IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-3 NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. No. 1050/Del/2016 Assessment Year: 2011-12 M/s CKlear Software Pvt. Ltd., VS. ITO, WARD-3(2) IC/13, New Rohtak Road, New Delhi Karol Bagh, New Delhi 110 005 (PAN: AACCC5051A) (ASSESSEE) (RESPONDENT) Assessee by: Sh. Rajesh Malhotra, CA Revenue by: Sh. B. Raman Janyulu, Sr. DR Date of Hearing on : 15/09/2016 Order Pronounced on : 04/10/2016 PER H.S. SIDHU, JM ORDER This appeal is filed by assessee against order dated 16.11.2015 passed by Ld. CIT(A)-2, New Delhi relating to Assessment Year 2011-12 on following grounds:- 1. On facts and in circumstances of case and in law Ld. CIT{A} has erred in dismissing appeal without considering fact of case of assessee. action of authority below is wrong, illegal, misconceived, unjustified, against nature of justice and bad at law therefore it should be quashed. 2. On facts and in circumstances of case and in law authorities below has erred in disallowing claim of assessee of deduction u/s 1OA of Rs. 25,56,255/- being provided to newly established undertaking. action of authorities is wrong, illegal, misconceived, unjustified, 2 against nature of justice and bad at law therefore it should be quashed. 3. Without prejudice to Ground no. 3 above regarding claim of deduction of assessee u/s 1OA on facts and in circumstances of case and in law authorities below has erred in dismissing plead of assessee for alternative claim for deduction u/s 1OB of Rs. 25,56,255/- just in case of deduction u/s 1OA is rejected by authorities. action of authorities is wrong, illegal, misconceived, unjustified, against nature of justice and bad at law therefore it should be quashed. 4. On facts and in circumstances of case and in law authorities. below have erred in imposing interest u/s 234B of Income Tax Act. action of authorities is wrong, illegal, misconceived, unjustified, against nature of justice and bad at law therefore it out be quashed. 5. appellant craves right to add/ alter/ amend/delete all or any of ground of appeal at time of hearing. 2. Facts narrated by revenue authorities are not disputed by both parties, hence, same are not repeated here for sake of convenience. 3. At time of hearing, Ld. Counsel of assessee has stated that AO has disallowed exemption claimed by Assessee u/s. 10A on basis of decision of Assessment Year 2007-08 and Ld. First Appellate Authority has also dismissed appeal of assessee by upholding view of AO. He further stated that now on Appeal filed by assessee against assessment order for assessment year 2007-08 passed in case of assessee, ITAT has allowed exemption claimed by assessee u/s. 10A of I.T. Act, 1961 in ITA No. 2512/Del/2014 vide order dated 18.8.2016. Assessee s counsel has also filed copy of orders of AO, Ld. CIT(A) for assessment year 2007-08 and also order of ITAT passed in ITA No. 2512/Del/2014 for AY 2007-08 dated 3 8.8.2016 in shape of Paper Book containing pages 1 to 45. He requested that Appeal filed by assessee may be allowed. 4. On contrary, Ld. DR relied upon orders of authorities below. 5. I have heard both parties and carefully gone through orders passed by authorities below alongwith assessment order for assessment year 2007-08 in which Revenue Authority has disallowed exemption claimed by assessee u/s. 10A of I.T. Act and order of Ld. First Appellate Authority dated 25.2.2014 in Appeal filed by assessee for assessment year 2007-08 as well as order of ITAT B Bench, New Delhi dated 18.8.2016 passed in ITA No. 2512/Del/2014 for AY 2007-08 in case of assessee wherein Tribunal has allowed Appeal of assessee by allowing exemption benefit u/s. 10A of I.T. Act. relevant portion i.e. para no. 3 to 6 of aforesaid Tribunal s order is reproduced as under:- 3. We have heard rival submissions and perused relevant material on record. It is admitted position that assessee set up new undertaking on 23.10.2003 and started its business of maintenance of software. undertaking obtained its STPI registration on 6.7.2006, copy of which is available on pages 24 to 26 of paper book. Competent authority, namely, Software Technology Parks of India, issued Green card to assessee as 100% EOU under STP Scheme. This Green card was initially valid for one year upto 5.7.2007 and, thereafter, it was renewed from time to time. assessee was not set up in area