White House Business Solution Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1641/CHNY/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6302 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR; A S SRIRAMAN
• Keywords: Revenue expenditure

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC C BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2143/MDS/2014 ( / ASSESSMENT YEAR: 2006-07) THE ACIT, COMPANY CIRCLE III(3), CHENNAI 34. VS M/S. WHITE HOUSE BUSINESS SOLUTIONS PVT. LTD., NO.1096, EVR PERIYAR ROAD, PERIMET, CHENNAI 600 003. PAN: AAACW2942J ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NO.1641/MDS/2014 ( / ASSESSMENT YEAR: 2006-07) M/S. WHITE HOUSE BUSINESS SOLUTIONS PVT. LTD., NO.1096, EVR PERIYAR ROAD, PERIMET, CHENNAI 600 003. VS THE ACIT, COMPANY CIRCLE III(3), CHENNAI 34. PAN: AAACW2942J ( /APPELLANT) ( /RESPONDENT) /REVENUE BY : SHRI SUPRIYO PAL, JCIT /ASSESSEE BY : SHRI S. SRIDHAR & A.S. SRIRAMAN, ADVOCATES !' /DATE OF HEARING : 16.06.2017 #$!' /DATE OF PRONOUNCEMENT : 22.08.2017 / O R D E R THESE APPEALS BY THE REVENUE AND ASSESSEE ARE ARISI NG OUT OF THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI DATED 28.02.2014 IN ITA NO.1 273/2013-14 2 ITA NO.2143& 1641/MDS/2014 FOR THE ASSESSMENT YEAR 2006-07 PASSED U/S.250(6) R .W.S.143(3) OF THE ACT. 2. THERE IS A DELAY OF 61 DAYS IN FILING THE APPEAL BY THE REVENUE. THE LD.ACIT HAS FURNISHED AN AFFIDAVIT BE FORE US STATING THAT THE DELAY HAD OCCURRED DUE TO THE ACUT E SHORTAGE OF STAFF AND TIME TAKEN TO TRACE THE RECORDS. IT WAS THEREFORE PLEADED THAT THE DELAY IN FILING THE APPEAL MAY BE CONDONED. THE LD.AR OBJECTED TO THE SUBMISSION OF THE LD.DR. HOWEVER, AFTER HEARING BOTH SIDES, THOUGH WE DO NOT APPRECIA TE THE LETHARGIC ATTITUDE OF THE REVENUE, IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED VIEW THAT THE SHORT DELAY IN FILI NG THE APPEAL REQUIRES TO BE CONDONED. ACCORDINGLY I HEREBY COND ONE THE DELAY OF 61 DAYS IN FILING THE APPEAL BY THE REVENU E AND PROCEED TO HEAR THE CASE ON MERITS. 3. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LD.CIT(A) HAS ERRED IN DIRECTING THE LD.AO TO A LLOW DEDUCTION U/S 10A OF THE ACT, ON THE ENHANCED PROFI T ARRIVED AT, BECAUSE OF THE DISALLOWANCE OF THE 3 ITA NO.2143& 1641/MDS/2014 EXPENDITURE INCURRED TOWARDS BELATED PAYMENT OF PROVIDENT FUND. 4. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- (I) THE LEARNED COMMISSIONER OF INCOME TAX HAD ERRED IN EXCLUDING THE WORK IN PROGRESS AMOUNTING TO RS.41,34,600/- FROM THE ELIGIBLE PROFITS FOR 10A DEDUCTION. (II) THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS- III THOUGH RIGHTLY HAS EXCLUDED THE FOREIGN TRAVEL EXPENDITURE FROM THE EXPORT TURNOVER, HOWEVER ERRED IN NOT EXCLUDING THE SAME FROM TOTAL TURNOVER. 5. REVENUES APPEAL IN ITA NO.2143/MDS/2014:- AT THE OUTSET, THE LD.AR SUBMITTED BEFORE ME THAT T HE APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN LIEU O F THE CIRCULAR NO.21/2013 DATED 10.12.2015 ISSUED BY THE CBDT WITH RESPECT TO MONETARY LIMIT. HENCE, IT WAS PLEADED THAT THE APPEAL OF THE REVENUE MAY BE DISMISSED. THE LD. DR COULD NOT CON TROVERT TO THE SUBMISSION OF THE LD.AR. 4 ITA NO.2143& 1641/MDS/2014 5.1 AFTER HEARING BOTH LD.A.R AND THE LD.D.R, I FIN D MERIT IN THE SUBMISSION OF THE LD.AR. THE CBDT HAS DIRECTED THE REVENUE NOT TO FILE APPEAL BEFORE THE TRIBUNAL WHERE THE TA X EFFECT DOES NOT EXCEED RS.10 LAKHS. FROM THE FACTS OF THE CASE , IT IS NOT DISPUTED THAT IN THE CASE OF THE ASSESSEE THE TAX E FFECT IS LESS THAN RS.10 LAKHS AS STIPULATED BY THE CBDT IN THE C IRCULAR CITED SUPRA. THEREFORE, I HEREBY HOLD THAT THE APPEAL FI LED BY THE REVENUE IS NOT MAINTAINABLE. 