CIT Vs. NOVA PETROCHEMICALS LTD.

JUDGEMENT

(1.) THE Revenue has preferred this Tax Appeal, challenging the order of the ITAT, Dt. 16 -2 -2012, raising the following substantial question of law for our consideration,

(2.) FOR the assessment year 2003 -2004, the assessee filed the return. The question that has been raised in the present appeal is with regard to disallowance under section 10A of the Income Tax Act, 1961 (herein after referred to as the Act for short), by the Assessing Officer, on the ground that the conditions laid under section 10A(2)(i) of the Act have not been satisfied, when challenged by the assessee before CIT(Appeals), by passing the detailed order, it sustained the claim of the assessee. Therefore, the Revenue challenged the same before the ITAT and the Tribunal concurred with the CIT(Appeals) and favoured the assessee. Therefore, the present appeal, raising the aforementioned question of law.

(3.) IT can be noticed from the evidence and the record that has been produced before us that the assessee in the year 2001 -2002 started new venture of software development and claimed gross profit of Rs. 43.6 crores. It claimed sum of Rs. 2,89,42,468 as profit of software division under section 10A of the Income Tax Act. The Assessing Officer had doubted very professional competence and skill of the assessee -respondent and its employees in developing the software, that too, in a very short duration. He also had questioned the date of registration of certificate approved by the Director, Software Technology Parks of India, Gandhinagar, with respect to the export made through internet. On having failed to be convinced from contemporaneous record that software was developed by the assessee or that the same was transmitted to the foreign countries through internet, he rejected the claim of the assessee under section 10A of the Act, treating the said transaction as a bogus and sham transaction, and therefore, the entire sum of Rs. 2,89,42,468 had been added as an unexplained cash credit under section 68 of the Act.