Tribunal grants software company 10-year deduction under section 10A for AY 2009-10

The Tribunal allowed the assessee's appeal, directing the AO to allow the deduction u/s 10A for the assessment year 2009-10. The Tribunal held that the assessee, engaged in software development, was eligible for the deduction for ten consecutive years from the year of commencing manufacturing, which in this case was AY 2000-01. The Tribunal set aside the lower authorities' orders and dismissed the appeal grounds challenging the validity of reopening the assessment, as there was no change of opinion by the AO during the original assessment.

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Issues:
Appeal against order of CIT(A) disallowing deduction u/s 10A for assessment year 2009-10. Validity of reopening assessment based on change of opinion. Interpretation of Section 10A eligibility for deduction.

Analysis:
1. The assessee, engaged in software development, appealed against CIT(A)'s order disallowing deduction u/s 10A for AY 2009-10. Original assessment made disallowances u/s 40(a)(i) & 14A. CIT(A) granted relief, but ITAT set aside the order and remitted the matter back to AO for reconsideration.
2. AO issued notice u/s 148 and completed re-assessment disallowing deduction u/s 10A. Assessee challenged it, arguing reopening was based on a change of opinion and deduction should be allowed from the year of commencement of manufacturing. CIT(A) upheld AO's view.
3. AR submitted that the assessee started software development in FY 1999-2000 and claimed deduction u/s 10A from AY 2000-01. They argued for eligibility based on the year of commencement of manufacturing. The AR cited a relevant case to support their claim.
4. The Tribunal analyzed the facts and Section 10A, which allows deduction for ten consecutive years from the year of commencing manufacturing. As the assessee started manufacturing software in AY 2000-01, they were eligible for the deduction up to AY 2009-10. The lower authorities' orders were set aside, directing the AO to allow the deduction.
5. Regarding the validity of reopening the assessment, the Tribunal found no change of opinion by the AO during the original assessment. The CIT(A) upheld the AO's action, and as the assessee failed to provide material refuting this, the Tribunal dismissed the appeal grounds on this issue.
6. The Tribunal partly allowed the assessee's appeal, directing the AO to allow the deduction u/s 10A. The order was pronounced on February 1, 2018, in Chennai.

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