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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 03.03.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds:
The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi hereinafter referred as CIT(A)] erred in treating the appeal of the Appellant as non est for the sole reason that the appeal has been filed manually by the Appellant.
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The CIT(A) erred in not adjudicating the action of the 2. The CIT(A) erred in not adjudicating the action of the 2. The CIT(A) erred in not adjudicating the action of the AO in disallowing AO in disallowing Testing Charges of Rs. 162,459/ Testing Charges of Rs. 162,459/- u/s 40(a)(ia) of the Act on the ground that no tax has been the Act on the ground that no tax has been the Act on the ground that no tax has been deducted at source. deducted at source. The Appellant submits that no TDS is required to be The Appellant submits that no TDS is required to be The Appellant submits that no TDS is required to be deducted on testing charges of Rs.162,459/ deducted on testing charges of Rs.162,459/- as the as the parties have obtained lower deduction Certificate or the parties have obtained lower deduction Certificate or the parties have obtained lower deduction Certificate or the amounts paid to parties are withi amounts paid to parties are within the prescribed limit; n the prescribed limit; hence on the facts and circumstances of the case hence on the facts and circumstances of the case hence on the facts and circumstances of the case disallowance u/s 40(a)(ia) of the Act made by the AO disallowance u/s 40(a)(ia) of the Act made by the AO disallowance u/s 40(a)(ia) of the Act made by the AO shall be deleted. shall be deleted. 3. The CIT(A) erred in not adjudicating the action of the 3. The CIT(A) erred in not adjudicating the action of the 3. The CIT(A) erred in not adjudicating the action of the AO in disallowing AO in disallowing Rs.5,75,091/- [80% of Rs.7,18,864] [80% of Rs.7,18,864] u/s 40(a)(ia) of the Act out of testing charges made on /s 40(a)(ia) of the Act out of testing charges made on /s 40(a)(ia) of the Act out of testing charges made on the ground that TDS has been deducted w/s 194C the ground that TDS has been deducted w/s 194C the ground that TDS has been deducted w/s 194C instead of section 194J of the Act. instead of section 194J of the Act. The Appellant submits that it has duly deducted TDS The Appellant submits that it has duly deducted TDS The Appellant submits that it has duly deducted TDS under Chapter XVII under Chapter XVII-B on payment of testing charges; B on payment of testing charges; hence no disallowance u/s 40(a)(ia) of the Act is disallowance u/s 40(a)(ia) of the Act is disallowance u/s 40(a)(ia) of the Act is attracted in its case and disallowance made by the AO attracted in its case and disallowance made by the AO attracted in its case and disallowance made by the AO shall be deleted. shall be deleted. 4. The CIT(A) erred in not adjudicating the action of the 4. The CIT(A) erred in not adjudicating the action of the 4. The CIT(A) erred in not adjudicating the action of the AO in disallowing expenses of Rs.8,90,907/ AO in disallowing expenses of Rs.8,90,907/- related to related to increase in share capital and increase in share capital and issue of shares treating issue of shares treating the same as capital expenditure. the same as capital expenditure. The The The Appellant Appellant Appellant submits submits submits that that that on on on the the the facts facts facts and and and circumstances of the case of the Appellant and in law circumstances of the case of the Appellant and in law circumstances of the case of the Appellant and in law expenses expenses of of Rs.890,907/- Rs.890,907/ shall shall be be allowed allowed as as deductible revenue expense. deductible revenue expense. 5. The CIT(A) erred in not 5. The CIT(A) erred in not adjudicating the action of the adjudicating the action of the AO in disallowing audit fees of Rs.2,55,250/ AO in disallowing audit fees of Rs.2,55,250/ AO in disallowing audit fees of Rs.2,55,250/- w/s 40(a)(ia) of the Act on the ground that no tax has been 40(a)(ia) of the Act on the ground that no tax has been 40(a)(ia) of the Act on the ground that no tax has been deducted at source. deducted at source. The The The Appellant Appellant Appellant submits submits submits that that that on on on the the the facts facts facts and and and circumstances of the case of the Appellant and in law circumstances of the case of the Appellant and in law circumstances of the case of the Appellant and in law audit fees of Rs.2.55,250/ udit fees of Rs.2.55,250/- shall be allowed as shall be allowed as deductible revenue expense. deductible revenue expense.