designated as STP Complex. However, on basis of Instruction No.1 dated 31.3.2006 4 issued by CBDT providing that STP may be new unit by itself, assessee applied for registration, which was duly granted by treating assessee as 100% EOU. Though assessee was set up on 23.10.2003, it did not claim any benefit of section 10A for assessment years 2004-05 onwards because it was not having STP registration. It was only pursuant to clarification issued by CBDT vide its Instruction No.1 dated 31.3.2006 that assessee applied for registration and it was granted approval as 100% EOU under STP Scheme. When assessee was set up on 23.10.2003, benefit of exemption u/s 10A was otherwise available to qualifying units. Since assessee did not get registration from date of its setting up, it did not claim benefit of exemption u/s 10A and paid tax on its regular income. mere fact that assessee was granted STPI registration on 6.7.2006 would not disqualify it for benefit of section 10A for period commencing from such date if other requisite conditions stand satisfied. case of Revenue is that assessee should have claimed benefit of section 10A from assessment year 2004-05 itself as it was set up in previous year relevant to that assessment year and since no such claim was made, it cannot be considered as eligible for benefit in year under consideration. We are not convinced with this logic. There can be no denial of fact that assessee otherwise fulfilled all requisite conditions for availing benefit u/s 10A from date it was set up in Financial year 2003-04. It was only due to lack of STPI registration that assessee did not get benefit of section 10A for intervening period terminating on date it was granted certificate of STPI registration as 100% 5 EOU on basis of Instruction No.1 dated 31.3.2006. By not claiming exemption u/s 10A for earlier years, assessee simply lost benefit for those years. As assessee was not eligible for benefit of section 10A for earlier years for lack of registration, it cannot be said that benefit of section 10A, which is otherwise rightly due to assessee, should also be denied on getting requisite registration for remaining period of ten consecutive assessment years beginning with assessment year relevant to previous year in which undertaking begins to manufacture or produce .. computer software . Hon ble Delhi High Court in Praveen Soni vs. CIT (2011) 333 ITR 324 (Del) has held that special deduction u/s 80IB cannot be denied for remaining years if it was not claimed for initial years subject to fulfillment of requisite conditions. Delhi Bench of Tribunal in ITO vs. Vidya Tech Solutions (P) Ltd. (2010) 35 SOT 25 (Del), has allowed benefit of section 10A under similar circumstances as are prevailing instantly. 4. authorities below have also canvassed view that since assessee purchased some old computers, it was case of reconstruction of business. We are not satisfied with this proposition in so far as facts of instant case are concerned. fact that assessee used some old computers for administrative purposes would not make assessee ineligible for benefit of section 10A, when computers and software used by assessee in industrial undertaking were new. We have seen balance sheets of assessee starting with its first closing on 31.3.2014 and thereafter. It is observed that in first 6 closing on 31.3.2014, there were no fixed assets. assessee started purchasing computers and software etc. from second year onwards. assessee simply purchased some second hand computers for administrative purposes. It does not make it case of reconstructed business. 5. In view of foregoing discussion, we are satisfied that ld. CIT(A) was not justified in confirming denial of section 10A benefit to assessee. impugned order is set aside to this extent. 6. In result, appeal is allowed. 6. Respectfully following aforesaid precedent of Coordinate Bench of Tribunal in assessee s own case for assessment year 2007-08, I allow benefit of section 10A to assessee and accordingly, impugned order is set aside to this extent. 7. In result, appeal filed by assessee stands allowed. Order pronounced in Open Court on 04/10/2016. Sd/- [H.S. SIDHU] JUDICIAL MEMBER Date 04/10/2016 SRBHATNAGAR Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT By Order, Assistant Registrar, ITAT, Delhi Benches 7 M/s CKlear Software Pvt. Ltd. v. ITO, WARD-3(2), New Delhi