Appellate tribunal directs Assessing Officer to determine profits eligible for exemption under section 10A

The appellate tribunal allowed the appeal for statistical purposes, directing the Assessing Officer (AO) to determine the profits eligible for exemption under section 10A of the Income Tax Act from the Software Technology Park of India (STPI) approval date onwards, with the appellant required to provide necessary documentation for this assessment. The tribunal found the appellant entitled to the exemption from the STPI approval date but noted the AO lacked details to calculate the exempt amount post-approval, remitting the issue back for further examination.

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Issues: Disallowance of claim u/s 10A of the Income Tax Act, 1961

In this case, the appellant, a company engaged in website development and promotion, outsourcing, and search optimization, appealed against the disallowance of a claim under section 10A of the Income Tax Act, 1961. The Assessing Officer (AO) denied the claim on the basis that the company had commenced manufacturing before receiving approval from the Software Technology Park of India (STPI). The AO held that the company needed to set up a new unit to qualify for the claim under section 10A. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this disallowance, stating that only profits derived from software exports after the STP unit's approval date would be eligible for deduction under section 10A. The CIT(A) referred to Circular No.1/2005 issued by the Central Board of Direct Taxes (CBDT) to support this decision. The appellant failed to provide evidence that the profits were derived from software exports post-approval. However, the appellate tribunal found that the appellant was entitled to the exemption under section 10A from the date of STPI approval, but the AO lacked necessary details to determine the exempt amount post-approval. The tribunal remitted the issue back to the AO to ascertain the profits eligible for exemption from the approval date onwards, directing the appellant to provide all relevant documents for this determination. The tribunal allowed the appeal for statistical purposes, emphasizing the need for a fresh order by the AO on this issue.

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