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The CIT(A) erred in not adjudicating the action of the 6. The CIT(A) erred in not adjudicating the action of the 6. The CIT(A) erred in not adjudicating the action of the AO in disallowing AO in disallowing Rs.1,10,332/- out of rent expense out of rent expense claimed by the Appellant based on the principle of claimed by the Appellant based on the principle of claimed by the Appellant based on the principle of averaging as averaging as provided under Accounting Standard 19 provided under Accounting Standard 19 issued by the Institute of Chartered Accountants of issued by the Institute of Chartered Accountants of issued by the Institute of Chartered Accountants of India. The Appellant submits that the rent expense was The Appellant submits that the rent expense was The Appellant submits that the rent expense was provided evenly in its books of accounts throughout the provided evenly in its books of accounts throughout the provided evenly in its books of accounts throughout the lease period as required under Accounting lease period as required under Accounting Standard 19; Standard 19; hence, on the facts and circumstances of the case and hence, on the facts and circumstances of the case and hence, on the facts and circumstances of the case and in law the addition of Rs. 1,10,332/ in law the addition of Rs. 1,10,332/- made by the AO made by the AO shall be deleted. shall be deleted. 7. The CIT(A) erred in not adjudicating the action of the 7. The CIT(A) erred in not adjudicating the action of the 7. The CIT(A) erred in not adjudicating the action of the AO in disallowing AO in disallowing Rs.30,96,506/- w/s 40(2)(b) of the w/s 40(2)(b) of the Act out of rent paid Act out of rent paid to its holding company M/s Dystar to its holding company M/s Dystar India Pvt. Ltd treating the same as rent paid in excess of India Pvt. Ltd treating the same as rent paid in excess of India Pvt. Ltd treating the same as rent paid in excess of fair value. The Appellant submits that payment of rent made to its The Appellant submits that payment of rent made to its The Appellant submits that payment of rent made to its holding company are at fair market value; hence on the holding company are at fair market value; hence on the holding company are at fair market value; hence on the facts and circumstances of the case of t facts and circumstances of the case of the Appellant he Appellant and in law the disallowance of Rs.30,96,506/ and in law the disallowance of Rs.30,96,506/- made by made by the AO shall be deleted. the AO shall be deleted. 8. The CIT(A) erred in not adjudicating the action of the 8. The CIT(A) erred in not adjudicating the action of the 8. The CIT(A) erred in not adjudicating the action of the AO in not granting depreciation of Rs.89,89,924/ AO in not granting depreciation of Rs.89,89,924/ AO in not granting depreciation of Rs.89,89,924/- u/s 32 of the Act on assets acquired on slump sale on th 32 of the Act on assets acquired on slump sale on th 32 of the Act on assets acquired on slump sale on the ground that slump sale was violative of sec. 2 (42C) of ground that slump sale was violative of sec. 2 (42C) of ground that slump sale was violative of sec. 2 (42C) of the Act and similar such disallowance were made in the Act and similar such disallowance were made in the Act and similar such disallowance were made in earlier years i.e..Y.2008 earlier years i.e..Y.2008-09 and onwards. The Appellant submit that the claim of depreciation w/s The Appellant submit that the claim of depreciation w/s The Appellant submit that the claim of depreciation w/s 32 of the Act on assets acquired on slump sale is 32 of the Act on assets acquired on slump sale is 32 of the Act on assets acquired on slump sale is allowable as the slump sale is as per sec. allowable as the slump sale is as per sec. 2(42C) of the 2(42C) of the Act and similar such claim is allowed by the Appellate Act and similar such claim is allowed by the Appellate Act and similar such claim is allowed by the Appellate Authorities in earlier years; hence on the facts and Authorities in earlier years; hence on the facts and Authorities in earlier years; hence on the facts and circumstances circumstances of the case of the Appellant and in law of the Appellant and in law the depreciation of Rs.89,89,924/ the depreciation of Rs.89,89,924/- shall be allowed to hall be allowed to the Appellant. the Appellant. 9. The CIT(A) erred in not adjudicating the action of the 9. The CIT(A) erred in not adjudicating the action of the 9. The CIT(A) erred in not adjudicating the action of the AO in considering net profit as per Profit and loss AO in considering net profit as per Profit and loss AO in considering net profit as per Profit and loss
