Talisma Corporation Pvt Ltd, Bangalore V. Joint Commissioner of Income Tax (OSD), Circle-7(1)(1), Banagalore

ITA 1635/BANG/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1926 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Revised return; Unabsorbed depreciation; TDS
• Section: 143(3); 142(1); 10AA; 250; 201; 144C; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. NO. 1635 /BANG/201 7 (ASSESSMENT YEAR: 201 0 - 11 ) M/S. TALISMA CORPORATION PRIVATE LIMITED, 3 RD FLOOR, OLYMPIA / BUILDING NO.1, BAGMANE TECH PARK, C V RAMAN NAGAR, BYRASANDRA POST, BANGALORE - 560 093 PAN: AABCT 1052F VS. JT. COMMISSIONER OF INCOME TAX (OSD) , CIRCLE 7(1)(1), BANGALORE. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI SHARATH RAO, C.A. REVENUE BY: S MT. P. RENUGA DEVI, ADDL. CIT (D.R) DATE OF HEARING : 27.08 .2019 DATE OF PRONOUNCEMENT : 04.09 .2019 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 7 , BANGALORE PASSED U/S . 143(3) R.W.S. 144C AND U/S . 250 OF THE INCOME TAX ACT, 1961 (THE ACT) AND RAISED THE FOLLOWING GROUNDS OF APPEAL : 2 ITA NO.1635/BANG/2017 3 ITA NO.1635/BANG/2017 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN SOFTWARE DEVELOPMENT AND SOFTW ARE PRODUCTS, SALES AND SERVICE AND FILED THE RETURN OF INCOME FOR THE ASST. YEAR 2010 - 11 ON 5.10.2010 DISCLOSING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 10AA OF THE ACT AND SET OFF BROUGHT FORWARD LOSSES. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN ON 31.3.2012 AND THE RETURN OF INCOME WAS PROCESSED AND THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE CLARIFICATIONS. SINCE THE ASSESSEE HAS INTERNATIONAL TRANSACTIONS THE LD. ASSESSING OFFICER WITH THE PRIOR A PPROVAL OF THE CIT, BANGALORE REFE RRED TO TRANSFER PRICING OFFICER (TPO) AND THE TPO HAS PASSED THE ORDER UNDER SECTION 92CA OF THE ACT ON 30.01.2014 WITH NO ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTIONS ENTERED WITH ASSOCIATED ENTERPRISES (AES). T HE ASSESSING OFFICER ON PERUSALO F THE FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS REQUIRED UNDER SECTION 194J OF THE ACT ON AUDIT FEE AND MADE ADDITION APPLYING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT AND WITH OTHER ADJUSTMENTS DETERMINED THE TOTAL INCOME OF RS. NIL AFTER ADJUSTING THE DEPRECIATION / LOSS AND PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 144C OF THE ACT DT.17.3.2014. AGGRIEVED BY THE 4 ITA NO.1635/BANG/2017 ORDER, THE ASSESSEE FILED AN APPEAL WITH THE LEARNED CIT (APPEALS) WHEREAS THE LEARNED CIT (APPEALS) CONCURRED WITH THE ACTION OF THE ASSESSING OFFICER AND DISMISSED THE ASSESSEE'S APPEAL. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THAT THE LEARNED CIT (APPEALS) HAS NOT ADJUDICATED GROUND S OF APPEAL NO.1 & 3 IN RESPECT OF PROPORTIONATE DISALLOWANCE OF TDS CREDIT AND CARRY FORWARD OF LOSSES BECAUSE THE ASSESSEE HAS SUBMITTED APPLICATION FOR RECTIFICATION BEFORE THE ASSESSING OFFICER . SIMILARLY CIT ( APPEALS) CONFIRMED THE DISALLOWANCE OF PROVISION FOR AUDIT FEES FOR NON - DEDUCTION OF TAX . T HE LEARNED AUTHORISED REPRESENTATIVE EMPHASIZED THAT THE ASSESSEE HAS NOT PAID THE AMOUNT AND A C C O U N T I N G ENTRY WAS REVERSED IN THE SUBSEQUENT ASSESSMENT YEAR AND HENCE THERE IS NO REQUIREMENT OF DEDUCTION OF TDS AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF CIT (APPEALS). 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE FIRST GR OUND OF APPEAL, THE LD. AR SUBMITTED THAT THE LEARNED CIT (APPEALS) HAS NOT ADJUDICATED GROUND NO S . 1 AND 3. T HE ASSESSEE HAS FILED AN APPLICATION FOR RECTIFICATION BEFORE ASSESSING OFFICER AND I S OF THE OPINION THAT THE ASSESSEE INTEND TO WITHDRAW THE APPEAL ON ABOVE GROUNDS OF APPEAL WHEREAS THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY ARGUED THAT THERE IS NO SUCH MENTION OF WITHDRAWAL AND THE ASSESSEE HAS PRIMA FACIE GOOD CASE AND PRAYED FOR ONE MORE OPPORTUNITY BEFORE THE CIT (APPEALS) TO SUBST ANTIATE THE FACTS WITH EVIDENCE. WE CONSIDERING THE SUBMISSIONS AND THE FINDINGS OF THE CIT (APPEALS), ARE INCLINED TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE AS THE CIT (APPEALS) HAS NOT ADJUDICATED THE GROUND S OF APPEAL IN RESPECT OF PROPORTIONATE D ISALLOWANCE OF TDS AND CARRY FORWARD OF UNABSORBED DEPRECIATION. ACCORDINGLY, WE RESTORE THESE 5 ITA NO.1635/BANG/2017 GROUNDS OF APPEAL RAISED TO THE FILE OF CIT (APPEALS) TO ADJUDICATE ON MERIT AND PASS A REASONABLE ORDER AND FURTHER THE ASSESSEE SHOULD BE PROVIDE D ADEQUATE O PPORTUNITY OF HEARING AND CO - OPERATE IN SUBMITTING THE INFORMATION FOR EARLY DISPOSAL OF APPEAL AND THE GROUNDS OF APPEAL OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . 5. ON THE OTHER DISPUTED ISSUE OF DISALLOWANCE OF PROVISION FOR AUDIT FEES, THE LEARNED AUTHORISED REPRESENTATIVES CONTENTION THAT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE AS NO TAX HAS BEEN DEDUCTED (TDS) ON PROVISION FOR AUDIT FEE THE LEARNED AUTHORISED REPRESENTATIVE SUBM ITTED THAT TDS IS DEDUCTIBLE ONLY WHEN INCOME IS CHARGEABLE TO TAX A N D BY MAKING THE PROVISION IN THE BOOKS OF ACCOUNT NO INCOME IS ACCRUED TO THE PAYEE AND THEREFORE THE TDS PROVISIONS ARE NOT APPLICABLE . FURTHER THE PROVISION MADE IN THE PRESENT ASSESSMEN T YEAR HAS BEEN REVERSED IN A SUBSEQUENT ASSESSMENT YEAR AS NO INCOME IS ACCRUED TO THE PAYEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION . THE LEARNED AUTHORISED REPRESENTATIVE REFERRED TO PAGE 110 OF PAPER BOOK WHERE THE ASSESSEE HAS SUBSTANTIATED THAT THE PROVISION OF AUDIT FEES OF RS. 7 LAKHS AND RS.2 LAKHS AS ON 31.3.2010 WAS REVERSED IN APRIL, 2010 AND SUPPORTED WITH E V I D E N C E I N PAPER BOOK. WE ON PERUSAL OF THE ORDER OF ASSESSING OFFICER FIND AT PAGE 2 PARA 5, THE ASSESSING OFFICER HAS MADE ABOVE ADDITION AS THE ASSESSEE COU LD NOT PRODUCE ANY DETAILS. THE CONTENTION S OF THE LEARNED AUTHORISED REPRESENTATIVE THAT NO INCOME HAS ACCRUED TO THE PAYEE THEREFORE NO TDS IS DEDUCTED CANNOT BE ACCEPTED. BUT THE FACTS ARE CLEAR THAT THE ASSESSEE HAS CLAIMED DEDUCTION IN TH E PROFIT AND LOSS ACCOUNT AND WAS NOT ADDED IN THE COMPUTATION OF INCOME, WE FIND LEARNED CIT (APPEALS) HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES AND LEGAL PROVISIONS AND SUBMISSIONS HAS TAKEN A REASONABLE VIEW AND CONFIRM E D THE ADDITION WHICH WE ARE NOT INCLINED TO INTERFERE 6 ITA NO.1635/BANG/2017 AND UPHELD THE SAME. ACCORDINGLY THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE ASSESSEE'S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 T H S E P T E M B E R , 2019. S D / - S D / - ( JASON P BOAZ ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 0 4 . 0 9 . 2019. *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE