The ITO, Ward-4(1),, Ahmedabad v. M/s. e-Infochips Limited,, Ahmedabad

ITA 4235/AHD/2007 | 1999-2000
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 423520514 RSA 2007
Assessee PAN AACCS1310E
Bench Ahmedabad
Appeal Number ITA 4235/AHD/2007
Duration Of Justice 2 year(s) 5 month(s)
Appellant The ITO, Ward-4(1),, Ahmedabad
Respondent M/s. e-Infochips Limited,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-04-2010
Date Of Final Hearing 28-04-2010
Next Hearing Date 28-04-2010
Assessment Year 1999-2000
Appeal Filed On 30-11-2007
Judgment Text
ITA.4235-07 A.Y.99-00. 1 IN THE INCOME_TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI T.K. SHARMA AND SHRI D.C. AGRAWAL. ITA. NO.4235/AHD/2007 (ASSESSMENT YEAR:1999-00) INCOME TAX OFFICER WARD 4(1) AHMEDABAD. VS E-INFOCHIPS LTD. 11/A-B CHANDRA COLONY BEHIND CARGO MOTORS OFF: C.G.ROAD AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: AACCS1310E APPELLANT BY : SHRI B.S. GAHLOT CIT(DR) RESPONDENT BY : SHRI. S.N.SOPARKAR SR.ADVOCATE ( (( ( )/ )/)/ )/ ORDER PER: SHRI D.C. AGRAWAL A.M. THIS IS AN APPEAL FILED BY THE DEPARTMENT ON THE IS SUE OF GRANTING DEDUCTION U/S. 10B OF THE ACT. THE GROUNDS RAI SED BY REVENUE ARE ARGUMENTATIVE AND DETAILED. SIMILAR GROUNDS WERE TAKEN BY THE REVENUE IN THE ASSESSMENT YEARS 1998-99 AND 2000-01 IN I TA NIO.3124 & 3125/AHD/2004. THE ISSUES RAISED IN A.Y. 19 99-00 ARE EXACTLY THE SAME AS IN A.Y. 198-99 AND 2000-01. IN THO SE YEARS THE TRIBUNAL FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2001-02 IN ITA. NO./4005/AHD/2003 WHER EIN THE ISSUE WAS DECIDED AS UNDER :- 7.5. WE HAVE HEARD THE RIVAL CONTENTION AND GONE TH ROUGH THE FACTS OF THE CASE. ON THE ASPECTS OF VIOLATION OF STPI N ORMS AND ESTABLISHMENT OF NEW UNDERTAKING WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF LD. CIT(A). IN RESPECT OF FINDING O F THE AO ITA.4235-07 A.Y.99-00. 2 REGARDING CONVERSION OF UNIT IN TO STPI UNIT WE MAY HAVE A LOOK AT THE FOLLOWING CIRCULAR ISSUED BY THE CBDT. SUBJECT:- TAX HOLIDAY UNDER SECTION 10B OF THE INCOME TAX ACT TO 100% EXPORT ORIENTED UNDERTAKING CERTAIN CLARIF ICATION REG. CIRCULAR NO.1 OF 2005 DT. 6 TH JAN. 2005. SECTION 10B OF THE I.T. ACT PROVIDES FOR 100% DEDUCTIO N OF PROFITS DERIVED BY A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING FROM EXPORT OF ARTICLES OR THINGS OR COMPU TER SOFTWARE MANUFACTURED OR PRODUCED BY IT. THE DEDUCTION IS AVAILABLE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREV IOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE. HOWEVER NO DEDU CTION UNDER SEC. 10B IS AVAILABLE AFTER ASSESSMENT YEAR 2009-10 . 2. THE DEDUCTION UNDER SEC.10B IS AVAILABLE TO AN UNDER TAKING WHICH FULFILLS ALL THE FOLLOWING CONDITIONS:- I) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THING OR COMPUTER SOFTWARE; II) IT IS NOT FORMED BY THE SPLITTING UP OR THE RECON STRUCTION OF A BUSINESS ALREADY IN EXISTENCE EXCEPT IN THE CIRCUMSTANCES SPECIFIED UNDER SEC. 33B OF THE I.T. ACT. III) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINE SS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. 3. REPRESENTATIONS HAVE BEEN RECEIVED FROM VARIOUS QUA RTERS AS TO WHETHER AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA WHICH IS SUBSEQUENTLY APPROVED AS 100% EOU BY THE BOARD APPOINTED BY THE CENTRAL GOVT. IN EXERCISE OF POWERS CO NFERRED UNDER SEC. 