6. ASSESSEES APPEAL IN ITA 1641/MDS/2014: 6.1 GROUND NO. 4 (I): ADDITION WITH RESPECT TO WORK-IN - PROGRESS OF RS.41,34,600/-:- THE ASSESSING OFFICER HAD EXCLUDED THE WORK-IN-PR OGRESS OF RS.41,34,600/- WHILE COMPUTING THE ELIGIBLE PROF IT OF THE ASSESSEE FOR THE PURPOSE OF GRANTING DEDUCTION U/S. 10A OF THE ACT. THE REASON ADDUCED BY THE LD.AO WAS THAT THE ASSESSEE HAD NOT FURNISHED ANY DETAILS WITH RESPECT TO THE W ORK-IN- PROGRESS; HENCE HE WAS NOT ABLE TO ASCERTAIN THE NA TURE OF EXPENDITURE INCURRED BY THE ASSESSEE SUCH AS CAPITA L EXPENDITURE OR REVENUE EXPENDITURE. ON APPEAL, THE LD.CIT(A) ALSO CONFIRMED THE ORDER OF THE LD.AO SINCE THE ASS ESSEE HAS 5 ITA NO.2143& 1641/MDS/2014 NOT FURTHER MADE ANY CLARIFICATION ON THE ISSUE. B EFORE ME, THE LD.AR REQUESTED THAT ONE MORE OPPORTUNITY MAY BE PR OVIDED TO THE ASSESSEE FOR FURNISHING THE DETAILS BEFORE THE REVENUE AUTHORITIES. THE LD.DR STRONGLY OPPOSED TO THE SUB MISSION OF THE LD.AR. AFTER HEARING BOTH THE PARTIES, I DO NOT FIND MUC H STRENGTH IN THE SUBMISSION OF THE LD.AR, BECAUSE HE HAS NOT FURNISHED ANY DETAILS NEITHER BEFORE THE REVENUE AUTHORITIES NOR BEFORE ME AT THIS STAGE. HOWEVER, IN THE INTEREST OF JUSTICE , I REMIT BACK THE MATTER TO THE FILE OF LD.AO FOR DE-NOVA CONSIDERATI ON. I ALSO DIRECT THE ASSESSEE TO CO-OPERATE WITH THE REVENUE, IN ORD ER TO EXPEDITE THEIR ORDERS FAILING WHICH THE LD. REVENUE AUTHORITIES SHALL BE AT LIBERTY TO DECIDE THE MATTER IN ACCORDA NCE WITH MERIT AND LAW BASED ON THE MATERIALS ON RECORD. 6.2 GROUND NO. 4(II) : FOREIGN TRAVEL EXPENDITURE:- THE LD.AO WHILE COMPUTING THE DEDUCTION U/S.10A O F THE ACT, HAD EXCLUDED THE FOREIGN TRAVEL EXPENDITURE FR OM THE EXPORT TURNOVER, HOWEVER FAILED TO EXCLUDE THE SAME FROM T HE TOTAL 6 ITA NO.2143& 1641/MDS/2014 TURNOVER. THE LD.CIT(A) ALSO CONFIRMED THE ORDER O F THE LD.AO BECAUSE THE ASSESSEE HAD NOT FURNISHED ANY DETAILS OF THE SAME. BEFORE ME, THE LD.AR CITED THE DECISION OF THE SP ECIAL BENCH OF THE TRIBUNAL IN THE CASE ITO V. SAK SOFT L TD REPORTED IN 30 SOT 55, WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF APPLYING THE FORMULA UNDER THE ACT, SUCH EXPENDITURE WHEN EX CLUDED FROM THE EXPORT TURNOVER (NUMERATOR), THE SAME SHALL ALS O BE EXCLUDED FROM THE TOTAL TURNOVER (DENOMINATOR). THE LD.AR F URTHER ARGUED THAT THE SAME DECISION MAY BE FOLLOWED IN THE CASE OF THE ASSESSEE ALSO. THE LD.DR THOUGH ARGUED IN SUPPORT OF THE ORDER OF THE LD.CIT(A) COULD NOT CONTROVERT TO THE SUBMIS SION OF THE LD.AR. AFTER HEARING BOTH SIDES, I FIND MERIT IN T HE SUBMISSION OF THE LD.AR. AS POINTED OUT BY THE LD.AR THE SPECIAL BENCH OF THE TRIBUNAL HAD HELD THAT IN SUCH SITUATION, THE EXPEN DITURE SHOULD BE DEDUCTED FROM THE TOTAL TURNOVER (DENOMINATOR) A LSO. THEREFORE, FOLLOWING THE DECISION OF THE SPECIAL BE NCH OF THE TRIBUNAL, I HEREBY DIRECT THE LD.AO TO DEDUCT THE F OREIGN TRAVEL EXPENDITURE FROM THE EXPORT TURNOVER (NUMERATOR) AS WELL AS FROM THE TOTAL TURNOVER (DENOMINATOR) WHILE APPLYING TH E FORMULA LAID DOWN UNDER THE ACT. 7 ITA NO.2143& 1641/MDS/2014 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 22 ND AUGUST, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER %& /CHENNAI, '( /DATED 22 ND AUGUST, 2017 RSR ( *+ ,+ /COPY TO: 1. /ASSESSEE 2. /RESPONDENT 3. / ( )/CIT(A) 4. / /CIT 5. /REVENUE 6. 01 /GF