COMMISSIONER OF INCOME TAX Vs. REGENCY CREATIONS LTD

JUDGEMENT

(1.) THESE appeals have been preferred by the Revenue claiming to be aggrieved by the common orders of the Income Tax Appellate Tribunal (ITAT) in respect of the two assessees, i.e. M/s. Regency Creations Ltd. and Valiant Communications Ltd. The questions of law which arises in all the appeals is common, i.e.

(2.) THE facts pertaining to the cases of M/s. Regency Creations Ltd. (ITA Nos. 69/2008 and 783/2009) in respect of Assessment Years 2003-04 and 2004-05 are that it is engaged in 100% export of artware handicrafts, home furnishing and software exports. THE assessee had three divisions respectively, in connection with the said three activities ­ i.e. artware handicrafts, home furnishing and software division, which was named M/s. Maxtech iSolution. THE assessee claimed exemption under Section 10B in respect of its software export income. THE Assessing Officer held that to qualify for such benefit, the assessee should be a 100% Export Oriented Unit (EOU) and approved by the Central Government through its appropriate authority under Section 14 of the Industries (Development and Regulation) Act, 1951 (IDR Act). THE Assessing Officer concluded that the Assessee had no valid certificate for software export and had not mentioned in its Articles of Memorandum of Association that it could carry-out business in computer software and that M/s. Maxtech iSolution was not shown to be an undertaking of the assessee, in its Articles of Memorandum of Association. THE assessees' appeal was allowed for academic years 2003-07; the Appellate Commissioner held that the claim for exemption under Section 10B was admissible since it was registered with the Central Government, i.e. Software Technology Park of India (STPI) and that the business activity of software export was permissible with the main and the ancillary object spelt-out in the Memorandum of Association. THE CIT (Appeals) relied upon a Circular of the Central Board of Direct Taxes (CBDT). THE Revenue appealed to the Tribunal, which dismissed the appeal, holding as follows:

(3.) LEARNED counsel for the assessees contended that the rationale for granting approval for Software Technology Park units was with the intention of their exporting services and products. The intention of Section 10B had to be, therefore, read in the context of the concerned Scheme, i.e. ETPI and STPI which was meant to permit growth of foreign trade in the sector, i.e. computer software. It was argued, besides, that the rule of consistency, enunciated by the Supreme Court in Radhasoami Satsang Soami Bagh, Agra v. CIT AIR 1992 SC 377 = (1992) 193 ITR 321 (SC) and followed by this Court in CIT v. Jagson International Limited 2008 214 CTR 227 (Del), estopped the Revenue from contending that the asseessee did not possess the requisite approval. It is also submitted that the Tribunal had correctly relied upon a clarification dated 31.03.2011 which put the matter beyond any shadow of doubt, i.e. that Press Notes 2 and 5 enured in favor of the assessee. They could clearly avail the benefit of deduction under Section 10B.