2012 (11) TMI 382 - AT - Income Tax

Tech Co Wins Tax Exemption for Exporting Telecom Equipments

The Tribunal upheld the Commissioner of Income Tax (Appeals)' decision to allow the appellant, a public limited company engaged in manufacturing and ... Deduction under section 10B - 100% Export Oriented Unit approval - STPI registration treated as valid approval - Instruction No.1/2006 / CBDT Circulars - Explanation 2(iv) to section 10B - principle of consistencyDeduction under section 10B - 100% Export Oriented Unit approval - STPI registration treated as valid approval - Explanation 2(iv) to section 10B - Instruction No.1/2006 / CBDT Circulars - reliance on Tribunal precedent - principle of consistency - Whether STPI registration/approval is sufficient to treat the assessee as a 100% EOU for allowing deduction under section 10B and whether the CIT(A) was right in allowing the claim. - HELD THAT: - The Tribunal upheld the CIT(A)'s allowance of deduction under section 10B, accepting that registration granted by the Software Technology Parks of India (STPI) is valid for purposes of section 10B in the facts of the case. The Tribunal relied on its earlier decision in the assessee's own matter for assessment year 2005-06, which followed CBDT instructions (including Instruction No.1 dated 31.3.2006/CBDT Circulars) and a Tribunal decision (Regency Creations Ltd.) holding that STPI registration qualifies as appropriate approval for a 100% EOU. The Tribunal noted that the alternate view in Infotech Enterprises Ltd. (Hyd.) was rendered prior to the CBDT instruction and, on the identical facts before it, found the earlier acceptance of deduction in assessment year 2004-05 by the AO and the rule of consistency relevant. In these circumstances the Tribunal found no infirmity in the CIT(A)'s conclusion that the assessee was eligible for deduction under section 10B and declined to interfere. [Paras 6, 7, 8]The CIT(A)'s orders allowing deduction under section 10B are confirmed and the Department's appeals are dismissed.Final Conclusion: The Tribunal dismissed the Department's appeals and confirmed the CIT(A)'s allowance of the assessee's claim of exemption under section 10B for the assessment years 2003-04, 2004-05, 2006-07 and 2007-08, holding STPI registration to be valid for the purpose and relying on CBDT instruction and prior Tribunal precedents and consistency of treatment. Issues:Appeal against the allowance of exemption u/s 10B of the Income Tax Act for multiple assessment years.Analysis:The appellant, a public limited company engaged in manufacturing and exporting Telecom Transmission Equipments, claimed exemption u/s 10B of the Income Tax Act for various assessment years. The Assessing Officer (AO) rejected the claim, stating that approval from Software Technology Park of India does not equate to approval from the Board appointed u/s 14 of the Industries (Development and Regulation) Act, 1951. The AO relied on a previous Tribunal decision for this conclusion. However, the Commissioner of Income Tax (Appeals) allowed the deduction, leading to the Department's appeals.The Department contended that the CIT(A) erred in allowing the claim, as it contravened the statutory requirement of approval by the Board under the Industries Act. The Department argued that a specific Instruction cited by the CIT(A) was not applicable to section 10B, and the CIT(A) failed to consider the relevant legal provisions. The Department sought cancellation of the CIT(A)'s orders.On the other hand, the assessee's counsel supported the CIT(A)'s decision and presented a previous Tribunal order in favor of the assessee. The Tribunal had held that registration by STPI for establishing a 100% Export Oriented Unit (EOU) under the Software Technology Park Scheme is valid for claiming deduction u/s 10B. The Tribunal emphasized consistency in applying the law and dismissed the revenue's appeal.The Tribunal confirmed the CIT(A)'s orders, stating that the facts were similar to a previous assessment year where the assessee's eligibility for deduction u/s 10B was accepted. The Tribunal found no error in the CIT(A)'s decision and rejected the Department's appeals, upholding the allowance of exemption u/s 10B for the relevant assessment years.