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TMI Blog2019 (12) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover subsequent to the order passed u/s 263, the Assessing Officer was directed to work out the claim of deduction to be allowed u/s 10A afresh in accordance with the Act. Accordingly, the CIT(A) allowed the appeal of the assessee. Eligible for alternate claim of deduction u/s. 10A - No such claim was made by the appellant in the return of income filed and this was not raised as an additional ground/claim but as an alternative claim before the appellate authority, where as a claim for deduction u/s. 10B was already mad ein the return of income - HELD THAT:- As decided in M/S FLYTXT TECHNOLOGY P. LTD. [ 2017 (10) TMI 872 - KERALA HIGH COURT] no reason to think that the Tribunal has committed an illegality by directing the Assessing Officer to decide the matter afresh duly adverting to the claim of the assessee for the benefit of Section 10A. Ground relating to entertaining a new claim of deduction u/s. 10A - There is no bar to entertain such claim by the CIT(A) otherwise than by filing a revised return as held by the Supreme Court of India in the case of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] Disallowance of interest on diverted fund - HELD THAT:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax(DR) and both copies were retained there on the impression that it pertains to that office. Later on, it was learnt that this case had not been filed before the ITAT and subsequently, vide letter dated 31/07/2019, Commissioner of Income-tax(DR), ITAT, Kochi directed this office to file the appeal afresh with necessary condonation petition after completing the formalities from the higher authorities. According to the Ld. DR, on that basis this office had once again obtained an order u/s. 253(2) from the Principal Commissioner of Income-tax, Thiruvananthapuram on 26/08/2019. Thus, there was delay of 49 day. Accordingly, it was prayed that it is only just and reasonable that the delay was condoned, and the appeal was heard on merits. 2.2 We have gone through the condonation petition filed by the Department. As seen from the records, both the copies of required documents relating to the filing of the appeal were inadvertently sent to the office of the Commissioner of IncomeI. tax(DR), ITAT, Kochi instead of the Commissioner of Income-tax(Appeals), Trivandrum. We find that reasons advanced by the Department is bona fide and there is good and sufficient cause for belate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2008-09, relevant to the AY under consideration, the appellant had advanced an amount of ₹ 50,00,000/- to Toonz Animation India (P) Ltd. on 27.02.2009 and ₹ 16,18,441/- to UST Global Information Technology Parks (P) Ltd. on 12/03/2009 which can t be considered as identical to the decision relied upon. 6. For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of appeals, Trivandrum on the above points may be set aside and that of the Assessing Officer restored. 4. The first ground is too general in nature which does not require adjudication. 4.1 The second ground is with regard to allowance of deduction u/s. 10A of the I.T. Act. 5. The facts of the case are that having found that its claim of deduction made u/s. 10B has not been entertained during the course of assessment proceedings, the assessee made an alternative claim of deduction u/s. 10A of the Act by filing a revised return but the same has not been entertained by the Assessing Officer as there was no consistency in the claim of deduction and not supported by recognized certification. The assessee filed Form No. 56F dt.17.02.2016 making a cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there in the return . In our opinion, though the assessing officer could not entertain the claim made by the assessee otherwise than through a revised return, nothing prevented the learned Commissioner of Income-tax (Appeals) from considering the claim of the assessee, which the assessee had specifically, raised in its ground of appeal in view of the decision of the Hon'ble Apex Court in NTPC's case referred supra. 5.1 In the background of forgoing, according to the CIT(A), it was clarified beyond doubt that the first appellate authority can entertain the fresh claim of deduction made u/s 10A subject to raising the issue in the grounds of appeal and the facts on the basis of which the issue could be raised are readily available before the first appellate authority. Further, various Courts have held that powers of the CIT(A) is co-terminus with that of the Assessing Officer. Thus, the CIT(A) went ahead with verifying the claim of deduction made u/s 10A as the assessee had already raised this issue in the grounds of appeal and facts are more or less same for the claim of deduction either u/s 10B or u/s 10A of the Act. 5.2 With regard to the eligibility to claim d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture or production had rightly been started only on 13.03.2000 based on which not only the assessment orders for the earlier assessment years were passed but also the appellate proceedings were also completed. 5.4 For the alternative claim of deduction made u/s 10A of the Act, the CIT(A) called for remand report from the incumbent Assessing Officer. The assessing authority on verification of details furnished by the assessee brought out the following issues as identified and for further consideration: (a) The assesses has commenced manufacturing or production on 13.03.2010 as per form 56F submitted, but as per section 10A the assesses can claim the deduction u/s 10A for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce. So assessee is eligible for 10A deduction only from AY 2010-11, and not for AY 2009-10. (b) As per section 80A(5) of the Income Tax Act 1961 deduction u/s 10A can be allowed only if the claim is made in the return of income filed. The assessee has claimed deduction u/s 10A only in the return of income filed against notice u/s 147. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of computer software from the year in which the unit begins to manufacture computer software, subject to conditions mentioned in the sub - sections to 10A Yes Sub - section 1A Sub - section 1B Sub - section 1C Conditions for deduction under section available to erstwhile units in SEZ Not applicable Sub - section 2 ( i ) The unit should begin development of software in a Software Technology park Limited on or after 01 April, 1994 . ( The Company had obtained approval as a 100 % export oriented unit from STPI on 28 September 1999 ) Yes In the year of formation for all three eligible units . Sub - section 2 ( ii ) The unit should not be formed by splitting up or reconstruction of a business already in existence . ( The eligible unit of the company were newly formed in AY 1999 - 2000 ) Sub - section 2 ( iii ) The unit should not be formed by transfer of plant and machinery previously used . Sub - section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to the software technology park units only on the ground that the approval / registration to such units had been granted by the Directors of the Software Technology Parks of India. In the instruction, the Board also made a reference to the Inter-Ministerial communication dated March 23, 2006, issued by the Secretary, Ministry of Communications and Technologies to the effect that the approvals issued by the directors of the Software Technology Parks of India had the authority of the Inter-Ministerial Standing Committee and that all approvals granted by the directors of the Software Technology Parks of India were, therefore, deemed to be valid. The position was also clear from a letter dated May 6, 2009, issued by the Board to the Joint Secretary, Ministry of Commerce and Industry wherein a distinction had been drawn between the provisions of sections 10A and 10B and in which it had been clarified that a unit approved by a director under the Software Technology Parks Scheme would be allowed exemption only u/s 10A as a software technology park unit and not u/s 10B as a 100 percent export oriented unit. Therefore, approvals granted by the directors of the Software Technology Parks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is only required to consider the questions of law arising from the facts which are on record, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Even if the contention raised by the learned Senior Counsel for the revenue that the power conferred on the appellants under Section 263 only authorised him to examine whether the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the revenue, that restriction of power cannot affect the powers of the Tribunal which is bound to exercise under Section 254 of the Act. In such a situation, having regard to the language of Section 254 and as interpreted by the Apex Court in National Thermal Power Co. Ltd.'s case (supra), we do not see any reason to think that the Tribunal has committed an illegality by directing the Assessing Officer to decide the matter afresh duly adverting to the claim of the assessee for the benefit of Section 10A. 7. Though the learned Senior Counsel for the revenue relied on the judgment of a Delhi High Court in Regency Creations Ltd. s ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Toons Animation India (,P) Ltd and UST Global Information Technology Parks (P) Ltd without charging interest thereon. The Assessing Officer further noticed that the assessee had availed interest bearing loans to the tune of ₹ 60.51 cr and paid interest of ₹ 7.40 cr thereon during the year under consideration. He took the view that the assessee had diverted interest bearing funds to its associate concerns for non business purposes that too without charging interest. The assessee objected to the inference drawn by the assessing authority and also submitted that it is eligible for deduction u/s 10B of the Act. However, the Assessing Officer by placing reliance on the decision of the jurisdictional High Court of Kerala in the case of CIT vs. V I Baby Co (254 ITR 248) disallowed proportionate amount of interest relatable to the amounts diverted to the associate concerns. The disallowance worked out is ₹ 1,18,408/-. 13. On appeal, the CIT(A) observed that an identical issue in the assessee's own case for the AY 2008-09 in ITA No.02/Coch/2013 dt.23.08.2013, the ITAT, Cochin Bench had decided the issue in favour of the assessee and deleted the interest which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,497,561 Thus, it is seen that the assessee has advanced the amounts to its sister concerns in the earlier years and not during the year under consideration, as presumed by the assessing officer. Thus, the presumption entertained by the AO is against the facts available on record. 7. Further, the AO has placed reliance on the decision rendered by the Hon'ble jurisdictional High Court in the case of V.I. Baby and Co., referred supra. The Ld D.R also placed heavy reliance on the above said decision rendered by the Hon'ble jurisdictional High Court. We have carefully gone through the said decision and notice that the assessee therein was a partnership firm and the withdrawals made by its partners resulted in converting the Capital balances into debit balances . There should not be any doubt that the debit balance in the capital account indicates drawing of funds from out of loan and other creditors account. Under that set of facts, the withdrawals made by the partners of the firm were considered as diversion of funds in the case of V.I. Baby (supra). However, in the instant case, the assessee has shown that it was having Reserves and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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