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account at Rs.49,17,610/ account at Rs.49,17,610/- and thereby calculating the and thereby calculating the tax on book profit w/s 115JB of the Act without tax on book profit w/s 115JB of the Act without tax on book profit w/s 115JB of the Act without appreciating that there is a loss of Rs. 49,17,610/ ng that there is a loss of Rs. 49,17,610/- as ng that there is a loss of Rs. 49,17,610/ per Audited Profit & Loss A/c of the Appellant. per Audited Profit & Loss A/c of the Appellant. 10. The CIT(A) erred in not adjudicating the action of the 10. The CIT(A) erred in not adjudicating the action of the 10. The CIT(A) erred in not adjudicating the action of the AO in not granting set off of brought forward business AO in not granting set off of brought forward business AO in not granting set off of brought forward business losses and unabsorbed depreciation available to losses and unabsorbed depreciation available to losses and unabsorbed depreciation available to the extent of Rs.3,61,20,120/ extent of Rs.3,61,20,120/- against the assessed income against the assessed income of Rs.1,76,38,940/ of Rs.1,76,38,940/-, without assigning any reason. , without assigning any reason. 11. The CIT(A) erred in not adjudicating the action of the 11. The CIT(A) erred in not adjudicating the action of the 11. The CIT(A) erred in not adjudicating the action of the AO in not granting credit of TDS to the extent of AO in not granting credit of TDS to the extent of AO in not granting credit of TDS to the extent of Rs.6,40,493/ Rs.6,40,493/- without assigning any reason. 2. Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed return of income on 29.11.2013 electronically declaring total return of income on 29.11.2013 electronically declaring total return of income on 29.11.2013 electronically declaring total income at Rs. Nil after adjustment of brought forward losses. The income at Rs. Nil after adjustment of brought forward losses. The income at Rs. Nil after adjustment of brought forward losses. The return of income filed by the assessee was selected for scrutiny and return of income filed by the assessee was selected for return of income filed by the assessee was selected for statutory notices under the Income statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed u/s were issued and complied with. In the assessment order passed u/s were issued and complied with. In the assessment order passed u/s 143(3) of the Act on 16.02.2016, the Assessing Officer made various 143(3) of the Act on 16.02.2016, the Assessing Officer made various 143(3) of the Act on 16.02.2016, the Assessing Officer made various disallowances/additions and assessed th disallowances/additions and assessed the returned income at e returned income at Rs.1,76,38,940/-. Aggrieved, the assessee filed appeal before the . Aggrieved, the assessee filed appeal before the . Aggrieved, the assessee filed appeal before the Ld. CIT(A) on 23.03.2016 in paper form. The Ld. CIT(A) however in Ld. CIT(A) on 23.03.2016 in paper form. The Ld. CIT(A) howeve Ld. CIT(A) on 23.03.2016 in paper form. The Ld. CIT(A) howeve view of revised procedure of filing of view of revised procedure of filing of appeals electronically appeals electronically, did not admit the present appeal filed i admit the present appeal filed in paper form. The relevant finding of n paper form. The relevant finding of the Ld. CIT(A) is reproduced as under : the Ld. CIT(A) is reproduced as under :
It is seen that the appeal has not been filed electronically by 4. It is seen that the appeal has not been filed electronically by 4. It is seen that the appeal has not been filed electronically by the appellant. As per record, the appeal has been filed manually the appellant. As per record, the appeal has been filed manually the appellant. As per record, the appeal has been filed manually on 23.03.2016 in form No.35. Rule 45 of the Income Tax Rules, on 23.03.2016 in form No.35. Rule 45 of the In come Tax Rules,
