ITO, NON CORPORATE WARD -8(3), CHENNAI vs. KARMAN ENGINEERING SERVICES LLP, CHENNAI

This appeal by the Revenue is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-9, Chennai dated 31.05.2017 in for the assessment year 2013-14 passed U/s.250(6) r.w.s. 143(3) of the Act.

The Revenue has raised the following grounds in its appeal:-

The brief facts of the case are that the assessee is a limited liability partnership firm engaged in the business of engineering consultancy services and wind power generation filed its return of income for the assessment year 2013-14 on 24.03.2014 admitting total income of Rs.10,56,361/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny and notice U/s.143(2) of the Act was issued on 20.09.2014. Finally assessment order was passed U/s.143(3) of the Act on 24.03.2016 wherein the Ld.AO made addition of Rs.2,73,46,304/- towards the income of non-eligible business U/s.80IA of the Act.

On appeal, the Ld.CIT(A) deleted the addition made by the Ld.AO by observing as under:-

At the outset, the Ld.DR submitted before us that the Ld.CIT(A) has erred in granting deduction to the assessee U/s.80IA of Act, thereby deleting the addition made by the Ld.AO for Rs.2,73,46,304/- and thereafter argued in support of the grounds raised by the Ld.AO which is extracted herein above. Further the Ld.DR argued by stating that the assessee had claimed deduction U/s.80IA of the Act for the relevant assessment year in the Form 10CCB dated 29.09.2013 and therefore the initial assessment year for claiming deduction U/s. 80IA of the Act has to be taken as the relevant assessment year 2013-14. On the other hand the Ld.AR argued in support of the order of the Ld.CIT(A) and further stated that the Ld.AO had incorrectly adopted Rs.5,58,85,631/- as the assessee’s income from business in his computation. He further submitted that if the incorrect computation made by the Ld.AO is rectified then addition made by the Ld.AO cannot be sustained. He therefore pleaded that the entire matter may be remitted back to the file of Ld.AO for verification. The Ld.AR further submitted that the assessee had not adopted the relevant assessment year as the initial assessment year for claiming deduction U/s.80IA of the Act, though it was mentioned in the audit report in Form No.10CCB dated 29.09.2013 by the Chartered Accountant.

We have heard the rival submissions and carefully perused the materials on record. From the facts of the case, it appears that the Ld.CIT(A) have observed certain incorrect computation made by the Ld.AO. Further the Ld.CIT(A) has relied on the decision of the Hon’ble Jurisdictional Madras High Court in the case Velayudhasamy Spinning Mills Pvt. Ltd., reported in 340 ITR 477 while deciding the issue in favour of the assessee, which was lost sight by the Ld.AO. However in the interest of justice, we are of the considered view that the Ld.AO is required to re-examine the entire matter in the light of the observations made by the Ld.CIT(A) and prayer of the Ld,AR to rectify the mistake made by the Ld.AO for adopting Rs.5,58,85,631/- as the assessee’s income from business. Further the assessee has stated that it has not claimed deduction U/s.80IA of the Act in the return of income for the relevant assessment year by treating the relevant assessment year as the initial assessment year though the claim was made in the Form No.10CCB dated 29.09.2013 which is signed only by Chartered Accountant. If that is so, we are of the view that the prayer of the assessee should be accepted without giving any weightage to the certificate of the Chartered Accountant in Form No.10CCB. With these observations, we hereby remit the matter back to the file of Ld.AO for de-nova consideration.

In the result, the appeal of the Revenue is allowed for statistical purposes as indicated herein above.