M/s SumTotal Systems India Pvt. Ltd., Hyderabad V. DY. CIT, Circle-3(2), Hyderabad

ITA 1439/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59174 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: A BAJOR IA; R RAHMAN
• Keywords: Business income; TDS
• Section: 115JB; 143(1); 90; 154

Judgement Text

ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1439/HYD/2011 ASSESSMENT YEAR 2008-09 M/S SUM TOTAL SYSTEMS INDIA P LTD., HYDERABAD (PAN AABCC9379C) VS THE DCIT, CIRCLE 3(2), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : S/SHRI R. RAHMAN & A. BAJOR IA RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 26.12.2011 DATE OF PRONOUNCEMENT : 31.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST AN ORDER PASSED BY THE LEARNED CIT(A)-IV, HYDERABAD DATED 25.07.201 1 FOR ASSESSMENT YEAR 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY (M/S SUM TOTAL SYSTEMS INDIA PRIVATE LIMITED) IS ENGAGED IN THE BUSINESS OF RENDERING SOFTWARE DEVELOPMENT SERVICES AND IS REGI STERED WITH THE SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI) OF THE GOVT. OF INDIA. 2.1. THE INCOME OF THE ASSESSEE FOR THE YEAR IN APP EAL UNDER THE NORMAL PROVISIONS OF THE ACT IS RS.29,131 (AFTER CONSIDERI NG DEDUCTION UNDER ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD SECTION 10A OF RS.9,82,99,186) AND BOOK PROFIT UNDE R MAT IS RS.6,67,69,517. THE ASSESSEE WAS LIABLE TO PAY TAX UNDER PROVISIONS OF SECTION 115JB TO THE TUNE OF RS.76,87,869 AND THE S AME WAS DISCHARGED BY WAY OF TDS AND ADVANCE TAX PAYMENTS. 2.2. HOWEVER, WHILE FILING THE RETURN OF INCOME, T HOUGH THE TAX LIABILITY WAS COMPUTED CORRECTLY, THE ASSESSEE HAS ERRONEOUSL Y TAKEN AND ENTERED AN AMOUNT OF RS.9,82,47,301 UNDER INCOME FROM BUSIN ESS OR PROFESSION INSTEAD OF NIL (REF: SERIAL NO. 37 OF THE BP SHEE T OF ITR-6) WHICH LEAD TO AN INCREASE IN GROSS TOTAL INCOME. 2.3. THE ASSESSEE HAD SUBSEQUENTLY RECEIVED AN INT IMATION UNDER SECTION 143(1) ADOPTING THE GROSS TOTAL INCOME OF R S.9,82,76,432 (WHICH INCLUDES THE AFORESAID RS.9,82,47,301 AS INCOME FRO M BUSINESS AND PROFESSION AS WELL AS RS.29,131 AS INCOME FROM OTHE R SOURCES) BASED ON THE ERRONEOUS DECLARATION BY THE APPELLANT AND THE TAX LIABILITY UNDER NORMAL PROVISIONS WAS COMPUTED AT RS.3,34,04,159 AL ONG WITH S.234B AND S.234C INTEREST AT RS.61,26,768 AND RS.15,74,20 7 RESPECTIVELY. 4. AGGRIEVED BY THIS 143(1) INTIMATION THE ASSESSE E FILED A RECTIFICATION PETITION U/S 154 OF THE ACT AS IT FEL T IT WAS A MISTAKE CLEARLY EVIDENT FROM THE RETURN OF INCOME FILED BY THE ASSE SSEE. 4.1. IT IS TO BE NOTED THAT THE ASSESSEES RETURN WAS ALSO SELECTED FOR SCRUTINY AND THE ASSESSEE RECEIVED NOTICE U/S 143(2 ) CALLING FOR INFORMATION. THE ASSESSEE HAD SUBMITTED AN ALTERNA TE PLEA TO THE AO THAT THE ERROR COULD BE RECTIFIED BY THE 154 PETITI ON OR UNDER SCRUTINY ASSESSMENT PROCEEDINGS U/S 143(3). ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD 4.2. IN ANY CASE, THE AO REJECTED THE RECTIFICATIO N PETITION OF THE ASSESSEE STATING THAT THE SAME WOULD NOT COME UNDER THE PURVIEW OF SECTION 154 OF THE ACT AND ALSO INITIATED PENALTY P ROCEEDINGS U/S 221(1) OF THE ACT. 5. AGGRIEVED BY THE REJECTION OF THE RECTIFICATION PETITION U/S 154, THE ASSESSEE APPEALED TO THE CIT(A). 6. THE LEARNED CIT(A) UPHELD THE ORDER OF THE AO R EJECTING THE RECTIFICATION PETITION U/S 154 WHILE OBSERVING AS F OLLOWS: I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. SO FAR AS THE CASE OF THE PRESENT AP PELLANT IS CONCERNED, IT IS SEEN THAT EVEN THOUGH THE APPELLANT HAD MENTI ONED DEDUCTION U/S 10A AT RS.9,82,99,186/- IN SR.NO 35 OF THE ITR 6 AN D THE NET PROFIT OR LOSS FROM BUSINESS OR PROFESSION AT SR. NO 36 WAS S HOWN AT 0 , IN THE COLUMN NO. 37 THE APPELLANT ITSELF HAD SHOWN THE NE T PROFIT AT RS.9,82,47,301/-. ACCORDINGLY, THE SAME WAS ADOPTED BY THE ASSESSING OFFICER WHILE PROCESSING THE RETURN. EVEN IF IT IS CONTENDED THAT THE NET PROFIT HAD BEEN ERRONEOUSLY TAKEN AT THE SAID FIGUR E BY THE APPELLANT, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAD ANY M EANS TO EXAMINE SUCH ERROR WHILE DEALING WITH THE RETURN OF INCOME OF THE APPELLANT FOR THE LIMITED PURPOSE OF PROCESSING. BESIDES, IT ALSO CANNOT BE DENIED THAT THE RETURN, EVEN THOUGH WITH A MISTAKE, HAD BEEN DU LY VERIFIED AND SIGNED BY THE APPELLANT. HAVING SO PROCESSED THE RE TURN OF INCOME, THE ASSESSING OFFICER COULD NOT HAVE DONE ANY RECTIFICA TION THEREIN, EVEN ON THE RECEIPT OF THE RECTIFICATION APPLICATION FROM T HE APPELLANT, AS EVEN AT THE SAGE OF RECTIFICATION APPLICATION, NO FURTHER A CTION COULD HAVE BEEN TAKEN AS THE MATTER WAS INDEED NOT WITHIN THE PURVI EW OF SEC. 154. ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD ACCORDINGLY I AM VIEW THAT NO INFIRMITY CAN BE FOUN D IN THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE APPLICATION OF T HE APPELLANT 7. AGGRIEVED BY THE ORDER OF THE CIT(A)-IV, HYDERA BAD DATED 25.07.2011 THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE ARGUMENTS MADE BEFORE T HE CIT(A) AND RELIED ON HONBLE JURISDICTIONAL TRIBUNAL DECISION IN CASE OF SATYAM ASSOCIATES TRUST VS. ACIT (ITA NO.507/HYD/07) AS WELL AS CBDT CIRCULAR NO.XIV DATED 11-04-1955. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 9. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IALS AVAILABLE ON RECORD. THE SHORT POINT UNDER APPEAL IS ONLY WHETH ER THE ERRONEOUS DECLARATION MADE BY THE ASSESSEE WHILE FILING ITS R ETURN OF INCOME ONLINE FOR WHICH IT HAS RECEIVED 143(1) INTIMATION CAN BE RECTIFIED BY A PETITION U/S 154. SECTION 143(1) FOR THE YEAR UNDER APPEAL READS AS F OLLOW S: 143 . (1) WHERE A RETURN HAS BEEN MADE UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142, SUCH RETURN SHALL BE PROCESSED IN THE FOLLOWING MANNER, NAMELY: (A) THE TOTAL INCOME OR LOSS SHALL BE COMPUTED AFT ER MAKING THE FOLLOWING ADJUSTMENTS, NAMELY: (I) ANY ARITHMETICAL ERROR IN THE RETURN; OR (II) AN INCORRECT CLAIM, IF SUCH INCORRECT CLAIM I S APPARENT FROM ANY INFORMATION IN THE RETURN; ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD (B) THE TAX AND INTEREST, IF ANY, SHALL BE COMPUTE D ON THE BASIS OF THE TOTAL INCOME COMPUTED UNDER CLAUSE (A); (C) THE SUM PAYABLE BY, OR THE AMOUNT OF REFUND DU E TO, THE ASSESSEE SHALL BE DETERMINED AFTER ADJUSTMENT OF THE TAX AND INTEREST, IF ANY, COMPUTED UNDER CLAUSE (B) BY ANY TAX DEDUCTED AT SOURCE, ANY TAX COLLECTED AT SOURCE, ANY ADVANCE TAX PAID, ANY RELIEF ALLOWABLE UNDER AN AGREEMENT UNDER SECTION 90 OR SE CTION 90A, OR ANY RELIEF ALLOWABLE UNDER SECTION 91, ANY REBATE A LLOWABLE UNDER PART A OF CHAPTER VIII, ANY TAX PAID ON SELF-ASSESS MENT AND ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST; (D) AN INTIMATION SHALL BE PREPARED OR GENERATED A ND SENT TO THE ASSESSEE SPECIFYING THE SUM DETERMINED TO BE PAYABL E BY, OR THE AMOUNT OF REFUND DUE TO, THE ASSESSEE UNDER CLAUSE (C); AND (E) THE AMOUNT OF REFUND DUE TO THE ASSESSEE IN PU RSUANCE OF THE DETERMINATION UNDER CLAUSE (C) SHALL BE GRANTED TO THE ASSESSEE: PROVIDED THAT AN INTIMATION SHALL ALSO BE SENT TO THE ASSESS EE IN A CASE WHERE THE LOSS DECLARED IN THE RETURN BY THE A SSESSEE IS ADJUSTED BUT NO TAX OR INTEREST IS PAYABLE BY, OR N O REFUND IS DUE TO, HIM: PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB-SECTION SHALL BE SENT AFTER THE EXPIRY OF ONE YEAR FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE RETURN IS MADE. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN INCORRECT CLAIM APPARENT FROM ANY INFORMA TION IN THE RETURN SHALL MEAN A CLAIM, ON THE BASIS OF AN ENTR Y, IN THE RETURN, (I) OF AN ITEM, WHICH IS INCONSISTENT WITH ANOTHER ENTRY OF THE SAME OR SOME OTHER ITEM IN SUCH RETURN; ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD (II) IN RESPECT OF WHICH THE INFORMATION REQUIRED TO BE FURNISHED UNDER THIS ACT TO SUBSTANTIATE SUCH ENTRY HAS NOT B EEN SO FURNISHED; OR (III) IN RESPECT OF A DEDUCTION, WHERE SUCH DEDUCT ION EXCEEDS SPECIFIED STATUTORY LIMIT WHICH MAY HAVE BEEN EXPRE SSED AS MONETARY AMOUNT OR PERCENTAGE OR RATIO OR FRACTION; (B) THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DE EMED TO BE THE INTIMATION IN A CASE WHERE NO SUM IS PAYABLE BY, OR REFUNDABLE TO, THE ASSESSEE UNDER CLAUSE (C), AND WHERE NO ADJUSTM ENT HAS BEEN MADE UNDER CLAUSE (A). 