ITAT Allows Deduction Claim Under Section 10A of Income Tax Act Subject to Verification

The Income Tax Appellate Tribunal (ITAT), in one of its significant rulings, allowed a company’s appeal challenging its claim for deduction under section 10A of the Income Tax Act, 1961, for the assessment year 2003-04.

The assessee company, RMSI Pvt Ltd, had allegedly claimed a higher deduction under Section 80HHE of the Income Tax Act as compared to its declared turnover. Due to the discrepancies in the company’s declared turnover, the AO had recalculated the deduction under section 80HHE of the Income Tax Act, and the extra claim was disallowed. The assessee challenged this before the CIT(A), but did not succeed. Therefore, the assessee approached the ITAT Delhi.

In its previous ruling, the ITAT had directed the AO to allow the deduction under Section 10A, ruling that Section 10A(9) was no longer applicable due to an amendment in 2004. But the AO did not comply with the order, resulting in the second round of litigation.

Additionally, the revenue had also filed a petition before the Delhi High Court, which dismissed the petition, holding that there was no transfer of ownership but a reorganisation of shareholding within the group. The Revenue then challenged the ITAT’s order before the Supreme Court, which was also rejected.

The ITAT again ordered the Assessing Officer to re-examine the case, verify the documents, and then grant the deduction.