ITAT Delhi Remands Apache Labs Section 10AA Claim for De Novo Verification

Apache Labs Private Ltd. Vs ITO (ITAT Delhi)

Summary: The Delhi Bench of the Income Tax Appellate Tribunal disposed of the connected appeals filed by Apache Labs Private Ltd. and the Revenue concerning Assessment Years 2014-15, 2015-16 and 2016-17, with ITA No. 4699/Del/2025 for AY 2014-15 taken as the lead case. The assessee, incorporated on February 13, 2012 and engaged in production and distribution of software-defined high-frequency radios, printed circuit boards and transistors, had filed its return for AY 2014-15 declaring nil income after claiming deduction under Section 10AA. The original assessment under Section 143(3) accepted the returned income. Subsequently, the PCIT invoked revisionary jurisdiction under Section 263 on the ground that the auditor’s report in Form 56F had been filed manually rather than electronically following the amendment to Rule 12 of the Income Tax Rules, 1962. The earlier Tribunal order dated 07.01.2019 directed the Assessing Officer to take the manually filed Form 56F into account and re-examine the claim after providing an opportunity to the assessee.

The AO thereafter disallowed the Section 10AA deduction, and the CIT(A) partly allowed the assessee’s appeal, permitting certain components of the claim while disallowing miscellaneous income, interest income and the foreign-exchange-related claim. Before the Tribunal, the assessee contended that the earlier Tribunal direction was confined to consideration of Form 56F and did not authorise a fresh examination of the merits of the Section 10AA claim. The Revenue contended that the earlier Tribunal direction required verification of the Section 10AA claim on merits and had not been challenged before a higher forum.