2018 (1) TMI 386 - AT - Income Tax

Appeal dismissed for late filing under Income Tax Act; eligibility for deduction granted.

The tribunal dismissed the appeal due to a delay in filing against an order under section 263 of the Income Tax Act, 1961, for the assessment year ... Claim of deduction made u/s 10B - as per AO the approval is granted by the Director, Software Technology Parks of India which is a society formed under the Software Technology Park Scheme, thus the approval for the undertaking is not granted by the Board - Held that:- There is no dispute that the assessee has been duly granted approval by STPI. We find that the said approval of the STPI was ratified by the Board vide letter dated 13.08.2007 and the same is exhibited at pages 18 to 20 of the Paper Book. Identical issue was considered by the Hon’ble jurisdictional High Court of Gujarat in the case of PCIT vs. ECI Technologies Pvt. Ltd. [2015 (5) TMI 230 - GUJARAT HIGH COURT] wherein held it is found that at the relevant time the Development Commissioner granted the approval of 100% EOU in favour of the assessee-Company, which came to be subsequently ratified by the Board of Approval and as observed hereinabove as such the ratification shall be from the date on which the Development Commissioner granted the approval, both the learned CIT(A) as well as the learned Tribunal have rightly held that the assessee was entitled to deduction under Section10B of the Act as claimed - Decided in favour of assessee. Issues:- Condonation of delay in filing appeal against order under section 263 of the Income Tax Act, 1961- Eligibility for deduction under section 10B of the Income Tax Act, 1961Analysis:Condonation of Delay:The appellant challenged the validity of an order under section 263 of the Income Tax Act, 1961, for the assessment year 2008-09, but the appeal was late by 860 days. The appellant claimed that the delay was due to not knowing about the order and a belief that an appeal was unnecessary. However, the tribunal found the reasons given by the appellant vague and not a bonafide cause for the delay. Consequently, the delay was not condoned, and the appeal was dismissed.Eligibility for Deduction under Section 10B:The appellant, engaged in software development, claimed a deduction of &8377; 32,56,998 under section 10B of the Act. The Assessing Officer disallowed the deduction stating that the approval was not granted by the Board as required by the Act. The appellant argued that the approval by the Director, STPI was subsequently ratified by the Board, fulfilling the conditions for the deduction. The tribunal noted that the approval by STPI was indeed ratified by the Board and referred to a CBDT circular clarifying the validity of such approvals. Citing a similar case from the High Court, the tribunal held that once the approval by the Development Commissioner is ratified by the Board, it relates back to the date of the original approval. Therefore, the tribunal set aside the CIT(A)'s findings and directed the Assessing Officer to allow the deduction claimed under section 10B.In conclusion, the tribunal dismissed one appeal due to a delay in filing and allowed the other appeal concerning the eligibility for deduction under section 10B of the Income Tax Act, 1961.