Section 10A exemption- Approvals given by Directors of STPI is valid

Assesee claimed deduction of Rs. 1.33 crores under Section 10A of the Act. On being called upon to explain about the eligibility of deduction, the assessee stated that it was entitled to deduction in view of fulfillment of all the requisite conditions as prescribed under Section 10A.

The Assessing Officer held the assessee to be not qualifying for deduction under this section because the registration was granted by the Software Technology Park of India (STPI) and not the Inter-ministerial Standing Committee (IMSC) . He held that the IMSC was entrusted with the obligation to examine the proposals for STP units and there was no provision under which it could delegate this power to Software Technology Park of India. He further held that STPI society has mechanically approved all the units without examining anything except export commitments. Further, there was no evidence that Press Note 5 and Green Card were issued with the concurrence of the Department of Revenue or the CBDT. The learned CIT(A) overturned the assessment order on this point by relying on the order dated 06.06.2008 passed by the Delhi Bench of Tribunal in the case of ACIT Vs. Sanjay Bhalla.

The only objection taken by the Assessing Officer for refusing deduction under Section 10A is that the registration was granted by the STPI Society and not the Inter-ministerial Standing Committee. We find that this issue is no more res integra in view of the judgment dated 26.2.2013 of the Hon’ble Delhi High Court in CIT Vs. Technovate E Solution Pvt. Ltd., a copy of which has been placed on record by the ld. AR. In this judgment, it has been held that the approvals given by the Directors of Software Technology Parks of India are valid having the authority of the Inter-ministerial Standing Committee. This position was fairly accepted by the ld. DR also. In view of the binding precedent of the Hon’ble jurisdictional High Court, the facts of which are on all fours with those of the assessee company, we are of the considered opinion that no exception can be taken to the view canvassed by the learned CIT(A) on this score. This ground fails.