ITO, Ward – 6(2), Ahmedabad v. M/s. Interact CRM
[Citation -2016-LL-0923-200]

Citation 2016-LL-0923-200
Appellant Name ITO, Ward – 6(2), Ahmedabad
Respondent Name M/s. Interact CRM
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 23/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags export oriented undertaking • software technology park • industrial development • information technology
Bot Summary: Ii) The Ld. CIT(A) has erred in law and on facts in holding that the Assessee was eligible for deduction u/s.10B of the I.T. Act observing that ITA No. 2484/Ahd/12 A.Y. 09-10 Page 2 the Assessee s unit was registered as 100 EOU with Software Technology Park, ignoring the fact that the unit was not approved by the Board of Approval appointed by the Central Government which was conferred with the specific powers by section 14 of the Industrial Act, 1951. The A.O. pointed out that the notification filed by the assessee is not giving power of Board of Approval of EOU under Ministry of Commerce to the Inter Ministerial Standing Committee for units in and. Board of approval for hundred percent export oriented undertaking appointed by the Central Government in exercise of the powers conferred by Section 14 of the Industries Act, 1951 and the rules made under the Act in respect of hundred per cent export oriented undertaking. Assessing Officer held that the claim u/s.10B of the Act is not available to the assessee for lack of valid approval u/s.10B of the Act which was disallowed and added to the total income of assessee. Against the order of Assessing Officer, assessee has filed appeal before the CIT(A), CIT(A) has allowed the appeal of assessee stating that assessee is 100 of EOU with Software Technology Park of India and is eligible to claim deduction u/s.10B of the Act. The only question that clinches the issue involved in this appeal is whether for becoming eligible to the deduction under S.10B of the Act, whether it is enough if the assessee is registered with Software Technology Park of India as a 100 EOU or it is also necessary for the assessee to have the approval of the Board constituted by the Central Government under S.14 of the Industries Act, 1951. D.R. relied on the order of A.O. and stated that the claim of deduction u/s.10B of the Act is wrongly allowed by the CIT(A) in absence of valid approval from the Board of Approval, appointed by the Central Government which conferred with specific powers by Section 14 of the Industrial Development and Regulation Act, 1951.


IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD Before: Shri Rajpal Yadav, Judicial Member Shri Amarjit Singh, Accountant Member ITA No. 2484/Ahd/2012 Assessment Year :2009-10 ITO, Vs. M/s. Interact CRM Ward 6(2), Ahmedabad 402, Shastra, Opp. Drive in Road, Ahmedabad 380052 PAN No. AABFI1300E (Appellant) (Respondent) By Revenue Shri James Kurian, Sr. D.R. By Assessee Shri Sunil Talati, A.R. Date of Hearing 06.09.2016 Date of 23.09.2016 Pronouncement ORDER PER AMARJIT SINGH, A.M.: This appeal is directed at instance of Revenue against order of ld. CIT(A)-XI, Surat, dated 01.08.2012 passed for A.Y.2009-10 on following grounds: i) Ld. CIT(A) has erred in law and on facts in deleting disallowance made by Assessing Officer (A.O.) of claim of Assessee of deduction u/s.10B of Income Tax Act, 1961. ii) Ld. CIT(A) has erred in law and on facts in holding that Assessee was eligible for deduction u/s.10B of I.T. Act observing that ITA No. 2484/Ahd/12 A.Y. 09-10 (ITO vs. M/s. Interact CRM) Page 2 Assessee s unit was registered as 100% EOU with Software Technology Park, ignoring fact that unit was not approved by Board of Approval appointed by Central Government which was conferred with specific powers by section 14 of Industrial (Development and Regulation) Act, 1951 (65 of 1951). 