ACIT 9(3), MUMBAI vs. TCS E-SERVE LTD, MUMBAI

1) ITA number 2380/MUm/2011 is filed by The Assistant Commissioner Of Income Tax, Circle – 9 (3), Mumbai (The Learned AO) for Assessment Year 2005 – 2006 against the appellate order passed by The Commissioner Of Income Tax (Appeals) – 15, Mumbai [ The ld CIT (A) ] dated 14/1/2011 wherein in appeal filed by assessee against Assessment Order dated 23/12/2008 passed by The Deputy Commissioner Of Income Tax Range 9 (1), Mumbai (the learned AO) under section 143 (3) of The Income Tax Act 1961 for assessment year 2005 2006, appeal of the assessee is partly allowed. 2) The learned assessing officer is aggrieved with that and therefore has preferred an appeal raising following grounds of appeal:- i. on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in holding that the assessee is entitled to deduction under section 10 A without appreciating the fact that the assessee company had not fulfilled all the conditions under section 10 A in respect of its STPI business. ii. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in allowing deduction under section 10 A without appreciating the fact that the 10 A unit of the assessee company was formed by splitting up as well as reconstruction of business which was already in existence. iii. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in deleting the disallowance to the extent of ₹ 209,751/– while computing disallowance under section 14 A, ignoring the fact that the assessee had not taken into account 3) In CO 151/M/2012, in ITA number 2380/M/2011, assessee has preferred this cross objection for assessment year 2005 2006 raising following grounds of cross objections:- i. The Commissioner of income tax (appeals) – 15, Mumbai erred in holding that the known issue of show cause notice with regard to final selection of comparable is while determining the arm's-length price does not invalidate the assessment order, having failed to appreciate that the non-issue of such show cause notice violate the principles of natural justice, and is bad in law. ii. The learned CIT (A) erred in holding that there is no mandatory requirement of law to establish the motive of tax evasion before transfer pricing provisions can be invoked without appreciating that 4) First, we take up above appeal of Ld AO and cross objections with respect to assessment year 2005 –

06. The fact shows that assessee is a company engaged in the business of information technology enabled services wherein assessee company provides back-office transaction processing and customer Services to various units of Citigroup worldwide. It filed its return of income on 31/10/2005 at ₹ 279,800,980/–. This return was picked up for scrutiny. The assessment was made under 20) We find that ground with respect to allowance of bad debt of ₹ 19,843,434 and business loss of ₹ 212 lakhs as well as notional amount pertaining to lease rental has become infructuous, as the claim has been allowed by the CIT (A) in assessment year 98 – 99 and there is no further appeal filed by the revenue against that order. Further with respect to the disallowance of deduction of bad debt of ₹ 11,865,034 and the business loss of Rs. 2,43,62,520 relating to Prakash industries Ltd is also allowed by the CIT (A) in assessment year 99 – 2000 and no further appeal as been filed by the learned assessing officer.

Order pronounced in the open court on 18.04.2023.