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1962, 1962, mandates mandates compulsory compulsory -filing filing of of appeals appeals before before Commissioner of Income Tax (Appeals) with effect from Commissioner of Income Tax (Appeals) with effect from Commissioner of Income Tax (Appeals) with effect from 01.03.2016. The Board vide circular No. 20/2016 issued vide 01.03.2016. The Board vide circular No. 20/2016 issued vide 01.03.2016. The Board vide circular No. 20/2016 issued vide F.No.279/Misc/M-54/2016/ITJ dated 26.05.2016 pertaining to F.No.279/Misc/M 54/2016/ITJ dated 26.05.2016 pertaining to E-filing of appeals: eals:
“4. Extension of time limit Extension of time limit-reg., extended the window for filing e reg., extended the window for filing e- appeals which were due to be filed by 15.05.2016 to appeals which were due to be filed by 15.05.2016 to appeals which were due to be filed by 15.05.2016 to 15.06.2016. In view of the extended window for filing e 15.06.2016. In view of the extended window for filing e- 15.06.2016. In view of the extended window for filing e appeals, taxpayers who could not successfully e-file their appeals, taxpayers who could not successfully e file their appeal and had filed paper appeals were required to file an e iled paper appeals were required to file an e iled paper appeals were required to file an e- appeal in accordance with Rule 45 before the extended period appeal in accordance with Rule 45 before the extended period appeal in accordance with Rule 45 before the extended period i.e. 15.06.2016. Such e 15.06.2016. Such e-appeals would also be treated as appeals would also be treated as appeals filed within time. appeals filed within time. 5. It is seen from the records that the appeal of the appellant It is seen from the records that the appeal of the appellant It is seen from the records that the appeal of the appellant has been filed against the order dated 16.02.2016 passed u/s. has been filed against the order dated 16.02.2016 passed u/s. has been filed against the order dated 16.02.2016 passed u/s. 143(3) of Act in paper form on 23.03.2016 whereas the same 143(3) of Act in paper form on 23.03.2016 whereas the same 143(3) of Act in paper form on 23.03.2016 whereas the same was required to be e-filed as per Rule 45. Though the case falls was required to be e filed as per Rule 45. Though the case falls within the extended time limit as per Board's circular referred to within the extended time limit as per Board's circular referred to within the extended time limit as per Board's circular referred to above by virtue of which appellant could have e ve by virtue of which appellant could have e- filed its appeal filed its appeal before 15.06.2016, however, appellant failed to avail this before 15.06.2016, however, appellant failed to avail this before 15.06.2016, however, appellant failed to avail this opportunity opportunity and and e-file e file its its appeal appeal before before 15.06.2016. 15.06.2016. Accordingly, the manual appeal filed by the appellant is treated Accordingly, the manual appeal filed by the appellant is treated Accordingly, the manual appeal filed by the appellant is treated as non est.” 3. At the outset, we may note that the present appeal filed before At the outset, we may note that the present appeal filed before At the outset, we may note that the present appeal filed before the Tribunal by the assessee is with delay of seven days. The Ld. the Tribunal by the assessee is with delay of seven days. The Ld. the Tribunal by the assessee is with delay of seven days. The Ld. Counsel of the assessee referred t Counsel of the assessee referred to the affidavit of the employee o the affidavit of the employee (accountant) of the assessee company of the assessee company, wherein he submitted wherein he submitted that due to change of incumbent, t o change of incumbent, the order of the Ld. CIT(A) could not be he order of the Ld. CIT(A) could not be forwarded to the concerned counsel who was dealing with the forwarded to the concerned counsel who was dealing with the forwarded to the concerned counsel who was dealing with the matter of filing of the appeal. The Ld. Counsel before us has matter of filing of the appeal. The Ld. Counsel matter of filing of the appeal. The Ld. Counsel submitted that this being submitted that this being an inadvertent and bona fide mista inadvertent and bona fide mistake and
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there was no intension on the part of the assessee in delaying the there was no intension on the part of the assessee in there was no intension on the part of the assessee in appeal.