2. return of income was filed on 29.09.2009 declaring total income of Rs.19,72,900/-. Assessee has claimed exemption of Rs.38,23,604/- u/s.10B of Act. During course of assessment, Assessing Officer observed that there was no proof on record regarding approval of Central Government under provisions of Section 10B of Act for starting export oriented undertaking Scheme (in short EOU ). In this connection, Assessing Officer has issued show cause notice to assessee pointing out that by exemption claimed u/s.10B of Act should not be allowed in absence of ratification by Board of Approval for EOU and taxed accordingly. In this connection, Assessing Officer has also sought information from Directors, Software Technology Parks of India, Navi Mumbai. Assistant Director, STPI has furnished details in this connection as under: STP scheme is being administrated by Department of Information Technology, Ministry of Communication and Information Technology, Govt. of India. Inter Ministerial Standing Committee (IMSC) has been constituted under Section 14 of IDR Act, 1951A Notification No. S. O. 117(E) issued dated 22nd February, 1993 and this body has all power in respect of regulating STP and EHTP scheme as BOA has in respect of 100% of EOU. M/s. Interact CRM as STP unit was granted Letter f Approval (LOP) as per Para 6.26 of Foreign Trade Policy. It states in case of units under STP/EHTP Schemes, necessary approval / permission under relevant paragraphs of this chapter shall be granted by office designated by Ministry of Communication and Technology instead of Development Commissioner and by IMSC instead of BOA. From above reply of STPI, Assessing Officer has noticed that IMSC of STP does not have power in respect of 100% of EOU for claiming deduction u/s.10B of Act and it has power only in respect of STP scheme. On other hand, BOA have power in respect of EOU and function and jurisdiction of both are different. assessee in reply to show cause notice claimed ITA No. 2484/Ahd/12 A.Y. 09-10 (ITO vs. M/s. Interact CRM) Page 3 that he had approval by Inter Ministerial Standing Committee on Software Technology Park Scheme. assessee also filed notification no.117(E) dated 22.02.1993. A.O. pointed out that notification filed by assessee is not giving power of Board of Approval of EOU under Ministry of Commerce to Inter Ministerial Standing Committee for units in (EHTP) and (STP). Inter Ministerial Standing Committee has separate jurisdiction over STP and does not having powers of Board of Approval under EOU Scheme. A.O. stated that there are three separate entities granting approval to units claiming deduction u/s.10A and 10B of Income Tax Act, 1961 as under: 1. Board of approval for hundred percent export oriented undertaking appointed by Central Government in exercise of powers conferred by Section 14 of Industries (Development and Regulation) Act, 1951 (65 of 1951) and rules made under Act in respect of hundred per cent export oriented undertaking. 2. Inter Ministerial Standing Committee appointed by notification of Government of India in Ministry of Industry (Department of Industrial Development) No. S. O. 117(E), dated 22nd February, 1993 in respect of unit in Electronic Hardware Technology (EHTP). 3. Inter Ministerial Standing Committee appointed by notification of Government of India in Ministry of Industry (Department of Industrial Development) No. S. O. 117(E), dated 22nd February, 1993 in respect of unit in Software Technology Parks (STP). These three Boards/Committees are separate entities. Board of Approval for EOU is falling under Ministry of Commerce under Chairmanship of Commerce under Chairmanship of Commerce Secretary and Inter Ministerial Standing Committee for STP is administered by Department of Information Technology. Both are separate bodies and having separate jurisdiction. Assessing Officer held that claim u/s.10B of Act is not available to assessee for lack of valid approval u/s.10B of Act which was disallowed and added to total income of assessee. ITA No. 2484/Ahd/12 A.Y. 09-10 (ITO vs. M/s. Interact CRM) Page 4 3. Against order of Assessing Officer, assessee has filed appeal before CIT(A), CIT(A) has allowed appeal of assessee stating that assessee is 100% of EOU with Software Technology Park of India and is eligible to claim deduction u/s.10B of Act. relevant part of decision of CIT(A) is reproduced as under: 2.2 I have carefully considered rival submissions. It is seen that similar issue has been decided by Hon'ble Hyderabad ITAT in ITA No.1501/Hyd/2011 A.Y.2005-06 in case of ITO vs Secunderabad Software Services Pvt. Ltd., Secunderabad. issue of allowance of 10B deduction were decided in favour of appellant with following observations :- "6. We heard parties and perused impugned orders of lower authorities. only question that clinches issue involved in this appeal is whether for becoming eligible to deduction under S.10B of Act, whether it is enough if assessee is registered with Software Technology Park of India as 100% EOU or it is also necessary for assessee to have approval of Board constituted by Central Government under S.14 of Industries (Development and Regulation) Act, 1951. CIT(A) has decided this issue in favour of assessee, and held assessee as eligible for deduction under S.10B of Act, following decisions of co-ordinate Benches of Tribunal in following cases (a) VSN Makro Technology P. Ltd. V/s. ACIT (ITA No.1057/Hyd/2010) dated 13.1.2011, wherein still earlier decision of Tribunal in case of Infotech Enterprises Ltd.