The DCIT, Circle-4(1)(1), Ahmedabad V. Sai Infosytem(India)Ltd., Ahmedabad

ITA 123/AHD/2015

AI Insights

The case involves multiple appeals related to the income tax assessments of Sai Infosystem (India) Limited for various assessment years. The appeals were filed by both the Revenue and the Assessee against the orders of the CIT(A), which had partly allowed the Assessee's appeal against the Assessment Order. The main issues revolved around the deductions claimed under Section 80IC of the Income Tax Act, disallowances related to salaries and purchases, and various additions made by the Assessing Officer. The tribunal examined the detailed findings of the CIT(A) and the submissions made by both parties, including the affidavit from the Official Liquidator, which indicated that there were no demands for certain assessment years due to refunds issued.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129722 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-09-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 11-01-2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VISHAL RAVAL
• Keywords: Depreciation
• Section: 68; 154; 40A(3); 250; 80IC; 80IC

Judgement Text

ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 1 of 8 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.2023/Ahd/2012 Assessment Year: 2008-09 The Deputy Commissioner of Income Tax, Circle – 8, Ahmedabad. Vs. Sai Infosystem (India) Limited, Sai Care, Super Plaza, Sandesh Press Road, Vastrapur, Ahmedabad – 380 015. [PAN – AAHCS 2059 R] ITA No.2062/Ahd/2012 Assessment Year: 2008-09 Sai Infosystem (India) Limited, Sai Care, Super Plaza, Sandesh Press Road, Vastrapur, Ahmedabad – 380 015. [PAN – AAHCS 2059 R] Vs. The ACIT (OSD) Circle – 8, Ahmedabad. ITA No.2471/Ahd/2012 Assessment Year: 2009-10 Sai Infosystem (India) Limited, Sai Care, Super Plaza, Sandesh Press Road, Vastrapur, Ahmedabad – 380 054. [PAN – AAHCS 2059 R] Vs. The JCIT, Range – 8, Ahmedabad. ITA No.2578/Ahd/2012 Assessment Year: 2009-10 The Deputy Commissioner of Income Tax, Circle – 8, Ahmedabad. Vs. Sai Infosystem (India) Limited, Sai Care, Super Plaza, Sandesh Press Road, Vastrapur, Ahmedabad – 380 015.. [PAN – AAHCS 2059 R] ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 2 of 8 ITA No.123/Ahd/2015 Assessment Year: 2010-11 The Deputy Commissioner of Income Tax, Circle – 4(1)(1) Ahmedabad. Vs. Sai Infosystem (India) Limited, Sai Care, Super Plaza, Sandesh Press Road, Vastrapur, Ahmedabad – 380 054. [PAN – AAHCS 2059 R] (Appellants) (Respondents) Assessee by Shri Vishal Raval, AR Revenue by Shri Kamlesh Makwana, CIT (DR) Da te o f He a r in g 06.09.2023 Da te o f P ro n o u n ce m e n t 15.09.2023 O R D E R PER BENCH : ITA Nos.2023 & 2062/Ahd/2012 are cross appeals filed by the Revenue and Assessee against order dated 29.06.2012 passed by the CIT(A)-XIV, Ahmedabad for the Assessment Year 2008-09, ITA Nos.2471 & 2578/Ahd/2012 are cross appeals filed by the Assessee & Revenue against order dated 31.08.2012 passed by the CIT(A)-XIV, Ahmedabad for the Assessment Year 2009-10 and ITA No.123/Ahd/2015 is appeal filed by the Revenue against order dated 05.09.2014 passed by the CIT(A)- XIV, Ahmedabad for the Assessment Year 2010-11. 2. As we are firstly taking up the Cross Appeals filed by the Revenue and Assessee for the Assessment Year 2008-09 i.e. ITA Nos.2023/Ahd/2012 & 2062/Ahd/2012, the grounds raised in these appeals are reproduced as under :- ITA No.2023/Ahd/2012 for A.Y. 2008-09 filed by the Revenue “1) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in allowing the deduction of Rs.18,47,87,358/- u/s.80IC of the Act. 2) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of salary to wives of Director's amounting to Rs.9,60,007/- u/s.40A(2)(b) of the Act. 3) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of 10% of the ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 3 of 8 purchases made from E-mail Infotech Pvt. Ltd. amounting to Rs.26,11,988/- u/s.40A(2)(b) of the Act. 4) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in restricting the disallowance of expenditure incurred under the head 'repairs & Maintenance' from Rs.17,60,963/- to Rs.4,40,240/-. 5) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of interest on account of advance to suppliers of Rs.94,09,652/- u/s.36(1)(iii) of the Act. 6) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of interest on account of advance to others amounting to Rs.93,17,977/- u/s.36(1)(iii) of the Act. 7) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of interest on account of interest on account of capital work-in-progress amounting to Rs.6,21,321/- u/s.36(1)(iii) of the Act. 8) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition made on account of share application money of Rs.10,00,00,000/- u/s.68ofthe Act. 9) On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 10) It is therefore, prayed that the order of the Ld. Commissioner of Income- Tax (Appeals)-XIV, Ahmedabad may be set-aside and that of the order of the Assessing Officer be restored.” ITA No.2062/Ahd/2012 for A.Y. 2008-09 filed by the Assessee “1. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the action of the AO of allocating the expenditure in ratio of turnover to rework the eligible deduction u/s.80IC of the act and consequently reducing the claim u/s. 80IC of the act by Rs.1,79,51,412/- is totally uncalled for, unjustified and bad in law. He ought to have allowed the entire claim u/s. 80IC of the act. 1.1 Without prejudice to the above, and in law and in the facts and circumstances of the appellant's case the Id. CIT(A) has erred in upholding the reallocation of consolidated expenses made by the AO instead of reallocating the expense of HO only which in substance is bad in law and absolutely erroneous. ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 4 of 8 2. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the disallowance made by the AO u/s. 14A of the act of Rs.23,90,483/-. He ought to have deleted the impugned addition. 3. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the disallowance u/s 40A(2)(b) of the act of Rs.4,08,000/- being the payment of incentive made to Entourage Communication. He ought to have deleted the same. 4. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the disallowance of depreciation of Rs. 8,04,055. He ought to have directed the AO to delete the same. 5. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the disallowance of depreciation of Rs.35,100/- made by the AO u/s. 40A(3) of the act, since depreciation is the non cash expense and can not be disallowed u/s. 40A(3). He ought to have directed the AO to delete the same. 6. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the disallowance of Rs.28,000/- being House Rent Deposit, without appreciating the correct facts in substance. He ought to have directed the AO to delete the same. 7. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) ought to have held that the Repairs and Maintenance expense claimed by the appellant are bonafide and accordingly he should have deleted the whole of the impugned addition of Rs.17,60,963/- carried out by the AO instead of deleting partly. 8. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in confirming the disallowance of deferred revenue expenditure amounting to Rs.17,25,316/-. He ought to have directed the AO to delete the same. 9. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) should have allowed the entire claim of commission expense of Rs.20,46,534/- instead of disallowing one fourth of commission expenses of Rs.5,11,663/-. He ought to have deleted the same. 10. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in dismissing the ground raised for charging the interest u/s.234B, 234C and 234D of the act. 11. In law and in the facts and circumstances of the appellant's case, the Id. CIT(A) has erred in dismissing the ground raised in relation to the initiation of the penalty proceedings u/s. 271(1) (c) of the act. He should have directed the AO to drop the same.” ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 5 of 8 3. The Ld. DR submitted the comments of the Assessing Officer vide letter dated 05.09.2023 as well as 31.08.2023 in this matter. The Ld. DR submitted that the Assessment Order was passed on 28.12.2010 wherein various additions were made and the income of the assessee was determined at Rs.39,00,25,020/- thereby raising the demand at Rs.17,32,79,645/- by the Assessing Officer. Thereafter, the order under Section 154 of the Act was passed in the assessee’s case on 09.02.2011 determining total income of Rs.39,00,25,020/- and the demand was determined at Rs.13,47,16,339/-. The assessee filed appeal before the CIT(A) against the Assessment Order and the CIT(A) vide order dated 29.06.2012 has partly allowed the appeal of the assessee wherein some additions were confirmed and some additions were deleted. The order giving effect to the decision of the CIT(A) was passed in the case of the assessee on 27.08.2012 wherein income of the assessee was determined at Rs.8,06,59,002/- and refund of Rs.13,22,78,052/- (including interest under Section 244A of the Act of Rs.57,12,920/-). Since there was refund instead of the demand and since there was no demand in the case of the assessee for A.Y. 2008-09, no claim was lodged in the case of the assessee before the Hon’ble National Company Law Tribunal (NCLT) for the A.Y. 2008-09 by the Revenue. The Ld. DR submitted that the contesting issues in appeal filed by the Revenue are discussed by the Assessing Officer and the Ld. DR is relying upon the Assessment Order. 4. From the office of the Official Liquidator the affidavit of the Liquidator with signature of Sai Infosystem (India) Private Limited i.e. the assessee herein was filed on 21.12.2022 before us thereby annexing order of the Hon’ble NCLT dated 30.11.2017. The Ld. Counsel appearing for the Official Liquidator submitted that for A.Y. 2008-09 there was refund and, therefore, the claim was not filed by the Revenue before the Hon’ble NCLT and, therefore, the CIT(A) has rightly deleted the additions contested by the Revenue in the appeal which becomes revenue neutral and hence the appeal of the Revenue be disposed. 5. We have heard both the parties and perused all the relevant material available on record. Since vide letter dated 05.09.2023, though there is no demand in the case of the assessee for A.Y. 2008-09 and no claim was lodged in the case of the assessee before Hon’ble NCLT, after going through the grounds of appeal filed by the Revenue relating to : ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 6 of 8 a) Deduction of Rs.18,47,87,358/- under Section 80IC of the Act. b) Disallowance of Salary to wives of the Directors amounting to Rs.9,60,007/- under Section 40A(2)(b) of the Act. c) Disallowance of 10% of the purchases made from E-Mail Infotech Pvt. Ltd. amounting to Rs.26,11,988/- under Section 40A(2)(b) of the Act. d) Disallowance of expenditure in respect of repairs and maintenance from Rs.17,60,963/- to Rs.4,40,240/-. e) Disallowance of interest on account of advance to suppliers of Rs.94,09,652/- under Section 36(1)(iii) of the Act. f) Disallowance of interest on account of advance to others amounting to Rs.93,17,977/- under Section 36(1)(iii) of the Act. g) Disallowance of interest on account of capital work in progress amounting to Rs.6,21,321/- under Section 36(1)(iii) of the Act. h) Addition on account of share application money of Rs.10,00,00,000/- under Section 68 of the Act. 6. From the perusal of the order passed by the CIT(A) in respect of each of these ground the CIT(A) has given detailed finding and, therefore, there is no need to interfere with the said finding at all and hence appeal of the Revenue being ITA No.2023/Ahd/2012 for A.Y. 2008-09 is dismissed. 7. Now coming to ITA No.2062/Ahd/2012 for A.Y. 2008-09 filed by the Assessee, since the Official Liquidator in his affidavit has not contested the issues on merit, same are dismissed. Hence, ITA No.2062/Ahd/2012 filed by the assessee for A.Y. 2008-09 is dismissed. 8. As relates to ITA No.2471/Ahd/2012 filed by the assessee for the A.Y. 2009-10, Since the Official Liquidator in his affidavit has not contested the issues on merits, the appeal being ITA No.2471/Ahd/2012 for A.Y. 2009-10 is dismissed. In fact, in this appeal for A.Y. 2009-10 as well there was refund of Rs.9,55,23,150/- and, therefore, no demand for A.Y. 2009-10 was raised as well as no claim was lodged by the assessee before Hon’ble NCLT by the Revenue. ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 7 of 8 9. Now coming to ITA No.2578/Ahd/2012 for A.Y. 2009-10, the Revenue has filed appeal and the issues contested therein are: a) Disallowance of salary to wives of Directors’ amounting to Rs.9,60,000/- under Section 40A(2)(b) of the Act. b) Disallowance of 10% of the purchases made from E-Mail Infotech Pvt. Ltd. amounting to Rs.44,94,237/- under Section 40A(2)(b) of the Act. c) Addition of Rs.95,89,920/- made under Section 145A of the Act. d) Addition of Rs.1,53,716/- made under Section 36(1)(va) of the Act. e) Disallowance of interest on account of advance to suppliers of Rs.1,77,82,748/- under Section 36(1)(iii) of the Act. f) Disallowance of interest on account of capital work in progress amounting to Rs.26,15,450/- under Section 36(1)(iii) of the Act. g) Addition of Rs.14,31,805/- made under Section 41(1) of the Act. h) Disallowance of Rs.1,25,000/- lifetime membership i) Deduction of Rs.2,07,98,370/- under section 80IC of the Act in respect of Unit-I at Parwanoo j) Deduction of Rs.25,03,16,010/- under Section 80IC of the Act in respect of Unit-II at Parwanoo k) Deduction in respect of Foreign Exchange Fluctuation Gain of Rs.4,41,54,763/- under Section 80IC of the Act in respect of Unit-I & II at Parwanoo l) Addition of income from other sources amounting to Rs.24,62,73,317/- out of total addition of Rs.35,18,46,245/- 10. From the perusal of the order of the CIT(A) the issues contested by the Revenue in the said appeal has been elaborately discussed and after taking cognizance of the details filed by the assessee during the assessment proceedings as well as at the stage of appellate proceedings the CIT(A) has given detailed finding. There is no need to interfere in the said finding. Hence, ITA No.2578/Ahd/2012 for A.Y. 2009-10 filed by the Revenue is dismissed. 11. As relates to ITA No.123/Ahd/2015 for A.Y. 2010-11 filed by the Revenue, the Official Liquidator has filed affidavit dated 21.12.2022 wherein the liability under ITA Nos.2023, 2062, 2471, 2578/Ahd/2012 &123/Ahd/2015 AYs.: 2008-09, 2008-09, 2009-10, 2009-10 & 2010-11 Page 8 of 8 Section 271 & Section 250 has been admitted by the Official Liquidator which is reflected in page 4 of the said affidavit (Paper Book). As regards the issues contested by the Revenue relating to addition of Rs.9,30,444/- under Section 40A(2)(b) of the Act for purchase from E-Mail Infotech Pvt. Ltd., addition under Section 145A of the Act of Rs.39,14,353/- for unutilised/closing balance of Modvat/Cenvat, addition under Section 41(1) of the Act of Rs.2,95,530/-, addition of Rs.1,52,920/- on account of disallowance of capitalization of interest related to capital WIP and addition under Section 36(1)(iii) of the Act of Rs.1,21,11,599/-. The issues contested by the Revenue are categorically discussed and finding given by the CIT(A) does not require any interference. Hence, appeal of the Revenue being ITA No.123/Ahd/2015 for A.Y. 2010-11 is dismissed. 12. In the result, all the appeals filed by the Revenue and Assessee are dismissed. Order pronounced in the open Court on this 15 th September, 2023. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 15 th day of September, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad