M/s Tata Elxsi Ltd , Bangalore V. The Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore

ITA 2464/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3767 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-11-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FWIHAT HUSSAIN QURESHI
• Assessee Lawyers: PADAMCHAND KHINCHA
• Section: 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2464/BANG/2018 ASSESSMENT YEAR : 2012-13 TATA ELXSI LTD., ITPB ROAD, HOODY, WHITEFIELD, BENGALURU-560 048. PAN AAACT 7872 Q VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-7(1)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, C.A RESPONDENT BY : SHRI FWIHAT HUSSAIN QURESHI, CIT (DR) DATE OF HEARING : 03-11-2020 DATE OF PRONOUNCEMENT : 05-11-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 09/08/2018 PASSED BY LD.CIT(A)-7, BANGALORE F OR ASSESSMENT YEAR 2012-13 ON FOLLOWING GROUNDS OF APP EAL: 1.1. THE ID. AO HAS ERRED IN DISALLOWING DEDUCTION UNDER SECTION 80JJAA AMOUNTING TO RS.8,93,19,981 AND THE LD. CIT( A) HAS ERRED IN CONFIRMING THE SAID DISALLOWANCE. ON FACTS AND C IRCUMSTANCES OF THE CASE AND LAW APPLICABLE, DEDUCTION UNDER SEC TION 80JJAA SHOULD BE ALLOWED AS CLAIMED IN THE RETURN OF INCOM E. 2.1. THE LEARNED AO HAS ERRED IN DISALLOWING DEDUCT ION CLAIMED IN RESPECT OF SHARE OF LOSS FROM M/S A SQUARED ELXSI E NTERTAINMENT LLC (A2E2), USA AMOUNTING TO RS.4,11,75,000/- AND T HE LD. PAGE 2 OF 11 ITA NO.2464/BANG/2018 CIT(A) HAS ERRED IN CONFIRMING THE SAID DISALLOWANC E. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, T HE IMPUGNED DISALLOWANCE SHOULD BE DELETED IN ENTIRETY. 3.1. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE A DDUCED AT THE TIME OF HEARING, THE APPELLANT COMPANY PRAYS THAT THE OR DER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7, IN SO FAR IT IS PREJUDICIAL TO THE APPELLANT, BE QUASHED OR IN THE ALTERNATIVE (I) DEDUCTION UNDER SECTION 80JJAA BE ALLOWED AS CLAIMED IN THE RETURN OF INCOME; (II) DEDUCTION IN RESPECT OF SHARE OF LOSS FROM A2E2, US A BE ALLOWED AS CLAIMED IN THE RETURN OF INCOME. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF D ISTRIBUTED SYSTEMS, DESIGN AND DEVELOPMENT OF HARDWARE AND SOF TWARE AND DIGITAL CONTENT CREATION. IT FILED ITS RETURN OF IN COME FOR YEAR UNDER CONSIDERATION ON 29/11/2012 DECLARING TOTAL I NCOME OF RS.26,38,79,760/-. THE CASE WAS SELECTED FOR SCRUTI NY AND NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISS UED. 2.1. DURING THE SCRUTINY PROCEEDINGS LD.AO NOTICED THAT ASSESSEE CLAIMED DEDUCTION OF RS.8,93,19,981/-UNDER SECTION 80JJAA OF THE ACT. LD.AO REJECTED THE CLAIM OF ASSESSEE FOR N ON-FULFILMENT OF FOLLOWING THE REASON THAT THE CONDITION OF 300 DAYS TO BE FULFILLED BY THE REGULAR WORKMEN AS PER THE PROVISIONS DOES N OT STAND FULFILLED. 