AI Insights
M/s Texanlab Laboratories Pvt. Ltd. appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, which had treated their appeal as non est due to it being filed manually instead of electronically. The original assessment for the year 2013-14 included various disallowances/additions, leading to a higher assessed income. The Tribunal noted that the assessee had also filed an electronic appeal within the extended deadline provided by a circular from the Board, which was not considered by the CIT(A). The Tribunal decided to condone the delay in filing and restored the matter to the CIT(A) for further action on the electronic appeal.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123431 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 21 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-07-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
E
Next Hearing Date
25-07-2023
Assessment Year
2013-2014
Appeal Filed On
09-05-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1614/MUM/2023 Assessment Year: 2013-14 M/s Texanlab Laboratories Pvt. Ltd., W-384, TTC Industrial Area, Rabale, Navi Mumbai-400701. Vs. DCIT-15(3)(1), Room No. 451, Aayakar Bhavan, New Marine Lines Mumbai-400020. PAN NO. AABCT 4229 Q Appellant Respondent Assessee by : Mr. Ravikant Pathak Revenue by : Mr. P.D. Chogule (Addl. CIT) Date of Hearing : 26/07/2023 Date of pronouncement : 31/07/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 03.03.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds: 1. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi hereinafter referred as CIT(A)] erred in treating the appeal of the Appellant as non est for the sole reason that the appeal has been filed manually by the Appellant. 2. The CIT(A) erred in not adjudicating the action of the AO in disallowing 40(a)(ia) of the Act on the ground that no tax has been deducted at source. The Appellant submits that no TDS is required to be deducted on testing charges of Rs.162,459/ parties have obtained lower deduction Certificate or the amounts paid to parties are withi hence on the facts and circumstances of the case disallowance u/s 40(a)(ia) of the Act made by the AO shall be deleted. 3. The CIT(A) erred in not adjudicating the action of the AO in disallowing u/s 40(a)(ia) of the Act out of testing charges made on the ground that TDS has been deducted w/s 194C instead of section 194J of the Act. The Appellant submits that it has duly deducted TDS under Chapter XVII hence no disallowance u/s 40(a)(ia) of the Act is attracted in its case and disallowance made by the AO shall be deleted. 4. The CIT(A) erred in not adjudicating the action of the AO in disallowing expenses of Rs.8,90,907/ increase in share capital and the same as capital expenditure. The Appellant submits that on the facts and circumstances of the case of the Appellant and in law expenses of Rs.890,907/ deductible revenue expense. 5. The CIT(A) erred in not AO in disallowing audit fees of Rs.2,55,250/ 40(a)(ia) of the Act on the ground that no tax has been deducted at source. The Appellant submits that on the facts and circumstances of the case of the Appellant and in law audit fees of Rs.2.55,250/ deductible revenue expense. M/s Texanlab Laboratories Pvt. Ltd. ITA No. 2. The CIT(A) erred in not adjudicating the action of the AO in disallowing Testing Charges of Rs. 162,459/ the Act on the ground that no tax has been deducted at source. The Appellant submits that no TDS is required to be deducted on testing charges of Rs.162,459/- as the parties have obtained lower deduction Certificate or the amounts paid to parties are within the prescribed limit; hence on the facts and circumstances of the case disallowance u/s 40(a)(ia) of the Act made by the AO shall be deleted. 3. The CIT(A) erred in not adjudicating the action of the AO in disallowing Rs.5,75,091/- [80% of Rs.7,18,864] /s 40(a)(ia) of the Act out of testing charges made on the ground that TDS has been deducted w/s 194C instead of section 194J of the Act. The Appellant submits that it has duly deducted TDS under Chapter XVII-B on payment of testing charges; disallowance u/s 40(a)(ia) of the Act is attracted in its case and disallowance made by the AO shall be deleted. 4. The CIT(A) erred in not adjudicating the action of the AO in disallowing expenses of Rs.8,90,907/- related to increase in share capital and issue of shares treating the same as capital expenditure. The Appellant submits that on the facts and circumstances of the case of the Appellant and in law expenses of Rs.890,907/- shall be allowed as deductible revenue expense. 5. The CIT(A) erred in not adjudicating the action of the AO in disallowing audit fees of Rs.2,55,250/ 40(a)(ia) of the Act on the ground that no tax has been deducted at source. The Appellant submits that on the facts and circumstances of the case of the Appellant and in law udit fees of Rs.2.55,250/- shall be allowed as deductible revenue expense. Texanlab Laboratories Pvt. Ltd. 2 ITA No. 1614/Mum/2023 2. The CIT(A) erred in not adjudicating the action of the Testing Charges of Rs. 162,459/- u/s the Act on the ground that no tax has been The Appellant submits that no TDS is required to be as the parties have obtained lower deduction Certificate or the n the prescribed limit; hence on the facts and circumstances of the case disallowance u/s 40(a)(ia) of the Act made by the AO 3. The CIT(A) erred in not adjudicating the action of the [80% of Rs.7,18,864] /s 40(a)(ia) of the Act out of testing charges made on the ground that TDS has been deducted w/s 194C The Appellant submits that it has duly deducted TDS B on payment of testing charges; disallowance u/s 40(a)(ia) of the Act is attracted in its case and disallowance made by the AO 4. The CIT(A) erred in not adjudicating the action of the related to issue of shares treating The Appellant submits that on the facts and circumstances of the case of the Appellant and in law shall be allowed as adjudicating the action of the AO in disallowing audit fees of Rs.2,55,250/- w/s 40(a)(ia) of the Act on the ground that no tax has been The Appellant submits that on the facts and circumstances of the case of the Appellant and in law shall be allowed as 6. The CIT(A) erred in not adjudicating the action of the AO in disallowing claimed by the Appellant based on the principle of averaging as issued by the Institute of Chartered Accountants of India. The Appellant submits that the rent expense was provided evenly in its books of accounts throughout the lease period as required under Accounting hence, on the facts and circumstances of the case and in law the addition of Rs. 1,10,332/ shall be deleted. 7. The CIT(A) erred in not adjudicating the action of the AO in disallowing Act out of rent paid India Pvt. Ltd treating the same as rent paid in excess of fair value. The Appellant submits that payment of rent made to its holding company are at fair market value; hence on the facts and circumstances of the case of t and in law the disallowance of Rs.30,96,506/ the AO shall be deleted. 8. The CIT(A) erred in not adjudicating the action of the AO in not granting depreciation of Rs.89,89,924/ 32 of the Act on assets acquired on slump sale on th ground that slump sale was violative of sec. 2 (42C) of the Act and similar such disallowance were made in earlier years i.e..Y.2008 The Appellant submit that the claim of depreciation w/s 32 of the Act on assets acquired on slump sale is allowable as the slump sale is as per sec. Act and similar such claim is allowed by the Appellate Authorities in earlier years; hence on the facts and circumstances the depreciation of Rs.89,89,924/ the Appellant. 9. The CIT(A) erred in not adjudicating the action of the AO in considering net profit as per Profit and loss M/s Texanlab Laboratories Pvt. Ltd. ITA No. 6. The CIT(A) erred in not adjudicating the action of the AO in disallowing Rs.1,10,332/- out of rent expense claimed by the Appellant based on the principle of averaging as provided under Accounting Standard 19 issued by the Institute of Chartered Accountants of The Appellant submits that the rent expense was provided evenly in its books of accounts throughout the lease period as required under Accounting Standard 19; hence, on the facts and circumstances of the case and in law the addition of Rs. 1,10,332/- made by the AO shall be deleted. 7. The CIT(A) erred in not adjudicating the action of the AO in disallowing Rs.30,96,506/- w/s 40(2)(b) of the Act out of rent paid to its holding company M/s Dystar India Pvt. Ltd treating the same as rent paid in excess of The Appellant submits that payment of rent made to its holding company are at fair market value; hence on the facts and circumstances of the case of the Appellant and in law the disallowance of Rs.30,96,506/- made by the AO shall be deleted. 8. The CIT(A) erred in not adjudicating the action of the AO in not granting depreciation of Rs.89,89,924/ 32 of the Act on assets acquired on slump sale on th ground that slump sale was violative of sec. 2 (42C) of the Act and similar such disallowance were made in earlier years i.e..Y.2008-09 and onwards. The Appellant submit that the claim of depreciation w/s 32 of the Act on assets acquired on slump sale is allowable as the slump sale is as per sec. 2(42C) of the Act and similar such claim is allowed by the Appellate Authorities in earlier years; hence on the facts and circumstances of the case of the Appellant and in law the depreciation of Rs.89,89,924/- shall be allowed to the Appellant. 9. The CIT(A) erred in not adjudicating the action of the AO in considering net profit as per Profit and loss Texanlab Laboratories Pvt. Ltd. 3 ITA No. 1614/Mum/2023 6. The CIT(A) erred in not adjudicating the action of the out of rent expense claimed by the Appellant based on the principle of provided under Accounting Standard 19 issued by the Institute of Chartered Accountants of The Appellant submits that the rent expense was provided evenly in its books of accounts throughout the Standard 19; hence, on the facts and circumstances of the case and made by the AO 7. The CIT(A) erred in not adjudicating the action of the w/s 40(2)(b) of the to its holding company M/s Dystar India Pvt. Ltd treating the same as rent paid in excess of The Appellant submits that payment of rent made to its holding company are at fair market value; hence on the he Appellant made by 8. The CIT(A) erred in not adjudicating the action of the AO in not granting depreciation of Rs.89,89,924/- u/s 32 of the Act on assets acquired on slump sale on the ground that slump sale was violative of sec. 2 (42C) of the Act and similar such disallowance were made in The Appellant submit that the claim of depreciation w/s 32 of the Act on assets acquired on slump sale is 2(42C) of the Act and similar such claim is allowed by the Appellate Authorities in earlier years; hence on the facts and of the Appellant and in law hall be allowed to 9. The CIT(A) erred in not adjudicating the action of the AO in considering net profit as per Profit and loss account at Rs.49,17,610/ tax on book profit w/s 115JB of the Act without appreciating that there is a loss of Rs. 49,17,610/ per Audited Profit & Loss A/c of the Appellant. 10. The CIT(A) erred in not adjudicating the action of the AO in not granting set off of brought forward business losses and unabsorbed depreciation available to extent of Rs.3,61,20,120/ of Rs.1,76,38,940/ 11. The CIT(A) erred in not adjudicating the action of the AO in not granting credit of TDS to the extent of Rs.6,40,493/ 2. Briefly stated, facts of the case are that the assessee filed return of income on 29.11.2013 electronically declaring total income at Rs. Nil after adjustment of brought forward losses. The return of income filed by the assessee was selected for statutory notices under the Income were issued and complied with. In the assessment order passed u/s 143(3) of the Act on 16.02.2016, the Assessing Officer made various disallowances/additions and assessed th Rs.1,76,38,940/-. Aggrieved, the assessee filed appeal before the Ld. CIT(A) on 23.03.2016 in paper form. The Ld. CIT(A) howeve view of revised procedure of filing of admit the present appeal filed i the Ld. CIT(A) is reproduced as under : 4. It is seen that the appeal has not been filed electronically by the appellant. As per record, the appeal has been filed manually on 23.03.2016 in form No.35. Rule 45 of the In M/s Texanlab Laboratories Pvt. Ltd. ITA No. account at Rs.49,17,610/- and thereby calculating the tax on book profit w/s 115JB of the Act without ng that there is a loss of Rs. 49,17,610/ per Audited Profit & Loss A/c of the Appellant. 10. The CIT(A) erred in not adjudicating the action of the AO in not granting set off of brought forward business losses and unabsorbed depreciation available to extent of Rs.3,61,20,120/- against the assessed income of Rs.1,76,38,940/-, without assigning any reason. 11. The CIT(A) erred in not adjudicating the action of the AO in not granting credit of TDS to the extent of Rs.6,40,493/- without assigning any reason. Briefly stated, facts of the case are that the assessee filed return of income on 29.11.2013 electronically declaring total income at Rs. Nil after adjustment of brought forward losses. The return of income filed by the assessee was selected for statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed u/s 143(3) of the Act on 16.02.2016, the Assessing Officer made various disallowances/additions and assessed the returned income at . Aggrieved, the assessee filed appeal before the Ld. CIT(A) on 23.03.2016 in paper form. The Ld. CIT(A) howeve view of revised procedure of filing of appeals electronically admit the present appeal filed in paper form. The relevant finding of the Ld. CIT(A) is reproduced as under : 4. It is seen that the appeal has not been filed electronically by the appellant. As per record, the appeal has been filed manually on 23.03.2016 in form No.35. Rule 45 of the Income Tax Rules, Texanlab Laboratories Pvt. Ltd. 4 ITA No. 1614/Mum/2023 and thereby calculating the tax on book profit w/s 115JB of the Act without ng that there is a loss of Rs. 49,17,610/- as 10. The CIT(A) erred in not adjudicating the action of the AO in not granting set off of brought forward business losses and unabsorbed depreciation available to the against the assessed income , without assigning any reason. 11. The CIT(A) erred in not adjudicating the action of the AO in not granting credit of TDS to the extent of Briefly stated, facts of the case are that the assessee filed return of income on 29.11.2013 electronically declaring total income at Rs. Nil after adjustment of brought forward losses. The return of income filed by the assessee was selected for scrutiny and tax Act, 1961 (in short ‘the Act’) were issued and complied with. In the assessment order passed u/s 143(3) of the Act on 16.02.2016, the Assessing Officer made various e returned income at . Aggrieved, the assessee filed appeal before the Ld. CIT(A) on 23.03.2016 in paper form. The Ld. CIT(A) however in appeals electronically, did not n paper form. The relevant finding of 4. It is seen that the appeal has not been filed electronically by the appellant. As per record, the appeal has been filed manually come Tax Rules, 1962, mandates compulsory Commissioner of Income Tax (Appeals) with effect from 01.03.2016. The Board vide circular No. 20/2016 issued vide F.No.279/Misc/M E-filing of appeals: “4. Extension of time limit appeals which were due to be filed by 15.05.2016 to 15.06.2016. In view of the extended window for filing e appeals, taxpayers who could not successfully e appeal and had filed paper appeals were required to file an e appeal in accordance with Rule 45 before the extended period i.e. 15.06.2016. Such e appeals filed within time. 5. It is seen from the records that the appeal of the appellant has been filed against the order dated 16.02.2016 passed u/s. 143(3) of Act in paper form on 23.03.2016 whereas the same was required to be e within the extended time limit as per Board's circular referred to above by virtue of which appellant could have e before 15.06.2016, however, appellant failed to avail this opportunity and e Accordingly, the manual appeal filed by the appellant is treated as non est.” 3. At the outset, we may note that the present appeal filed before the Tribunal by the assessee is with delay of seven days. The Ld. Counsel of the assessee referred t (accountant) of the assessee company due to change of incumbent, t forwarded to the concerned counsel who was dealing with the matter of filing of the appeal. The Ld. Counsel submitted that this being M/s Texanlab Laboratories Pvt. Ltd. ITA No. 1962, mandates compulsory -filing of appeals before Commissioner of Income Tax (Appeals) with effect from 01.03.2016. The Board vide circular No. 20/2016 issued vide F.No.279/Misc/M-54/2016/ITJ dated 26.05.2016 pertaining to eals: Extension of time limit-reg., extended the window for filing e appeals which were due to be filed by 15.05.2016 to 15.06.2016. In view of the extended window for filing e appeals, taxpayers who could not successfully e-file their iled paper appeals were required to file an e appeal in accordance with Rule 45 before the extended period 15.06.2016. Such e-appeals would also be treated as appeals filed within time. It is seen from the records that the appeal of the appellant has been filed against the order dated 16.02.2016 passed u/s. 143(3) of Act in paper form on 23.03.2016 whereas the same was required to be e-filed as per Rule 45. Though the case falls within the extended time limit as per Board's circular referred to ve by virtue of which appellant could have e- filed its appeal before 15.06.2016, however, appellant failed to avail this opportunity and e-file its appeal before 15.06.2016. Accordingly, the manual appeal filed by the appellant is treated At the outset, we may note that the present appeal filed before the Tribunal by the assessee is with delay of seven days. The Ld. Counsel of the assessee referred to the affidavit of the employee of the assessee company, wherein he submitted o change of incumbent, the order of the Ld. CIT(A) could not be forwarded to the concerned counsel who was dealing with the matter of filing of the appeal. The Ld. Counsel submitted that this being an inadvertent and bona fide mista Texanlab Laboratories Pvt. Ltd. 5 ITA No. 1614/Mum/2023 filing of appeals before Commissioner of Income Tax (Appeals) with effect from 01.03.2016. The Board vide circular No. 20/2016 issued vide 54/2016/ITJ dated 26.05.2016 pertaining to reg., extended the window for filing e- appeals which were due to be filed by 15.05.2016 to 15.06.2016. In view of the extended window for filing e- file their iled paper appeals were required to file an e- appeal in accordance with Rule 45 before the extended period appeals would also be treated as It is seen from the records that the appeal of the appellant has been filed against the order dated 16.02.2016 passed u/s. 143(3) of Act in paper form on 23.03.2016 whereas the same filed as per Rule 45. Though the case falls within the extended time limit as per Board's circular referred to filed its appeal before 15.06.2016, however, appellant failed to avail this file its appeal before 15.06.2016. Accordingly, the manual appeal filed by the appellant is treated At the outset, we may note that the present appeal filed before the Tribunal by the assessee is with delay of seven days. The Ld. o the affidavit of the employee wherein he submitted that he order of the Ld. CIT(A) could not be forwarded to the concerned counsel who was dealing with the matter of filing of the appeal. The Ld. Counsel before us has inadvertent and bona fide mistake and there was no intension on the part of the assessee in appeal. 4. We have heard rival submission of the parties on the issue of the condoning the delay cause for delay in filing the appeal. The reasons, accordingly, we condoned admited the appeal for adjudication. 5. Before the Ld. Counsel of the assessee referred to the Paper Book filed and submitted that along with paper form asse also filed the appeal in the electronic format. The Ld. Counsel referred to the acknowledgement of e reproduced for ready M/s Texanlab Laboratories Pvt. Ltd. ITA No. there was no intension on the part of the assessee in We have heard rival submission of the parties on the issue of the delay. The assessee has demonstrated sufficient cause for delay in filing the appeal. The delay being due to bona fide reasons, accordingly, we condoned the delay in filing the appeal and the appeal for adjudication. Before the Ld. Counsel of the assessee referred to the Paper Book filed and submitted that along with paper form asse also filed the appeal in the electronic format. The Ld. Counsel referred to the acknowledgement of e-filing of the appeal which is reproduced for ready reference: Texanlab Laboratories Pvt. Ltd. 6 ITA No. 1614/Mum/2023 there was no intension on the part of the assessee in delaying the We have heard rival submission of the parties on the issue of he assessee has demonstrated sufficient delay being due to bona fide the delay in filing the appeal and Before the Ld. Counsel of the assessee referred to the Paper Book filed and submitted that along with paper form assessee has also filed the appeal in the electronic format. The Ld. Counsel filing of the appeal which is 6. We find that the assessee did not brought this filing of the appeal before the Ld. CIT(A) and therefore, the Ld. CIT(A) has rejected the appeal filed in paper form as un view of the acknowledgement of the e restore the matter back to the file of the Ld. whether the appeal filed in electronic format has been adjudicated or not. If said appeal has not been adjudicated may take necessary efforts for disposal of the e expeditiously. If said e deficiency, then the assessee may in electronic format or the format prescribed as per the relevant rules and same may be admitted for adjudication and decided in accordance with law. The gr is accordingly allowed. The remaining ground on merits are not adjudicated as appeal has been restored to the file of the Ld. CIT(A). 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 31/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant M/s Texanlab Laboratories Pvt. Ltd. ITA No. We find that the assessee did not brought this filing of the appeal before the Ld. CIT(A) and therefore, the Ld. CIT(A) has rejected the appeal filed in paper form as un view of the acknowledgement of the e-filing filed before us, we restore the matter back to the file of the Ld. CIT(A) for verifying whether the appeal filed in electronic format has been adjudicated or not. If said appeal has not been adjudicated, then the Ld. CIT(A) may take necessary efforts for disposal of the e expeditiously. If said e-filing has been rejected because of any then the assessee may be directed to file the fresh appeal in electronic format or the format prescribed as per the relevant rules and same may be admitted for adjudication and decided in accordance with law. The ground No. 1 of the appeal of the assessee is accordingly allowed. The remaining ground on merits are not adjudicated as appeal has been restored to the file of the Ld. CIT(A). In the result, the appeal filed by the assessee is allowed for nounced in the open Court on 31/07/2023. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : Texanlab Laboratories Pvt. Ltd. 7 ITA No. 1614/Mum/2023 We find that the assessee did not brought this fact of the e- filing of the appeal before the Ld. CIT(A) and therefore, the Ld. CIT(A) has rejected the appeal filed in paper form as un-admitted. In filing filed before us, we CIT(A) for verifying whether the appeal filed in electronic format has been adjudicated then the Ld. CIT(A) may take necessary efforts for disposal of the e-filed appeal been rejected because of any directed to file the fresh appeal in electronic format or the format prescribed as per the relevant rules and same may be admitted for adjudication and decided in ound No. 1 of the appeal of the assessee is accordingly allowed. The remaining ground on merits are not adjudicated as appeal has been restored to the file of the Ld. CIT(A). In the result, the appeal filed by the assessee is allowed for /07/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Texanlab Laboratories Pvt. Ltd. ITA No. BY ORDER, (Assistant Registrar) ITAT, Mumbai Texanlab Laboratories Pvt. Ltd. 8 ITA No. 1614/Mum/2023 BY ORDER, (Assistant Registrar) ITAT, Mumbai
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