10. WE OBSERVE THAT SECTION 143(1)(A) ALLOWS PRIMA FACIE ADJUSTMENTS IN THE NATURE OF ARITHMETICAL ERRORS IN THE RETURN (143(1)(A)(I)); CLEARLY IN THE ASSESSEES CASE THE ENTERING OF WRONG NUMERICAL VALUE RESULTED IN AN ARITHMETIC ERROR IN AS MUCH AS THE INCOME OF THE AS SESSEE WAS CAUSED TO BE WRONGLY COMPUTED AND HENCE SUCH AN ERROR CAN IND EED BE RECTIFIED. 11. WE ALSO OBSERVE THAT IN THE PAPER BOOK (PAGE 2 0), SERIAL NO.37 IN THE BP ROI SHEET IS A MANUAL ENTRY CELL I.E., THE U SER HAS TO KEY IN, AS OPPOSED TO VARIOUS OTHER CELLS IN THE RETURN WHICH ARE AUTOMATICALLY COMPUTED AND FILLED IN BY THE SOFTWARE. HENCE, IT I S CLEAR THE MISTAKE WAS MADE BY THE ASSESSEE IN MANUALLY ENTERING THE VALUE. WE FURTHER NOTE THAT FROM A CLOSER PERUSAL OF THE RETURN OF INCOME, WE SEE THAT SERIAL NO.36 (I.E., NET PROFIT OR LOSS FROM BUSINESS OR P ROFESSION OTHER THAN SPECULATIVE BUSINESS 34-35V) IS CORRECTLY COMPUTED AS 0 (NIL) AND THE IMMEDIATELY FOLLOWING SERIAL NO.37, WHICH CONTAINS THE ERRONEOUS DECLARATION, IS TO BE THE SAME VALUE AS SERIAL NO.3 6 AFTER APPLYING RULE 7A, 7B OR 7C. THESE RULES (7A,7B AND 7C) RELATE TO AGRICULTURAL INCOME WHICH THE ASSESSEE ADMITTEDLY DOES NOT HAVE ANY AND HENCE SERIAL NO.37 ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD SHOULD HAVE BEEN SAME AS SERIAL NO.36 I.E., 0 (NIL) BUT SOME VALUE WAS ERRONEOUSLY ENTERED INSTEAD BY THE ASSESSEE. 12. FURTHERMORE, IN THE JURISDICTIONAL TRIBUNAL DE CISION OF M/S SATYAM ASSOCIATES TRUST (SUPRA) THE HONBLE ITAT ALLOWED THE RECTIFICATION PETITION FILED BY ASSESSEE TO ALLOW S TATUTORY EXEMPTION UNDER SECTION 10(34) OF THE ACT RELATING TO DIVIDEND INCO ME NOT CLAIMED IN ITS RETURN OF INCOME. WE FIND THE SAME PRINCIPLE UPHELD IN THE HONBLE ITAT ORDER OF M/S SATYAM ASSOCIATES (SUPRA) SQUARELY APPLIES TO THE ASSESSEES CASE. 13. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS AN EXPORT ORIENTED COMPANY EXPORTING SOFTWARE AND H AS CLAIMED DEDUCTION U/S 10A. THE ASSESSEE FILED E RETURN FOR THE AY 2008-09 ON 27.9.2008. A COPY OF THE E RETURN FILED HAS BEEN FU RNISHED. THE E-RETURN CONTAINS HUNDREDS OF ENTRIES COVERING VARIOUS ITEMS OF INCOME AND EXPENDITURE. IN THE RETURN, THE ASSESSEE IS REQUIRE D MAKE MANUAL ENTRIES AGAINST MOST OF THE ITEMS WHILE THE COMPUTER FILLS CERTAIN ENTRIES AUTOMATICALLY PICKING UP THE FIGURES FROM THE OTHER ENTRIES MADE MANUALLY. THE ASSESSEE HAD FILLED VARIOUS ENTRIES O N INCOME, EXPENDITURE AS WELL DEDUCTION U/S 10A. THE ASSESSEE ARRIVED AT INCOME FROM BUSINESS AT RS. 9,82,99,186/- AND HAS COMPUTED RELI EF U/S 10A (UNDER SCHEDULE XA IN THE RETURN) AS RS. 9,82,99,186/-. AC CORDINGLY HE ARRIVED AT THE NET BUSINESS INCOME AT `NIL. (ENTRY NO 36 O F SCHEDULE BP-A OF THE E-RETURN. NEXT ENTRY 37 READS AS UNDER: NET PROFIT OR LOSS FROM BUSINESS OR PROFESSION AF TER APPLYING RULE ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD 7A,7B OR 7C (SAME AS ABOVE IN 36 EXCEPT IN CASE OF SPECIAL BUSINESS AFTER APPLYING RULE 7A,7B OR7C) 14. THE ASSESSEE ERRONEOUSLY ENTERED RS. 9,82,47,3 01/- AS INCOME FROM BUSINESS OR PROFESSION. THE ASSESSEE HAS COMPU TED INCOME ON BOOK PROFITS UNDER SEC 115JB AND COMPUTED THE TAX L IABILITY THEREON (PART B-TTL).THE RETURN WAS ACCEPTED BY THE COMPUTE R. 15. SUBSEQUENTLY AN INTIMATION U/S 143(1) WAS ISS UED ON 5.3.2010 DETERMINING THE TOTAL INCOME AT RS. 9,82,76,430/- A ND DEMANDING TAX AND INTEREST THEREON. THE ASSESSEE FILED A PETITION FOR RECTIFICATION ON 5.5.2010 STATING THAT THE INCOME UNDER THE NORMAL P ROVISIONS OF THE ACT WAS ONLY RS. 29,131/- CONSIDERING DEDUCTION U/S 10A AND THE TAX WAS PAYABLE ONLY UNDER THE BOOK PROFITS U/S 115JB. THE APPLICATION WAS REJECTED BY THE AO AND THE CIT(A) ON THE GROUND SUC H RECTIFICATION OF INTIMATION WAS NOT PERMISSIBLE. 16. THE ASSESSEE IS BEFORE US. THE ISSUE FOR CONSI DERATION IS WHAT SHOULD BE TAKEN AS THE INCOME RETURNED BY THE ASSES SEE IN THE RETURN OF INCOME. IS IT THE FIGURE ENTERED IN ONE LINE (HERE ENTRY 37 OF THE SCHEDULE BP), WHETHER IT IS ERRONEOUS, WRONGLY ENTERED OR TH ERE IS A TYPOGRAPHICAL MISTAKE. A SINGLE LINE CANNOT CONSTITUTE THE RETURN . THE ENTIRE DOCUMENT FILED BY THE ASSESSEE WILL CONSTITUTE THE RETURN OF INCOME. THE DEPARTMENT CANNOT TAKE ONLY ONE ENTRY FROM THE RETU RN AND SHUT THEIR EYES TO THE REST OF THE DOCUMENT. NO DOUBT, CORRECT IONS WHICH ARE DEBATABLE IN NATURE CANNOT BE CARRIED OUT IN AN INT IMATION U/S 143(1)(A). THAT DOES NOT PRECLUDE OR BAR THE DEPARTMENT FROM C ORRECTING GLARING MISTAKES WHICH IS APPARENT FROM THE RETURN OF INCOM E. THE SECTION ITSELF PERMITS ADJUSTMENTS FOR ANY ARITHMETICAL ERROR AND INCORRECT CLAIM. IT WOULD EQUALLY APPLY FOR ANY PATENT MISTAKES WHICH C AN BE FOUND FROM ITA NO.1439 OF 2011 M/S SUM TOTALS, HYDERABAD THE RETURN. WE FEEL THE MISTAKE IS AN ARITHMETICAL ONE WHEN ENTRY 36 WAS CARRIED DOWN TO ENTRY 37 OF SCH BP. THIS MISTAKE I S APPARENT AND DOES NOT REQUIRE DETAILED INVESTIGATION OR APPLICATION O F ANY LEGAL PROVISIONS. IT IS THEREFORE RECTIFIABLE U/S 154. WE THEREFORE UPHO LD THE CLAIM OF THE ASSESSEE FOR RECTIFICATION AND DIRECT THE AO ADOPT THE INCOME FROM BUSINESS OR PROFESSION AS `NIL. HENCE, ASSESSEES APPEAL IS ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON : 31.1.2012 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 31 ST JANUARY, 2012 COPY FORWARDED TO: 1. M/S SUM TOTALS SYSTEMS INDIA PRIVATE LIMITED, 7 TH FLOOR, MAXIMUMS TOWERS, BUILDING 2B, MINDSPACE, RAJEHA IT PARK, MADHAPUR, HYDERABAD.500 081. 2. THE DCIT, CIRCLE 3(2), HYDERABAD 3. THE CIT(A)-IV, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/