2.2. LD.AO OBSERVED THAT ASSESSEE HAS CLAIMED DEDUCTION OF RS.4,11,75 000/-TOWARDS SHARE OF LOSS FROM M/S.A SQ UARD ELXSI ENTERTAINMENT LLC. LD.AO ACCORDINGLY CALLED FOR DET AILS IN RESPECT OF THE SAME AND FOUND NOTED THAT ASSESSEE H AS NOT BEEN ALLOTTED SHARES IN M/S A SQUARD ELXSI ENTERTAINMENT LLC, USA (HEREINAFTER REFERRED TO AS A2E2) DURING THE YEAR U NDER PAGE 3 OF 11 ITA NO.2464/BANG/2018 CONSIDERATION. IT HAS BEEN NOTED BY HIM THAT 50% LO SS CLAIMED BY ASSESSEE IS NOT IN ACCORDANCE WITH PROVISIONS OF TH E ACT AND ACCORDINGLY THE CLAIM WAS DISALLOWED. AGGRIEVED BY ADDITIONS, ASSESSEE PREFERRED APPEAL B EFORE LD.CIT(A) 3. LD.CIT(A) UPHELD THE DISALLOWANCE FOLLOWING DECISIO N OF HONBLE DELHI TRIBUNAL IN CASE OF LG ELECTRONICS INDIA PVT.LTD REPORTED IN (2013) 33 TAXMANN.COM 465, WHEREIN, IT WAS HELD THAT ONLY NEW WORKMEN EMPLOYED FOR A PERIOD OF 300 DAYS IN RELEVA NT PREVIOUS YEAR ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 JJ AA OF THE ACT. HE ALSO PLACED RELIANCE ON FULL BENCH BY DECISION HONBLE SUPREME COURT IN CASE OF COMMISSIONER OF CUSTOMS (IMPORT) VS. DINESH KUMAR & CO. & ORS. REPORTED IN CIVIL APPEAL NO.3327 OF 2007 BY ORDER DATED 30/07/2018. 3.1. IN RESPECT OF THE 2 ND ISSUE LD.CIT(A) OBSERVED THAT IN THE ABSENCE OF SHARES IN THE JOINT-VENTURE CLAIM OF 50% LOSS ON THE SAME ON ACCOUNT OF OWNERSHIP IN JOINT-VENTURE BY AS SESSEE DOES NOT STAND TO LOGIC AND LEGALLY NOT SUSTAINABLE. HE THUS REJECTED THE CLAIM OF ASSESSEE. AGGRIEVED BY ORDER OF LD.CIT(A), ASSESSEE IS IN APP EAL BEFORE US NOW. 4. AT THE OUTSET IT HAS BEEN SUBMITTED THAT GROUND 3.1 IS GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION . 4.1. GROUND NO.1.1 IS IN RESPECT OF DISALLOWANCE UNDER SECTION 80JJAA OF THE ACT AMOUNTING TO RS.8,93,19,981/-. PAGE 4 OF 11 ITA NO.2464/BANG/2018 LD.AR SUBMITTED THAT, FOR PURPOSES OF SECTION 80JJA A OF THE ACT, GROSS TOTAL INCOME OF ELIGIBLE ASSESSEE SHOULD INCL UDE INCOME FROM AN INDUSTRIAL UNDERTAKING ENGAGED IN THE MANUF ACTURE OR PRODUCTION OF AN ARTICLE OR THING. HE SUBMITTED THA T, THE TERM INDUSTRIAL UNDERTAKING IS NOT DEFINED IN THIS SEC TION HOWEVER IT IS DEFINED IN SECTION 10(15) OF THE ACT. HE ALSO RE FERRED TO THE INDUSTRIAL DISPUTES ACT, TO WHICH, SUBSTANTIAL REF ERENCE HAS BEEN MADE IN SECTION 80JJAA OF THE ACT, THAT DEFINES IN DUSTRY AS UNDER: INDUSTRY MEANS ANY BUSINESS, TRADE, UNDERTAKING, MA NUFACTURE OR CALLING OF EMPLOYERS AND INCLUDES ALL CALLING, SERV ICE, EMPLOYMENT, HANDICRAFT OR INDUSTRIAL OCCUPATION OR REVOCATION O F WORKMEN. 