Gofrugal Technologies Pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2136/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8758 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 01-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 09-11-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: N V BALAJI
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 142(1); 115JB

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2 136/MDS/2015 / ASSESSMENT YEAR :201 0 - 11 M/S. GOFRUGAL TECHNOLOGIES PVT. LTD., [THE AMALGAMATED COMPANY OF M/S. GOFRUGAL SOFTWARE TECHNOLOGIES PVT. LTD.], SREE NARAYANA COMPLEX , 11, SARATHY NAGAR, VI JAYA NAGAR, VELACHERRY, CHENNAI 600 042. [PAN: A ACCA4341F ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CORPORATE CIRCLE 2(1), CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI N.V. BALAJI , ADVOCATE / RESPONDENT BY : S HRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 0 1 . 0 6 .201 6 / DATE OF P RONOUNCEMENT : 11 . 0 8 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEA L FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 1 , CHENNAI , DATED 31 . 08 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 20 1 0 - 1 1 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT HE LD. CIT(A ) HAS ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN ALLOWING THE MAT CREDIT ON TAX WITHOUT INCLUDING SURCHARGE, ADDITIONAL SURCHARGE AND EDUCATIONAL CESS, WHICH WERE I.T.A. NO . 2136 /M/ 15 2 PAID UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] IN THE E ARLIER YEARS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND EXPORT AND FILED ITS RETURN OF INCOME ON 26.09.2010 DECLARING INCOME OF .69,44,89,922/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA OF THE ACT AMOUNTING TO .11,37,500/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 13.09.2011 ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY, NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 14.09.2011 AND SERVED ON THE ASSESSEE. HOWEVER, THERE WAS NO RESPONSE FROM THE ASSESSEE AND THEREFORE, NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED ON 09.03.2012. IN RESPONSE THERETO, THE ASSESSEE HAS FILED ALL DETAILS SUCH AS AUDIT REPORT UNDER SECTION 44AB OF THE ACT, COMPUTATI ON OF INCOME, DETAILS OF DEDUCTION CLAIMED, COMPUTATION OF TAX UNDER SECTION 115JB OF THE ACT AND FORM 3CEB AN D DETAILS OF IMMOVABLE PROPERTIES OWNED BY THE ASSESSEE. ACCORDINGLY, A REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICER FOR COMPUTATION OF THE ARMS LENGTH IN RELATION TO THE INTERNATIONAL TRANSACTIONS ON 15.11.2011. VIDE ORDER DATED 30.10.2013, THE ORDER UNDER SECTION 92CA OF THE ACT WAS PASSED BY THE TPO GIVING A FINDING THAT NO ADJUSTMENT IS CALLED FOR IN THIS CASE. AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE AND VERIFYING THE PARTICULARS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER I.T.A. NO . 2136 /M/ 15 3 SECTION 143(3) OF THE ACT ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT .69,44,89,920/ - BY OBSERVING THAT ONLY THE DIFFERENCE BETWEEN THE MAT AND THE REGULAR TAX WOULD BE CONSIDERED AS MAT CREDIT FOR THE PURPOSE OF CARRY FORWARD. 3. T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE AND EXAMINING THE ISSUE IN DISPUTE, THE LD. CIT(A) CONCURRED WITH THE FINDINGS OF THE ASSESSING OFFICER IN ALLOWING THE MAT CREDIT ONLY TO THE EXTENT OF MAT PAID UNDER SECTION 115JAA [WITHOUT INCLUDING SURCHARGE AND EDUCATIONAL CESS ] OVER AND ABOVE THE REGULAR TAX BY DRAWING INFERENCE IN VIEW OF THE DECISION OF THE DELHI BENCHES OF THE TRIBUNAL IN THE CASE OF RICHA GLOBAL EXPORTS P. LTD. V. ACIT [2012] 25 TAXMANN.COM 1(DELHI). 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2001 - 12 VIDE ORDER DATED 19.05.201 6. 5. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. I.T.A. NO . 2136 /M/ 15 4 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ON SIMILAR FACTS AND CIRCUMSTANCES, IN ASSESSEE S O WN CASE FOR THE ASSESSMENT YEAR 2011 - 12, THE COORDINATE BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 19.05.2016 HAS OBSERVED AS UNDER: 7. WE HEARD RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD, JUDICIAL DECISIONS CITED. THE ONLY CONTENTION OF THE LD. A UTHORISED REPRESENTATIVE BEING THAT ASSESSING OFFICER HAS RESTRICTED MAT CREDIT TO THE EXTENT OF TAX PORTION OF EARLIER YEARS AND NOT ALLOWED SURCHARGE AND EDUCATIONAL CESS. IN THE CURRENT ASSESSMENT YEAR, THE ASSESSEE COMPANY LIABLE TO PAY INCOME TAX BASE D ON THE NORMAL COMPUTATION OF INCOME, IN SUCH CIRCUMSTANCES THE ASSESSEE IS ELIGIBLE FOR MAT CREDIT CARRIED FORWARDED FROM EARLIER ASSESSMENT YEARS U/S.115JA OF THE ACT. UNDER THE PROVISIONS OF SEC. 115JB TAX COMPONENTS DEEMED TO HAVE INCLUDED SURCHARGE A ND EDUCATIONAL CESS. THIS VIEW WAS CONSIDERED BY THE APEX COURT IN THE CASE OF CIT VS. K. SRINIVASAN 83 ITR 0346 WERE WORDS INCOME - TAX IN THE FINANCE ACT OF 1964 IN SUB - SEC(2)(A) AND SUB - SE(2)(B) OF SEC. 2 WOULD INCLUDE SURCHARGE AND ADDITIONAL SURCHAR GE. A SIMILAR ISSUE WAS DECIDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.2122/MDS/2015, DATED 03.02.2016 IN THE CASE OF M/S. SAINT GOBAIN GYPROC INDIA LTD IN ASSESSMENT YEAR 2013 - 2014 HELD IN PARA 7 AS UNDER: - WE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES PERUSED THE MATERIAL ON RECORD AND ALSO JUDICIAL DECISION CITED. THE ASSESSEE COMPANY HAS CLAIMED MAT CREDIT SET OFF AGAINST INCOME TAX ON NORMAL PROVISIONS WHICH IS ALLOWABLE AND SUCH MAT CREDIT CAN BE CARRIED FORWARD ALSO. UNDER THE PRO VISIONS OF SEC. 115JB TAX COMPONENTS ALSO INCLUDES SURCHARGE AND EDUCATION CESS. THE LD. AUTHORISED REPRESENTATIVE REITERATED HIS SUBMISSIONS MADE BEFORE THE APPELLATE PROCEEDINGS WERE RELIEF WAS GRANTED. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE RELI ED ON THE FINDINGS OF THE ASSESSING OFFICER AND ARGUED TO SET ASIDE THE APPEAL. IN REPLY, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE DECISION OF ITAT, MUMBAI BENCH WYETH LIMITED VS. ACIT IN ITA NO.6682/MUM/2011, DATED 09.01.2015 WHICH HAS ENDORSED THE PROVISIONS OF ALLOWING MAT CREDIT OBSERVED AT PAGE 4 IN PARA 5 AS UNDER: - I.T.A. NO . 2136 /M/ 15 5 5. THUS IT IS CLEAR THAT THE HON BLE HIGH COURT HAS TAKEN INTO ACCOUNT THE ORDER OF ENTRIES IN THE FORM ITR - 6 FOR THE A.Y. 2011 - 12 IN THE SAID CASE AND HELD THAT AS PER FORM ITR - 6, THE MAT CREDIT HAS TO BE GIVEN AGAINST THE GROSS TAX PAYABLE EXCLUSIVE OF SURCHARGE /CESS AND ONLY AFTER THE MAT CREDIT TAX LIABILITY, THE SURCHARGE AND CESS HAS TO BE CALCULATED FOR THE PURPOSE OF WORKING OUT THE GRAND TAX LIABILITY. WE ALSO FIND MERIT AND SUBSTANCE IN THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT IF THE MAT CREDIT IS TAKEN INTO ACCOUNT WITHOUT INCLUDING THE SURCHARGE AND EDUCATION CESS THEN THE SURCHARGE AND EDUCATION CESS ON THE TAX LIABILITY HAS TO BE CALCULATED ONLY AFTER ALLOWING THE MAT CREDIT. ALTERNATIVELY, THE AMOUNT OF MAT CREDIT SHOULD ALSO INCLUDE SURCHARGE AND EDUCATION CESS FOR THE PURPOSE OF ALLOWING THE CREDIT AGAINST THE TAX LIABILITY INCLUSIVE OF SURCHARGE AND EDUCATION CESS. THEREFORE, THE MAT AS WELL AS N ORMAL TAX BEFORE ALLOWING THE MAT CREDIT HAS TO BE TAKEN ON PARITY EITHER EXCLUSION OF SURCHARGE AND EDUCATION CESS OR INCLUSIVE OF SURCHARGE AND EDUCATION CESS OR INCLUSIVE OF SURCHARGE AND EDUCATION CESS. ACCORDINGLY WE SET ASIDE THE ORDERS OF AUTHORITIE S BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE MAT CREDIT AGAINST THE TAX LIABILITY PAYABLE BEFORE SURCHARGE AND EDUCATION CESS OR ALTERNATIVELY THE AMOUNT OF MAT CREDIT SHOULD ALSO BE INCLUSIVE OF SURCHARGE AND EDUCATION CESS AND THEN ALLOW THE CRE DIT AGAINST THE TAX PAYABLE INCLUSIVE OF SURCHARGE AND EDUCATION CESS . WE RESPECTFULLY FOLLOWING THE ABOVE DECISION, UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE REVENUE APPEAL . WE RESPECTFULLY FOLLOWING THE CO - ORDIN ATE BENCH DECISION ON MAT TAX CREDIT U/S.115JAA OF THE ACT AND ALLOW THE GROUNDS IN FAVOUR OF THE ASSESSEE. 7. THE LD. DR COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE TRIBUNAL OR FILED ANY HIGHER COURT DECISION TO TAKE A DIFFERENT VIEW. THUS, RESPECTF ULLY FOLLOWING THE ABOVE DECISION OF THE COORDINATE BENCH IN ASSESSEE S OWN I.T.A. NO . 2136 /M/ 15 6 CASE FOR THE ASSESSMENT YEAR 2011 - 12, THE APPEAL, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 08 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 11 TH AUGUST, 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 11 . 0 8 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.