Servion Global Solutions Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1223/CHNY/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5134 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2018
• Assessment Year: 1999-2000
• Appeal Filed On: 21-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SP CHIDAMBARAM
• Keywords: Business income; Depreciation; Search and seizure; Opportunity of being heard; Bad and doubtful debts

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NOS.1223, 1224, 1225, 1226, 1227 & 1228/CH NY/2015 / ASSESSMENT YEAR : 1999-00, 2002-03, 2003-04, 2004-05, 2007-08 & 2008-2009. M/S. SERVION GLOBAL SOLUTIONS LTD, PLOT NO.4/600 & 4197, 7 TH STREET, DR. VSI ESTATE, PHASE II, THIRUVANMIYUR, CHENNAI 600 041. [PAN AAACI 0947F] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 6(1) CHENNAI 600 034 ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. S.P. CHIDAMBARAM, ADV /RESPONDENT BY : SHRI. AR.V. SREENIVASAN, JCIT. /DATE OF HEARING : 07-06-2018 ! /DATE OF PRONOUNCEMENT : 12-06-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AGAINST ORDERS DATED 19.03.2015 OF LD. COMMISSIONER OF INC OME TAX (APPEALS)-15, CHENNAI, FOR THE IMPUGNED ASSESSMENT YEARS. ITA NOS 1223 TO 1228/15. :- 2 -: 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE WAS PRESSING ONLY THOSE GROUNDS WHICH WERE LISTED BY HIM IN THE CHART FILED. AS PER LD. COUNSEL GROUNDS IF ANY, APART FROM THOSE MENTIO NED IN THE CHART WERE SUPPORTIVE IN NATURE AND THE ISSUES INVOLVED STOOD COVERED BY THE GROUNDS LISTED IN THE CHART. ACCORDINGLY, WE RE STRICT OURSELVES TO THE GROUNDS DEPICTED IN THE CHART FURNISHED BY THE LD. AUTHORISED REPRESENTATIVE. 3. APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 1999-200 0 IN ITA NO.1223/CHNY/2015 IS TAKEN UP FIRST FOR DISPO SAL. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS AP PEAL EMANATED FROM AN ORDER PASSED BY THE LD. ASSESSIN G OFFICER, PURSUANT TO THE DIRECTIONS OF THIS TRIBUNAL. AS P ER THE LD. AUTHORISED REPRESENTATIVE, GROUND NO.2 WAS ON DISALLOWANCE OF SHARE ISSUE EXPENDITURE OF B3,31,421/-. SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THIS TRIBUNAL HAD DIRECTED THE LD. ASSESSING OFFICER TO RECONSIDER THE CLAIM BASED ON EVIDENCE S UBMITTED BY THE ASSESSEE. LD.AUTHORISED REPRESENTATIVE ADMITTED THA T ASSESSEE WAS UNABLE TO PROVIDE EVIDENCE TO SHOW THAT THE FUNDS R ECEIVED THROUGH INCREASE IN SHARE CAPITAL WERE UTILIZED FOR THE PU RPOSE OF EXTENSION OF ITS INDUSTRIAL UNDERTAKING OR FOR SETTING UP A NEW INDUSTRIAL UNIT. ITA NOS 1223 TO 1228/15. :- 3 -: 5. WE HAVE CONSIDERED THE CONTENTIONS OF THE LD. AUTHO RISED REPRESENTATIVE AND PERUSED THE ORDERS OF THE AUTHOR ITIES BELOW. LD. ASSESSING OFFICER HAD DISALLOWED B3,31,421/-, BEING SHARE ISSUE EXPENDITURE CLAIMED BY THE ASSESSEE U/S.35D OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THIS TRIBUNAL HAD THRO UGH ITS ORDER DATED 24.03.2009 IN ITA NO.999/MDS/2007, REMITTED THIS I SSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR EXAMINATION A FRESH AFTER CONSIDERING THE FACTUAL ASPECTS. EVEN IN THE FRESH PROCEEDINGS , ASSESSEE WAS UNABLE TO BRING ANY EVIDENCE TO DEMONSTRATE THAT F UNDS FROM INCREASED SHARE CAPITAL WAS USED FOR EXTENSION OF ITS EXISTING INDUSTRIAL UNDERTAKING OR SPENT IN CONNECTION WITH THE SETTING UP OF A NEW INDUSTRIAL UNIT. SINCE THE DISALLOWANCE WAS MA DE DUE TO INABILITY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM, WE DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. GROUND NO.2 OF THE ASSESSEE STANDS DISMISSED. 6. ONLY OTHER EFFECTIVE GROUND RAISED BY THE ASSESSEE APPEARING AS GROUND NO.4 IN THE CHART IS ON A DISALLOWANCE O F INTEREST INCOME FOR THE PURPOSE OF COMPUTATION OF DEDUCTION CLAIMED BY THE ASSESSEE U/S.80HHE OF THE ACT. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT INTERE ST OF B3,11,014/- WAS EARNED ON FIXED DEPOSITS KEPT FOR MEETING THE ITA NOS 1223 TO 1228/15. :- 4 -: MARGIN REQUIREMENT FOR LETTER OF CREDIT AND BANK GU ARANTEES. ACCORDING TO HIM, SUCH INTEREST WAS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S.80HHE OF THE ACT. 8. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CLAIM OF THE ASSES SEE IS THAT THE FIXED DEPOSITS WERE KEPT FOR THE PURPOSE OF MEETING MARGI N REQUIREMENT FOR OPENING LOC AND OBTAINING BANK GUARANTEES. HOWEVER , ASSESSEE COULD NOT SUBSTANTIATE THIS CLAIM BEFORE THE LOWER AUTHORITIES DESPITE OPPORTUNITIES GIVEN TO IT. LD. COMMISSIONER OF INC OME TAX (APPEALS) HAD RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF DOLLAR APPARELS VS. ITO, 294 ITR 484, CONFIRMING THE DISALLOWANCE. SINCE ASSESSEE WAS UNABLE TO SUPPORT THE CLAIM WITH PROPER EVIDENCE, WE DO NOT FIND ANY REASON TO INTER FERE WITH THE ORDERS OF THE LOWER AUTHORITIES. GROUND NO.4 OF THE ASSESS EE STANDS DISMISSED. 10. NOW, WE TAKE UP THE APPEAL OF ASSESSEE FOR THE ASSE SSMENT YEAR 2002-03 IN ITA NO.1224/CHNY/2015. ITA NOS 1223 TO 1228/15. :- 5 -: 11. FIRST EFFECTIVE GROUND APPEARING AS GROUND NO.2 IN THE CHART IS ON DISALLOWANCE OF PRIOR PERIOD EXPENDITURE OF B 18,33,815/-. 12. WE HAVE HEARD THE CONTENTIONS OF THE LD. COUNSEL. ASSESSEE HAD CLAIMED PRIOR PERIOD EXPENDITURE OF B18,33,815/ -. LD. ASSESSING OFFICER HAD DISALLOWED THE CLAIM SINCE EXPENDITUR E RELATED TO AN EARLIER YEAR, AND DID NOT RELATE TO THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR. CONTENTION OF THE ASSESSE E BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT SUCH EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND BEING A GENUINE BUSINESS OUTGO, WAS REQUIRED TO BE ALLOWE D U/S.37 OF THE ACT. HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPE ALS) DID NOT ACCEPT THIS CONTENTION. ARGUMENT OF THE LD. AUTHOR ISED REPRESENTATIVE BEFORE US IS THAT, IF THE PRIOR PERIOD EXPENDITURE IS NOT ALLOWED FOR THE IMPUGNED ASSESSMENT YEAR, CORRESPONDING ALLOWANCE S HOULD BE GIVEN FOR THE EARLIER YEARS TO WHICH SUCH EXPENDITURE RE LATED TO. WE ARE AFRAID, WE CANNOT ACCEPT THIS CONTENTION. IF ASSES SEE WAS OF THE OPINION THAT EXPENDITURE RELATED TO AN EARLIER YEAR , IT OUGHT HAVE FILED CLAIMS IN THE RESPECTIVE YEARS. IT IS NOT DISPUTED THAT THE EXPENDITURE OF B18,33,815/- DID NOT RELATE TO THE IMPUGNED ASSE SSMENT YEAR. HENCE, IN OUR OPINION, THE CLAIM WAS RIGHTLY DISAL LOWED. WE THEREFORE ITA NOS 1223 TO 1228/15. :- 6 -: FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. GROUND NO.2 OF THE ASSESSEE STANDS DISMISSED. 