Case Law Details
Macquarie Global Services Pvt. Ltd. Vs DCIT (ITAT Delhi)
If eligibility of deduction u/s 10A or 10B or 10AA has been accepted in initial assessment year, then it cannot be withdrawn in subsequent years for breach of certain conditions which are required to be seen or examined in the first year of claim.
The assessee in the year 2007 had set up an Export Oriented Unit for which it was eligible for deduction u/s 10A / 10B. In the financial year 2010-11 another ‘SEZ unit’ was set up which started its operation in the assessment year 2011-12. It is an undisputed fact that in the first year of operation the assessee has claimed the deduction u/s 10AA which was duly supported by an audit report in Form 56F and such a claim has been allowed by the AO in scrutiny proceedings after completing the assessment u/s 143(3). Not only that, in the subsequent assessment year also, i.e., in the assessment year 2012-13, similar claim for deduction u/s 10AA has been allowed by the AO in the order passed u/s 143(3). All these details of the assessment order as well as Form 56F has been duly submitted before us in the paper book. Now in the third year of the operations, Ld. AO seeks to disturb the said eligibility of claim of deduction on the ground that there is some kind of splitting up or reconstruction of the old business in terms of clause (ii) of sub section (4) section 10AA. The conditions laid down in section 10AA (4) has to be seen on the date of formation, whether the undertaking has violated any conditions prescribed therein or not. If the conditions stipulated in the section has been accepted, that is, once the eligibility of deduction u/s 10A or 10B or 10AA has been accepted in the initial assessment year, then it cannot be withdrawn in the subsequent years for a breach of certain conditions which are required to be seen or examined in the first year of claim. Now it is a well settled propositions laid down in various judgments of the Hon’ble High Courts including that of the Jurisdictional High Courts as referred by the Ld. Counsel. The Hon’ble Bombay High Court in the case of CIT vs. Western Outdoor Interactive Pvt. Ltd. (supra) has held that whether a benefit of deduction is available for a particular number of years on satisfaction of certain conditions and under the provision of Act, then without withdrawing or setting aside the relief granted for the first assessment year in which claim was made and accepted, the AO cannot withdraw the relief for subsequent assessment years. This ratio was laid down in the context of section 10A. Once there is no change in the facts and circumstances of the case from the earlier years from the initial year when the claim has been accepted, then ostensibly deduction cannot be disallowed or denied in the subsequent years of claim This principle has been reiterated again in the case of CIT vs. Arts & Crafts Exports (Bombay) (supra); and CIT vs. Macbrout Engineering (P) Ltd. (supra) by the Hon’ble Bombay High Court. Hon’ble Jurisdictional High Court in the case of CIT vs. Tata Communication Internet Services Ltd. (supra) in the context of 80IA(3), concluded that bar as provided u/s 80IA(3) is to be considered only for the first year of claim for deduction u/s 80IA and not in the subsequent years.
We hold that, once the claim of deduction u/s 10AA has been accepted in the first year of the operations and also in the second year, then in the third year same cannot be withdrawn by examining the factors which were required to be seen in the first year of the claim. Thus, on this ground alone, we hold that the AO cannot deny the claim of deduction u/s 10AA with the assessee in this year and hence is directed to allow the same.
FULL TEXT OF THE ITAT JUDGMENT
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