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATI ON) ACT 1951 IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE I.T. ACT. 4. THE MATTER HAS BEEN EXAMINED AND IT IS HEREBY CLARI FIED THAT AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA (DT A) AND DERIVING PROFIT FROM EXPORT OF ARTICLES OR THINGS OR CO MPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT WHICH IS SUBSEQU ENTLY CONVERTED INTO A EOU SHALL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE I.T. ACT ON GETTING APPROVAL AS 100 % EXPORT ORIENTED UNDERTAKING. IN SUCH A CASE THE DEDUCTION SHAL L BE AVAILABLE ONLY FROM THE YEAR IN WHICH IT HAS GOT THE APPROVAL AS ITA.4235-07 A.Y.99-00. 3 100% AND SHALL BE AVAILABLE ONLY FOR THE REMAINING P ERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDER TAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR CO MPUTER SOFTWARE AS DTA UNIT. FURTHER IN THE YEAR OF APPROV AL THE DEDUCTION SHALL BE RESTRICTED TO THE PROFITS DERIVED FR OM EXPORTS FROM AND AFTER THE DATE OF APPROVAL OF THE DTA UNIT AS 100% EOU. MOREOVER THE DEDUCTION TO SUCH UNITS IN ANY CASE W ILL NOT BE AVAILABLE AFTER ASSESSMENT YEAR 2009-10. 4. TO CLARIFY THE ABOVE POSITION CERTAIN ILLUSTRATIONS ARE GIVEN AS UNDER :- I) UNDERTAKING A IS SET UP IN DOMESTIC TARIFF ARE A AND STARTS MANUFACTURE OR PRODUCTION OF COMPUTER SOFTWARE IN F INANCIAL YEAR 1999-00 RELEVANT TO ASSESSMENT YEAR 2000-01. IT GET S APPROVAL AS 100% EOU ON 10 TH SEPTEMBER 2004 IN THE FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. ACCORDINGLY I T SHALL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B FROM ASSES SMENT YEAR 2005-06 I.E. THE YEAR IN WHICH IT FULFILLS THE BAS IC CONDITION OF BEING A 100% EOU. FURTHER THE DEDUCTION SHALL BE AVAILA BLE ONLY FOR THE REMAINING PERIOD OF TEN YEARS I.E FROM ASSESSMENT YEAR 2005-06 TO ASSESSMENT YEAR 2009-10. THIS DEDUCTION UNDER SEC. 10B FOR THE ASSESSMENT YEAR 2005-06 SHALL BE RESTRICTED TO THE PROFITS DERIVED FROM EXPORTS FROM AND AFTER THE DATE OF APPROVAL O F THE DTA UNIT AS 1005 EOU. II) UNDERTAKING B SET UP IN DOMESTIC TARIFF AREA BEGINS TO MANUFACTURE OR PRODUCE COMPUTER SOFTWARE IN FINANCI AL YEAR 1996- 97 RELEVANT TO ASSESSMENT YEAR 1997-98. IT GETS APP ROVAL AS 100% EOU IN FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMEN T YEAR 2008- 09. NO DEDUCTION U/S. 10B SHALL BE ADMISSIBLE TO UN DERTAKING B AS THE PERIOD OF 10 YEARS EXPIRES IN FINANCIAL YEAR 20 05-06 RELEVANT TIO ASSESSMENT YEAR 2006-07 PRIOR TO ITS APPROVAL AS 1 00% EOU. III) UNDERTAKING C IS SET UP IN DOMESTIC TARIFF A REA IN THE FINANCIAL YEAR 2000-01 RELEVANT TO ASSESSMENT YEAR 2001-02 AN D ENGAGED IN THE BUSINESS OF PROVIDING COMPUTER RELATED SERVICES OTHER THAN THOSE NOTIFIED BY THE BOARD FOR THE PURPOSES OF SEC . 10B. IN FINANCIAL YEAR 2002-03 IT ACQUIRES MORE THAN 20% O F OLD PLANT AND MACHINERY AND STARTS MANUFACTURING COMPUTER SOFTWAR E. IT ALSO GETS APPROVAL AS 100% EOU IN FINANCIAL YEAR 2002-03. UND ERTAKING C SHALL NOT BE ELIGIBLE FOR DEDUCTION UNDER SEC.10B AS THERE HAS BEEN TRANSFER OF OLD PLANT AND MACHINERY. ITA.4235-07 A.Y.99-00. 