Approval by a Commissioner of STPI should be construed as approval of Board for allowing S. 10B Relief: ITAT [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ), recently accepted the contention of the assessee that the approval granted by a Commissioner of concerned STPI should be construed as approval of Board for the purpose of allowing deduction under Section 10B of the Income Tax Act, 1961.

The assessee has two main verticles in its business comprising development of software and running a call centre, income from which has been claimed as exempt u/s 10B of the Act. The assessee was registered under the Software Technology Park (STP in short) scheme as 100% Export Oriented Unit (EOU in short) on 28.1.2005. The same was subsequently renewed on 27.7.2010. The green card was issued to the assessee by the designated officer for Secretary to the Government of India, Department of Information Technology and Chairman Inter-Ministerial Standing Committee on Software Technology Park Scheme. The claim of deduction u/s 10B of the Act was disallowed by the Assessing Officer by holding that the assessee does not have any approval from the Board of Approval for EOU Scheme.

The assessee argued that based on the above email, it is clear that the ratification by the Board of Approval is not required by STPI units. It was further argued that since all the Commissioner of STPI are members of Combined Board of Approval and therefore, approval granted by a Commissioner of concerned STPI should be construed as approval of Board of Approval as well.

Following the decision of the Tribunal in the case of ITO vs Wizard Enterprises Pvt Ltd, the Tribunal decided the issue in favour of the assessee and directed the Assessing Officer to grant deduction u/s 10B of the Act to the assessee in the facts and circumstances of the case.