M/S WIPRO CHANDRIKA PRIVATE LIMITED ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-7(1)(2), BANGALORE

Date of hearing : 18.12.2018 Date of Pronouncement : 04.01.2019 O R D E R

Per N.V. Vasudevan, Vice President

There was a delay of about 309 days in filing the appeal before the CIT(Appeals). The assessee filed an application for condonation of delay before the CIT(Appeals), but the same was not accepted the CIT(A). The reasons given by the assessee before the CIT(Appeals) was that pursuant to a scheme of arrangement ("the Scheme') under Section 391 to 394 of the Companies Act, 1956, Wipro Limited had demerged its non IT business comprising consumer care and lighting, infrastructure engineering and other non IT business segments into Wipro Enterprises Limited (the holding company of the Assessee). The Assessee was being supported for a short period by an employee of Wipro Limited, as a part of the transition measure. However, the person assisting the Assessee (from Wipro Limited) had submitted his resignation in March 2016 and was relieved thereafter. It was only in September 2016 that a person was appointed to oversee the tax function. The person appointed to oversee tax matters, took a short while to file the appeal since he had to (i) acquaint himself with the diverse business and the relevant facts and (b) clear the back-log in work accumulated over a period. While reviewing past orders, the tax manager happened to stumble on the assessment order passed by the learned AO and immediately thereafter took steps filing the appeal. The Assessee also submitted that the delay was only because of the demerger and the need to build a separate team. It was also submitted that the delay is not occasioned deliberately, or on account of mala fides and that the Assessee does not stand to benefit by resorting to delay. It was further submitted that interest expenses that was disallowed was offered to tax by the holding company. The Assessee had borrowed loans for acquisition of brand “Chandrika” and paid interest on such loan. The interest expense was disallowed for the reason that the Assessee did not earn any income from use of the brand. It was submitted by the Assessee that the fact that such interest income has been offered to tax in the books of the Holding Company supports the case of the Assessee.

“4.7 In the instant case the "sufficient cause as stated by the applicant is that the employee responsible for tax matters resigned and his substitute was put in place after a gap who further took time to acquaint himself with facts and clear the backlog of pending matters. No evidence is brought on record to support this claim by the appellant. Further, the appellant is a company of a well known group being managed professionally by competent executives and managers. It is beyond comprehension as to how departure of one employee created such a disruption in the management of taxation matters that filing of appeal was forgotten for nearly a year. Hence, this explanation cannot be accepted as a sufficient reason for the failure on the part of the appellant to file appeal in time because accepting this kind of explanation to condone the delay will trivialize the very purpose of the provision prescribing such a stipulation for filing appeal. And also such an explanation of negligence, if accepted, can explain any delay in filing the appeal leading to defeat of the very purpose and rationale of the provision. In view of the above, I am of the considered opinion that the appellant has failed to give the sufficient reason for the delay of filing of appeal and hence, the delay in filing the appeal cannot be condoned. Consequently, the appeal of the appellant is treated as invalid.

Pronounced in the open court on this 04th day of January, 2019.