13. VIDE ITS EFFECTIVE GROUND NO.3, GRIEVANCE OF THE A SSESSEE IS THAT LEASE RENT DEPOSITS WHICH WERE WRITTEN OFF WERE NOT ALLOWED AS EXPENDITURE. 14. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSES SEE HAD WRITTEN OFF B3,97,923/- BEING RENTAL DEPOSITS AD JUSTED AGAINST RENTALS / MAINTENANCE CHARGES DUE ON PROPERTIES OCCUPIED BY THE ASSESSEE. AS PER THE LD. AUTHORISED REPRESENTATIVE, THIS WAS A N ORMAL BUSINESS LOSS WHICH OUGHT HAVE BEEN ALLOWED. LD. AUTHORISED REPRE SENTATIVE, RELIED ON A CO-ORDINATE BENCH ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2003-2004 AND 2004-05 (IN ITA NOS.1965 AND 1 966/MDS/2008, DATED 25 TH MAY, 2009). 15. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 16. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT WHAT WAS WRITTEN OFF BY THE ASSESSEE WAS NOT TRADING A DEBT NOR ANY MONEY LENT BY IT IN THE ORDINARY COURSE OF A BUSINESS OF BANK ING OR MONEY LENDING. NO DOUBT, LD. AUTHORISED REPRESENTATIVE PL ACED RELIANCE ON A ITA NOS 1223 TO 1228/15. :- 7 -: CO-ORDINATE BENCH ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2003-2004 AND 2004-05 (IN ITA NOS.1965 AND 1966/MD S/2008, DATED 25 TH MAY, 2009). PARA 13 OF THE SAID ORDER WHICH IS APP OSITE HERE IS REPRODUCED HEREUNDER:- 13. WE HAVE GIVEN OUR THOUGHT ON THE ISSUE. AS RE GARDS TO THE EARNED MONEY DEPOSIT WITH THE MTNL FOR TAKIN G TELEPHONE CONNECTION, THIS AMOUNT IS BEING REFUNDED DURING THE CERTAIN PERIOD OF TIME BY WAY OF CREDIT GIVEN I N MONTHLY OR BI- MONTHLY BILLS RAISED BY THE MTNL AS PER THE INDIAN TELEGRAPH RULES FRAMED UNDER THE INDIAN TELEGRAPHS ACT AND ON LY A CERTAIN PERCENTAGE, JUST TO SAY 4% OF THE TOTAL DEP OSIT IS CHARGED AS BOOK KEEPING CHARGES. THEREFORE, THE EAR NEST MONEY DEPOSITED WITH MTNL CANNOT BE TREATED AS IRRE COVERABLE ADVANCES AND THEREBY CANNOT BE TREATED AS BAD DEBTS . AS REGARDS TO THE OTHER EXPENSES BY EXAMINING THE NATU RE OF EXPENSES, IT IS CLEAR THAT THESE EXPENSES WERE INCURRED I BY THE ASSESSEE ON BEHALF OF ITS CUSTOMERS WITH WHOM THE A SSESSEE WAS DOING BUSINESS AND THEREFORE THE SAME WAS INCU RRED IN THE COURSE OF ORDINARY BUSINESS OF THE ASSESSEE AND ALL OWABLE AS EXPENDITURE / BUSINESS LOSS. ACCORDINGLY, WE HOLD T HAT EXCEPT THE EARNEST MONEY WITH THE MTNL, OTHER CLAIMS OF TH E ASSESSEE IS WRITTEN OFF BEING BAD DEBTS ARE ALLOWAB LE. HENCE, THE REVENUE PARTLY SUCCEEDS, QUA THIS ISSUE. A READING OF THE ABOVE, CLEARLY SHOW THAT AMOUNT WH ICH WAS WRITTEN IN THE SAID YEAR WAS EARNEST MONEY DEPOSIT WITH THE MTNL AND OTHER CLAIMS INCURRED ON BEHALF OF ITS CUSTOMERS. NO PART OF THE CLAIM WAS ON ANY WRITEOFF OF RENTAL DEPOSITS. THAT APART, THE EMD WRITTEN OFF WAS NOT ALLOWED BY THE TRIBUNAL. LD. AUTHORISED RE PRESENTATIVE ALSO PLACE RELIANCE ON AN DECISION OF DELHI BENCH OF TH E TRIBUNAL IN THE CASE OF FAB INDIA OVERSEAS P. LTD VS. CIT (ITA NO.199/ DEL /2012, DATED 28.06.2013 ). A PERUSAL OF THE SAID ORDER SHOW THAT SECURITY DEPOSITS WHICH WERE WRITTEN OFF WERE GIVEN FOR A L EASE WHICH NEVER ITA NOS 1223 TO 1228/15. :- 8 -: WENT THROUGH. THE TRIBUNAL HAD HELD THAT THERE WAS NO BINDING AGREEMENT BETWEEN ASSESSEE AND THE LESSOR, SINCE TH E LEASE DEED WAS NOT REGISTERED AND HELD THAT SECURITY DEPOSIT WRITT EN-OFF WAS A BUSINESS LOSS. HOWEVER, IN THE CASE BEFORE US, TH ERE IS NOTHING ON RECORD TO SHOW THAT RENTAL DEPOSITS WRITTEN OFF BY THE ASSESSEE PERTAINED TO ANY LEASE WHICH HAD NOT MATERIALIZED. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE ORDERS OF THE LOWER AUTHORITIES. GROUND NO.3 OF THE ASSESS EE STANDS DISMISSED. 17. VIDE ITS EFFECTIVE GROUND NO.4, GRIEVANCE OF THE A SSESSEE IS ON A DISALLOWANCE OF SOFTWARE EXPENDITURE OF B7,7 6,684/- CLAIMED BY IT AS REVENUE OUTGO. 18. WE HAVE CONSIDERED THE RIVAL COUNSEL. ASSESSEE HAD CLAIMED SOFTWARE EXPENDITURE OF B7,76,684/- AS A REVENUE OU TGO. LD. ASSESSING OFFICER WAS OF THE OPINION THAT IT WAS A CAPITAL OUTGO. THOUGH THE ASSESSEE HAD STATED THAT THE SOFTWARE P URCHASED WERE OFFICE TOOLS USED FOR ITS PROJECTS, SUCH CLAIM WA S NOT ACCEPTED. BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), AS SESSEE HAD ARGUED THAT THE COMPUTER SOFTWARE WERE INCLUDED IN THE DEFINITION OF COMPUTER FOR DEPRECIATION PURPOSES, ONLY FROM ASSE SSMENT YEAR 2003- 04 AND THEREFORE FOR THE IMPUGNED ASSESSMENT YEAR, IT WAS ALLOWABLE ITA NOS 1223 TO 1228/15. :- 9 -: AS REVENUE OUTGO. LD. COMMISSIONER OF INCOME TAX (A PPEALS) HOWEVER DID NOT ACCEPT THIS. WHAT WE FIND IS THAT ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SHOW THE NATURE OF THE SOFTWARE EXP ENSES. ASSESSEE WAS UNABLE TO DEMONSTRATE WHETHER IT WAS PAID AS S OFTWARE LICENCE FEE OR PAID FOR OUTRIGHT ACQUISITION OF A SOFTWAR E. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THAT LOWER AUT HORITIES WERE JUSTIFIED IN NOT ALLOWING THE CLAIM AS REVENUE OUTG O. HOWEVER, WE FIND THAT LD. ASSESSING OFFICER HAD ALLOWED DEPRECIATION @ 25% ONLY. ONCE PURCHASE OF SOFTWARE IS CONSIDERED AS A CAPIT AL EXPENDITURE, IT HAS TO BE GIVEN THE SAME RATE OF DEPRECIATION AS APPLICABLE FOR COMPUTER. ASSESSEE IS THEREFORE, IN OUR OPINION EN TITLED TO DEPRECIATION ON THE SOFTWARE EXPENDITURE AT THE RAT E APPLICABLE FOR COMPUTER FOR THE IMPUGNED ASSESSMENT YEAR. ORDERED ACCORDINGLY. GROUND NO.4 OF THE ASSESSEE IS TREATED AS PARTLY AL LOWED FOR STATISTICAL PURPOSES. 19. NOW, WE TAKE UP APPEAL OF THE ASSESSEE FOR ASSESSME NT YEAR 2003-04 IN ITA NO.1225/CHNY/2015. 20. EFFECTIVE GROUND NO.2 OF THE ASSESSEE IS ON SHARE I SSUE EXPENDITURE OF B11,31,421/- WHICH WAS DISALLOWED B Y THE LOWER AUTHORITIES. THIS IS SIMILAR TO THE GROUND NO.2 RA ISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1999-2000 IN ITA NO. 1223/M DS/2015. WE ITA NOS 1223 TO 1228/15. :- 10 -: HAVE ALREADY CONFIRMED THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) IN PARA 5 ABOVE. FACT SITUATION BEING THE SAME, GROUND NO.2 OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 IS ALSO DISMISSED. 21. VIDE ITS EFFECTIVE GROUND NO.4, GRIEVANCE RAISED B Y THE ASSESSEE IS ON DISALLOWANCE OF EXPENDITURE OF B1,17 ,866/- CLAIMED AS INCURRED FOR IMPROVEMENT OF LEASEHOLD PROPERTY. 22. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. ASSESSEE HAD CLAI MED 100% DEPRECIATION ON EXPENDITURE OF B1,17,866/- INCURR ED FOR IMPROVEMENT OF LEASEHOLD PREMISES. HOWEVER, LD. ASSESSING OFF ICER ALLOWED THE CLAIM ONLY TO THE EXTENT OF 10% BEING RATE OF DEPRE CIATION APPLICABLE FOR BUILDING. THE MATTER HAD REACHED THIS TRIBUNAL , IN AN EARLIER ROUND OF PROCEEDINGS AND THIS TRIBUNAL THROUGH ITS ORDER DATED 25.05.2009 IN ITA NO.1965 & 1966/MDS/08, HAD HELD AS UNDER:- THERE IS NO DOUBT THAT AS PER AMENDMENT IN SECTION 32, BY INSERTION OF EXPLANATION (1), CAPITAL ADDITIONS MAD E IN LEASEHOLD BUILDINGS ARE TO BE TREATED AS IF THE SAID BUILDING WAS OWNED BY THE ASSESSEE. HOWEVER, THE EXACT NATURE AS TO THE CLAIM OF THE ASSESSEE THAT THEY ARE TEMPORARY STRUCTURES HAS TO BE EXAMINED. IN THIS VIEW OF THE MATTER, WE REMIT THI S ISSUE TO THE FILE OF THE ASSESSING OFFICER TO GIVE A FINDING THE REON. THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BE ING HEARD. WHEN THE ISSUE WAS TAKEN AFRESH BY THE LD.AO, LA TTER REQUIRED THE ASSESSEE TO PROVIDE THE DETAILS OF THE EXPENDITURE. HOWEVER, ASSESSEE WAS UNABLE TO BRING IN ANY EVIDENCE TO PROVE THAT ITA NOS 1223 TO 1228/15. :- 11 -: THE EXPENDITURE INCURRED WAS FOR ANY TEMPORARY STR UCTURE. EVEN BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE FAILED TO SUPPORT ITS CLAIM THAT THE EXPENDITURE WAS INC URRED FOR ERECTING A TEMPORARY STRUCTURE IN THE LEASEHOLD PROPERTY. SIN CE THE DISALLOWANCE WAS MADE DUE TO INABILITY OF THE ASSESSEE TO PRODUC E EVIDENCE REGARDING NATURE OF EXPENDITURE INCURRED, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. GROUND NO.4 OF THE ASSESSEE STANDS DISMISSED. 23. VIDE ITS EFFECTIVE GROUND NO.7, GRIEVANCE RAISED B Y THE ASSESSEE IS ON A DISALLOWANCE OF B5,01,826/- BEING GRATUITY PAYMENTS TO LIC. 24. LD. COUNSEL FOR THE ASSESSEE, PLACING RELIANCE ON T HE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASS ESSMENT YEAR 2002-03 (IN ITA NO.369/MDS/2006, DATED 3.10.2007) S UBMITTED THAT SUCH CLAIM WAS ALLOWED IN EARLIER YEAR. ACCORDING T O HIM, THERE WAS NO CHANGE IN THE NATURE OF PAYMENTS MADE FOR THE IMPU GNED ASSESSMENT YEAR AS WELL. 25. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 26. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. WHAT WAS HELD BY THIS TRIBUNAL IN ITS ITA NOS 1223 TO 1228/15. :- 12 -: ORDER FOR ASSESSMENT YEAR 2002-03 IN ASSESSEES OW N CASE MENTIONED (SUPRA) IS REPRODUCED HEREUNDER:- 4.1 ON THIS ISSUE WE FIND THAT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD THAT THE ASSESSEE COMPANY HAS A SCHEME WITH THE LIFE INSURAN CE CORPORATION OF INDIA AND THE PAYMENT IS MADE TO LIF E INSURANCE CORPORATION OF INDIA AND IT IS NOT A PROV ISION IN THE BOOKS OF ACCOUNTS. HENCE, THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) HELD THAT THE AMOUNT PAID REPRESENTS PAYMENTS MADE TO LIFE INSURANCE CORPORAT ION OF INDIA AS PER THE SCHEME ADMINISTERED BY THEM AND AS LIFE INSURANCE CORPORATION OF INDIA IS AN APPROVED INSTITUTION FOR MAINTAINING GRATUITY FUNDS, HE DIRE CTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION F OR PAYMENTS OF GRATUITY. 4.2 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RELEVANT RECORDS. WE FIND THAT MATTERS THAT PAYMENT S WERE MADE TO LIFE INSURANCE CORPORATION OF INDIA AR E NOT EMANATING FROM ASSESSING OFFICER'S ORDER. HENCE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFIC ER TO EXAMINE THE FACTS AND GRANT NECESSARY RELIEF TO THE ASSESSEE IF THE PROVISION REPRESENTS PAYMENTS MADE TO LIFE INSURANCE CORPORATION OF INDIA. THE ASSESSEE S HOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. IT IS NOT DISPUTED THAT THE PAYMENTS WERE EFFECTED BY THE ASSESSEE TO LIC UNDER A SCHEME FOR ENSURING GRATUITY TO ITS EMP LOYEES. NO DOUBT, THIS TRIBUNAL HAD FOR ASSESSMENT YEAR 2002-03 REMI TTED THE ISSUE BACK TO THE LD. ASSESSING OFFICER FOR EXAMINING THE FACT S AND GIVING NECESSARY RELIEF TO THE ASSESSEE. HOWEVER, FOR TH E IMPUGNED ASSESSMENT YEAR, IT IS NOT DISPUTED THAT THE PAYMEN TS TO LIC WERE NOT A PROVISION BUT MADE UNDER THE GRATUITY SCHEME. WE ARE THEREFORE OF THE OPINION THAT ASSESSEE WAS ELIGIBLE TO CLAIM SUC H DEDUCTION. DISALLOWANCE OF B5,01,826/- IS DELETED. GROUND NO. 7 OF THE ASSESSEE IS ALLOWED. ITA NOS 1223 TO 1228/15. :- 13 -: 27. NOW, WE TAKE UP APPEAL OF THE ASSESSEE FOR THE ASSE SSMENT YEAR 2004-05 IN ITA NO.1226/CHNY/15. 28. EFFECTIVE GROUND NO.2 OF THE ASSESSEE IS ON DISALLO WANCE OF SHARE ISSUE EXPENDITURE OF B9,65,708/-. THIS IS SI MILAR TO THE GROUND NO.2 RAISED BY THE ASSESSEE IN ITS APPEAL FOR THE A SSESSMENT YEAR 1999-2000 IN ITA NO. 1223/MDS/2015. WE HAVE ALREADY CONFIRMED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) ON THIS ISSUE AT PARA 5 ABOVE. FACT SITUATION BEING THE SAME, GR OUND NO.2 OF THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR IS ALSO DISM ISSED. 29. VIDE ITS EFFECTIVE GROUND NO.4, GRIEVANCE RAISED B Y THE ASSESSEE IS ON A DISALLOWANCE OF B5,52,677/- BEING GRATUITY PAYMENTS TO LIC. THIS IS SIMILAR TO THE GROUND NO.7 RAISED B Y THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2003-04 IN ITA NO. 122 5/MDS/2015. WE HAVE ALREADY HELD IN PARA 26 ABOVE THAT THE DISALLO WANCE WAS NOT WARRANTED. FACT SITUATION BEING THE SAME, WE DELETE THIS DISALLOWANCE FOR IMPUGNED ASSESSMENT YEAR ALSO. GROUND NO.4 OF THE ASSESSEE FOR ASSESSMENT YEAR 2004-05 IS ALLOWED. 30. NOW, WE TAKE UP APPEAL OF THE ASSESSEE FOR THE ASS ESSMENT YEAR 2007-08 IN ITA NO.1227/CHNY/15. 31. VIDE ITS EFFECTIVE GROUND NO.1, GRIEVANCE RAISED BY THE ASSESSEE IS ON NON-EXCLUSION OF ITEMS DEDUCTED FRO M EXPORT TURNOVER, ITA NOS 1223 TO 1228/15. :- 14 -: FROM TOTAL TURNOVER WHILE WORKING OUT THE ELIGIBLE DEDUCTION U/S.10A OF THE ACT . 32. LD. COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON TH E JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. TATA ELXSI LTD, 349 ITR 98 AND THAT OF HONBLE APEX COU RT IN THE CASE OF CIT VS.HCL TECHNOLOGIES LTD, (2018) 93 TAXMANN.COM 33, SUBMITTED THAT PARITY BETWEEN EXPORT AND TOTAL TURNOVER WAS R EQUIRED FOR WORKING OUT THE DEDUCTION UNDER SECTION 10A OF THE ACT . 33. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 34. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. GRIEVANCE OF THE ASSESSEE IS ON NON DEDUCTION OF ITEMS EXCLUDED FROM EXPORT TURNOVER, F ROM TOTAL TURNOVER ALSO WHILE WORKING OUT RELIEF AVAILABLE U/S.10A OF THE ACT. BY VIRTUE OF THE JUDGMENTS OF HONBLE KARNATAKA HIGH COURT IN T HE CASE TATA ELXSI LTD (SUPRA) AND THAT OF HONBLE APEX COURT IN THE CASE HCL TECHNOLOGIES LTD (SUPRA), EXCLUSIONS MADE FROM EXP ORT TURNOVER HAVE TO BE CONSIDERED FOR REDUCTION FROM TOTAL TURNOVER ALSO WHILE WORKING OUT DEDUCTION AVAILABLE U/S.10A OF THE ACT. ACCORD INGLY, WE DIRECT THE LD. ASSESSING OFFICER TO REWORK THE DEDUCTION AVAIL ABLE TO THE ASSESSEE U/S.10A OF THE ACT. GROUND NO.1 OF THE ASSESSEE S TANDS ALLOWED. ITA NOS 1223 TO 1228/15. :- 15 -: 35. VIDE ITS EFFECTIVE GROUND NO.2, GRIEVANCE RAISED B Y THE ASSESSEE IS ON A DENIAL OF ITS CLAIM FOR DEDUCTION OF B4,07,15,784/- U/S.10A OF THE ACT FOR ITS STPI UNITS. 36. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. AS SESSING OFFICER HAD SET OFF THE LOSS FROM ONE STPI UNIT W ITH THE PROFIT OF ANOTHER STPI UNITS, BEFORE ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.10A OF THE ACT, ON THE LATTER. ACCORDI NG TO HIM, SUCH SET OFF OF PROFIT /LOSS BETWEEN TWO UNITS COULD NOT BE DONE, SINCE DEDUCTION U/S.10A OF THE ACT WAS TO BE GIVEN ON A STAND ALONE BASIS. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD, (391 ITR 274) . 37. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE FAIRLY AGREED THAT THE ISSUE STOOD COVERED IN FAVOUR OF THE ASSES SEE. 38. WE HAVE HEARD THE COUNSELS. BY VIRTUE OF THE JUDGM ENT OF HONBLE APEX COURT IN THE CASE OF YOKOGAWA INDIA LTD, (SUPRA) WHICH AFFIRMED THE JUDGMENT OF HONBLE KARNATAKA HIGH COU RT, IN THE SAME CASE, DEDUCTION U/S.10A OF THE ACT HAS TO BE CONS IDERED ON STAND ALONE BASIS WITHOUT SETTING OFF OF LOSS ANOTHER UN IT. ACCORDINGLY, WE DIRECT THE LD. ASSESSING OFFICER TO ALLOW THE CLAIM MADE BY THE ASSESSEE U/S.10A OF THE ACT WITHOUT SETTING OFF S UCH LOSS. GROUND NO.2 OF THE ASSESSEE STANDS ALLOWED. ITA NOS 1223 TO 1228/15. :- 16 -: 39. VIDE ITS EFFECTIVE GROUND NO.6, GRIEVANCE RAISED BY THE ASSESSEE IS ON DISALLOWANCE OF EXPENDITURE OF B4,9 9,373/- CLAIMED FOR IMPROVEMENT OF LEASEHOLD PROPERTY WAS TREATED AS CA PITAL OUTGO. THIS IS SIMILAR TO GROUND NO.4 RAISED BY THE ASSESSEE I N ITS APPEAL FOR ASSESSMENT YEAR 2003-04 IN ITA NO. 1225/MDS/2015. W E HAVE ALREADY CONFIRMED THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) AT PARA 22 ABOVE. FACT SITUATION BEING THE SAME, GR OUND NO.6 OF THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR IS ALSO DIS MISSED. 40. VIDE ITS EFFECTIVE GROUND NO.9, GRIEVANCE RAISED BY THE ASSESSEE IS ON A DISALLOWANCE OF B27,50,694/- BEING GRATUITY PAYMENTS TO LIC. THIS IS SIMILAR TO GROUND NO.7 RA ISED BY THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2003-04 IN ITA N O. 1225/MDS/2015. WE HAVE ALREADY SET ASIDE THE ORDER OF THE LOWER A UTHORITIES AND ALLOWED THE CLAIM FOR REASONS MENTIONED IN PARA 26 ABOVE. FACT SITUATION BEING THE SAME, GROUND NO.9 OF THE ASSESS EE FOR IMPUGNED ASSESSMENT YEAR 2007-08 IS ALLOWED. 41. NOW, WE TAKE UP APPEAL OF THE ASSESSEE FOR THE ASSE SSMENT YEAR 2008-09 IN ITA NO.1228/CHNY/15. 42. EFFECTIVE GROUND NO.1 OF THE ASSESSEE SEEKS PARITY BETWEEN EXPORT TURNOVER AND TOTAL TURNOVER FOR WORKING OUT THE ADDITION MADE U/S.10A OF THE ACT. THIS IS SIMILAR TO GROUND NO.1 RAISED BY THE ITA NOS 1223 TO 1228/15. :- 17 -: ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2007-08 IN ITA NO. 1227/MDS/2015. WE HAVE ALREADY ALLOWED THE RELIEF S OUGHT BY THE ASSESSEE, FOR REASONS MENTIONED AT PARA 34 ABOVE. F ACT SITUATION BEING THE SAME, GROUND NO.1 OF THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR IS ALLOWED. 43. EFFECTIVE GROUND NO.2, IS ON CLAIM U/S.10A OF TH E ACT BEING ALLOWED, AFTER SETTING OFF LOSS OF ANOTHER STPI UNI T. THIS IS SIMILAR TO GROUND NO.2 RAISED BY THE ASSESSEE IN ITS APPEAL F OR ASSESSMENT YEAR 2007-08 IN ITA NO. 1227/MDS/2015. WE HAVE HELD AT P ARA 34 ABOVE THAT DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN ON STAND ALONE BASIS. SIMILAR DIRECTIONS ARE GIVEN HERE ALSO. GROUND NO.2 OF THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR 2008-09 IS ALLOWED. 44. VIDE ITS EFFECTIVE GROUND NO.6, GRIEVANCE RAISED B Y THE ASSESSEE IS ON A DISALLOWANCE OF EXPENDITURE OF B4, 49,435/- CLAIMED AS INCURRED FOR IMPROVEMENT OF LEASEHOLD PROPERTY. THI S IS SIMILAR TO GROUND NO.4 RAISED BY THE ASSESSEE IN ITS APPEAL F OR ASSESSMENT YEAR 2003-04 IN ITA NO. 1225/MDS/2015. WE HAVE ALREADY C ONFIRMED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) AT PARA 22 ABOVE. FACT SITUATION BEING THE SAME, GROUND NO.6 O F THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR IS DISMISSED. ITA NOS 1223 TO 1228/15. :- 18 -: 45. TO SUMMARIZE THE RESULTS, APPEAL OF THE ASSESSEE FO R ASSESSMENT YEAR 1999-2000 IS DISMISSED, WHEREAS IT S APPEALS FOR ALL OTHER YEARS ARE PARTLY ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED ON TUESDAY, THE 12 TH DAY OF JUNE, 2018, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 12 TH JUNE, 2018. KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF