M/s. Interview Master Technology Solutions Private Limited, Bengaluru V. The Income Tax Officer, Ward- 3(1)(2), Bengaluru

ITA 1813/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7207 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-09-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 19-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 145; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI. A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.1813/BANG/2019 ASSESSMENT YEAR : 201516 M/S INTERVIEW MASTER TECHNOLOGY SOLUTIONS PVT. LTD., 17 TH CROSS, SECTOR-6, HSR LAYOUT, BENGALURU. PAN AADCI 2043 M VS. THE INCOME T AX OFFICER WARD-3(1)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI S SUNDAR RAJAN, ADDL. CIT DATE OF HEARING : 01 - 0 9 - 2020 DATE OF PRONOUNCEMENT : 04 - 0 9 - 2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 9/07/2019 PASSED BY LD. CIT (A)-3, BANGALORE FOR AS SESSMENT YEAR 2015-16 ON FOLLOWING GROUNDS OF APPEAL: 1. THE IMPUGNED ORDER PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS-3), BENGALURU HHIY UNJUST, UNRE ASONABLE AND CONTRARY TO FACTS AND LAW. PAGE 2 OF 7 ITA NO. 1813/BANG/2019 2. THE LEARNED COMMISSIONER IS NOT JUSTIFIED IN CO NFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER IGNORING THE FACTS AND CIRCUMSTANCES AND THE DOCUMENTARY EVIDENCE SUBMITTE D DURING THE COURSE OF HEARING 3. LEARNED COMMISSIONER HAS FAILED TO APPRECIATE T HAT THE APPELLANT HAD FOLLOWED THE MANDATORY ACCOUNTING STA NDARDS (AS-9) PRONOUNCED BY THE [CAI AS WELL AS THE MANDATE OF SE CTION 145 OF THE INCOME TAX ACT IN RECOGNIZING THE REVENUE DURIN G THE RELEVANT PREVIOUS YEAR. 4. THE LEARNED COMMISSIONER HAS ERRED IN LAW IN NOT DECLARING THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIE D IN TREATING THE ENTIRE RECEIPTS, COVERING MORE THAN ONE FINANCIAL Y EAR, DURING THE YEAR OF RECEIPT ITSELF, MERELY BASED ON APPELLANT'S SERVICE TAX RETURNS. 5. THE LEARNED COMMISSIONER IN NOT JUSTIFIED IN NOT GRANTING ADEQUATE OPPORTUNITY TO THE APPELLANT TO SUBMIT ADD ITIONAL INFORMATION/DOCUMENTS, IF SO DESIRED BY HIM IN SUPP ORT OF THEIR CLAIM. 6. THE LEARNED COMMISSIONER OUGHT TO HAVE APPRECIAT ED THAT IT IS THE SETTLED LAW, THE AMOUNT RECEIVED, IN ADVANCE , AGAINST SERVICES TO BE RENDERED (AT A LATER DATE) IN SUBSEQ UENT FINANCIAL YEAR, CID NOT ACCRUE AS INCOME DURING THE YEAR OF R ECEIPT AND THAT THE REVENUE ACCRUES ONLY DURING THE RE4EVANT PREVIO US YEAR WHEN THE ACTUAL SERVICE WAS RENDERED. 7. LEARNED COMMISSIONER IS NOT JUSTIFIED IN SELECTI VELY CONSIDERING CERTAIN CLAUSES OF THE MASTER AGREEMENT DATED 19.06 .2017 AND DRAWING CERTAIN ADVERSE INFERENCES, CONTRARY TO FAC TS AND CIRCUMSTANCES OF THE CASE. 8. THE LEARNED COMMISSIONER OUGHT TO HAVE BEEN GUID ED BY THE PRINCIPLES OF LAW LAID DOWN BY HON'BLE ITAT / HIGH COURT, DELHI, UNDER SIMILAR CIRCUMSTANCES IN THE FOLLOWING CASES: A. DOT CIRCLE 8(1), NEW DELHI VS SISTEMA SHYAM TELE SERVICES LTD ( ITAT-DEL) B. CIT VS SHYAM TELELINKS LTD., BRIEF FACTS OF THE CASE ARE AS UNDER : 2. LD.AO NOTES THAT ASSESSEE WAS INCORPORATED DURIN G FINANCIA YEAR 2013-14 AND WAS INVOLVED IN SOFTWARE PUBLISHIN G, CONSULTANCY AND SUPPLY. ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30/09/2015 FOR YEAR UNDER CONSIDERATION. LD.AO NOTICED THAT AS SESSEE RECEIVED PAGE 3 OF 7 ITA NO. 1813/BANG/2019 SHARE PREMIUM DURING THE YEAR. ACCORDING TO LD.AO A PPLICABILITY OF SECTION 56 (2) (VIIB) NEEDED TO BE VERIFIED. LD.AO ALSO FOUND SALES MISMATCH IN TURNOVER. ACCORDINGLY, CASE WAS SELECTE D FOR SCRUTINY FOR THESE TWO REASONS AND NOTICE UNDER SECTION 143( 2) OF THE ACT WAS ISSUED TO ASSESSEE. IN RESPONSE TO STATUTORY NO TICES REPRESENTATIVE OF ASSESSEE PEERED BEFORE LD.AO AND FILED REQUISITE DETAILS AS CALLED FOR. 3. LD.AO NOTED THAT, ASSESSEE RAISED SALE INVOICES TO THE EXTENT OF RS.88,31,379/-. HOWEVER IN P&L ACCOUNT, ASSESSEE SH OWN SALE REVENUE OF RS.32,56,054/-, ONLY ON ACCOUNT OF SERVI CES PROVIDED BY TWO CLIENTS. LD.AO THEREFORE CALLED UPON ASSESSEE T O RECONCILE THE DIFFERENCE, AND TO EXPLAIN AS TO WHY, THE BALANCE A MOUNT OF RS.55,75,325/- WAS NOT DECLARED AS REVENUE IN P&L A CCOUNT. ASSESSEE IN RESPONSE, SUBMITTED THAT, IT RECOGNISED INCOME ON MONTHLY BASIS AND BALANCE AMOUNT WAS TREATED AS ADV ANCE RECEIVED FROM CUSTOMERS THAT WAS DECLARED AS REVENUE IN SUBS EQUENT ASSESSMENT YEARS. IT WAS ALSO SUBMITTED THAT, SERVI CES WERE RENDERED BY ASSESSEE TO ITS CLIENT OVER A PERIOD OF TIME WHICH COULD FALL INTO MULTIPLE FINANCIAL YEARS, AND THAT, REVEN UE WAS RECOGNISED IN RELATION TO MONTHS WHICH FELL IN FINANCIAL YEAR AND BALANCE AMOUNT WAS TREATED AS ADVANCE RECEIPTS FROM CUSTOME RS. 4. LD.AO REJECTED ASSESSEES CONTENTION ON THE BASIS T HAT, INCOME ACCRUED TO ASSESSEE ON THE DATE OF RAISING INVOICES , AND THAT, CUSTOMERS PAID THE AMOUNT AS PER INVOICES FOR SERVI CES RENDERED. IT HAS ALSO BEEN OBSERVED BY LD.AO THAT, CUSTOMERS DED UCTED TDS ON PAGE 4 OF 7 ITA NO. 1813/BANG/2019 SUCH PAYMENT AND, CREDIT FOR THE SAME HAS BEEN CLAI MED BY ASSESSEE DURING THE YEAR ITSELF. LD.AO ALSO NOTED T HAT ASSESSEE DECLARED FULL AMOUNT IN ITS SERVICE TAX RETURN, AND THAT, NONE OF THE CUSTOMERS GAVE ANY ADVANCED TO ASSESSEE WHICH WAS C ONFIRMED DURING ASSESSMENT PROCEEDINGS AS WELL AS BY THE CHI EF OPERATING OFFICER AND CO-FOUNDER OF ASSESSEE. 5. LD.AO THUS MADE ADDITION IN THE HANDS OF ASSESSEE A MOUNTING TO RS.55,75,325/-. 6. AGGRIEVED BY ORDER OF LD.AO, ASSESSEE PREFERRED APP EAL BEFORE LD.CIT(A). 7. BEFORE LD.CIT(A) ASSESSEE FILED MASTER SERVICE AGR EEMENT DATED 19/06/2017 AND CONTENDED THAT, SALIENT FEATURES OF ARRANGEMENT BETWEEN ASSESSEE AND ITS CLIENTS WERE SIMILAR TO WH AT HAS BEEN AGREED IN MASTER SERVICE AGREEMENT. LD.CIT(A) RECOR DED THAT, ASSESSEE DID NOT FURNISH ANY INDEPENDENT AGREEMENT WITH ITS CLIENTS ENTERED BY ASSESSEE, AND THAT, ONUS OF SAID AMOUNT OF RS.55,75,325/- HAD NOT ACCRUED TO ASSESSEE DURING Y EAR UNDER CONSIDERATION WAS NOT SATISFIED. 8. LD.CIT(A) CONFIRMED ADDITION MADE BY LD.AO. 9. AGGRIEVED BY ORDER OF LD.CIT(A) ASSESSEE IS IN APPE AL BEFORE US NOW. 10. LD.AR AT THE OUTSET, SUBMITTED THAT, AGREEMENTS WI TH INDIVIDUAL CLIENTS COULD BE FURNISHED FOR VERIFICATION. 11. LD.SR.DR PLACED RELIANCE ON ORDERS PASSED BY AUTHO RITIES BELOW. PAGE 5 OF 7 ITA NO. 1813/BANG/2019 WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 12. WE ARE OF THE OPINION THAT, AGREEMENTS ENTERED INTO BY ASSESSEE WITH ITS CLIENTS INDEPENDENTLY NEEDS TO BE VERIFIED BEFORE ASCERTAINING INCOME THAT ACCRUED TO ASSESSEE, FOR S ERVICES RENDERED DURING THE YEAR UNDER CONSIDERATION. WE DIRECT ASSE SSEE TO FILE ALL AGREEMENTS AGAINST WHICH INCOME HAS ACCRUED TO ASSE SSEE FOR YEAR UNDER CONSIDERATION. LD.CIT (A) SHALL THEN VERIFY T HE RECEIPTS VIS-A- VIS TDS CLAIMED BY ASSESSEE AND INCOME DECLARED BY ASSESSEE FOR YEAR UNDER CONSIDERATION UNDER SERVICE TAX RETURN. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE STANDS ALLO WED FOR STATISTICAL PURPOSES. IN THE RESULT. APPEAL FILED BY ASSESSEE STANDS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPT, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 4 TH SEPT, 2020. /VMS/ PAGE 6 OF 7 ITA NO. 1813/BANG/2019 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE.