TaxTMI 
TaxTMI 
2016 (9) TMI 387
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....Notice under section 142(1) of the Act was also issued on 06.11.2013. In response thereto, the assessee filed various information called for. After verification of details furnished by the assessee, the assessment was completed under section 143(3) of the Act by accepting the returned income of the assessee. 3. On verification of records, the ld. PCIT has observed that the assessee got the initial approval from STPL for setting up of 100% EOU on 07.10.2010 and signed the agreement with STPL only on 18.11.2010. He further noticed from the invoice details that the software service provided by the assessee to its client in USA was from April 2010 to November, 2010 and only a meagre amount of Rs..4,64,440/- out of the total export proceeds of Rs..53,19,900/- has been received from the service rendered by the assessee after signing the agreement with the STPL. Therefore, the ld. PCIT was of the opinion that the assessee is not eligible to claim deduction under section 10B of the Act for service rendered before November, 2010. 4. Further, from the profit and loss account, the ld. PCIT has observed that the assessee had shown only meagre amount for salary and it is also noticed that....
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....tled to get the benefits under the STP Scheme only after entering into the legal agreement with STPI-Chennai. Accordingly, the assessee has signed the agreement with STPL on 18.11.2010 and this fact was not disputed. However, the ld. PCIT has disputed that the assessee has not received the approval from the Board appointed on this behalf by the Central Government in view of Explanation 2 to section 10B of the Act and therefore, the assessee's undertaking cannot be defined as 100% EOU to claim exemption under section 10B of the Act. By considering various decisions of the Benches of the Tribunal, the Pune Benches of the Tribunal in the case of ITO v. Cat Labs Pvt. Ltd. in I.T.A. No. 131/PN/2013 for the assessment year 2009-10 dated 26.02.2014 has observed and held as under: "7. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the assessment order for A.Y. 2008-09 has also denied the claim of deduction u/s.10B on the ground that the assessee company is not a 100% ....
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.... monitoring and regulation of software exports, it was held by the AO that the status of EOU for the purpose of deduction u/s 10B cannot be recognized. The AO for the above has also placed reliance on the decision given by the ITAT, Hyderabad in the case of Infotech Enterprises Ltd. Vs. Jt.CIT (2003) 85 ITD 325 (Hyd). The appellant has contended in detail in their submission that the finding of the AO is hyper technical. The Ministry of Information Technology has specifically constituted STPI for granting 100% EOU approval to the units engaged in the manufacturing of softwares and its exports and therefore, this approval must be given recognition equivalent to the Board constituted under Industries Development & Regulation) Act. The appellant has placed reliance on different judgments, as can be seen from the submissions quoted above, which has approved the allowability of this deduction on the basis of STPI registration and it was also claimed that the above referred judgments have been given after taking into account the judgment of Infotech Enterprises Ltd. relied upon by the AO. The appellant has claimed that all the conditions prescribed in the section have been fulfilled. ....
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....siness of manufacturing of software. In view of the above and the fact that the submissions of the appellant has remained uncontroverted, demonstrating that the appellant is engaged in the activity of manufacturing of softwares, it has to be held that the aforesaid finding of the AO is not correct. Therefore, it has to be considered in the facts of the case available on record that the appellant is engaged in the business of software manufacturing and export. Now coming to the main objection of the AO that the approval is not under sec. 14 of the Industries (D&R) Act, 1951, it is noted that there is no dispute to the fact that the approval for EOU available with the appellant is not from the Board constituted u/s 14 of the Industries (D&R) Act, 1951, but is from the STPI. However, the claim of the appellant that the STPI is a body constituted by the Govt. of India for the specific purpose of granting approval of EOU status to units engaged in the manufacturing and exports of softwares and therefore, the same is equivalent and serving the same purpose is required to be considered, is required to examined. For this purpose, the appellant has referred to a comparative table giving ref....
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....of Information Technology (earlier, Department of Electronics). In view of the ambiguity in the legal status of the approval by Director of STPs, the Inter-Ministerial Standing Committee will meet to consider the approvals by Directors of STPs issued in the past. Therefore, with a view to avoid infructuous demand raised in assessment and reassessment of assesses claiming deduction u/s 10A, it has been decided that the claim of the deduction u/s 10A of the Income tax Act, shall not be denied to STP units only on the ground that the approval/ registration to such unit has been granted by the Directors of Software Technology Parks. However, it has to be ensured that all other conditions specified in sec. 10A are fully satisfied before allowing any such claim." The Tribunals have in the judgments relied upon by the appellant, after 2006 have come to the conclusion that the registration granted by STPI should be considered as enough for the fulfillment of this condition. The Tribunals have also considered the Minutes of the Industrial Ministerial Communication vide letter dated 23.3.2006 issued by Ministry of Communication &Technology, as discussed in detail in the case of DCIT Vs. V....