(supra), relied by assessing officer in impugned assessment order has been considered and same has been held to be inapplicable as same has been rendered prior to issuance of Instruction No.1 dated 31.3.2006 by CBDT and letter dated 23.3.2006 issued by Ministry of Communications and Technologies. (b) DCIT V/s. Valliant Communication Ltd. (ITA No.2706/Del/2008 dated 23.4.2010) (2010 - TIOL-452- ITAT-Del), wherein still earlier decision of Delhi Bench in case of ITO Vs. Regency Creations Ltd. (ITA No.4006/Del/2006) dated 13.4.2006 has been followed. (c) Smt. K. Sudha Rani V/s. ITO (ITA No.1750/Hyd/2008) dated 30.10.2009 ITA No. 2484/Ahd/12 A.Y. 09-10 (ITO vs. M/s. Interact CRM) Page 5 Consistent with view taken by various Bench of Tribunal, including Benches at Hyderabad, in similar matters, we hold that assesses, having been registered with STPI, is entitled for deduction under S.10B of Act. In that view of matter, we find no infirmity in impugned order of CIT(A), which is accordingly confirmed and grounds of Revenue are rejected." 2.3 In this regard appellant had rightly placed reliance on following cases :- (i) I.T.O., Ward - 3(1) V/s. M/s. Secunderabad Software Services Pvt. Ltd. (ITA No.1501/Hyd/2011 - A.Y.2005-06) (ii) Regency Creations Ltd. V/s. AC IT Circle 15(1), New Delhi (ITA No.1588/Del./2010-A.Y.2007-08) (iii) DCIT Circle 17(1),New Delhi V/s. M/s. Valliant Communications Ltd. (I.T.A. No.2706/Del/2008 -A.Y.2005-06) (iv) DCIT Circle 16(1), New Delhi V/s. M/s. Technovate eSolutions Pvt. Ltd. (ITA No. 135/Del/2011 - A.Y.2003-04) 2.4 Respectfully following above case laws and keeping in view fact that appellant is registered as 100% export oriented unit with Software Technology Park, India, I hold that appellant is eligible to claim deduction u/s.10B of I.T.Act. Accordingly, A.O. is directed to delete disallowance of Rs. 38,23,604/-. 4. Before us, ld. D.R. relied on order of A.O. and stated that claim of deduction u/s.10B of Act is wrongly allowed by CIT(A) in absence of valid approval from Board of Approval, appointed by Central Government which conferred with specific powers by Section 14 of Industrial Development and Regulation Act, 1951. On other hand, learned Authorized Representative relied on order of CIT(A) and referred to various pages of paper book pertaining to approval obtained from Software Technology Park of India and correspondings made in this connection for seeking approval. 5. After hearing both sides and perused material on record carefully, we find that assessee has filed paper book containing correspondence made by assessee to obtain ratification letter issued by Board of Approval for EOU ITA No. 2484/Ahd/12 A.Y. 09-10 (ITO vs. M/s. Interact CRM) Page 6 Scheme and copy of judgment of Hon ble High Court of Gujarat in case of Principal Commissioner of Income Tax, Gandhinagar vs. ECI Technologies Pvt. Ltd. in Tax Appeal No. 203 of 2015 on which assessee has placed reliance. In this connection, during course of proceeding before us ld. counsel failed to produce Board of Approval for EOU Scheme. We observed that in end of justice, it is required to verify valid certificate, if any, obtained by assessee from Board of Approval for claiming exemption u/s.10B of Act. Accordingly, we set aside case to file of Assessing Officer to verify and if there is valid certificate obtained by assessee from Board of Approval, then decide case accordingly afresh. 6. In result, appeal filed by Revenue is allowed for statistical purpose. This Order pronounced in open Court on 23.09.2016 Sd/- Sd/- (Rajpal Yadav) (Amarjit Singh) Judicial Member Accountant Member Ahmedabad: Dated 23/09/2016 True Copy S.K.Sinha Copy of Order Forwarded to:- 1. Appellant 2. Respondent 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order ITO, Ward – 6(2), Ahmedabad v. M/s. Interact CRM
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