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Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO
This is an appeal filed by the assessee-company directed against the order of the Commissioner of Income-tax (LTU) [CIT], Bangalore, dated 1/3/2015 passed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] for the assessment year 2006-07.
IT(TP)A No.833/Bang/2013 Page 2 of 9 2. The assessee-company raised the following grounds of appeal:
IT(TP)A No.833/Bang/2013 Page 3 of 9
6. The appellant craves leave to add, alter, or amend any of the above grounds at the time of hearing.
Briefly facts of the case are that the assessee is a company engaged in the business of design and manufacturing of UPS, Power Protection Devices and Software Development Services.
IT(TP)A No.833/Bang/2013 Page 4 of 9 Return of income for the assessment year 2006-07 was filed on 30/11/2006 declaring income of Rs.22,98,86,248/-. Subsequently the return of income was revised at a total income of Rs.28,46,00,420/- but the return was uploaded only on 01/04/2008. It was stated that though the return was actually uploaded on 31/03/2008, due to technical reasons, it was shown as on 1/4/2008. The assessment was completed accepting the income declared in the revised return in which income from business was declared at Rs.193,72,76,043/- and deduction u/s 10A was enhanced to Rs.165,99,91,465/-. The Assessing Officer [AO] accepted the revised return as well as revised claim u/s 10A while passing the assessment order. However, he made adjustment under the provisions of sec.92A as directed by the Disputes Resolution Panel [DRP].
Aggrieved by the DRP’s addition, assessee-company was in appeal before the CIT(A). While the matter stood there, the CIT (LTU), Bangalore, was of the view that the enhanced claim under the provisions of sec.10A was accepted though revised return was filed later and beyond the time prescribed under the statute. Therefore, he was of the view that the revised claim under the provisions of sec.10A was not supported by the revised return of income. Hence, enhanced claim was not admissible in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd, vs. CIT (157 Taxman 1)(SC) wherein it was held that new claim for deduction can be made only by filing revised return
IT(TP)A No.833/Bang/2013 Page 5 of 9 of income. Therefore, the CIT issued show cause notice u/s 263. In response to show cause notice, it was stated that the law laid down by the Hon’ble Supreme Court in Goetze (India) Ltd. (supra) is applicable only to the power of the AO and not that of the appellate authorities. It was further submitted that though return of income was uploaded on 31/3/2008 within the due date, due to some technical problem, return of income has got uploaded after 12 AM and consequently the acknowledgment for e-filing was declared as on the next date. It was further submitted that no new claim was made under the provisions of sec.10A. It is only a revised computation of income. Hence, revised claim for deduction u/s 10A cannot be denied. The CIT, after considering the above submission, held that there was no communication from the concerned DIT(Systems) communicating any technical glitches while uploading return as on 31/3/2008. Under these circumstances, the CIT rejected the contention that the revised return of income was filed in time. Therefore, he was of the view that enhanced claim for deduction u/s 10A cannot be accepted following the law laid down by the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra). Thus, he held that the assessment order passed by the AO is erroneous and prejudicial to the interests of revenue and exercising the power vested with him under the provisions of sec.263 of the Act, directed the AO to re-computed the tax liability without considering the enhanced claim of deduction u/s 10A of the Act.
IT(TP)A No.833/Bang/2013 Page 6 of 9 5. Aggrieved by this order, the assessee-company is before us in the present appeal.
The learned counsel for the assessee-company argued that it is the duty of the AO to compute correct deduction under the provisions of sec.10A and it is only a matter of re-working of the deduction under the provisions of the Act. It does not amount to new claim which was not made in the original return of income. Even the revised return was not taken into consideration. It is obligatory on the part of the AO when he has adopted the revised total income to recomputed the deduction u/s 10A in view of the law laid down by the Hon’ble Bombay High Court in the case of CIT vs. Gem Plus Jewellery India Ltd. (94 Taxman 192). He also relied on the following decisions:
i. Malbar Industries Co Ltd v. CIT [20001 243 ITR 83 (SC); ii. CIT v. Max India Limited [2007] 295 ITR 282 (SC); iii. CIT v Gokuldas Exports [2012] 20 taxmann.com 491 (Kar.HC); iv. CIT v Vodafone Essar South Ltd [IT Appeal No.119 of 2012] (Delhi HC); v. CIT v Honda Siel Power Products Ltd. [2010] 333 ITR 547 (Delhi HC); vi. Infosys BPO Ltd v ACIT [2012] 25 taxmann.com 571 (Bangalore ITAT); vii. Reliance Communication Limited v ACIT [ITA No 2915/ Mum/ 2012] (Mumbai ITAT); viii. Broadcom India Research (P.) Ltd v DClT [IT (TP)A No.1180/Bang/2011]; and ix. Sanghvi Jewellery Mfg. Co. (P.) Ltd v. ITO [2012] 135 ITO 174 (Mumbai ITAT) x. Bartronics India Ltd. v. ACIT [2012] 52 SOT 188 (Hyderabad ITAT)
IT(TP)A No.833/Bang/2013 Page 7 of 9 xi. S.B. Builders & Developers v. ITO [2011] 45 SOT 335 (Mum. ITAT) xii. DClT vs. Magarpatta Township Development & Construction Co [2013] 141 ITD 682 (Pune ITAT) xiii. ITO v. M/s. Sahasra Electronics Private Limited (ITA No. 1951/Del/2009) (Delhi ITAT)
On the other hand, learned CIT(DR) relied on the order of the CIT.
We heard the rival submissions and perused material on record. The only issue involved in this appeal is about legality of the proceedings initiated by the CIT exercising powers vested u/s 263 of the Act. In the order passed by the CIT us 263, the CIT directed the AO to disallow enhanced claim under the provisions of sec.10A on the ground that revised return of income was filed belatedly and beyond the period allowed by the statute. It is undisputed fact that the claim for deduction u/s 10A was made in the original return of income. The same was scrutinized by the AO and found that the assessee-company was entitled for deduction u/s 10A of the Act. Therefore, it is clear that no new claim was made in the revised return of income which is not accepted by the department. The AO, though had not taken cognizance of the revised return of income but adopted the total income as per revised return of income and also allowed the claim u/s 10A made in the revised return while completing the taxable income. It is not a condition sine qua non to allow the enhanced claim under the provisions of sec.10A that a revised return should
IT(TP)A No.833/Bang/2013 Page 8 of 9 be filed. The only requirement of the Act is that original return should be filed within the due date specified under the provisions of sec.139(1) of the Act. Therefore, the reasoning adopted by the CIT while exercising the power of revision is not acceptable. However, we find that the AO had allowed revised claim u/s 10A without applying his mind as to whether other requirement of the provisions of sec.10A have been fulfilled or not in respect of enhanced claim u/s 10A. We are informed at the Bar that enhanced total income is on account of prior period income which is shown as prior period income in the financial statements. The AO has not applied his mind on this aspect. We restore this issue to the file of the AO to examine whether the additional income offered qualify for deduction under the provisions of sec.10A and if it is so found, to allow the same in accordance with law after affording due opportunity to the assessee-company. We are conscious of fact that direction is only on same subject matter of show cause notice issued u/s 263.
In the result, the appeal filed by the assessee-company is partly allowed for statistical purposes.