INCOME TAX ACT, 1961

Section 10A

Deduction under section 10A - Undertaking in a free-trade zone - Assessee being registered with Software Technology Park but not situated within the area of Software Technology Park -

Assessee-firm was engaged in business of computer software development and IT enabled services. It was also registered with Software Technology Park of India (STPI), Gandhinagar. It claimed deduction under section 10A, which was accepted by AO. However, CIT under section 263 perceived that the order framed by the AO was erroneous, insofar as prejudicial to the interest of Revenue for the reason that the assessee was not located within the area of STPI, Gandhinagar but situated in Ahmedabad. Thus, the assessee failed to comply with the condition prescribed under section 10A(2)(i)(b) and accordingly, it was not eligible for claiming deduction under section 10A. Therefore, the AO rejected the assessee's claim of deduction under section 10A. Held: For claiming deduction under section 10A, it is not necessary for the assessee to be situated within the area of Software Technology Park. As such unit/undertaking located within the jurisdiction of the designated officer of Software Technology Park can be registered on standalone basis. Further, the CBDT vide Circular No. 149/194/2004/TPL, dated 6-1-2015 directed that the registration with STPI is sufficient for claiming deduction under section 10A. Furthermore, AO himself allowed deduction under section 10A to the assessee for first time in assessment year 2004-05 and in subsequent assessment years, the assessee by following the same claimed deduction under section 10A and the AO had not disputed the same. However, in the year under consideration, the AO disallowed the deduction only after CIT invoking his revisionery power under section 263, set aside the assessment order. Therefore, it was transpired that the AO was convinced to the fact that assessee was eligible for deduction under section 10A. Hence, the assessee's claim of deduction under section 10A was allowed.

REFERRED : Xerox India Ltd. v. ACIT (2010) 127 TTJ 84 (Delhi) : 2010 TaxPub(DT) 0859 (Del-Trib)

FAVOUR : In assessee's favour

A.Y. : 2010-11

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