centres (xv) Website Services- Our services to the company Chemtura would squarely cover under Computer software as per the above circular. c) It was also mentioned that the agreement with Chemtura was expired on 1st March, 2007. We herewith enclosed the renewed agreement with Chemtura. d) We also herewith enclosed the legal agreement with the Director STPI, in the prescribed form of Appendix- 14F. Hence, we request your goodselves to drop the re-opening of assessment under Section 148 of the Income Tax Act." The assessee has entered into legal agreement with the Director, STPI, Hyderabad on 7-7-2006 in the prescribed from 14-IF within one month from the date of letter of approval (LOP) dated 29-06-2006 and furnished copy of the same. The assessee also furnished the Revival and extension of consulting agreement with "CHEMTURA" from 1-3-2007 to 31-3-2006. The assessee furnished copy of the Notification No. 11521 dated 26-9-2000 issued by the CBDT and as per which all the Information technology enabled services are cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the A.O. were erroneous and prejudicial to the interest of the revenue due to the following reasons: The assessee is engaged only in consultancy work which will not come with in the purview of section 10B of the Act. The A.O. has not followed the ratio of the Delhi High Court in the case of M/s. Regency Creations Limited as mentioned above. 9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT has taken up the case for revision u/s 263 of the Act since the assessee is not in the activity of manufacturing the computer software and the assessee did not obtain the approval from the Board to be constituted by Central Government which issues notification. However, on verification of the assessment order, it is observed that the assessing officer has examined the issue whether the assessee is carrying on consultancy work or engaged in the manufacturing of computer software. In the reply submitted by the assessee before the A.O. which was reproduced above, the assessee submitted that the it is engaged in the Data processing and Remote Maintenance which is information technology enabled pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce computer software/IT enabled services in any Software Technology Park (STP). As per Explanation 2 (vii) to section 1OA, STP or STPI (software technology part of India) means any park set up in accordance with the software technology park scheme notified by the government in the Ministry of Commerce and Industry. The deduction u/s 10B as claimed has been denied in the case under consideration by the department only on the ground that software technology park scheme as notified stipulates that the entity STP must be approved by the Board and mere approval by the Inter Ministerial Standing Committee (IMSC) is not enough. As per Gazette Notification GSR No.526(E) published in Part II Sec. III of the Gazette of India Extra ordinary, dated 13th August, 1991, the IMSC was invested with the function of approval of setting up of 100% EOUs for the units under the STP scheme. It may be noted that STP while registering a unit executes an agreement between such unit and President of India (referred to as the Govt.) and accordingly grants the status of 100% export oriented unit as defined in Ministry of Commerce, Notification No.33 (RE) 92-97 dated 22" March 1994 on software technology ..... X X X X Extracts X X X X X X X X Extracts X X X X
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