|CORAM:||G. S. Pannu (AM), R. S. Padvekar (JM)|
|CATCH WORDS:||deduction, EOU Unit, STPI|
|DATE:||October 30, 2014 (Date of pronouncement)|
|DATE:||October 31, 2014 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|Though approval of Director of STPI to EOU is sufficient for s. 10A, it is not so for s. 10B. For s. 10B, the approval of the Board appointed under I(D&R) Act is necessary. Claim for s. 10A can be made before CIT(A)|
(1) The fact that the assessee is a 100% EOU approved by the Director, STPI does not mean entitle the assessee to deduction u/s 10B if the undertaking is not been approved by the Board appointed in this behalf by the Central Government in exercise of powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951, which is an express requirement for claiming deduction u/s 10B of the Act because of Explanation 2(iv) below section 10B of the Act as held in Regency Creations 27 taxmann.com 322 (Del). The plea of the assessee that the High Court has not considered the argument that a conjoint reading of the Exim Policy/Foreign Trade Policy entitles the assessee to the benefits of section 10B of the Act, once the unit is approved as per the Exim Policy is not acceptable because, having regard to judicial discipline, the Tribunal cannot disregard the judgement of the High Court in the manner sought to be canvassed. In Technovate E Solutions P. Ltd 354 ITR 110 (Del) the Delhi High Court held that the approval granted by the Director of STPI is sufficient approval so as to satisfy the condition stipulated in section 10A(2)(i)(b) of the Act in view of the Instruction and communication of the CBDT and it was held that the approval granted by the Director of STPI would be deemed valid for the purposes of compliance with the conditions stipulated u/s 10A(2) of the Act. However, as the aforesaid judgement in Technovate E Solutions P. Ltd deals with section 10A of the Act and not with section 10B, it does not help the assessee in the present case.
(ii) However, the Revenue’s contention that the assessee cannot be allowed the benefits of section 10A of the Act merely because the prescribed Audit Report in Form No.56F was not filed in the return of income, is quite erroneous because after denial of deduction u/s 10B of the Act in the assessment order, the earliest opportunity for the assessee to stake claim for deduction u/s 10A of the Act was before the CIT(A); and, the assessee made the claim before the CIT(A) along with the prescribed Audit Report in Form No.56F. The Delhi High Court in Valiant Communications (supra) in similar circumstances held that the claim of the assessee for deduction u/s 10A of the Act is required to be examined in accordance with law.