Satish Kumar Mittal, J. - (1.) THE Revenue has filed this appeal under Section 260A of the IT Act, 1961 against the order dt. 25th July, 2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (hereinafter referred to as 'the Tribunal') in ITA No. 319/Chd/2005 for the asst. yr. 2001 -02, raising the following substantial question of law: Whether on the facts and in the circumstances of the case, the Tribunal is right in law in affirming the order of the CIT(A) in directing the AO to allow deduction under Section 10B of the IT Act, 1961 in spite of the fact that the assessee company has not fulfilled the conditions laid down under Section 10B of the IT Act, 1961 as it was not a newly established undertaking?
(2.) THE brief facts of the case are that the assessee, who is 100 per cent export oriented undertaking, is engaged in the business of export of computer software. It started production during the year relevant to asst. yr. 1998 -99. In the year under consideration i.e., 2001 -02, the assessee claimed exemption under Section 10B of the Act. The AO asked the assessee to justify its claim of exemption under Section 10B of the Act, as it was not a new unit. The assessee claimed that it is a 100 per cent export oriented undertaking and started production in the asst. yr. 1998 -99 and was registered with the Software Technology Park on 23rd March, 2000. Since the assessee fulfills all the requirements and conditions for claiming exemption under Section 10B of the Act in relation to its profit derived from export of computer software, therefore, it claimed the said exemption. It was further submitted that under Section 10B of the Act, the exemption is available to an assessee for a period of 10 years. The assessee submitted that merely because in the asst. yrs. 1998 -99, upto 2000 -01, it claimed deduction under Section 80HHE of the Act, it is not debarred from claiming exemption under Section 10B of the Act, in the assessment year under consideration, if it fulfills all the conditions mentioned in the said provision. The AO did not allow the plea of the assessee for exemption under Section 10B of the Act on the ground that export undertaking of the assessee was not newly established in the year under consideration and the exemption under Section 10B of the Act is available to the undertakings, which are newly established. Feeling aggrieved against the said order, the assessee filed appeal before the CIT(A), who vide his order dt. 7th Jan., 2005 allowed the claim of the assessee, while observing that the assessee satisfies all the conditions necessary for claiming exemption under Section 10B of the Act. It was held that the claim under Section 10B of the Act is available for a period of 10 years starting with the assessment year in which the unit starts to manufacture. Therefore, the assessee was entitled for the said benefit upto the year 2007 -08. It was further held that it was optional for the assessee to either claim the exemption under Section 10B or deduction under Section 80HHE of the Act in relation to its export profits. Since in the year under consideration, the assessee has not claimed deduction under Section 80HHE of the Act, therefore, it was entitled to claim exemption under Section 10B of the Act, as it fulfilled all the conditions.
(3.) FEELING aggrieved against the said order, the Revenue filed appeal before the Tribunal, which was dismissed vide the impugned order.;