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TMI Blog2022 (5) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from April 2010,then the fact of the expansion unit not being approved so from January 2010 onwards would not tantamount as violation of prescribed Rules and Regulations so as to penalize the assessee. Even otherwise, the assessee having cured all defects from January 2010 onwards, paid penalty for the defects also, the fresh application filed in April 2010 is to be treated for all purposes in continuation of its original application filed in January 2010 .And the approval so granted by STPI vide letter dated April 2010 is therefore to be treated as in pursuance to the original application filed in January 2010.Which is how even the STPI authorities have treated it by certifying invoices relating to the January March 2010 period. Also gone through the Circular of 2005, which the Revenue contends operates against the assessee and we find that the scope of the said circular is with respect to exemptions claimed u/s. 10B of the Act and not 10A under which the assesse has claimed exemption. Also, we find that in response to representations received by the CBDT, whether Domestic Tariff Area (DTA) Units converted to export oriented unit (EOU) are eligible to exemption u/s 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even prior to shifting there in January 2010. Accordingly therefore the AO denied the assessee grant of exemption to the profits generated from activities carried out in the new/expansion unit from September 2009 onwards ,which amounted to Rs. 1,56,32,460/-, rejecting the assesses contention that the approval though granted in April 2010, should be treated as relating back to January 2010 when the assessee had initially applied for approval but the grant of the same was delayed on account of certain discrepancies noted in the application filed, which took some time to correct in a fresh application filed thereafter. 3. The specific facts relating to the issue are The assessee had been registered under the STPI Gandhinagar jurisdiction with its address located at 101-102, Sampatti, Sardar Baug Lane, Alkapuri, Vadodara-390007., vide letter of permission dated 19/10/2006 Information sought from the Director STPI, Gandhinagar, Gujarat,by notice issued u/s 133(6) of the Act revealed that on a number of occasions the assessee had shifted its location and sought approval for the expansion units, for which approval had been granted. The letter of permission granted latest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 31, 2010. 1.4 The learned AO failed to appreciate the fact that the Software Export Declaration (softex) Forms filed with STPI for the months January 2010 to March 2010, has been approved by STPI, which in itself proves that appellant's Vadodara Hyper unit was approved from January 1, 2010. 1.5 The learned AO failed to appreciate the fact that the appellant filed the application for approval of its Vadodara Hyper premises in the month of January 2010 itself and the delay in approval was because of the reasons beyond its control. 1.6 The leaned AO erred on facts that delay in getting approval from STPI was because of non-fulfillment of the conditions laid down by the STPI. However, the delay was only due to some procedural lapses and that too beyond the control of the appellant. 1.7 The learned AO erred in law and on facts by relying on the CBDT Circular No. 1/2005 dated January 6, 2005. The said circular was specifically for 100% export oriented units and claiming deduction under section 10B of the Act. 2. Without prejudice to above, the learned AO erred in law and on facts by not giving proper effect to the directions issued by the Hon'ble Disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.01.2010 pointing out discrepancies in the application submitted by the assessee dated 06.01.2010, placed before us at paper book page no. 28. (iv) Assessees letter dated 05.03.2010 to STPI along with all enclosures rectifying discrepancies noted earlier by STPI in its original application 2006 placed before us at paper book page no. 27 to 38. (v) Application to STPI filed by the Assessee dated 19.04.2010 2006 placed before us at paper book page no. 43 submitting that the penalty levied had been duly paid and furnish application in the prescribed format along with necessary documents. (vi)Approval for expansion issued by the STPI dated 21.04.2010 placed before us at paper book page no. 14 to 16. (vii) Softex(Software Export Declaration) Form filed with STPI by the assessee for the month of January 2010 to March 2010 2006 placed before us at paper book page no. 44 to 79, along with letter of STPI addressed to RBI certifying the valuation of software exported. 8. Ld. Counsel for the assessee further relied on the following case laws in support of his contention of retrospective application of approval. 1. Director of I.T. (Exemption) v/s Vishwa Hindu Parishad 82 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no approval from STPI, is not eligible for exemption u/s 10 A of the Act. 13. Reaffirmed by the DRP at para 16.1 of its order as under: 161. Basically the assesee's objection is twofold:- regarding the disallowance itself and quantification of the disallowance. The Assessee argued that it had applied for the approval w,e,f January 1, 2010 and approval has been granted on 21 April, 2010 only on account of procedural lapses. As per the assessce, approval is deemed to be received from date of the application i.e. January 1, 2010. We are not convinced by this argument. The approval letter issued by the STPI authorities do not mention any thing about the approval being retrospectively effective. It is not for the DRP to second-guess the intention of the approving, authority particular when the language of the letter has no ambiguity. The assessee could have obtained a clarification from the approving authority rather than asking the AO or the DRP to find out the true intent of the approval. We also agree with the AO that circular no 1/2005 would apply in the assesee's case though the circular mentions only section 10B and not section 10A. The assesses has not br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication filed by the assessee in January 2010. The later application filed in April 2010 only cured certain deficiencies/discrepancies noted by the STPI in the earlier application filed, for which it was duly penalized also by the Director STPI. 17. The lapses/discrepancies noted in the assesses application filed in January 2010, communicated to it by the STPI vide letter dated 11.01.2010, were to the following effect: 1. Your Custom Bonding License has been expired on 21.11.2009 2. Lease agreement should be on Judicial Stamp Paper. 3. All Pending MPR s QPR s (if any) 18. As is evident from the above the lapses noted related to custom bonding license having expired on 21.112009, lease agreement not being on judicial stamp paper and on account of any pending monthly or quarterly progress reports i.e. MPR and QPR. 19. From the documents filed before us, and which were filed to both the AO/DRP also, we find that the assessee renewed its custom bonding license for further period of one year up to 21.11.2010. Copy of the letter of the Central Excise and Customs division, dated 22.02.2010, to this effect placed at paper book page no. 37 evidences this fact. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules. The violation was undoubtedly noted from the application filed by the assessee in January 2010 for approval of expansion Unit and it pertained to more particularly the expansion Unit not being approved as a bonded warehouse by the Customs and Central Excise authority as on the date of seeking approval i.e. January 2010. If the approval was with effect from April 2010,then the fact of the expansion unit not being approved so from January 2010 onwards would not tantamount as violation of prescribed Rules and Regulations so as to penalize the assessee. Even otherwise, the assessee having cured all defects from January 2010 onwards, paid penalty for the defects also, the fresh application filed in April 2010 is to be treated for all purposes in continuation of its original application filed in January 2010 .And the approval so granted by STPI vide letter dated April 2010 is therefore to be treated as in pursuance to the original application filed in January 2010.Which is how even the STPI authorities have treated it by certifying invoices relating to the January March 2010 period. 21. We have also gone through the Circular of 2005, which the Revenue contends operates against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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