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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI DUVVURU RL REDDY & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The Revenue filed this appeal against the order of the Commissioner of Income Tax (Appeals)- 15, Chennai, in dated 30.11.2017 for assessment year 2012-13.
M/s. Sanina SCI India Pvt. Ltd., the assessee, is engaged in the business of providing services related to back office. While making the assessment for assessment year 2012-13, the AO found that the assessee claimed deduction u/s. 10AA. While computing the deduction it has excluded communication expenditure as well as travel expenses from the export turnover as well as total turnover. The AO after giving opportunity to the assessee has excluded them from export turnover only. Further, the AO disallowed the assessee’s claim of deduction towards provision for warranty on the ground that it was not scientific and the assessee had not given the account details. The AO has also found that the assessee has not remitted the Employees contribution of ESI & PF within the specific due dates specified under those Acts, although, the assessee has remitted them within 2 to 4 days after the due date specified by the respective Acts, but well ahead of the due date specified u/s. 139(1). Aggrieved, the assessee filed an appeal before the Ld. CIT(A).
On the first issue, the Ld. CIT(A) following the decision of Sak soft Ltd., allowed the appeal. On the second issue, the assessee pleaded before the Ld. CIT(A) that the provision for warranty may be allowed in the subsequent year in which the AMC for previous year was reversed and offered as income. The Ld. CIT(A) held that the provision for warranty cannot be taxed twice in assessment year 2012-13 as well as in assessment year 2013-14. Therefore, he directed the AO to verify the assessee’s claim and allow it in the next assessment year in which the AMC was reversed. On the third issue, the Ld. CIT(A) deleted the addition applying the Jurisdictional High Court decision in the case of Industrial Security and Intelligence India Pvt. Ltd., (TCA No. 585 & 586 of 2016 & MP No. 1 of 2015). Aggrieved, the Revenue filed this appeal.
On the issue of computation of admissible deduction u/s. 10A of the Income Tax Act, 1961, the Ld. DR submitted that this issue is covered by the CBDT Circular of 04/2018 in F.No. 279/Misc/140/2015/ITJ, which was issued based on the Hon’ble Supreme Court decision in the case of CIT, Central III vs M/s. HCL Technologies Ltd., dated 24.04.2018.
4.1 We have gone through the circular. The relevant portion of the circular is extracted as under:
“Thus, all charges/expenses specified in Explanation 2(iv) to section 10A of the Act, are liable to be excluded from total turnover also for the purpose of computation of deduction u/s. 10A of the Act. 7. Accordingly, henceforth, appeals may not be filed by the Department on the above settle issue, and those already filed may be withdraw/not pressed upon.”
In accordance with the above circular, the corresponding grounds of the Revenue’s appeal is treated as dismissed.
In respect of the second issue, it is clear from the order of the Ld. CIT(A) that he had upheld the addition made by the ld. AO. However, considering the assessee’s plea that the corresponding amount which was reversed in the subsequent year and offered to tax should not be assessed in assessment year 2013-14 also he directed the AO to verify the assessee’s claim in the subsequent year and i.e. in assessment year 2013-14 if it was found that the assessee has reversed the AMC provision in that assessment year (ie 2013-14) also. The Revenue has filed appeal holding that the Ld. CIT(A) ought to have appreciated that as per section 251(1)(A) the “Power of set aside” are “examining the issue afresh” has been omitted w.e.f.
01.06.2001 as pert Finance Act, 2001.
5.1 We have heard the rival submissions. The Ld. CIT(A) has upheld the addition, however, directed the AO not to assess the same sum in the subsequent assessment year, if the assessee has in accordance with its accounts has offered the same as income in the subsequent assessment year.
The direction of the Ld. CIT(A) that the same amount cannot be taxed twice both in assessment year 2012-13 as well as 2013-14 and hence if the assessee has admitted the same sum in the subsequent year as income, it should not be charged again is in order and hence we dismiss the corresponding grounds of the appeal of the Revenue
On the third issue, the Ld. CIT(A) held that the Employees contribution to PF & ESI remitted by the assessee after due date specified before the respective Acts but well ahead of the due date specified u/s. 139(1) is in accordance with the Jurisdictional High Court decision, supra, and hence we do not find any reason to interfere with his order. The corresponding grounds of the Revenue fail.
In the result, the Revenue’s appeal is dismissed.
Order pronounced on Tuesday, the 21st day of August, 2018 at Chennai.