Tribunal upholds assessment re-opening for 2009-10, directs AO to re-consider deduction claim

The Tribunal upheld the re-opening of assessment for the assessment year 2009-10, rejecting the assessee's argument of lack of fresh material. Regarding the deduction u/s.10A / 10AA of the Act, the Tribunal directed the AO to re-consider the claim due to the assessee's declared loss, emphasizing the need for proper justification for turnover reduction. The appeal was partially allowed for statistical purposes, with the issue remanded to the AO for fresh consideration.

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Issues:
Validity of re-opening of assessment
Deduction u/s.10A / 10AA of the Act

Validity of re-opening of assessment:
The appeal challenged the re-opening of assessment for the assessment year 2009-10. The assessee contended that the re-opening was based on a mere 'change of opinion' without fresh tangible material, citing legal precedents. The Department argued that the re-opening was justified based on new material indicating income escapement. The Tribunal observed that since the original assessment did not address the exemption claimed u/s.10AA, the concept of 'change of opinion' did not apply. It was noted that the AO formed a reasonable belief of income escapement post the original assessment. The Tribunal upheld the re-opening, rejecting the assessee's argument of lack of fresh material.

Deduction u/s.10A / 10AA of the Act:
The assessee, a 100% export-oriented unit, initially claimed exemption u/s.10AA but later omitted the claim due to a net loss. The AO rejected the claim citing lack of evidence. The Tribunal found that if the assessee could justify the reduction in export turnover, the AO should consider the revised turnover for assessing income and granting deductions. The assessee provided STPI approvals supporting eligibility for the deduction. As the assessee declared a loss, the Tribunal directed the AO to re-consider the deduction claim, emphasizing the need for proper justification for the turnover reduction. The issue was remanded to the AO for fresh consideration.

The Tribunal partially allowed the appeal for statistical purposes, emphasizing a fresh review by the AO regarding the deduction claim. The order was pronounced in Chennai on November 23, 2022.

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