We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of the condoning the delay the delay. The assessee has demonstrated sufficient he assessee has demonstrated sufficient cause for delay in filing the appeal. The cause for delay in filing the appeal. The delay being due to bona fide delay being due to bona fide reasons, accordingly, we condoned reasons, accordingly, we condoned the delay in filing the appeal and the delay in filing the appeal and admited the appeal for adjudication. the appeal for adjudication.
Before the Ld. Counsel of the assessee referred to the Paper Before the Ld. Counsel of the assessee referred to the Paper Before the Ld. Counsel of the assessee referred to the Paper Book filed and submitted that along with paper form assessee has Book filed and submitted that along with paper form asse Book filed and submitted that along with paper form asse also filed the appeal in the electronic format. The Ld. Counsel also filed the appeal in the electronic format. The Ld. Counsel also filed the appeal in the electronic format. The Ld. Counsel referred to the acknowledgement of e referred to the acknowledgement of e-filing of the appeal which is filing of the appeal which is reproduced for ready reproduced for ready reference:
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We find that the assessee did not brought this We find that the assessee did not brought this We find that the assessee did not brought this fact of the e- filing of the appeal before the Ld. CIT(A) and therefore, the Ld. filing of the appeal before the Ld. CIT(A) and therefore, the Ld. filing of the appeal before the Ld. CIT(A) and therefore, the Ld. CIT(A) has rejected the appeal filed in paper form as un-admitted. In CIT(A) has rejected the appeal filed in paper form as un CIT(A) has rejected the appeal filed in paper form as un view of the acknowledgement of the e view of the acknowledgement of the e-filing filed before us, we filing filed before us, we restore the matter back to the file of the Ld. restore the matter back to the file of the Ld. CIT(A) for verifying CIT(A) for verifying whether the appeal filed in electronic format has been adjudicated whether the appeal filed in electronic format has been adjudicated whether the appeal filed in electronic format has been adjudicated or not. If said appeal has not been adjudicated or not. If said appeal has not been adjudicated, then the Ld. CIT(A) then the Ld. CIT(A) may take necessary efforts for disposal of the e-filed appeal may take necessary efforts for disposal of the e may take necessary efforts for disposal of the e expeditiously. If said e expeditiously. If said e-filing has been rejected because of any been rejected because of any deficiency, then the assessee may then the assessee may be directed to file the fresh appeal directed to file the fresh appeal in electronic format or the format prescribed as per the relevant in electronic format or the format prescribed as per the relevant in electronic format or the format prescribed as per the relevant rules and same may be admitted for adjudication and decided in rules and same may be admitted for adjudication and decided in rules and same may be admitted for adjudication and decided in accordance with law. The gr accordance with law. The ground No. 1 of the appeal of the assessee ound No. 1 of the appeal of the assessee is accordingly allowed. The remaining ground on merits are not is accordingly allowed. The remaining ground on merits are not is accordingly allowed. The remaining ground on merits are not adjudicated as appeal has been restored to the file of the Ld. CIT(A). adjudicated as appeal has been restored to the file of the Ld. CIT(A). adjudicated as appeal has been restored to the file of the Ld. CIT(A).
In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on nounced in the open Court on 31/07/2023. /07/2023. Sd/ Sd/- Sd/- Sd/ (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 31/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant
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The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai