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Income Tax Appellate Tribunal, BANGALORE BENCHES “B”, BANGALORE
Before: Shri George George K, JM & Ms.Padmavathy S, AM
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “B”, BANGALORE Before Shri George George K, JM & Ms.Padmavathy S, AM ITA No.424/Bang/2022 : Asst.Year 2016-2017 M/s.Global Edge Software Limited The Deputy Commissioner of Block 4, Global Village, IT SEZ Income-tax, Circle 3(1)(2) v. Pattanagere, Mylasandra Village Bangalore. RVCE Post, Off.Mysore Road Bangalore – 560 059. PAN : AACCS6556N. (Appellant) (Respondent) Appellant by : Sri.C.R.Krishna, CA Respondent by : Sri.K.R.Narayana, Add.CIT-DR Date of Pronouncement : 20.10.2022 Date of Hearing : 19.10.2022 O R D E R Per George George K, JM : This appeal at the instance of the assessee is directed against CIT(A)’s order dated 10.06.2019. The relevant assessment year is 2016-2017.
There is a delay of 1019 days in filing this appeal before the Tribunal. By excluding the period of limitation due to Covid-19 pandemic (in view of the Hon’ble Apex Court judgment dated 10.01.2022 in MA 21/2022 and 665/2021 in suo moto WP (C) No.3/2020), there is a delay in filing this appeal by 304 days. The assessee has filed a petition for condonation of delay along with an Affidavit of the Director of the assessee-company. The reasons stated in the condonation petition for belated filing of this appeal is that the management of the assessee-company changed in view of the
2 ITA No.424/Bang/2022 M/s.Global Edge Software Limited global acquisition of Altram Group by Capgemini Group. It was stated that there was no full time in-house Tax Manager in the assessee-company to oversee the tax affairs and same was outsourced to independent tax consultants. It is stated that during the course of takeover of all the tax matters in the month of April 2022, the new management identified that the assessee-company had inadvertently missed filing the appeal before the Tribunal against the order of the CIT(A). Immediately on knowing the status of the appellate order, the assessee after consulting a senior professional, filed the present appeal on 10.06.2019. It is submitted by the learned AR that non-filing of the appeal within the time prescribed is not deliberate but a bonafide mistake on the part of the erstwhile management, due to the process of change of management and global acquisition of the assessee by Capgemini Group. The learned AR relied on various judicial pronouncements.
The learned Departmental Representative strongly opposed the delay condonation petition.
We have heard rival submissions and perused the material on record. After excluding the period due to Covid-19 pandemic lock down, there is a delay of 304 days in filing this present appeal before the Tribunal. The reasons stated for the delay is that the erstwhile management inadvertently missed in filing the appeal before the Tribunal due to the process of change in management in global acquisition of Atran Group by Capgemini Group. When the new management took over all the tax matters in the month of April 2022, it was
3 ITA No.424/Bang/2022 M/s.Global Edge Software Limited identified that the assessee-company had missed filing the appeal before the ITAT. It was also stated that since there was no demand pursuant to the CIT(A)’s order, but only reduction of refund, the matter was not given much importance by the erstwhile management. We find that there is “sufficient cause” for belated filing of this appeal and the delay cannot be attributed due to any latches of the assessee. The Hon’ble Apex Court in the case of Collector, Land Acquisition v. MST.Katiji and Others reported in 167 ITR 471 (SC) and also in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi and Others reported in (1979) 118 ITR 507 (SC) had held that the assessee cannot gain anything from belated filing of appeal. It was held by the Hon’ble Court that if the application for delay in filing the appeal is not allowed, the concerned appellant would be put to great hardship and irreparable injury, however, no hardship or injury would be caused to the respondent, if the application of condonation of delay is allowed. The Hon’ble jurisdictional High Court in the case of CIT & Another v. ISRO Satellite Centre in ITA No.532 of 2008 (judgment dated 28.10.2011), had condoned the delay of five years in filing the appeal before the CIT(A). The reliance is also placed on the following judicial pronouncements for the proposition of law that lenient and compassionate view is to be taken when an application for condonation of delay is being considered :- (i) Ram Nath Sao alias Ram Nath Sahu & Others v. Gobardhan Sao & Others reported in (2002) 3 Supreme Court Cases 195 (SC) (ii) CIT v. K.S.P.Shanmugavel Nadar reported in (1987) 30 Taxmann 133 (Madras HC)
4 ITA No.424/Bang/2022 M/s.Global Edge Software Limited
(iii) Anatek Services Pvt. Ltd. v. ACIT in ITA No.102 of 2018 dated 11.02.2022 (Bombay HC) (iv) Smt.Shankuntala Hegde, Legal Heir of Mr.Ramakrishna Hegde v. ACIT in ITA No.2785/Bang/2004 (order dated 25.04.2006) (v) M/s.Midas Polymer Compounds Pvt. Ltd. v. ACIT in ITA No.288/Coch/2017 (order dated 25.06.2018).
In view of the above judicial pronouncements and the facts of the instant case, we condone the delay in filing this appeal before the Tribunal and proceeded to dispose of the same on merits.
The grounds raised read as follows:-
“1.1 On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in recomputing the disallowance under section 14A at Rs.4,02,827/- without appreciating the fact that the appellant had already computed and offered for tax an amount of Rs.l,87,181 under section 14A read with Rule 8D while filing the return of income for A Y 2016-17. 1.2 On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeal) erred in not appreciating the fact that the method followed by the assessee is in accordance with Section 14A and consequently increasing the disallowance by Rs.2,15,646/- which needs to be deleted. 1.3 Without prejudice to the above, on the facts and circumstances of the case, the learned Commissioner of lncome Tax (Appeals) has erred in not giving a finding on the allocation of the aforesaid disallowance to 10AA and non- 10AA units, thereby reducing the eligible deduction under section 10AA. 1.4 On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeal) erred in not appreciating the fact that the investments were made out of surplus funds.
5 ITA No.424/Bang/2022 M/s.Global Edge Software Limited 2. DISALLOWANCE OF DEDUCTIONS U/S 80G OF Rs.7,50,750 2.1 On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeal) erred in not allowing deduction u/s 80G of Rs. 7,50,750/- on the ground that the amount incurred is in respect of corporate social responsibility and the same is not eligible for deduction under section 80G. 2.2 On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeal) erred in not appreciating that the donations were made to registered trust under section 12AA of Income Tax Act, 1961, consequent to which such donations are eligible for deduction under section 80G.
The appellant seeks leave to add to, to amend any of the foregoing grounds as and when considered necessary/at the time of hearing.” We shall adjudicate the above grounds as under:
Grounds 1.1 and 1.2 7. The above ground is with regard to disallowance of expenditure u/s 14A of the I.T.Act. The limited submission of the learned AR is that disallowance u/s 14A of the I.T.Act is to be restricted by applying the dictum laid down by the Special Bench of the ITAT Delhi Bench in the case of ACIT v. Vireet Investment (P.) Ltd. reported in (2017) 58 ITR (Tri.) 313 (Delhi Tribunal) (SB).
The learned DR was duly heard.
We have heard rival submissions and perused the material on record. The Special Bench of the Delhi Tribunal in the case of ACIT v. Vireet Investment (P.) Ltd. (supra) had held that investments which did not yield any exempt income should not enter into computation under Rule 8D of the I.T.Rules while arriving at the average value of the
6 ITA No.424/Bang/2022 M/s.Global Edge Software Limited investment, income from which does not form part of the total income. In other words, it was held by the Special Bench of the Delhi Tribunal that only those investments are to be considered for computing the average value of the investment which yielded exempt income during the relevant assessment year. In view of the above order of the Special Bench of the Tribunal, we restore the matter to the files of the A.O. The A.O. is directed to make disallowance u/s 14A of the I.T.Act keeping in mind the dictum laid down by the Special Bench of the Delhi Tribunal in the case of ACIT v. Vireet Investment (P.) Ltd. (supra). It is ordered accordingly.
Grounds 1.3 and 1.4 10. During the course of hearing, the learned AR did not press the above grounds, hence, the same are dismissed.
Ground 2 11. The above ground is in respect of disallowance of deduction u/s 80G of the I.T.Act amounting to Rs.7,50,750. The learned AR submitted that the CIT(A) has erred in not allowing deduction u/s 80G of the I.T.Act on the ground that the amount incurred is in respect of corporate social responsibility and the same is not eligible for deduction u/s 80G of the I.T.Act.
The learned DR was duly heard.
We have heard rival submissions and perused the material on record. The Bangalore Bench of the Tribunal in the case of Infinera India (P.) Ltd. v. JCIT reported in (2022)
7 ITA No.424/Bang/2022 M/s.Global Edge Software Limited 194 ITD 463 (Bangalore-Tribunal) and in the case of Sling Media (P.) Ltd. v. DCIT reported in (2022) 194 ITD 1 (Bangalore-Tribunal) had clearly held that the amount incurred u/s 37 of the I.T.Act was entitled to the benefit of deduction u/s 80G of the I.T.Act provided that other conditions are satisfied. Hence, the matter is remitted to the files of the A.O. The A.O. after taking into account the dictum laid down by the Tribunal in the cases of Infinera India (P.) Ltd. v. JCIT (supra) and Sling Media (P.) Ltd. v. DCIT shall allow the claim of deduction u/s 80G of the I.T.Act. It is ordered accordingly.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced on this 20th day of October, 2022. Sd/- Sd/- (Padmavathy S) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : 20th October, 2022. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-3, Bangalore. 4. The Pr.CIT-3, Bangalore. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore