Itat/109/2017 Ia No:ga/2/2017 (Old No: Ga/1042/2017) Principal Commissioner Of Income Tax 3, Kolkata v. M/S. Wizard Enterprises Pvt. Ltd

Form No.(J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE P R E S E N T : THE HON’BLE JUSTICE T.S.SIVAGNANAM A N DTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITAT/109/2017IA NO:GA/2/2017(Old No: GA/1042/2017)PRINCIPAL COMMISSIONER OF INCOME TAX 3, KOLKATAVS.M/S. WIZARD ENTERPRISES PVT. LTD. Mr. Soumen Bhattacharyya, Adv. …for the AppellantMr. Pratyush Jhunjhunwala, Adv. …for the respondent Heard on : 17.01.2022 Judgment on : 17.01.2022 T.S. SIVAGNANAM, J. :- This appeal by the revenue filedunder Section 260A of the Income Tax Act, 1961 (the Act) is directed against the composite order dated 4[th] March, 2016 passed by the IncomeTax Appellate Tribunal “C” Bench, Kolkata, (Tribunal) in ITA No.628/Kol/2011 and C.O. No. 134/Kol/2013 for the assessment year2007-08 and ITA No.65/Kol/2012 and C.O. No.133/Kol/2013 for theassessment year 2008-09. The revenue has raised the following substantial questions oflaw for our consideration :- 1.Whether on the facts and in the circumstances of the case, theLearned Tribunal erred in law in allowing the benefit ofexemption under Section 10 B of the Income Tax Act by holdingthe assessee as 100% Export Oriented Undertaking though theassessee was not approved by the concerned statutory Board asExport Oriented Undertaking as is required in terms of clauseIV of Explanation 2 of section 10 B of the Act. 2.Whether on the facts and in the circumstances of the case, theLearned Tribunal erred in law in allowing the benefit ofexemption under section 10 A of the Income Tax Act by holdingthe assessee as 100% Export Oriented Undertaking though theassessee was not approved by the concerned statutory Board asExport Oriented Undertaking as is required in terms of clauseIV of Explanation 2 of section 10 A of the Act. 3.Whether on the facts and circumstances of the case, theLearned Tribunal erred in law in treating the assessee as 100%Export Oriented Undertaking particularly when the assesseedid not have the Certificate of Approval from the Boardappointed in this regard by the Central Government in theexercise of its power conferred under section 14 of theIndustries (Development and Regulation) Act 1951 and rulesframed thereunder.Learned Tribunal erred in law in treating the assessee as 100%Export Oriented Undertaking particularly when the assesseedid not have the Certificate of Approval from the Boardappointed in this regard by the Central Government in theexercise of its power conferred under section 14 of theIndustries (Development and Regulation) Act 1951 and rulesframed thereunder. We have heard Mr. Soumen Bhattacharyya, learned standingCounsel appearing for the appellant/revenue and Mr. PratyushJhunjhunwala, learned Counsel appearing for the respondent/assessee.The assessing officer while completing the assessment under Section143(3) of the Act by order dated 24.12.2008 denied the benefit ofexemption under Section 10 B of the Act on the ground that the assesseeis not a hundred per cent export oriented undertaking within themeaning of the said Section. In other words, it was held, that theassessee was not approved by the concerned statutory Board as ahundred per cent export oriented undertaking as required underexplanation to Section 10 B of the Act. The assessee carried the matterin appeal before the Commissioner of Income Tax (Appeals) – VIII,Kolkata (CIT(A)). The CIT(A) by an elaborate order allowed the appeal filed by the assessee vide order dated 20.12.2010. Aggrieved by thesame, the revenue has preferred the appeal before the Tribunal, in whichthe assessee filed cross objection questioning the correctness of the orderof the CIT(A) in not allowing the deduction under Section 10A of the Actand granting relief to the assessee only under Section 10B of the Act. TheTribunal took up the appeals as well as the cross objections together andnoted that the question to be decided in the appeals as well as the crossobjections are whether the assessee is entitled for claim of deductionunder Section 10B/10A of the Act, in respect of profits derived from thecall centre operations from the unit registered with software technologypark of India (STPI) as hundred per cent export oriented unit (EOU).The Tribunal took note of the entire facts and from paragraph 6 of theorder proceeded to take note of the various approvals which have beengranted by the authorities which were all documents filed by theassessee in the paper book. Tribunal noted that an agreement wasentered into between the assessee and the Central Government on20.01.2006 wherein there is a reference to a resolution passed by theMinistry of Commerce dated 2.3.1994 granting status of the hundred percent export oriented unit to the assessee. The Tribunal has also referredto the copy of the green card issued by the designated officer,Government of India, Department of Information Technology and Chairman, Inter-Ministerial standing committee on software technologypark scheme vide green card dated 16.02.2006. Further the Tribunaltook note of a letter dated 2.9.2011 addressed to the assessee by theSTPI regarding registration for setting up STP Unit. After noting thesefacts the Tribunal also considered the submission on behalf of theassessee that CBDT has issued a clarification dated 9.3.2009 to theeffect that power to grant approval under Section 14 of the Industrial(Development & Regulation) Act, 1951 has been delegated to theDevelopment Commissioner and the approval granted by theDevelopment Commissioner shall be considered valid for the purpose ofexemption under Section 10B of the Act. With the above factual findingthe Tribunal granted relief to the assessee under Section 10B of the Actby affirming the order passed by the CIT(A). Next the Tribunal took upfor consideration the issue as to whether the assessee would be entitledto relief under Section 10A of the Act. The Tribunal pointed out thesimilarities between Section 10A and Section 10B of the Act and heldthat assessee is entitled for the benefit of deduction under Section 10Athat the assessee has not claimed the same under that provision on lawin the return of income. Further, the Tribunal rightly took note of thejudgement of the Hon’ble Supreme Court in the case of CIT VS.Mahalaxmi Sugar Mills Co. Ltd. reported in (1986) 160 ITR 920 (SC) wherein it was held that the duty cast on the Income Tax Officer to applyrelevant provisions of the Act for the purpose of determining the truefigure of the assessee’s taxable income and the consequential taxliability. That the assessee failed to claim the benefit of a set off cannotrelieve the income tax officer of his duty to apply Section 24 in anappropriate case. It is settled legal principle that the department cannottake advantage of the assessee’s mistake in not claiming the exemptionin the return of income, thereby denying the exemption. This is so,because the object of administration of the provisions of the Income TaxAct is to ensure that the revenue is generated for the development of thenation at the same time the assessee cannot be taxed for something morethan what is due and liable to be paid to the revenue. As rightly pointedout by the learned Counsel appearing for the respondent/assesseepowers of the CIT(A) under Section 246A are wide enough to consider asto whether the assessee was entitled for the claim of deduction underSection 10A as well. Thus we find that a thorough factual exercise hasbeen done by the CIT(A) which has been re-examined for its correctnessby the Tribunal while affirming the findings of the CIT(A) qua, the reliefgranted under Section 10B of the Act. That apart we find with regard tothe relief granted to the assessee under Section 10A of the act, theTribunal rightly took note of the legal position and granted relief. Hence, we are satisfied that the order passed by the Tribunal is perfectly validand does not call for any interference. In the result, the appeal filed bythe revenue is dismissed and substantial questions of law areaccordingly answered against the revenue. Consequently, the stay application stands dismissed. (T.S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) GH/kb.