2020 (4) TMI 14 - AT - Income Tax

Tribunal Reverses CIT(A) Grant of Section 10B Deductions, Citing Prior Decision and Lack of Eligible Profits for Deduction.

The Tribunal allowed the Revenue's appeal, overturning the CIT(A)'s decision to grant a deduction under section 10B. It emphasized that the Tribunal's ... Eligibility of deduction u/s.10A - CIT(A) allowed the alternate claim u/s.10B - In the earlier proceedings, earlier CIT(A) specifically held that, deduction u/s 10B is not available - HELD THAT:- AO had categorically held that the assessee is not eligible to claim deduction u/s.10A of the Act as the assessee had not complied with the conditions stipulated such as filing form No.56FF. However, the ld. CIT(A) placing reliance on the decision of Heartland K.G. Information Ltd [2013 (9) TMI 375 - MADRAS HIGH COURT] had directed the Assessing Officer to allow the claim of deduction u/s.10B of the Act. The issue of allowability of claim u/s.10B of the Act is neither alive nor it is permissible, as it amounts to overruling the decision of the Tribunal, by CIT(Appeals). Thus, the ld. CIT(A) had seriously fell in error in directing the Assessing Officer to allow the claim for deduction of provision u/s.10B of the Act. Further, it is an admitted position that before making addition on account of Arm’s Length Price adjustment u/s.92CA(3), there was be no profit available which can be claimed as deduction u/s.10B or 10A of the Act. The provisions of Sub Section (4) of Section 92CA of the Act specifically provides that addition made u/s.92CA(3) of the Act is not eligible profits for deduction neither u/s.10A nor u/s.10B of the Act. The ld. CIT(A) in the flagrant ignorance of the plain provisions of the Act allowed the claim for deduction u/s.10B of the Act. Therefore, we reverse the order of the ld. CIT(A) and allow the appeal filed by the Revenue. Issues:- Appeal against order of CIT(A) for AY 2009-2010- Allowance of deduction u/s.10B of the Act- Eligibility of claim u/s.10A of the Act- Compliance with conditions for deductionAnalysis:1. The appeal was filed by the Revenue against the order of the CIT(A) for the Assessment Year 2009-2010. The Revenue contended that the CIT(A) erred in allowing the appeal of the assessee by relying on a High Court order without considering the specific conditions for claiming deduction under the correct section. It was argued that the conditions specified in sections 10A and 10B were not satisfied by the assessee.2. The brief facts revealed that the assessee, engaged in manufacturing and exporting, filed a return of loss for AY 2009-10. The Assessing Officer denied exemption u/s.10B due to lack of necessary approval. The CIT(A) upheld this decision. Upon appeal to the Tribunal, it was remitted back for reconsideration of deduction u/s.10A, with a clear ruling that the assessee was not entitled to deduction u/s.10B.3. Subsequently, a fresh assessment was conducted denying both u/s.10B and 10A due to non-filing of prescribed form. The CIT(A) allowed the deduction u/s.10B based on a High Court decision. The Revenue challenged this, arguing that the issue of u/s.10B was settled by the Tribunal, and only the eligibility for u/s.10A was under consideration.4. The Tribunal found that the CIT(A) erred in allowing the deduction u/s.10B as the Tribunal's decision was final on this matter. Additionally, it was noted that no profits were available for deduction u/s.10B or 10A after an adjustment under section 92CA(3). The provisions clearly stated that such adjustments were not eligible for deduction under these sections. Therefore, the Tribunal reversed the CIT(A)'s decision and allowed the Revenue's appeal.5. In conclusion, the Tribunal held that the appeal filed by the Revenue was allowed, overturning the CIT(A)'s decision. The judgment emphasized the importance of adhering to the specific provisions of the Act and respecting the finality of Tribunal decisions on certain matters.