TaxTMI 
TaxTMI 
2007 (9) TMI 302
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....ngaged in the business of development and export of computer software. For the assessment year under consideration, the assessee filed a return of income declaring income of Rs. 4,60,330 which, inter alia, included the claim of exemption under s. 10A of the Act amounting to Rs. 1,47,48,225. In the assessment completed under s. 143(3) of the Act on 31st March, 2005, the AO denied the claim of exemption under s. 10A of the Act. The claim of the assessee for exemption under s. 10A related to the profits derived in its industrial undertaking at NEPZ. This unit of the assessee was set up and started commercial operations in the previous year relevant to asst. yr. 1997-98. In the initial year i.e. asst. yr. 1997-98, the assessee suffered losses i....
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.... of the assessee on the basis of the decision of the Delhi Bench of the Tribunal in the case of Legato Systems India (P) Ltd. vs. ITO (2005) 93 TTJ (Del) 828. In the above background, we have heard the rival parties. 3. The sum and substance of the case of the Revenue is based on the reasoning of the AO adopted with reference to the provisions of sub-s. (5) of s. 80HHE of the Act. The learned Departmental Representative has relied upon the language of sub-s. (5) of s. 80HHE to argue that once the assessee opts to claim the deduction under s. 80HHE then exemption under any other provisions of the Act is not available to the assessee. 4. On the other hand, the learned counsel appearing for the respondent assessee has submitted that the deci....
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....ted by us in the earlier paras and are not repeated for the sake of brevity. So, however, it would be pertinent to note that in the initial assessment year of 1997-98, the assessee suffered a loss in its NEPZ unit and, therefore, did not claim exemption under s. 10A of the Act. In the second year i.e., asst. yr 1998-99, it claimed deduction under s. 80HHE in relation to the profits from NEPZ unit. Thereafter, from asst.yr 1999-2000 onwards, it claimed exemption under s. 10A on profits from the NEPZ unit. In the assessment year under consideration, for the first time, the claim of exemption under s. 10A has been denied, ostensibly on the strength of the provisions of s. 80HHE(5) of the Act. The issue is whether the said action of the AO is j....
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.... The said position is not in dispute. The only dispute to be addressed is the import of sub-s. (5) of s. 80HHE of the Act, which we have reproduced elsewhere in our order. 7. Sub-s. (5) of s. 80HHE, in our view, seeks to plug a situation whereby an assessee seeks to claim double deduction with reference to same income once under s. 80HHE and secondly under any other provision of the Act. The interpretation placed by the Revenue is that once the assessee has claimed exemption under s. 80HHE of the Act in respect of a business, no deduction shall be allowed under any other provision of the Act either for the same or any other assessment year in relation to the profits of such business. In our humble opinion, this interpretation does not emer....
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....HHC for a particular assessment year cannot be claimed as a deduction either for the same or any other assessment year. Similar has been the reasoning adopted by the Delhi Bench of the Tribunal in the case of Jindal Exports (P) Ltd. wherein it was held that deductions under s. 80HHC cannot be denied to the assessee simply because the assessee enjoyed exemption under s. 10A of the Act. Following the aforesaid discussion, in our considered opinion, the claim of the assessee has been rightly upheld by the CIT(A). In the result, the assessee succeeds on this ground and the Revenue fails. 8. The second ground preferred by the Revenue relates to the action of the AO in not considering the sales aggregating to Rs. 4,07,05,587 as export sales on t....
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....been placed in the paper book filed before us by the assessee in this regard. As a consequence, we hereby affirm the decision of the CIT(A) on this issue. Accordingly, the Revenue fails on this ground. 10. The last ground in this appeal relates to the action of the CIT(A) in setting aside the action of the AO in denying exemption under s. 10A with respect to a sum of Rs. 18,51,545 representing the profits earned by the assessee from its Japan branch. We find that the AO in the assessment order has denied the claim of the assessee on the ground that the provisions of s. 10A do not cover the profits of a foreign branch of the assessee, The CIT(A) however has allowed the claim of the assessee on the basis of the Expln. 3 to s. 10A of the Act.....