4.2. HE ALSO SUBMITTED THAT THE TERM ARTICLE OR THINGS IS NOT DEFINED IN THE INCOME TAX ACT AND THEY MUST BE UNDE RSTOOD WITH REFERENCE TO THE CONTEXT. LD.AR PLACED RELIANCE ON DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF TEXAS INSTRUMENTS (INDIA) PVT.LTD VS ACIT REPORTED IN (2020) 115 TAXMANN.COM 154 , WHEREIN, THE ISSUE REGARDING, WHETHER, EMPLOYEES EM PLOYED IN SOFTWARE INDUSTRIES COULD BE REGARDED AS WORKMEN HA S BEEN CONSIDERED IN THIS CASE WHEREIN THIS TRIBUNAL HELD THAT SOFTWARE INDUSTRY HAS ALSO BEEN NOTIFIED AS INDUSTRY FOR PUR POSE OF INDUSTRIAL DISPUTES ACT, 1947, BY STATE OF KARNATAK A, AND THAT, THE EMPLOYEES EMPLOYED IN THE SOFTWARE DEVELOPMENT INDUSTRY RENDERED TECHNICAL SERVICES AND NOT SERVICES IN THE NATURE OF SUPERVISORY OR MANAGEMENT CHARACTER. PAGE 5 OF 11 ITA NO.2464/BANG/2018 4.3. LD.AR SUBMITTED THAT, THIS IS THE 3 RD YEAR OF CLAIM BY ASSESSEE AND THAT THE EMPLOYEES AGAINST WHOSE WAGES THE DEDUCTION HAS BEEN CLAIMED SATISFIES THE NECESSARY CONDITIONS. HE PLACED RELIANCE ON THE OBSERVATIONS OF THIS TRIBUNAL IN TEXAS INSTRUMENTS (INDIA) PVT.LTD VS ACIT (SUPRA) REGARDING ALLOWABILITY OF CLAIM TO ASSESSEE. 4.4. ON THE CONTRARY LD.CIT.DR PLACED RELIANCE ON OBSERV ATIONS OF LD.CIT(A) AND PARA 4.2 OF IMPUGNED ORDER. HE SUB MITTED THAT LD.CIT(A) RELIED ON HIS ORDER FOR ASSESSMENT YEAR 2 012-13. HE THUS SUBMITTED THAT NOTHING ON RECORD ESTABLISHES T HE SUBMISSION OF LD.AR THAT THIS IS THE 3 RD YEAR OF CLAIM. LD.CIT.DR SUBMITTED THAT DETAILS WITH REGARD TO EMPLOYEES ON SALARY DEDUCTION HAS BEEN CLAIMED UNDER SECTION 80JJAA OF THE ACT HAS NOT BEEN PRODUCED IN THE PAPER BOOK. HE THUS REQUES TED FOR THE ISSUE TO BE REMANDED TO AUTHORITIES BELOW FOR VERIF ICATION. 5. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. WE NOTE THAT THE LD.AO DENIAL OF BENEFIT TO ASSESSE E IS BASED ON THE REASONING THAT ASSESSEE WAS DENIED BENEFIT AGAI NST THESE EMPLOYEES IN THE 1 ST YEAR OF THEIR EMPLOYMENT AND THAT ASSESSEE BEING A SOFTWARE DEVELOPMENT COMPANY IS NOT ELIGIBL E FOR DEDUCTION. 5.1. WE NOTE THAT THE 1 ST OF OBJECTION OF LD.AO REGARDING NON- SATISFACTION WITH RESPECT TO ADDITIONAL WAGES PAID TO NEW EMPLOYEES IN THE 1 ST YEAR OF EMPLOYMENT IS CONCERNED, THIS PAGE 6 OF 11 ITA NO.2464/BANG/2018 TRIBUNAL HAS EXPRESSED FOLLOWING VIEW IN CASE OF TEXAS INSTRUMENTS (INDIA) PVT.LTD VS ACIT (SUPRA): 9. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE ONLY REASON GIVEN BY THE AO FOR DENYING THE BENEFIT OF DEDUCTION U/S.80JJAA OF THE ACT, WHICH IS THE REASON THAT SUR VIVES FOR CONSIDERATION BY THE TRIBUNAL IS ACCORDING TO THE AO SINCE THE AD DITIONAL WAGES PAID TO THESE 287 EMPLOYEES WERE NOT ELIGIBLE TO DEDUCTION U/S.80JJAA OF THE ACT BECAUSE THESE EMPLOYEES DID NOT WORK FOR MORE THAN 300 DAYS IN FY 2006- 07 RELEVANT TO AY 2007-08, THE WAGES PAID TO THESE EMPLOYEES IN AY 2008- 09 WILL ALSO NOT QUALIFY FOR DEDUCTION U/S.80JJAA