Assessee's Appeals Allowed for Tax Exemption & Depreciation

The Tribunal allowed the assessee's appeals, condoning the delay in filing appeals and confirming eligibility for exemption under section 10A of the Income Tax Act. The Tribunal also granted depreciation on plant and machinery, following the Third Member decision. The Revenue's appeal was dismissed, and the Tribunal's order was pronounced on 22.05.2015.

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Issues Involved:
1. Condonation of delay in filing appeals.
2. Eligibility for exemption under section 10A of the Income Tax Act.
3. Entitlement to depreciation on plant and machinery.

Condonation of Delay in Filing Appeals:
The appeals filed by the assessee were delayed by 13 days. The assessee submitted a petition for condonation of delay along with an affidavit explaining the reasons for the delay. The Tribunal, after reviewing the petition, found that the assessee was prevented by reasonable cause from filing the appeals on time. In the interest of justice, the delay was condoned, and the appeals were admitted for hearing.

Eligibility for Exemption under Section 10A:
The primary issue in the Revenue's appeal was the Commissioner of Income Tax (Appeals) allowing the assessee's claim under section 10A of the Income Tax Act. The assessee, a private limited company engaged in software export, was subject to a search and seizure operation. During the assessment, the exemption under section 10A was denied by the Assessing Officer on the grounds that the necessary certificate in Form 10A was not filed with the return, and the plant and machinery were old, not new as required.

The assessee appealed to the Commissioner of Income Tax (Appeals), providing various details to support their claim under section 10A. The Commissioner, after examining the details and the remand report from the Assessing Officer, allowed the claim. The Revenue contended that the assessee did not furnish details about new machinery used in the 10A unit and the value of old machinery exceeded the prescribed percentage.

The Tribunal reviewed the order of the Commissioner of Income Tax (Appeals) and found that the assessee had purchased machines after approval from the Software Technology Park of India (STPI) and imported computers and stentura machines thereafter. The return of income for the assessment year 2001-02 was filed on 28.03.2002, accompanied by the audit report and Form No. 56F. The Assessing Officer, during remand proceedings, did not provide any adverse comments on the evidences produced by the assessee. The Tribunal upheld the order of the Commissioner of Income Tax (Appeals), confirming the assessee's eligibility for exemption under section 10A.

Entitlement to Depreciation on Plant and Machinery:
The assessee claimed depreciation for the assessment years 2002-03 and 2003-04, stating that the plant and machinery were ready for use but could not be used due to the lack of orders. The Commissioner of Income Tax (Appeals) denied the depreciation claim, stating that the assets were not put to use.

The Tribunal considered the submission of the assessee that the plant and machinery were kept ready for use and referred to the Third Member decision of the Chennai Bench in the case of ACIT Vs. Chennai Petroleum Corporation Ltd. The Tribunal noted that under section 32, it is sufficient if the machinery is kept ready for use, even if not actually used due to circumstances beyond the assessee's control.

Respectfully following the Third Member decision, the Tribunal allowed the assessee's claim for depreciation, concluding that the plant and machinery were kept ready for use.

Conclusion:
The appeal of the Revenue was dismissed, and the appeals of the assessee were allowed. The Tribunal pronounced the order in the open court on 22.05.2015.

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