Indian Kanoon - Search engine for Indian Law

i) Audit Report inform no. 56F as per Rule 16D was obtained and filed with the AO.

The AO has not specified which of the conditions stipulated in the section has not been met by the appellant which has been enjoying this exemption since assessment year 2005-06, the assessments for A.Y.s 2005-06 & 2006-07 having been completed under scrutiny after accepting the returned income and the deduction claimed. No adjustments to the income were made in A.Y. 2007-08 either under section 143(1). As regards the alleged mismatch of sale and FIRCs, the appellant has filed copies of the FIRCs and their reconciliation with the export sales as per which payments against the invoices were received within the year (copies of FIRCs were filed before the Asstt. year 2008-09 A.O. as well). Coming to the non-preparation or non-filing of softex forms, I agree with the appellant that this was a procedural issue between the STP Unit and STP office and does not impinge upon the allowance of exemption u/s 10B/10A, in case the conditions thereof are satisfied. The appellant submitted that other reports i.e. annual and monthly progress reports were duly filed with the STP Office which did not raise any objection or cancel its registration and in fact the delay in filing of Softex Forms has also subsequently been condoned. The green card of the appellant was not cancelled as alleged by the AO but only expired and was not renewed as the appellant did not have any further orders beyond August, 2007. Taking into account the totality of the facts of the case and the provisions of law in this regard, I am of the view that there was no justification for not allowing the exemption u/s 10B to the appellant. The disallowance made by the AO is therefore deleted. This ground of appeal is allowed."

5.1 It is argued that the delay in submission of Softex forms to STPI was condoned by it in letter dated 21.4.2011. There is no discrepancy in the amount mentioned in foreign inward remittance certificates (FIRC) and the turnover declared by the assessee as reconciliation in respect thereof has been furnished. It is further submitted that exemption u/s 10A and 10B are similar in nature except that approval of the Board is not required for claiming exemption u/s 10A. as held in the case of ITO vs. Vidya Tech Solutions (P) Ltd. (2010) 35 SOT 25 (Delhi). The claim of the assessee has been allowed by the revenue in earlier years in scrutiny assessments. It is also submitted that this is an incentive provision, which should be construed liberally.