O F THE ACT. IN OTHER WORDS ACCORDING TO THE AO IF THE CONDITION FOR GRANT OF D EDUCTION U/S.80JJAA OF THE ACT IS NOT SATISFIED WITH REFERENCE TO ADDITIONAL W AGES PAID TO NEW EMPLOYEES IN THE FIRST YEAR OF THEIR EMPLOYMENT, TH EN THE ADDITIONAL WAGES PAID TO SUCH NEW EMPLOYEES WILL NOT ALLOWED IN THE SECOND AND THIRD ASSESSMENT YEARS ALSO. AS POINTED OUT BY THE LEARNE D COUNSEL FOR THE ASSESSEE, THIS APPROACH OF THE REVENUE AUTHORITIES IS CONTRARY TO THE AO'S STAND ON CLAIM FOR SIMILAR DEDUCTION U/S.80JJAA OF THE ACT IN AY 2007-08. IN THE ORDER OF ASSESSMENT PASSED BY THE AO FOR AY 2007-08, HE HAS WHILE DISALLOWING THE CLAIM FOR DEDUCTION U/S.80JJAA OF T HE ACT FOR THAT AY, ACCEPTED THE POSITION THAT ON ADDITIONAL WAGES PAID TO NEW WORKMEN EMPLOYED DURING THE PREVIOUS YEAR RELEVANT TO AY 20 05-06 WHO HAVE WORKED MORE THAN 300 DAYS DURING THE PREVIOUS YEAR RELEVANT TO AY 2007- 08, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80JJA A OF THE ACT. IN THE DECISION RENDERED IN THE CASE OF BOSCH LTD. (SUPRA) THE BANGALORE ITAT AT PARAGRAPH 23 OF THE AFORESAID ORDER THE TRIBUNAL OB SERVED THAT THE DEDUCTION U/S.80JJAA OF THE ACT IS ALLOWED FOR THRE E YEARS INCLUDING THE YEAR IN WHICH THE EMPLOYMENT IS PROVIDED. HENCE, IN EACH YEAR IT HAS TO BE SEEN THAT THE WORKMEN WAS EMPLOYED FOR AT LEAST 300 DAYS DURING THAT PREVIOUS YEAR AND THAT SUCH WORKMEN WAS NOT A CASUA L WORKMEN OR WORKMEN EMPLOYED THROUGH CONTRACT LABOUR. THEREFORE , IF SOME WORKMEN WERE EMPLOYED FOR A PERIOD OF LESS THAN 300 DAYS IN THE PREVIOUS YEAR THEN NO DEDUCTION IS ALLOWABLE IN RESPECT OF PAYMENT OF WAGES TO SUCH WORK MEN IN THE PRESENT YEAR EVEN IF SUCH WORKMEN WAS EMPLOY ED IN THE PRECEDING YEAR FOR MORE THAN 300 DAYS BUT IN THE PRESENT YEAR , SUCH WORKMEN WAS NOT EMPLOYED FOR 300 DAYS OR MORE. BY THE VERY SAME REASONING THE FACT THAT IN THE FIRST YEAR OF EMPLOYMENT THE ADDITIONAL WAGES PAID IS NOT ALLOWED DEDUCTION FOR THE REASON THAT THE WORKMEN D ID NOT WORK FOR 300 DAYS OR MORE BUT IF THE NEXT TWO ASSESSMENT YEARS, IF HE WORKS FOR MORE THAN 300 DAYS EACH, THEN THE DEDUCTION U/S.80JJAA O F THE ACT HAS TO BE ALLOWED. IT IS NOT PROPER TO SAY THAT IF THE DEDUCT ION IS REFUSED IN THE FIRST YEAR OF EMPLOYMENT OF THE NEW EMPLOYEE THEN FOR THE NEXT TWO SUCCEEDING ASSESSMENT YEARS ALSO, THE BENEFIT OF DEDUCTION WIL L NOT BE AVAILABLE. SUCH AN APPROACH DEFEATS THE VERY PURPOSE FOR WHICH DEDU CTION U/S.80JJAA OF THE ACT IS ALLOWED FOR THREE CONSECUTIVE ASSESSMENT YEARS. THIS ASPECT HAS NOW BEEN CLARIFIED IN THE FINANCE ACT, 2018 BY ADDI NG A SECOND PROVISO TO PAGE 7 OF 11 ITA NO.2464/BANG/2018 THE DEFINITION OF ADDITIONAL EMPLOYEE IN EXPLANATIO N (II) TO SEC.80JJAA OF THE ACT. EVEN PRIOR TO SUCH CURATIVE OR CLARIFICATORY A