Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-I, Kolkata dated 21.05.2013. Assessment was framed by DCIT, Circle- 2, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30.12.2011 for assessment year 2009-10. Shri P.K.Chakraborty, Ld. Sr. Departmental Representative represented on behalf of Revenue and Shri K.K. Goswami and Sri Ankit Jalan, Ld. Advocates appeared on behalf of assessee.
DCIT. Cir-2, Kol. vs. M/s IKF Technologies Ltd. Page 2 2. Solitary inter-connected issue raised by Revenue is that Ld. CIT(A) erred in deleting the addition of ₹2,26,00,486/- u/s 80IC of the Act.
Facts as have been brought on record are that assessee in the present case is a Limited Company and engaged in BPO and IT services. The assessee for the year under consideration has filed its return income showing total income of ₹2,87,51,498/- . Thereafter the case was selected for scrutiny under CASS module and subsequently notices u/s. 143(2) r.w.s. 142(1) of the Act was issued. The assessee in its return income claimed deduction u/s. 80IC of the Act for an amount of ₹2,26,00,486/- in respect of its unit located at Meghalaya. The Assessing Officer during the course of assessment proceedings observed that assessee engaged in the business of call centers operation such as telemarketing, complaint and grievances redressal of corporate house. As per the AO there was no manufacturing activity of any article or thing as mandatorily required under section 80IC of the Act. Accordingly, AO opined that deduction u/s. 80IC will not be allowed as assessee is not engaged anything manufacturing activity. The AO disallowed the deduction claimed by assessee u/s. 80IC of the Act for an amount of ₹2,26,00,486/- and added to the total income of assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that deduction should have been allowed to assessee u/s 80IE of the Act in place of Sec. 80IC of the Act. Further assessee submitted while filing IT return there was a single column for claiming deduction u/s. 8IC and 80IE of the Act, the Assessing Officer has misunderstood the fact by observing as if the assessee has claimed deduction u/s 80IC of the Act though the assessee claimed its deduction correctly u/s. 80IE of the Act. Considering the submission of assessee Ld. CIT(A) deleted the addition made by AO by observing as under:- “After careful consideration of assessment order and written submission filed by the appellant, it is noticed that the appellant filed return of income e-filed on 30.09.2009 for income of Rs.2,87,51,498/- and claimed a deduction of Rs.2,26,00,487/- under Chapter-VIA. The assessee also furnished report dtd. 27.06.2009 of chartered accountant in Form No. 10CCB read with Rule 18BBB claiming deduction of Rs.2,26,00,487/- for its unit located in Shillong, DCIT. Cir-2, Kol. vs. M/s IKF Technologies Ltd. Page 3 Meghalaya where assessee was running an information technology training centre with annual receipts of Rs.5,00,74,805/-. The AO disallowed the above claim u/s. 80IC since the deduction u/s. 80IC could only be allowable to undertakings engaged in manufacturing activity in the North-east region and assessee had not paid any excise duty on its products as per its annual accounts.
The assessee had furnished the 10CCB report along with the P&L a/c of the undertaking doing computer training business for the financial year 2008-09 in form of a month-wise summary-chart before the AO. During the appellate proceedings the appellant submitted a modified ground of appeal claiming deduction u/s//s 80IE and not u/s 80IC of the IT Act as the appellant was a service sector undertaking and was not engaged in the business of manufacturing or production. The assessee also filed modified report dtd. 24.12.2012 in Form 10CCB for claim of deduction u/s. 80IE. The AO was confronted with copy of this report and modified ground of the appeal. The modified ground of appeal is admitted as 10CCB report submitted on 27.06.2009 and the modified report dtd 24.12.2012 are substantially same. In its paper book the A/R referred to the relevant provision section 80IE.
Section 80IE(2)(iii) allows deduction to any undertaking in North-east states which carry on any eligible business. Section 80IE(7)(v) defines “eligible business” as under: a) … … … b) … … … f) … … running information technology related training centre. Section 80IE(6) refers to sub-section (5) and sub-section (7) to (12) of section 80IA which shall apply to eligible undertaking under the section 80IE. In compliance to section 80IE(6) the appellant had filed a report of chartered accountant for claim of 80IE as assessee was carrying on eligible business s of computer related training centre.
After carefully considering the above refer provisions of section 80IE it is noticed that assessee was engaged in the business of computer related training business with annual receipts of Rs.5,00,74,805/- in the state of Meghalaya and had furnished 10CCB report of a chartered accountant regarding the eligibility of deduction 80IE claiming deduction of Rs.2,26,00,486/- from this undertaking and accordingly deduction u/s. 80IE is allowed to assessee as business of computer training was “eligible business” in terms of 80IE(7)(V)(f) of Income Tax Act, 1961.”
Aggrieved by the order of ld. CIT(A), Revenue is in appeal before us.
Before us Ld. DR submitted that assessee is engaged in service activity and therefore not eligible for deduction u/s. 80IC of the Act. For claiming the deduction DCIT. Cir-2, Kol. vs. M/s IKF Technologies Ltd. Page 4 the Form No. 10CCB duly certified by Chartered Accountant was not furnished at the time of assessment proceedings but Ld. CIT(A) has granted the relief to assessee on the basis of additional evidence, the certificate issued by CA in the form of 10CCB was submitted after due date of the balance-sheet.
On the other hand, Ld. AR submitted that there is no specific column for furnishing the deduction u/s. 80IC/80IE of the Act while furnishing the ITR online. There was only single column in the Income Tax Return for both the deduction under section 80IE/80IC of the Act. So the AO has misunderstood as if the assessee has claimed the deduction under section 80IC of the Act. There was no requirement to furnish Form No. 10CCB while filing IT return. Regarding the allegation of Ld. DR that relief has been granted on the basis of additional evidence the assessee submitted that AO was very much satisfied at the time of appellate proceedings before Ld. CIT(A) and relief was granted after confronting the documents from the AO. Ld. AR requested the Bench to confirm the order of Ld. CIT(A).
