D.C.I.T. 9(2), MUMBAI vs. M/S MWH INDIA LTD, MUMBAI

The only ground raised by the Revenue in its appeal is that the Ld.CIT(Appeals) erred in directing the Assessing Officer to recompute the deduction u/s 10B(4) without appreciating the fact that the Assessee failed to furnish separate balance sheet for each unit.

Briefly stated, the facts are that the Assessing Officer while completing the assessment disallowed the claim for deduction u/s 10B on the profits from Pune unit on the ground that the Assessee’s Mumbai unit suffered loss and Pune unit has shown substantial profits. Assessing Officer observed that for claiming deduction u/s 10B the Assessee diverted profits from Mumbai unit to Pune unit. He also observed that Assessee is siphoning of profits of Mumbai unit and also managing transactions in a manner to manipulate profits and therefore concluded that the deduction u/s 10B claimed by the Assessee does not appear to be genuine. However, he estimated the eligible profits of the unit and allowed deduction u/s 10B of the Act. On appeal by the Assessee the Ld.CIT(Appeals) directed the Assessing Officer to allow the claim of the CO No.205/Mum/2010, A.Y.2006-07 M/s MWH India Ltd.

The Ld. DR before us vehemently submits that the Ld.CIT(Appeals) granted relief to the Assessee without appreciating the facts and averments noted by the Assessing Officer and the Ld.CIT(Appeals) passed a very cryptic order without any discussion and findings and reasoning and therefore it was submitted that the matter may be restored to the Ld.CIT(Appeals) for fresh adjudication.

The Ld. Counsel for the Assessee though tried to defend the order of the Ld.CIT(Appeals), he submitted that the order of the Ld.CIT (Appeals) is cryptic and he has no serious objection in sending back the issue to the file of the Ld.CIT(Appeals) for fresh consideration.

On hearing both the parties, we are of the considered view that this matter has to be restored to the file of the Ld.CIT(Appeals) for passing a speaking and reasoned order on the issue of deduction under Section 10B of the Act. Thus, we restore this issue to the file of the Ld.CIT(Appeals) who shall decide in accordance with law after providing adequate opportunity of being heard to the Assessee.

Coming to the Cross Objection filed by the Assessee, the Ld. Counsel for the Assessee submits that Assessee filed additional evidences in respect of CO No.205/Mum/2010, A.Y.2006-07 M/s MWH India Ltd.

ground nos.1 to 4 of the Cross Objections i.e. disallowance in respect of provision for professional fee, disallowance in respect of provision for contractual payments and addition in respect of write off of excess provision for sole/non moving contracts.

The Ld. DR submits that these grounds may also be restored to the Ld. CIT (Appeals) as the Assessee filed additional evidences.

Considering the submission of the parties we restore these grounds of Cross Objection of the Assessee to the file of the Ld.CIT(Appeals) who shall consider them and decide afresh in the light of the additional evidences filed before us, especially pages 55, 56, 73, 79, 45 and 80 of the paper book. Thus, we restore these grounds to the Ld.CIT(Appeals) who shall decide in accordance with law.

Coming to ground no.5 of Cross Objection i.e. disallowance u/s 40(a)(ia) for short deduction of TDS, the Ld. Counsel for the Assessee submits that this issue is squarely covered in Assessee’s favour by the Coordinate Bench of the Tribunal, wherein, it was held that provisions of Section 40(a)(ia) have no application for short deduction of TDS. He placed reliance on the decision of the Coordinate Benches in the cases of ACIT Vs. Hindustan Thompson Associates Pvt. Ltd in dated 19.2.2016 and ACIT Vs. Lamhas Satellite Services Ltd. in ITA No.5966/Mum/2013 dated 16.3.2016.

We have perused the orders of the Tribunal placed before us and find that in these two decisions, it was held that provisions of Section 40(a)(ia) cannot be invoked where the Assessee deducts tax at lower rates. The Tribunal followed the decisions of the Hon’ble Calcutta and Madras High Courts. Therefore, respectfully following the said decisions, we allow this ground of the cross objection of the Assessee.

Ground no.6 is relating to computation of book profits u/s 115JB of the Act by adding back provision for gratuity and provision for various expenses. The Ld. Counsel for the Assessee submits that in so far as gratuity is concerned, this is decided in favour of the Assessee in Assessee’s own case and in respect of provision for various expenses, he submits that the Assessing Officer may be directed for deleting the adjustments made to book profits.

On hearing both the sides, we are of the view that this ground should go back to the Ld.CIT (Appeals) for fresh consideration who shall examine and decide in accordance with law after providing adequate opportunity of being heard.

In the result appeal of the revenue and Cross Objection of the Assessee are allowed for statistical purpose.