4 IV) UNDERTAKING D IS SET UP AND STARTS PRODU CING COMPUTER SOFTWARE IN FINANCIAL YEAR 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05. IT GETS APPROVAL AS 100% EOU IN FINANCIAL YEAR 2006-07 RELE VANT TO ASSESSMENT YEAR 2007-08. HOWEVER THE DEDUCTION SHA LL NOT BE AVAILABLE AFTER ASSESSMENT YEAR 2009-10. V) UNDERTAKING E IS SET UP AND STARTS PRODUCING C OMPUTER SOFTWARE PRIOR TO 31 ST MARCH 1994. IT GETS APPROVAL AS 100% EOU IN FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. UNDERTAKING E SHALL NOT BE ELIGIBLE FOR DEDUCTION UNDER SEC.10B AS THE PERIOD OF DEDUCTION OF 10 YEARS EXPIRES PRIOR T O ASSESSMENT YEAR 2005-06.. [ F.NO.149/194/2004-2004] 7.6. AS IS APPARENT FROM THE PARA-4 OF THE AFORESAI D CIRCULAR AND THE ILLUSTRATIONS GIVEN THEREAFTER CBDT ITSELF HAS PER MITTED AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA (DTA) AND DERIVING PROF IT FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PROD UCED BY IT AND WHICH IS SUBSEQUENTLY CONVERTED INTO A EOU DEDUCTION UND ER SEC. 10B OF THE I. T. ACT ON GETTING APPROVAL AS 100% EXPORT ORIENTED UNDERTAKING. THE DEDUCTION IS AVAILABLE FROM THE YEAR IN WHICH IT GE TS THE APPROVAL AS 100% EOU AND IS AVAILABLE ONLY FOR THE REMAINING PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEA R RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS AS A DTA UNIT. IN THE LIGHT OF THIS CIRCULAR AND THE FINDINGS OF LD. CIT (A) WITH WHICH WE AGREE THERE IS NO GROUND FOR DENIAL OF CLAIM FOR DEDUCTION U/S. 10 B OF THE ACT THE TAXPAYER HAVING REGISTERED AS 100% EOU IN THE PERIO D RELEVANT TO A.Y. 1996-97. AS REGARDS VIOLATION OF NORMS OF STPI WE ARE OF THE VIEW THAT UNLESS VIOLATION OF CONDITIONS OF APPROVAL IMPINGE ON CONDITIONS FOR GRANT OF DEDUCTION UNDER THE RELEVANT PROVISIONS OF THE A CT THERE IS NO GROUND FOR DENIAL OF DEDUCTION. IN THIS CASE THE STATUS OF TAXPAYER AS 100% EOU AND UNDER STPI SCHEME CONTINUES. FOR THE DEFAULT AL READY PENALTY HAS BEEN IMPOSED BY THE CONCERNED AUTHORITIES. 7.7. AS REGARDS DOMESTIC SALE SECOND PROVISO TO TH E EXTENT SEC. 10B(1) ITSELF PERMITS THAT THE PROFITS AND GAINS DERIVED F ROM SUCH DOMESTIC SALES OF ARTICLES OR THINGS OR COMPUTER SOFTWARE AS DO NO T EXCEED TWENTY-FIVE PER CENT OF TOTAL SALES SHALL BE DEEMED TO BE THE PROFI TS AND GAINS DERIVED FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER S OFTWARE. 7.8. REGARDING PERMISSION OF CENTRAL EXCISE AUTHORI TIES REFERRED TO IN GROUNDS OF APPEAL TO A QUERY BY THE BENCH LD. DR COULD NOT EXPLAIN AS TO HOW IN THE ABSENCE OF SUCH PERMISSION TAXPAYER COULD UNDERTAKE EXPORTS AND EARN VALUABLE FOREIGN EXCHANGE FOR THE COUNTRY. AS ALREADY STATED THE UNIT HAS BEEN GRANTED THE STATUS OF 100 % EOU ON 31.8.1995. ITA.4235-07 A.Y.99-00. 5 THE FACT OF EXPORTS HAS ALREADY BEEN TAKEN COGNIZAN CE BY THE COMMISSIONER CENTRAL EXCISE & CUSTOMS EVEN WHILE P ASSING ORDER DATED 28.6.2001 LEVYING PENALTY FOR VARIOUS DEFAULTS [ C. F. PAGE 420-424 OF PAPER BOOK]. TO SAY AT THIS STAGE THAT PERMISSION OF EXCI SE AUTHORITIES HAS NOT BEEN OBTAINED BEFORE EXPORTS IS QUITE CONTRARY TO FACTS ON RECORD. IN ANY CASE NO BASIS HAS BEEN ADDUCED BEFORE US FOR SUCH A PLEA. 7.9. IN VIEW OF THE FOREGOING WE DO NOT FIND ANY I NFIRMITY IN THE FINDINGS OF LD. CIT (A) AND CONSEQUENTLY UPHOLD HIS ORDER AN D REJECT THE GROUNDS RAISED BY THE REVENUE. 2. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN OPEN COURT ON 30 / 04 /2010. SD/- SD/- (T. K. SHARMA) (D.C.AGRAWAL) ACCOUNTANT MEMBER. JUDICIAL MEM BER. AHMEDABAD. DATED: 30 /04/2010. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. ITA.4235-07 A.Y.99-00. 6 ITA.4235-07 A.Y.99-00. 7