We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that the deduction claimed by assessee was disallowed by AO on the ground that assessee was not engaged in any manufacturing activity. However assessee before Ld. CIT(A) clarified that deduction was claimed u/s. 80IE of the Act and in support of its claim have produced the necessary documents. Considering the same, Ld. CIT(A) given relief to assessee. Now the issue before us arise so as to whether deduction claimed by assessee u/s. 80IE of the Act on the basis of certificate issued in the form of 10CCB which is duly certified by CA. The allegation of the ld. DR was base less as the AO in the instant case attended the hearing before the ld. CIT(A). The relief was granted to the assessee in the other assessment years. The ld. DR failed to bring anything contrary to the findings of the ld. CIT(A). In the identical facts and circumstances, several courts have decided this issue in favor of assessee. The Hon’ble Court of Punjab & Haryana in the case of CIT Vs. Ramco International 332 ITR 306 has observed as under :
DCIT. Cir-2, Kol. vs. M/s IKF Technologies Ltd. Page 5 “Deduction under s. 80-IB—Allowability—Claim not made in return—Assessee having duly furnished the documents and submitted Form No. 10CCB during assessment proceedings, claim for deduction under s. 80-IB by way of an application was admissible—There was no requirement for filing any revised return—No substantial question of law arises—Goetze (India) Ltd. vs. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC) distinguished
Assessee having duly furnished the documents and submitted Form No. 10CCB during assessment proceedings, claiming deduction under s. 80-IB which was not claimed in the return, deduction is admissible even in the absence of a revised return.”
Similarly, the Hon’ble ITAT, COCHIN BENCH in the case of Thomsa Kurian Vs. ACIT 106 ITD 158 has decided the issue as under :
“Deduction under s. 80HHC—Allowability—Claim made for the first time before CIT(A)—Issue raised before the first appellate authority for deduction under s. 80HHC, being a legal issue coupled with the facts already available on record, as recorded in the assessment order, the first appellate authority should have considered this claim and decided the issue in accordance with law—Further, AO being a quasi-judicial authority, once having noted in the assessment order that assessee had export turnover, was duty-bound to ask the assessee as to why he had not claimed deduction under s. 80HHC—Matter remanded to AO to decide assessee’s claim for deduction under s. 80HHC.
The taxing authorities should exercise quasi-judicial powers, in doing so they must act in a fair and not in a partisan manner. Being a quasi-judicial authority, the AO is duty-bound to determine the correct tax payable by the assessee. In arriving at such correct tax, the AO is duty-bound to allow the deductions and exemptions available to the assessee in accordance with law and disallow the claims, which are not eligible as per law. It is not fair and proper to argue and presume that the assessee should be aware of all the provisions of the complex nature of the IT Act. When the facts are available on record before the AO and particularly when he has also observed that the assessee is in the export business of sea foods and also noted the turnover and net profit from such business, the AO is duty-bound to have asked the assessee at least why he had not claimed the deduction under s. 80HHC, to which the assessee is eligible in accordance with law. Had the AO put this minimum question to the assessee, the assessee would have definitely claimed the deduction under s. 80HHC before the AO. In such circumstances just because the assessee had failed to claim deduction under s. 80HHC before the AO, the AO also cannot be silent when he is supposed to act as a quasi-judicial officer. In such circumstances, there is no reasonableness in the order of the CIT(A) for not admitting the claim of deduction under s. 80HHC made for the first time before him. May be, he was not having the power for restoring the matter back to the file of the AO at the relevant point of time, but at least he should have admitted the claim, called for a remand report and then decided according to law instead of rejecting al-together the claim of the assessee, more particularly when the facts of export business and relevant turnover and profit were glaringly available in the assessment order itself. The issue raised before the first appellate authority for deduction under s. 80HHC, being a legal issue coupled with the facts already available on record, as recorded in the assessment order, the first appellate authority should have considered this claim and decided the issue in accordance with law. However, considering the entire facts and circumstances of the case and the submissions made by both the sides, this is a fit and proper case for restoring the issue back to the file of the AO with a DCIT. Cir-2, Kol. vs. M/s IKF Technologies Ltd. Page 6 direction to decide the issue of claim of deduction under s. 80HHC which was raised before the CIT(A) for the first time by the assessee, in accordance with law, of-course, after giving effective opportunity of hearing to the assessee. AO having noted in the assessment order itself that assessee had export turnover, claim for deduction under s. 80HHC made for the first time before CIT(A) could not be rejected simply because the same was not made before the AO.” In view of the aforesaid facts and respectfully following the aforesaid judicial precedents relied upon hereinabove, we find no infirmity in the order passed by the Ld. CIT(A) and accordingly, the ground raised by Revenue is dismissed.
In the result, Revenue’s appeal stands dismissed. Order pronounced in open court on 07 /09/2016
Sd/- Sd/- (S.S.Viswanethra Ravi) (Waseem Ahmed) Judicial Member Accountant Member *Dkp �दनांकः- 07 /09/2016 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-DCIT, Circle-2, Aayakar Bhawan, 7th Floor P-7, Chowringhee Square, Kolkata-700 069 2. ��यथ�/Respondent-M/s IKF Technologies Ltd., Plot NO.IX-16, Block-EP & GP, Sector-V, Kolkata-700 091 3. संबं"धत आयकर आयु%त / Concerned CIT 4. आयकर आयु%त- अपील / CIT (A) 5. &वभागीय �)त)न"ध, आयकर अपील�य अ"धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड+ फाइल / Guard file.