DCIT, CIRCLE-4(2), NEW DELHI V. COFORGE LTD (FORMERLY NIIT TECHNOLOGIES LTD), NEW DELHI

ITA 1263/DEL/2022

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) concerning the assessment year 2016-17. The Revenue challenged the deletion of an adjustment of Rs. 1,18,14,779 on account of interest charged on outstanding receivables from Associated Enterprises (AEs) to the income of the assessee, citing amendments to section 92B by the Finance Act, 2012. The CIT(A)'s decision was contested on the grounds that interest on receivables from AEs should be charged if the receivables were outstanding beyond the agreed term, despite the assessee's margin being better than that of comparables after allowing for working capital adjustment. The appeal was dismissed based on the monetary threshold for tax effect as revised by the CBDT Circular, which aims to reduce litigation by dismissing cases where the tax effect is below Rs. 60 Lakhs.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31400 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 20-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 27-05-2022
• Laws Referred To: Section 92B of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SOMYA JAIN
• Keywords: Retrospective amendment; Tax effect; Earning of tax free income
• Section: 14A; 92B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No [Assessment Year : DCIT, Circle-4(2), New Delhi. APPELLANT Appellant by Respondent by Date of Hearing Date of Pronouncement PER PRADIP KUMAR KEDIA The captioned appeal has been filed at the instance of the Revenue against the order of the 07.03.2022 concerning assessment year 20 2. The grounds of appeal raised by the Revenue read as under: 1. “On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in deleting the adjustment of Rs. 1,18,14,779/ outstanding recei assessee even when the provisions of section 92B have been amended by The Finance Act, 2012 with retrospective amendment from 01.04.2002. 2. On the facts & under the circumstances of the case, the Ld. CIT(A) has erre from AEs con not be charged if the margin of the assessee is better than that of comparables after allowing working capital adjustment ignoring the fact that the receivables were outstanding beyond agreed term. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “I” BENCH: NEW DELHI SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1263/Del/2022 Assessment Year : 2016-17] vs Coforge Ltd., [Formerly NIIT Technologies Ltd.], 8, Balaji Estate, 1st Floor, Guru Ravi Das Marg, Kalkaji, New Delhi-110019. PAN-AAACN0332P RESPONDENT Shri Dharamvir Singh, CIT DR Respondent by Ms. Somya Jain, Adv. Date of Hearing 20.11.2024 Date of Pronouncement 20.11.2024 ORDER PRADIP KUMAR KEDIA, AM : The captioned appeal has been filed at the instance of the Revenue against the order of the Ld. CIT(A)-44 [“Ld. CIT(A)”], dated concerning assessment year 2016-17. The grounds of appeal raised by the Revenue read as under: On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in deleting the adjustment of Rs. 1,18,14,779/- on account of interest charged on outstanding receivable from the AEs to the income of the assessee even when the provisions of section 92B have been amended by The Finance Act, 2012 with retrospective amendment from 01.04.2002. On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in holding that interest on receivables from AEs con not be charged if the margin of the assessee is better than that of comparables after allowing working capital adjustment ignoring the fact that the receivables were outstanding beyond agreed term. SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & [Formerly NIIT Technologies Floor, Guru Ravi Das Marg, Kalkaji, Shri Dharamvir Singh, CIT DR The captioned appeal has been filed at the instance of the CIT(A)”], dated The grounds of appeal raised by the Revenue read as under:- On the facts & under the circumstances of the case, the Ld. CIT(A) has erred in deleting the adjustment of Rs. on account of interest charged on vable from the AEs to the income of the assessee even when the provisions of section 92B have been amended by The Finance Act, 2012 with On the facts & under the circumstances of the case, the d in holding that interest on receivables from AEs con not be charged if the margin of the assessee is better than that of comparables after allowing working capital adjustment ignoring the fact that the receivables 3. On the facts & under the circumstances the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee on disallowance u/s 14A ignoring the fact that the assessee failed to prove that investment resulting in exempt income were made out of own fun borrowed funds. 3. At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.09 of 2024 the previous thresholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at Rs.60 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.60 lakhs and therefore, appeal of the Revenue is required to be dismissed in limine. 4. The Ld.CIT.DR for the Revenue fairly adm applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. Accordingly, appeal of the Revenue is dismissed as not maintainable. However, it will be open to the Revenue to seek restoration of its appeal on showing inapplicability of the a CBDT Circular in any manner. 5. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on Sd/- (ANUBHAV SHARMA) JUDICIAL MEMBER * Amit Kumar * ITA No. On the facts & under the circumstances the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee on disallowance u/s 14A ignoring the fact that the assessee failed to prove that investment resulting in exempt income were made out of own funds and not from interest bearing borrowed funds.” At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently CBDT Circular No.09 of 2024 dated 17.09.2024 resholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised Rs.60 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.60 lakhs and therefore, appeal of the Revenue is required to be DR for the Revenue fairly adm applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. Accordingly, appeal of the Revenue is dismissed as not maintainable. However, it will be open to the Revenue to seek restoration of its appeal on showing inapplicability of the a CBDT Circular in any manner. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 20th November, 2024. S (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER ITA No.1263/Del/2022 Page | 2 On the facts & under the circumstances the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee on disallowance u/s 14A ignoring the fact that the assessee failed to prove that investment resulting in exempt income ds and not from interest bearing At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently 17.09.2024 revising resholds pertaining to tax effects. As per aforesaid Circular, all pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised Rs.60 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.60 lakhs and therefore, appeal of the Revenue is required to be DR for the Revenue fairly admitted the applicability of the CBDT Circular No.09 of 2024 dated 17.09.2024. Accordingly, appeal of the Revenue is dismissed as not maintainable. However, it will be open to the Revenue to seek restoration of its appeal on showing inapplicability of the aforesaid In the result, the appeal of the Revenue is dismissed. November, 2024. Sd/- PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ITA No. ASSISTANT REGISTRAR ITAT, NEW DELHI ITA No.1263/Del/2022 Page | 3 ASSISTANT REGISTRAR ITAT, NEW DELHI Draft dictated Draft placed before author Approved Draft comes to the Sr.PS/PS Order signed and pronounced on File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order. Date of uploading on the website ITA No. 20.11.2024 20.11.2024 Approved Draft comes to the Sr.PS/PS .11.2024 .11.2024 Date on which file goes to the Head Clerk. .11.2024 ITA No.1263/Del/2022 Page | 4 "