JT, CIT (OSD) 11(2)(2), MUMBAI vs. STATE STREET SYNTEL SERVICES PVT. LTD, MUMBAI

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ITA 3815/MUM/2019Status: DisposedITAT Mumbai26 July 2022AY 2013-148 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the interest income earned by the SEZ unit is eligible for deduction under Section 10AA, following the coordinate bench's decision. It also upheld the deletion of the disallowance for ESIC contribution, as the payment was made before the due date of filing the return of income.

What were the facts?

The assessee claimed deduction under Section 10AA on interest income earned by its SEZ unit. The Assessing Officer denied this deduction and also disallowed a sum for late payment of employees' contribution to ESIC. The CIT(A) allowed the deduction on interest income and deleted the disallowance for ESIC contribution.

What were the issues?

Whether interest income earned by an SEZ unit is eligible for deduction under Section 10AA, and whether disallowance under Section 36(1)(va) is warranted for employee contributions paid before the due date of filing the return of income.

Which sections of the Income-tax Act were involved?

Section 10AA,Section 36(1)(va),Section 43B

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

For Respondent: Shri Jasbir Chouhan, DR
Hearing: 11.07.2022Pronounced: 26.07.2022

1. This appeal is filed by The Joint Commissioner Of Income Tax (Osd) 11 (2) (2), Mumbai (the learned AO) for the assessment year 2013 – 14 against the order of The Commissioner Of Income Tax (Appeals) – 18, Mumbai dated 18th of March 2019 raising following grounds of appeal:-

1.

whether on the facts and in the circumstances of the case, was the Tribunal justified in allowing deduction u/s 10 AA of the income tax

2.

whether on the facts and in the circumstances of the case, was the tribunal justified in failing to consider that the company itself had shown this interest income as income from other sources where by not making a claim of this interest income as business income

3.

whether on the facts and circumstances of the case and in law, the learned CIT (A) was right in holding that bank interest is eligible to be treated as profit of understanding for purposes of Section 10 A and Section 10 AA, when the source of this income is the placement of disposal of funds with a financial institution

4.

whether on the facts and in the circumstances of the case and in law, the learned CIT (A) was right in holding that interest income of the respondent company had a direct nexus with the business and development of export of software to be eligible to be includible in the computation of profits for the purpose of deduction u/s 10 A and 10 AA of the act

5.

whether on the facts and circumstances of the case and in law, the criminal was justified in deleting the addition of ₹ 4,390,680/– on

6.

whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition without appreciating the fact that in the case of ITO versus LKP securities Ltd order dated 17/file/2013 in ITA number 638/M/2012 has made out a clear distinction between the two different provisions i.e. Section 43B in relation to employers contribution and Section 36 (1) (va) in relation to employees contribution after discussing in detail the ratio laid down in cases of CIT versus Alom Extrusion Ltd (2009) 319 ITR 306 (SC)

6. The assessee aggrieved with assessment order preferred an appeal before the learned CIT – A. The learned CIT – A held that the deduction of interest income u/s 10 AA of the income tax is allowable as it has already been decided by the coordinate bench in assessee’s own case for assessment year 2008 – 09 to 2012 – 13 and therefore the issue is already covered hence he followed the decision of the coordinate bench. With respect to the disallowance u/s 36 (1) (va) read with Section 2 (24) (tax) of the income tax act he deleted the disallowance holding that since the contribution was deposited before the due date of filing of the return of income following decision of the honourable jurisdictional High Court.

7.

Therefore, the learned assessing officer is aggrieved with the order of the learned CIT – A.

8.

Despite notice to the assessee, none appeared on behalf of the assessee and therefore the appeal of the learned assessing officer is decided on the merits of the case as per information available on record.

9.

The learned departmental representative vehemently supported the order of the learned assessing officer.

11.

Ground number 5-6 is with respect to the deletion of the addition of ₹ 4,390,680/– on account of late payment of the employee’s contribution to fund. Therefore, the learned assessing officer disallowed the same. The facts clearly show that assessee has paid the contribution for the month of April 2012 of ₹ 1,815,862/– on 25/05/2012, which is required to be deposited as per the respective ESIC law on or before 21/05/2012. Similarly for February 2013, assessee deposited the contribution of ₹ 2,574,818/– on 22/2/2013 which was required to be the deposited on or before 21/2/2013 as per ESIC law. It is undisputed that both the above contribution has been

12.

In the result, appeal of the learned assessing officer is dismissed.

Order pronounced in the open court on 26.07.2022.

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