Aditi Technologies Private Ltd, Banlgaore V. The Deputy Commissioner of Income Tax, Circle-1(1)(1), Bangalore

ITA 1423/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4784 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: L BHARATH
• Keywords: Earning of tax free income
• Section: 143(3); 10AA; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE S HRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . A. NO. 1423 /BANG/20 17 (ASSESSMENT YEAR : 20 12 - 13 ) M/S. ADITI TECHNOLOGIES PRIVATE LIMITED, (NOW KN OWN AS HARMAN CONNECTED SERVICES TECHNOLOGIES PRIVATE LIMITED, NO.C - 4, BLOCK, WING A, MANYATA EMBASSY BUSINESS PARK, OUTER RING ROAD, BANGALORE - 560 011 . . APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI L. BHARATH, C.A. R E SPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (D.R) DATE OF H EARING : 22.05.2018. DATE OF P RONOUNCEMENT : 25 .05 .201 8 . O R D E R PER SHRI INTURI RAMA RAO , A .M . : THIS APPEAL IS FILED BY THE ASSESSEE - COMPANY DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 1 , BANGALORE DT.11.4.2017 FOR THE ASSESSMENT YEAR 20 12 - 13. 2. THE ASSESSEE RAISE D THE FOLLOWING GROUNDS : 2 IT A NO. 1423 /BANG/201 7 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS O F COMPANIES ACT, 1956. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RENDERING IT ENABLED SERVICES. THE RETURN OF INCOME WAS FILED FOR THE ASSESSMENT YEAR 2012 - 13 ON 30.11.2012 DECLARING A LOSS OF RS.10,92,63,254 BELATEDLY AFTER CLAIMING DEDUCTION 3 IT A NO. 1423 /BANG/201 7 UNDER SEC TION 10AA OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') OF RS.16,26,03,245. THE RETURN OF INCOME WAS REVISED ON 13.1.2014 DECLARING INCOME OF RS.38,19,476 AFTER CLAIMING DEDUCTION UNDER SECTION 10AA OF THE ACT OF RS.10,58,30,802 AND UNDER SECTION 80 IAB OF RS.4,12,84,995. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED VIDE ORDER DT.24.3.2015 PASSED UNDER SECTION 143(3) OF THE ACT DETERMINING TOTAL INCOME OF RS.88,43,225. WHILE DOING SO, THE ASSESSING OFFICER MADE THE FOLLOWING DISALL OWANCES : - I) DISALLOWANCE OF EXCESS CLAIM U/S.10AA 10,52,302 II) DISALLOWANCE OF BELATED REMITTANCE OF EMPLOYEES CONTRIBUTION TO PF / ESI 25,38,277 III) DISALLOWANCE U/S.40(A)(IA) 7,92,590 IV) DISALLOWANCE U/S.14A R.W. RULE 8D 5,61,876 V) DISALLOWAN CE OF DONATIONS AS DISCUSSED 7,704 TOTAL : 49,52,749 BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT (APPEALS) WHO VIDE IMPUGNED ORDER GRANTED RELIEF IN RESPECT OF BELATED REMITTANCES OF PF CONTRIBUTION OF THE EMPLOYEES AND IN RESPECT OF TH E DISALLOWANCE OF EXCESS CLAIM UNDER SECTION 10AA OF THE ACT, THE LEARNED CIT (APPEALS) DIRECTED THE ASSESSING OFFICER TO REDUCE THE TELECOMMUNICATION EXPENSES, INSURANCE INCURRED IN FOREIGN CURRENCY FROM BOTH TOTAL 4 IT A NO. 1423 /BANG/201 7 TURNOVER AS WELL AS EXPORT TURNOVER FO LLOWING THE LAW LAID DOWN IN THE CASE OF CIT VS. TATA ELXSI LTD. 349 ITR 98 (KAR). THE LEARNED CIT (APPEALS) HOWEVER CONFIRMED THE ADDITION UNDER SECTION 14A OF THE ACT. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US IN RAISING THE PRESENT GROUNDS OF APPEAL. 4. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 5. GROUND NO.2 CHALLENGES THE FINDING OF THE LEARNED CIT (APPEALS) THAT THE EXPENDITURE INCURRED ON TRAVEL, INSURANCE AND TELECOMMUNICATION IN FOREIGN CURREN CY SHOULD NOT HAVE BEEN REDUCED FROM BOTH EXPORT TURNOVER AND TOTAL TURNOVER AS THEY ARE NOT INCURRED IN CONNECTION WITH THE RENDERING OF TECHNICAL SERVICES. 6. WE FIND THAT FROM PERUSAL OF THE ORDERS OF ASSESSMENT AS WELL AS FIRST APPELLATE ORDER, T HIS CONTENTION WAS NEVER RAISED BY THE ASSESSEE AT ANY STAGE OF PROCEEDINGS NOR RAISED ANY ADDITIONAL GROUND OF APPEAL BEFORE US. IN ANY EVENT, THIS IS AN ISSUE WHICH REQUIRES VERIFICATION OF FACTS AND THEREFORE CANNOT BE ENTERTAINED AT THIS STAGE OF PROC EEDINGS. HENCE THIS GROUND OF APPEAL FILED BY THE ASSESSEE IS DISMISSED. 5 IT A NO. 1423 /BANG/201 7 7. THE THIRD GROUND OF APPEAL CHALLENGES THE ADDITION UNDER SECTION 14A OF THE ACT ON THE GROUND THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE. 8. FROM THE PERUSAL OF TH E ASSESSMENT ORDER AS WELL AS THE CIT (APPEALS) ORDER, IT IS CL E AR THAT THE ASSESSEE HAD BEEN CONTENDING THAT THE ASSESSEE HAD NOT EARNED EXEMPT INCOME AND THEREFORE SECTION 14A CANNOT BE INVOKED. THIS PROPOSITION HA D BEEN APPROVED BY THE HON'BLE DELHI HI GH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT 61 TAXMANN.COM 118 & SPECIAL BENCH OF ITAT, HYDERABAD IN THE CASE OF ACIT VS. PROGRESSIVE CONSTRUCTIONS LTD. 92 TAXMANN.COM 104 (HYDERABAD TRIB.) (SB) AND THEREFORE WE ALLOW THIS GROUND OF APPEAL OF ASSES SEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 25TH DAY OF MAY, 2 01 8 . SD/ - (N.V. VASUDEVAN) JUDICIAL MEMBER SD/ - ( INTURI RAMA RAO ) ACCOUNTANT MEMBER BANGALORE, DT. 25 .05.2018. *REDDY GP 6 IT A NO. 1423 /BANG/201 7 COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.