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Income Tax Appellate Tribunal, “D”, BENCH
Before: SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH, JM
आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-21, Mumbai in appeal No.CIT(A)-21, DCIT-13(1)(1)/IT-505/2016-17 dated 28/12/2016 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 28/12/2016 by the ld. Dy. Commissioner of Income Tax, Circle 13(1)(1), Mumbai (hereinafter referred to as ld. AO).
The first issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in directing the ld. AO to allow claim of deduction of Rs.61,65,121/- u/s.40(a)(i) of the Act on account of software license payment in the light of the law prevailing that CIT(A) does not have power to set aside the case to the ld. AO.
The brief facts of this issue are that the assessee is engaged in the business of rendering software development and related services. It had filed its return of income for the A.Y.2014-15 on 28/11/2014 declaring total income of Rs.3,73,38,730/-. The ld. AO observed that during the course of assessment proceedings, the assessee company vide letter dated 12/11/2016 filed revised computation sheet wherein the claim for allowance of additional amount of Rs.61,65,121/- which was not claimed u/s.40(a) of the Act was made by the assessee. The ld. AO observed in his order that in A.Y.2013-14 same disallowance was made in respect of fee for technical services payable to QAD Ireland on which tax was not deducted and paid and the assessee had accepted such disallowances in A.Y.2013-14. The assessee claimed the deduction for this amount of Rs.61,65,121/- in A.Y.2014-15 on the ground that the tax has been duly deducted and paid. Since time limit for filing revised return had already expired, the assessee filed the revised computation to this effect and claimed deduction before the ld. AO during the course of assessment proceedings. The ld. AO by placing reliance on the decision of Hon’ble Supreme Court in the case of Goetze India Ltd., reported in 157 Taxman 1 denied the claim of the assessee as it was not made by way of valid return. This grievance was addressed by the ld. CIT(A) by granting relief to the assessee by observing as under:-
“I have considered the facts of the case and submissions made by the appellant. It is seen from the facts available on record that the assessee provides support, development and other service needs of clients, business units of QAD Inc and its subsidiaries as a Global Resource Centre. The assessee filed its return of income on 28.11.2014 declaring income Rs. 3, 73,38,725/-. The case was selected for scrutiny under CASS. During the course of assessment proceedings, the assessee filed revised computation claiming additional deduction of Rs 61,65,121/- u/s 40(a) of Income-tax Act, 1961. After analysis of the submissions filed by the assessee and on the facts and in the circumstances of the case, the A.O. did not allow the said claim. The A.O. has relied on the decision of the case of Goetze (India) Ltd Vs CIT 157 Taxman 1(SC). During the appellate proceedings, the appellant in its submission brought to my notice that the Hon'ble High Court of Bombay in the case of CIT vs. Prithvi Brokers & Shareholders (P) Ltd., held that "the jurisdiction of the appellate authorisation to entertain such a claim has not been negated by the Hon'ble Supreme Court in its judgment." Further, the assessee has also referred to the old Circular issued by CBDT No :14 (XL 35) Dated 11.04.1955 and various case laws in support of its claim. In view of the above judicial pronouncements and facts of the case, it is considered that the deduction claimed' should be allowed. The A.O. is directed to allow the deduction of Rs 61,65,121/- as claimed by the assessee after verification of details. Therefore, this ground of appeal is therefore allowed subject to verification.”
Aggrieved, the revenue is in appeal before us.
We have heard the rival submissions. We find that the ld. CIT(A) had given a categorical finding that the said deduction is entitled to the assessee in A.Y.2014-15 and had rejected the reasoning of the ld. AO by placing reliance on Goetze India supra and the ld. CIT(A) had instead placed reliance on the decision of Hon’ble jurisdictional High Court in the case of Prithvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 336. However, we find that the ld. CIT(A) had merely directed ld. AO to verify the details and grant deduction accordingly. Though we are in agreement with the arguments advanced by the ld. DR that the power of setting aside to the ld. AO by the ld. CIT(A) had been removed from the statute, still in view of the peculiar facts and circumstances, we are inclined to accept the arguments of the ld. AR that in order to avoid multiplicity of proceedings , there is no wrong committed by the ld. CIT(A). Accordingly, the ground No.1 raised by the revenue is dismissed.
The ground No.2 is with regard to the challenging the action of the ld. CIT(A) deleting the addition of Rs.6,71,653/- towards the addition made on account of AIR information. The ld. AR fairly stated that this addition has been subsequently deleted by the ld. AO vide 154 order passed by him on 20/06/2019, accordingly, there is no need to adjudicate this ground at this stage. To substantiate his contention, the ld. AR also placed a copy of submission made by the assessee before the ld. AO and copy of 154 order passed by ld. AO in the paper book. Accordingly, ground No.2 raised by the revenue is dismissed.
In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on this 21/08/2019