The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has allowed Tax Holiday relief under Section 10A to IBM India.
IBM India Pvt.in the original DAO dated 30/12/2009, the Ld.AO had denied relief under section 10A of the Income Tax Act 1961.The disallowance was upheld by the DRP in its original directions and accordingly, the original FAO was passed denying such relief. Aggrieved by the same, the assessee filed the original appeal before the Tribunal. While disposing off the original appeal, the Tribunal set aside the claim for relief of tax holiday with directions to the Ld.AO to allow the claim to the extent of receipt of sale proceeds of computer software exported out of India being brought into India in convertible foreign exchange. The .AO granted relief to the extent and disallowed the balance amount, concluding that the balance amount was deposited in an account outside India which was not approved by the Reserve Bank of India (RBI’).
Percy Pardiwala, who appeared for the assessee,submitted that, AO had disregarded the submission of the assessee that the RBI had subsequently in 2014, condoned the lapse on part of the assessee in not obtaining the renewal of permission to maintain such account.
He further submitted that, theassessee had filed the permission granted by RBI on 30/07/2012, wherein the assessee was permitted to hold and maintain the Foreign Currency Account in its own name for a period of one year from24/08/2012. It was submitted that the RBI vide its letter dated 04/01/2013, clarified that the lapse on part of the assessee in not obtaining renewal of permission of RBI to maintain the Foreign Currency Account stands condoned from the last renewal given by RBI.
K. Sankar Ganesh,who appeared for the revenue, relied on the order passed by the authorities.
Chandra Poojari (Accountant Member) and Beena Pillai (Judicial Member) allowed the appeal observing that the assessee had produced a letter of RBI dated 28/02/2014, the Competent Authority, mentioned u/s. 10B (3) of the Act and it clarifies that the assessee was granted post facto extension. The assessee company had also subsequently realised the said amount. The Bench observed that “The assessee has obtained post facto approval from RBI coupled with the fact that it has also realised the said amounts, it is entitled to the deduction u/s. 10A/10B of the Act on the said amounts.”
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