MENDMENT, WE ARE OF THE VIEW THAT THE CLAIM FOR DEDUCTION U/S.80JJAA OF THE ACT CANNOT BE AND OUGHT NOT TO HAVE BEEN DISALLOWED ON THIS GROUND. W E THEREFORE DIRECT THAT THE DEDUCTION CLAIMED BY THE ASSESSEE SHOULD BE ALL OWED. 5.2. FROM THE ABOVE OBSERVATIONS, THERE IS NO DOUBT THAT ASSESSEE CANNOT BE DENIED DEDUCTION UNDER SECTION 8 0JJAA OF THE ACT, PROVIDED THAT, SUCH EMPLOYEES FULFILS THE CONDITION OF BEING EMPLOYED FOR 300 DAYS FOR YEAR UNDER CONSIDER ATION , EVEN THOUGH SUCH EMPLOYEES DO NOT FULFIL THE CONDITION O F BEING EMPLOYED FOR 300 DAYS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 5.3. WE ALSO NOTE THAT, DETAILS FULFILMENT OF NUMBER OF DAYS OF SUCH EMPLOYEES, ON WHOSE SALARY DEDUCTION HAS BEEN CLAIMED BY ASSESSEE, ARE NOT AVAILABLE ON RECORD. THEREFORE, W E ARE UNABLE TO VERIFY, WHETHER NECESSARY CONDITION OF 300 DAYS STA NDS FULFILLED. WE ARE THEREFORE OF OPINION THAT THE ISSUE NEEDS TO BE REMANDED TO LD.AO TO VERIFY THESE DETAILS IN TERMS OF NEW EM PLOYEES HAVING SATISFIED THE 300 DAYS CRITERIA DURING THE YEAR. 5.4. WE DIRECT ASSESSEE TO PROVIDE ALL DETAILS REGARDING NUMBER OF REGULAR WORKMEN/EMPLOYEES, NUMBER OF NEW WORKMEN/EMPLOYEES ADDED FOR EACH OF THE IMMEDIATELY THREE PRECEDING ASSESSMENT YEARS TO LD.AO. LD.AO IS THEN DIRECTED TO ANALYSE FULFILMENT OF THE CONDITION IN RESPECT OF N EW EMPLOYEES/WORKMEN AGAINST WHOM THE CLAIM HAS BEEN M ADE BY ASSESSEE UNDER SECTION 80JJAA OF THE ACT. LD.AO IS THEN DIRECTED TO ALLOW DEDUCTION UNDER SECTION 80 JJAA OF THE ACT . ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS A LLOWED FOR STATISTICAL PURPOSES. PAGE 8 OF 11 ITA NO.2464/BANG/2018 6. GROUND NUMBER 2.1 IS IN RESPECT OF NOT ALLOWING THE LOSS CLAIMED IN RESPECT OF ASSESSEES SHARE FROM A2E2 AM OUNTING TO RS.4,11,75,000/- THAT WAS CLAIMED DURING ASSESSMENT PROCEEDINGS. AT THE OUTSET, BOTH PARTIES ADMIT THAT VARIOUS DETA ILS IN RESPECT OF THE CLAIM HAS NOT BEEN VERIFIED BY LD.AO AS THE SAM E WAS MADE BY WAY OF SUBMISSIONS DURING ASSESSMENT PROCEEDINGS . 6.1. BRIEF FACTS AS HAS BEEN SUBMITTED BY ASSESSEE IN RE SPECT OF THIS ISSUE IS THAT ASSESSEE ENTERED INTO A JOINT VE NTURE AGREEMENT WITH M/S.A SQUAD ENTERTAINMENT LLC HAVING ITS HEADQ UARTERS AT CALIFORNIA, USA. IT HAS BEEN SUBMITTED THAT THE JOI NT VENTURE WAS FOR THE PURPOSE OF CREATING VENTURE COMPANIES NAMED A2E2 WHICH WAS INCORPORATED AS PER THE LAW IS OFF USA ON 16/06/2011. IT HAS BEEN SUBMITTED THAT IN TERMS OF THE AGREEMENT SHARE HOLDING OF ASSESSEE WITH A2E2 WOULD BE THE PAID-UP EQUITY CAPITAL AMOUNTING TO USD 2 MILLION C OMPRISING OF 2 MILLION SHARES OF USD 1 EACH. ASSESSEE HAD AGREED TO PAY CASH OF USD 1,000,001 WORDS 1,000,001 SHARES OF A2E2 AND BALANCE OF 999,999 EQUITY SHARES WOULD BE ALLOTTED AS TO M/ S.A SQUAD ENTERTAINMENT LLC IN CONSIDERATION OF IT ASSIGNING ITS RIGHTS TO CERTAIN ANIMATED PROPRIETIES TO A2E2. ASSESSEE ACCO RDINGLY REMITTED USD 1,000,001 WORDS ITS SHARE OF EQUITY CO NTRIBUTION IN A2E2 DURING NOVEMBER 2011. M/S.A SQUAD ENTERTAINMEN T LLC DELAYED AND PERTAINING THE REQUISITE NO OBJECTION C ERTIFICATE FROM THE RESPECTIVE ASSIGNED FOR ASSIGNMENT OF ASSESSEE S RIGHTS TO PAGE 9 OF 11 ITA NO.2464/BANG/2018 A2E2 THAT PREVENTED THE BOARD OF MANAGEMENT AND ALL OTTING EQUITY SHARES TO BOTH THE JOINT VENTURE PARTNERS IN A2E2. 6.2. IT IS SUBMITTED THAT A2E2 OPTED TO BE ASSESSED AT P ARTNERS LEVEL. LD.AR SUBMITTED THAT A2E2 WAS CONSIDERED AS A PASSTHROUGH ENTITY AND THAT THE PROFITS OR LOSSES A RISING FROM A2E2 WAS ASSESSABLE IN THE HANDS OF JOINT VENTURE P ARTNERS DURING THE YEAR UNDER CONSIDERATION. THE LD.AR SUBM ITTED THAT THE LOSS CLAIMED BY ASSESSEE IS ASSESSEES 50% SHAR E IN THE LOSS SUFFERED BY A2E2 DURING THE YEAR IN USA. 6.3. WITH THE ABOVE FACTUAL BACKGROUND, WE NOTE THAT AUT HORITIES BELOW REJECTED THE CLAIM AS ASSESSEE ASSESSEE WAS N OT ALLOTTED SHARES IN THE LLC WHEREIN IT WAS A PARTNER. IN OUR VIEW THIS ISSUE NEEDS TO BE REMANDED TO LD.AO TO CONSIDER THE CLAIM OF ASSESSEE IN LIGHT OF EVIDENCES/DOCUMENTS, JOINT VENTURE AGRE EMENTS, DECLARATION BY THE U.S. LLC BEFORE THE TAX AUTHORIT IES THEREIN ETC, OECD COMMENTARY IS IN RESPECT OF THE SAME, THE MANN ER IN WHICH SUCH INCOMES/LOSS AS THE CASE MAY BE ARE TREA TED IN USA BEING THE SOURCE COUNTRY AND THE MANNER IN WHICH SU CH INCOME/LOSS ARE TO BE TREATED AS PER INDIAN INCOME TAX ACT. LD.AO SHALL TAKE A VIEW BASED UPON ALL THE DOCUMENT S IN LIGHT OF THE PROVISIONS APPLICABLE DURING THE RELEVANT PERIO D UNDER THE ACT. NEEDLESS TO SAY THAT PROPER OPPORTUNITY OF BEI NG HEARD SHALL BE GRANTED TO ASSESSEE IN ACCORDANCE WITH LAW FILED BY ASSESSEE, ACCORDANCE WITH LAW. 6.4. ACCORDINGLY, THE ISSUE IS REMANDED TO LD.AO. ASSESS EE IS DIRECTED TO FILE ALL REQUISITE DETAILS IN SUPPORT O F ITS CLAIM IN PAGE 10 OF 11 ITA NO.2464/BANG/2018 ACCORDANCE WITH LAW WHICH SHALL BE CONSIDERED BY LD .AO UPON VERIFICATION. ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 5 TH NOV, 2020 SD/- SD/- (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 5 TH NOV, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 11 OF 11 ITA NO.2464/BANG/2018 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -10-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -10-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -10-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -10-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -10-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -10-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS