Tetra Soft (India) Private Limited, Hyderabad, Hyderabad V. ACIT, Circle-2(3), Hyderabad, Hyderabad

ITA 218/HYD/2015

• Counselvise Citation: 21822514 RSA 2015
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PHANI RAJU
• Assessee Lawyers: G VENKATESWARLU
• Keywords: Depreciation
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 218 & 219/HYD/2015 ASSESSMENT YEARS: 2008-09 & 2010-11 TETRA SOFT (INDIA) PVT. LTD., HYDERABAD. PAN AACCT4313N VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 2(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. VENKATESWARLU REVENUE BY : SHRI PHANI RAJU DATE OF HEARING 25-05-2015 DATE OF PRONOUNCEMENT 03-06-2015 O R D E R PER SAKTIJIT DEY, J.M.: THESE APPEALS BY ASSESSEE ARE DIRECTED AGAINST SEP ARATE ORDERS BOTH DATED 12/12/2014 OF LD. CIT(A)-II, HYDE RABAD FOR THE AYS 2008-09 AND 2010-11. 2. ASSESSEE HAS RAISED IN TOTAL EIGHT GROUNDS. GROU ND NOS. 1, 2 & 8 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SPECIF IC ADJUDICATION, HENCE, THEY ARE DISMISSED. GROUND NO. 7 HAS BEEN RA ISED BY ASSESSEE CHALLENGING THE INITIATION OF PENALTY PROC EEDING U/S 271(1)(C) OF THE ACT. THIS GROUND BEING PREMATURE A T THIS STAGE OF PROCEEDING, DO NOT REQUIRE ADJUDICATION, HENCE, THE SAME IS DISMISSED. 2 ITA NOS. 218 & 219 /HYD/2015 TETRA SOFT (INDIA) PVT. LTD. 3. IN GROUND NO. 3, ASSESSEE HAS CHALLENGED THE DIS ALLOWANCE OF AN AMOUNT OF RS. 2,16,412, BEING EMPLOYEES CONTRIBU TION OF PF, U/S 36(1)(VA) OF THE ACT. 4. BRIEFLY THE FACTS ARE, ASSESSEE IS A COMPANY DER IVING INCOME FROM SOFTWARE DESIGN AND DEVELOPMENT. FOR THE AY UN DER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 22,27,430. DURING THE ASSESSMENT PROC EEDING, AO WHILE VERIFYING THE BOOKS OF ACCOUNT NOTICED THAT A SSESSEE HAS REMITTED PF CONTRIBUTION OF EMPLOYEES BELATEDLY FOR THE MONTH OF APRIL, MAY, JUNE AND OCTOBER07. REFERRING TO THE P ROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT, AO DISALLOWED THE AMOUNT OF RS. 2,16,412. BEING AGGRIEVED OF SUCH DISALLOWANCE, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CI T(A) ALSO CONFIRMED THE DISALLOWANCE. 5. LD. AR SUBMITTED BEFORE US, IF THE EMPLOYEES CON TRIBUTION TO PF IS REMITTED WITHIN THE DUE DATE OF FILING OF RETURN OF INCOME AS PROVIDED U/S 139(1) OF THE ACT, THE SAME WOULD BE A N ALLOWABLE DEDUCTION AS PER SECTION 43B OF THE ACT. IN THIS CO NTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: 1.CIT VS. SABARI ENTERPRISES, [2007] 298 ITR 141 (KAR.) 2. MAGUS CUSTOMERS DIALOG PVT. LTD., [2015] 371 IT R 242 (KAR.) 3. YUM RESTAURANT INDIA PVT. LTD., [2015] 371 ITR 139 (DEL.) 4. CIT VS. NIPSO POLY FABRIKS LTD., [2013] 350 ITR 327 (HP) 5. CIT VS. NUCHEM LTD., [2015] 371 ITR 164 (P&H) 6. LD. DR, ON THE OTHER HAND, RELIED UPON THE REASO NING OF THE AO. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. THOUGH IT IS A FACT THAT ASSESSEE HAS REMITTED EMPL OYEES CONTRIBUTION TO PF NOT WITHIN THE DUE DATE AS PRESCRIBED UNDER E XPLANATION TO 3 ITA NOS. 218 & 219 /HYD/2015 TETRA SOFT (INDIA) PVT. LTD. SECTION 36(1)(VA), HOWEVER, ASSESSEE HAS REMITTED T HE AMOUNT WITHIN THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139( 1) OF THE ACT. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 43B AND RATIO OF THE DECISIONS RELIED UPON BY LD. AR, THE AMOUNT CANNOT BE DISALLOWED. ACCORDINGLY, WE DELETE THE ADDITION MADE BY AO. 8. THE NEXT ISSUE AS RAISED IN GROUND NO. 4 RELATES TO RESTRICTING THE DEPRECIATION ON UPS AT 15%. 9. DURING THE ASSESSMENT PROCEEDING, AO HAVING NOTI CED THAT ASSESSEE HAS CLAIMED DEPRECIATION ON UPS AT 60%, RE STRICTED THE SAME TO 15% ON REASONING THAT IT IS NOT PART OF THE COMPUTER SYSTEM. THOUGH, ASSESSEE CHALLENGED THE DECISION OF THE AO BEFORE LD. CIT(A), BUT, HE ALSO CONFIRMED THE VIEW EXPRESSED B Y AO. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD. WE HOLD THAT UPS BEING PA RT AND PARCEL OF COMPUTER SYSTEM, DEPRECIATION ALLOWABLE ON UPS IS @ 60% AS PRESCRIBED FOR COMPUTERS. THERE ARE NUMBER OF DECIS IONS OF DIFFERENT BENCHES OF THE ITAT INCLUDING HYDERABAD BENCHES EXP RESSING SIMILAR VIEW. IN THE AFORESAID VIEW OF THE MATTER, WE ALLOW ASSESSEES CLAIM OF DEPRECIATION @ 60%. 11. IN GROUND NOS. 5 & 6, ASSESSEE HAS CHALLENGED T HE DECISION OF AO IN REDUCING THE INTERNET CHARGES AND ONSITE EXPE NSES FROM EXPORT TURNOVER WITHOUT REDUCING THE SAME FORM TOTAL TURNO VER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. 12. HAVING HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD, WE ARE OF THE VIEW THAT IN VIEW OF THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. GEMPLUS JEWELLERY, 33 0 ITR 175 AND SPECIAL BENCH DECISION OF THE CHENNAI TRIBUNAL IN T HE CASE OF ITO VS SAKSOFT LTD (313 ITR (AT) 353) AND A NUMBER OF D ECISIONS OF VARIOUS BENCHES OF THIS TRIBUNAL, INTERNET CHARGES AND ON SITE EXPENSES HAVE TO BE REDUCED BOTH FROM THE EXPORT TU RNOVER AND 4 ITA NOS. 218 & 219 /HYD/2015 TETRA SOFT (INDIA) PVT. LTD. TOTAL TURNOVER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. ACCORDINGLY, WE DIRECT AO TO COMPUTE DEDUCTION U/S 10A OF THE ACT BY REDUCING INTERNET CHARGES AND ON SITE EXPENSES B OTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. 13. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO. 219/HYD/2013 FOR AY 2010-11 14. GROUND NOS. 1, 2 & 8 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SPECIFIC ADJUDICATION, HENCE, THEY ARE DISMISSED. G ROUND NO. 7 HAS BEEN RAISED BY ASSESSEE CHALLENGING THE INITIATION OF PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT. THIS GROUND BE ING PREMATURE AT THIS STAGE OF PROCEEDING, DO NOT REQUIRE ADJUDICATI ON, HENCE, THE SAME IS DISMISSED. 15. IN GROUND NO. 3, ASSESSEE HAS CHALLENGED THE DI SALLOWANCE OF AN AMOUNT OF RS. 2,32,344 BEING EMPLOYEES CONTRIBUT ION OF PF U/S 36(1)(VA) OF THE ACT. 16. AS THIS GROUND IS SIMILAR TO THE GROUND NO. 3 IN ITA NO. 218/HYD/13, FOLLOWING THE CONCLUSIONS DRAWN THEREIN VIDE PARA NO. 7, WE DELETE THE ADDITION OF RS. 2,32,344 MADE BY AO T OWARDS EMPLOYEES CONTRIBUTION TO PF. 17. THE NEXT ISSUE AS RAISED IN GROUND NO. 4 RELATE S TO RESTRICTING THE DEPRECIATION ON UPS AT 15%. 18. THIS GROUND IS ALSO SIMILAR TO THE GROUND NO. 4 RAISED IN ITA NO. 218/HYD/2014. THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN VIDE PARA NO. 10, WE ALLOW ASSESSEES CLAIM OF DEPR ECIATION @ 60%. 19. IN GROUND NOS. 5 & 6, ASSESSEE HAS CHALLENGED T HE DECISION OF AO IN REDUCING THE INTERNET CHARGES AND ONSITE EXPE NSES FROM EXPORT TURNOVER WITHOUT REDUCING THE SAME FORM TOTAL TURNO VER WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT. 5 ITA NOS. 218 & 219 /HYD/2015 TETRA SOFT (INDIA) PVT. LTD. 20. AS THE ISSUES RAISED IN THE SAID GROUNDS ARE ID ENTICAL TO THAT OF THE GROUNDS 5 & 6 RAISED IN ITA NO. 218/HYD/2013, F OLLOWING THE CONCLUSIONS DRAWN VIDE PARA NO. 12, WE DIRECT AO TO COMPUTE DEDUCTION U/S 10A OF THE ACT BY REDUCING INTERNET C HARGES AND ON SITE EXPENSES BOTH FROM EXPORT TURNOVER AND TOTAL T URNOVER. 21. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 22. TO SUM UP BOTH THE APPEALS OF ASSESSEE ARE ALLO WED. PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2015. SD- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:3 RD JUNE, 2015 KV COPY TO:- 1) M/S TETRA SOFT (INDIA) PVT. LTD., PLOT NO. 18, H .NO. 8-2-248/B/13, ROAD NO. 3, JOURNALIST COLONY, BANJARA HILLS, H YD 500 016. 2) DCIT, 2(3), RANGE 2, IT TOWERS, AC GUARDS, HYD ERABAD. 3 CIT(A)-2, HYDERABAD 4) CIT-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.