Deputy Commissioner of Income Tax Circle-7(1)(2), Bangalore V. M/s Yahoo Software Development Pvt Ltd , Bangalore

ITA 2510/BANG/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2114 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Keywords: Deemed to accrue or arise in india; Reasonable cause; TDS
• Section: 115JB; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B , BANGALORE BEFORE SHRI N.V.VASUDEVAN, VICE-PRESIDENT & SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.2510/BANG/2017: ASST.YEAR 2009-2010 DY. COMMISSIONER OF INCOME-TAX, CIRCLE 7(1)(2) BANGALORE. VS. M/S. YAHOO SOFTWARE DEVELOPMENT PRIVATE LIMITED TORREY PINES, EMBASSY GOLD LINKS, BUSINESS PARK, OFF INDIRANAGAR KORAMANGALA INTERMEDIATE RING ROAD BANGALORE 560 071. PAN: AAACY1876D. (APPELLANT) (RESPONDENT) IT(TP)A NO.133/BANG/2018: ASST.YEAR 2009-2010 M/S. YAHOO SOFTWARE DEVELOPMENT PRIVATE LIMITED BANGALORE 560 071. VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 7(1)(2) BANGALORE. (APPELLANT) (RESPONDENT) REVENUE BY: SRI.MUZAFFAR HUSSAIN, CIT-DR ASSESSEE BY: SRI.SRIRAM SESHADRI, CA DATE OF HEARING: 25.02.2020 DATE OF PRONOUNCEMENT: 27/4/2020 O R D E R PER CHANDRA POOJARI, AM: THESE ARE CROSS APPEALS ARISING OUT OF THE ORDER OF THE CIT(A), BANGALORE, DATED 04.09.2017, AND THEY RELAT E TO THE ASSESSMENT YEAR 2009-2010. 2. FIRST, WE SHALL TAKE THE REVENUES APPEAL IN ITA NO.2510/BANG/2017. ITA NO.2510/BANG/2017 3. THE GROUND NOS. 2 AND 3 RAISED BY THE REVENUE RE AD AS FOLLOW: - ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) WAS JUSTIFIED IN LAW IN HOLDING THAT THE EXP ENDITURE INCURRED TOWARDS DATE LINK CHARGES / TELECOMMUNICAT ION CHARGES AND FOREIGN TRAVEL EXPENSES ATTRIBUTABLE TO DELIVERY OF COMPUTER SOFTWARE FOR PROVIDING TECHNICAL SERVICES OUTSIDE INDIA TO BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTIO N U/S 10A OF THE ACT, WHEREAS SUCH EXCLUSION IS PERMITTED TO ARRIVE AT THE EXPORT TURNOVER ONLY AS PER THE DEFINITIONS GIVEN I N SEC.10A OF THE ACT AND TOTAL TURNOVER HAS NOT BEEN DEFINED IN THE SECTION? 3. WHETHER THE CIT(A) IS CORRECT IN LAW IN FOLLOWIN G THE JUDGMENTS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. TATA ELXSI LTD., WHICH HAS NOT BECOME FINAL SINCE T HE SAME HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLPS AR E PENDING BEFORE THE HONBLE APEX COURT? 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS SQUARELY COVE RED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F CIT V. HCL TECHNOLOGIES LIMITED [(2018) 404 ITR 719 (SC)] , WHEREIN IT WAS HELD BY THE HONBLE SUPREME COURT THAT THE EXPE NDITURE INCURRED TOWARDS TELECOMMUNICATION CHARGES AND FORE IGN TRAVEL EXPENSES ATTRIBUTED TO THE DELIVERY OF COMPU TER SOFTWARE FOR PROVIDING TECHNICAL SERVICES OUTSIDE I NDIA TO BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOV ER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10A OF THE ACT. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN FOLLOWING THE JUDGMENT OF THE HONBLE KAR NATAKA HIGH COURT IN THE CASE OF CIT V. TATA ELXSI LIMITED [(2012) 349 ITR 98 (KAR.)] , AND THE SAME IS CONFIRMED. ACCORDINGLY, GROUND NOS.2 AND 3 RAISED BY THE REVENUE ARE DISMISSED. 5. GROUND NO.4 RAISED BY THE REVENUE IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS RIGHT IN ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 3 ALLOWING DEDUCTION U/S 10A ON THE ENHANCED INCOME A RISING OUT OF DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT A GAINST NON- DEDUCTION OF TAX ON RENT PAYMENT U/S.194I 6. IN THIS CASE, THE PROFIT OF THE ASSESSEE WAS INC REASED ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT FO R NON- DEDUCTION OF TDS ON RENT PAYMENT. HOWEVER, THE ASSE SSING OFFICER HAS NOT CONSIDERED THE ENHANCED INCOME FOR GRANTING DEDUCTION U/S 10A OF THE ACT. THE CIT(A) GRANTED TH E DEDUCTION BY PLACING RELIANCE ON THE JUDGMENT OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GEM PLUS JEWELERY INDIA LTD. [(2010) 330 ITR 175 (BOM.)] . 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS SQUARELY COVE RED BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT V. GEM PLUS JEWELERY INDIA LTD. (SUPRA), WHEREIN THE HONBLE COURT HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 10A OF THE ACT WITH REFERENCE TO THE ADDITION O F DISALLOWANCE OF PAYMENTS AS A PLAIN CONSEQUENCE OF THE DISALLOWANCE AND THE ADD BACK MADE BY THE ASSESSING OFFICER IS AN INCREASE IN THE BUSINESS PROFIT OF THE ASSESS EE. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A), HENCE, THE SAME IS CONFIRMED. 8. NOW, WE SHALL TAKE THE ASSESSEES APPEAL IN IT(T P)A NO.133/BANG/2018. ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 4 IT(TP)A NO.133/BANG/2018 9. THE ASSESSEE HAS RAISED GROUND NO.15(F) BEFORE T HE CIT(A) AS FOLLOWS: - WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED AO ERRE D IN NOT ALLOWING DEDUCTION UNDER SECTION 10A OF THE ACT WIT H RESPECT TO THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AMOUNTING TO RS.3,869,891, IN COMPUTING THE TOTAL I NCOME OF THE COMPANY AND CONSEQUENT INCREASE IN PROFIT ELIGI BLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT. 10. HOWEVER, THIS GROUND HAD NOT ADJUDICATED BY THE CIT(A). IN OUR OPINION, THIS GROUND IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE CIT V. GEM PLUS JEWELERY INDIA LTD. (SUPRA). AS DISCUSSED IN THE EARLIER PARAGRAPH, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 10A OF THE ACT ON THE EN HANCED PROFIT ON ACCOUNT OF DISALLOWANCE MADE U/S 40(A)(IA ) OF THE ACT AT RS.38,69,891. ACCORDINGLY, THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED. 11. GROUND NOS.3A AND 3B RAISED BY THE ASSESSEE REA D AS FOLLOW: - 3A. THAT THE LEARNED CIT(A) ERRED IN LAW AND FACTS BY HOLDING THAT THE ADDITIONAL REVENUE OF RS.157,993,5 98 WOULD NOT BE ELIGIBLE FOR A DEDUCTION UNDER SECTION 10A A ND THEREFORE, SHOULD BE EXCLUDED FROM THE `EXPORT TURN OVER WHILE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE AC T ON THE GROUND THAT THE SALE PROCEEDS WERE NOT RECEIVED WIT HIN THE STIPULATED TIME LINES. 3B. THAT THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 115(11A) WOULD NOT BE APPLICA BLE IN ALLOWING THE DEDUCTION UNDER SECTION 10A OF THE ACT . 12. THE FACTS OF THIS ISSUE ARE THAT THE ASSESSING OFFICER EXCLUDED ADDITIONAL REVENUE OF RS.15,79,93,598 IN T HE REVISED ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 5 RETURN OF INCOME FILED ON 31.03.2011. THE ASSESSEE MADE A PLEA BEFORE THE ASSESSING OFFICER THAT THE INVOICE RELATING TO THIS REVENUE WAS RAISED ON 29.03.2011 AND THE AMOUN T WAS COLLECTED ON 31.03.2011 AND CLAIMED DEDUCTION U/S 1 0A OF THE ACT ON THIS INCOME. THE ASSESSING OFFICER DID N OT CONSIDER THIS AMOUNT FOR DEDUCTION U/S 10A OF THE ACT FOR TH E REASON THAT THE SALE PROCEEDS WERE NOT RECEIVED WITHIN THE STIPULATED TIME LIMIT. THIS VIEW OF THE A.O. HAS BEEN UPHELD B Y THE CIT(A). 13. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. BEFORE US, IT WAS THE CONTENTION OF THE LEARNED AR THAT AS PER RBI CIRCULAR NO.FEMA 23/RB-2000 DATED 03 RD MAY, 2000, CLAUSE 9 SPECIFIES THAT THE PERIOD WITHIN WHICH EXP ORT VALUE OF GOODS / SOFTWARE TO BE REALIZED. CLAUSE 9 IS REPROD UCED AS UNDER: - 9. PERIOD WITHIN WHICH EXPORT VALUE OF GOODS / SOFTWARE TO BE REALIZED:- THE AMOUNT REPRESENTING THE FULL EXPORT VALUE OF GOODS OR SOFTWARE EXPORTED SHALL BE REALIZED AND REPATRIATED TO INDIA WITHIN SIX MONTHS FROM THE DAT E OF EXPORT; PROVIDED THAT WHERE THE GOODS ARE EXPORTED TO A WAREHOUSE ESTABLISHED OUTSIDE INDIA WITH THE PERMISSION OF THE RESERVE BANK, THE AMOUNT REPRESENTING THE FULL EXPORT VALUE OF GOODS EXPORTE D SHALL BE PAID TO THE AUTHORIZED DEALER AS SOON AS I T IS REALIZED AND IN ANY CASE WITHIN FIFTEEN MONTHS FROM THE DATE OF SHIPMENT OF GOODS. PROVIDED FURTHER THAT THE RESERVE BANK, OR SUBJECT TO THE DIRECTIONS ISSUED BY THAT BANK IN THIS BEHALF, THE ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 6 AUTHORIZED DEALER MAY, FOR A SUFFICIENT AND REASONABLE CAUSE SHOWN, EXTEND THE SAID PERIOD OF SIX MONTHS OR FIFTEEN MONTHS, AS THE CASE MAY BE. EXPLANATION: FOR THE PURPOSE OF THIS REGULATION, THE DATE OF EXPORT IN RELATION TO THE EXPORT OF SOFTWARE IN OT HER THAN PHYSICAL FORM, SHALL BE DEEMED TO BE THE DATE OF INVOICE COVERING SUCH EXPORT. 14. AS PER THE ABOVE EXPLANATION TO CLAUSE 9 OF RBI CIRCULAR NO.FEMA 23/RB-2000 DATED 03 RD MAY, 2000, THE DATE OF EXPORT MEANS THE DATE OF INVOICE MADE. IN THE PRES ENT CASE, THE DATE OF INVOICE IS 29.03.2011 AND THE AMOUNT HA S BEEN RECEIVED ON 31.03.2011. ACCORDINGLY, THE LEARNED AR PLEADED THAT THE EXPORT TURNOVER WAS RECEIVED WITHIN THE ST IPULATED PERIOD. FURTHER, HE RELIED ON THE ORDER OF THE PUNE BENCH OF THE ITAT IN THE CASE OF APPROVA SYSTEMS PVT.LTD. V. DCIT [ITA NO.1051/PUN/2015 ORDER DATED 12.03.2018 FOR THE PROPOSITION THAT ONCE THE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME AS BUSINESS PROFIT, THE SAME HAS TO BE CONSI DERED FOR DEDUCTION U/S 10A OF THE ACT. FURTHER, THIS ISSUE W AS ALSO CONSIDERED BY THE DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF ITO V. M/S.PCL EXPORTS [ITA NO.3563/DEL/2009]. THE TRIBUNAL VIDE ITS ORDER DATED 22.03.2011, HELD AS UNDER: - 3. NONE ATTENDED ON BEHALF OF THE ASSESSEE ON 22.03.2011 ALTHOUGH THE CASE WAS FIXED ON A NUMBER OF OCCASIONS EARLIER WHEN EITHER THE ASSESSEE OR TH E REVENUE SOUGHT ADJOURNMENT. ON 06.10.2010, THE LEARNED AR OF THE ASSESSEE HAD SOUGHT ADJOURNMENT, WHICH WAS GRANTED TO 22.03.2011. IN ABSENCE OF THE ASSESSEE, THE LEARNED DR EXPLAINED THE FACTS OF THE ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 7 CASE. HOWEVER, HE COULD NOT POINT TO ANY ERROR IN T HE IMPUGNED ORDER, WHICH REQUIRES CORRECTIONS FROM US. ON PERUSAL OF THE ORDER, WE FIND THAT SECTION 155(11A) PERMITS A MECHANISM TO MODIFY THE ORDER IN CASE SALE PROCEEDS ARE NOT RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA WITHIN THE PRESCRIBED TIM E BUT ARE RECEIVED AFTER THE EXPIRY OF THE LIMITATION . IN VIEW THEREOF, IT WOULD NOT BE PROPER TO ALLOW DEDUCTION AT LOWER AMOUNT AND THEREAFTER RECTIFY TH E ORDER TO GRANT CORRECT DEDUCTION U/S 155(11A). IN VIEW THEREOF, WE DO NOT FIND ANY REASON TO INTERFER E WITH THE ORDER OF THE LEARNED CIT(A). 15. BEING SO, IN THE PRESENT CASE, THE ASSESSEE HAS OFFERED THE SUBSEQUENT REALIZED EXPORT INCOME BY FILING A R EVISED RETURN. THEREFORE, THE SAME SHOULD BE CONSIDERED FO R GRANTING DEDUCTION U/S 10A OF THE ACT, AND THERE IS NO NECES SITY TO RECTIFY THE SAME AFTER COMPLETION OF ASSESSMENT AS HELD BY THE DELHI TRIBUNAL IN THE CASE OF ITO V. M/S.PCL EXPORTS (SUPRA) . ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED . 16. GROUND NO.4 RAISED BY THE ASSESSEE READS AS UN DER:- 4A. THAT THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ADDITIONAL REVENUE OF RS.157,993,598 SHOULD BE INCL UDED IN COMPUTING BOOK PROFITS UNDER SECTION 115JB OF THE A CT, EVEN THOUGH SUCH AMOUNT WAS NOT CREDITED TO THE PROFIT A ND LOSS ACCOUNT IN THE SAID YEAR. 4B. THAT THE LEARNED CIT(APPEALS) ERRED IN NOT FOL LOWING THE PRINCIPLES LAID DOWN BY HONBLE SUPREME COURT IN TH E CASE OF APOLLO TYRES LIMITED V. CIT (2002) 255 ITR 273 (SC) . 17. THE FACTS OF THE CASE OF THIS ISSUE ARE THAT TH E ASSESSING OFFICER TINKERED THE BOOK PROFIT BY ADDING THE ADDI TIONAL REVENUE ON ACCOUNT OF SUBSEQUENT REALIZATION OF EXP ORT, WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. THE ASSESSEE ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 8 HAS REVISED THE RETURN OF INCOME BY INCLUDING THE A DDITIONAL REVENUE IN ITS TOTAL INCOME. HOWEVER, THE ASSESSEE DID NOT MODIFY THE BOOK PROFIT U/S 115JB OF THE ACT. THE AS SESSING OFFICER RE-COMPUTED THE BOOK PROFIT BY ADDING THE A DDITIONAL INCOME ON ACCOUNT OF SUBSEQUENT REALIZATION OF EXPO RT PROFIT. IN OUR OPINION, THE ASSESSING OFFICER CANNOT TINKER THE BOOK PROFIT, IN SUCH CASES WHERE THE ADDITIONAL REVENUE WAS NOT SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT, AS H ELD BY THE HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LIMITED V. CIT [(2002) 255 ITR 273 (SC)]. THE OBSERVATION OF THE HONBLE SUPREME COURT READS AS FOLLOW:- 4. FOR DECIDING THIS ISSUE, IT IS NECESSARY FOR US TO EXAMINE THE OBJECT OF INTRODUCING SECTION 115J WHICH CAN BE EASILY DEDUCED FROM THE BUDGET SPEECH OF THE THEN FINANCE MINISTER OF INDIA MADE IN THE PARLIAMENT WHILE INTRODUCING T HE SAID SECTION WHICH IS AS FOLLOWS: 'IT IS ONLY FAIR AND PROPER THAT THE PROSPEROUS SHO ULD PAY AT LEAST SOME TAX. THE PHENOMENON OF SO-CALLED 'ZERO-TAX' HIGHLY PROFITABLE COMPANIES DESERVES ATTENTION. IN 1983, A NEW SECTION 80VVA WAS INSERTE D IN THE ACT SO THAT ALL PROFITABLE COMPANIES PAY SOM E TAX. THIS DOES NOT SEEM TO HAVE HELPED AND IS BEING WITHDRAWN. I NOW PROPOSE TO INTRODUCE A PROVISION WHEREBY EVERY COMPANY WILL HAVE TO PAY A 'MINIMUM CORPORATE TAX' ON THE PROFITS DECLARED BY IT IN ITS OWN ACCOUNTS. UNDER THIS NEW PROVISION, A COMPANY WILL PAY TAX ON AT LEAST 30 PER CENT OF ITS BOOK PROFIT. IN OTHER WORDS, A DOMESTIC WIDELY HELD COMPANY WILL PA Y TAX OF AT LEAST IS PER CENT OF ITS BOOK PROFIT. THI S MEASURE WILL YIELD A REVENUE GAIN OF APPROXIMATELY RS. 75 CRORES.' 5. THE ABOVE SPEECH SHOWS THAT THE INCOME-TAX AUTHO RITIES WERE UNABLE TO BRING CERTAIN COMPANIES WITHIN THE N ET OF INCOME-TAX BECAUSE THESE COMPANIES WERE ADJUSTING T HEIR ACCOUNTS IN SUCH A MANNER AS TO ATTRACT NO TAX OR V ERY LITTLE TAX. IT IS WITH A VIEW TO BRING SUCH OF THESE COMPA NIES WITHIN THE TAX NET THAT SECTION 115J WAS INTRODUCED IN THE INCOME-TAX ACT WITH A DEEMING PROVISION WHICH MAKES THE COMPAN Y LIABLE ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 9 TO PAY TAX ON AT LEAST 30 PER CENT OF ITS BOOK PROF ITS AS SHOWN IN ITS OWN ACCOUNTS. FOR THE SAID PURPOSE, SECTION 115J MAKES THE INCOME REFLECTED IN THE COMPANIES' BOOKS OF ACC OUNT AS THE DEEMED INCOME FOR THE PURPOSE OF ASSESSING THE TAX. IF WE EXAMINE THE SAID PROVISION IN THE ABOVE BACKGROUND, WE NOTICE THAT THE USE OF THE WORDS 'IN ACCORDANCE WIT H THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI TO TH E COMPANIES ACT' WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING AUTHORITY TO RELY UPON THE AUTHENTIC STAT EMENT OF ACCOUNTS OF THE COMPANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY. AN ASSESSING OFFICER UNDER THE INCOME- TAX ACT HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE COMPANIES ACT WHICH OBLIGATES THE COMPANY TO MAINTAIN ITS ACCOUNT IN A MANNER PROVIDE D BY THE COMPANIES ACT AND THE SAME TO BE SCRUTINISED AND CE RTIFIED BY STATUTORY AUDITORS AND WILL HAVE TO BE APPROVED BY THE COMPANY IN ITS GENERAL MEETING AND THEREAFTER TO BE FILED BEFORE THE REGISTRAR OF COMPANIES WHO HAS A STATUTO RY OBLIGATION ALSO TO EXAMINE AND SATISFY THAT THE ACC OUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUI REMENTS OF THE COMPANIES ACT. IN SPITE OF ALL THESE PROCEDU RES CONTEMPLATED UNDER THE PROVISIONS OF THE COMPANIES ACT, WE FIND IT DIFFICULT TO ACCEPT THE ARGUMENT OF THE REV ENUE THAT IT IS STILL OPEN TO THE ASSESSING OFFICER TO RESCRUTINISE THE ACCOUNTS AND SATISFY HIMSELF THAT THESE ACCOUNTS HAVE BEEN M AINTAINED IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. IN OUR OPINION. RELIANCE PLACED BY THE REVENUE ON SUB-SECT ION (1A) OF SECTION 115J IN SUPPORT OF THE ABOVE CONTENTION IS MISPLACED. SUB-SECTION (1A) OF SECTION 115J DOES NOT EMPOWER T HE ASSESSING OFFICER TO EMBARK UPON A FRESH INQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COM PANY. THE SAID SUB-SECTION, AS A MATTER OF FACT, MANDATES THE COMPANY TO MAINTAIN ITS ACCOUNT IN ACCORDANCE WITH THE REQU IREMENTS OF THE COMPANIES ACT WHICH MANDATE, ACCORDING TO US, I S BODILY LIFTED FROM THE COMPANIES ACT INTO THE INCOME-TAX A CT FOR THE LIMITED PURPOSE OF MAKING THE SAID ACCOUNT SO MAINT AINED AS A BASIS FOR COMPUTING THE COMPANY'S INCOME FOR LEVY OF INCOME- TAX. BEYOND THAT WE DO NOT THINK THAT THE S AID SUB- SECTION EMPOWERS THE AUTHORITY UNDER THE INCOME-TAX ACT TO PROBE INTO THE ACCOUNTS ACCEPTED BY THE AUTHORITIES UNDER THE COMPANIES ACT. IF THE STATUTE MANDATES THAT INCOME PREPARED IN ACCORDANCE WITH THE COMPANIES ACT SHALL BE DEEME D INCOME FOR THE PURPOSE OF SECTION 115J, THEN IT SHO ULD BE THAT INCOME WHICH IS ACCEPTABLE TO THE AUTHORITIES UNDER THE COMPANIES ACT. THERE CANNOT BE TWO INCOMES ONE FOR THE PURPOSE OF COMPANIES ACT AND ANOTHER FOR THE PURPOS E OF THE INCOME-TAX ACT BOTH MAINTAINED UNDER THE SAME ACT. IF THE LEGISLATURE INTENDED THE ASSESSING OFFICER TO REASS ESS THE COMPANY'S INCOME, THEN IT WOULD HAVE STATED IN SECT ION 115J ITA NO.2510/BANG/2017 IT(TP)A NO.133/BANG/2018 M/S.YAHOO SOFTWARE DEVELOPMENT PVT.LTD. 10 THAT 'INCOME OF THE COMPANY AS ACCEPTED BY THE ASSE SSING OFFICER'. IN THE ABSENCE OF THE SAME AND ON THE LAN GUAGE OF SECTION 115J, IT WILL HAVE TO HELD THAT VIEW TAKEN BY THE TRIBUNAL IS CORRECT AND THE HIGH COURT HAS ERRED IN REVERSING THE SAID VIEW OF THE TRIBUNAL. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER WHILE COMPUTING THE INCOME UNDER SECTION LL5J HAS O NLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT AS HAVIN G BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIE S ACT. THE ASSESSING OFFICER THEREAFTER HAS THE LIMITED PO WER OF MAKING INCREASE AND REDUCTIONS AS PROVIDED FOR IN T HE EXPLANATION TO THE SAID SECTION. TO PUT IT DIFFEREN TLY, THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION TO SECTION 1 15J. 18. IN VIEW OF THE FOREGOING REASONS AND RESPECTFUL LY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT (SUPRA), WE ALLOW THIS GROUND RAISED BY THE ASSESSEE. 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2020. SD/- SD /- ( N.V.VASUDEVAN ) ( CHANDRA POOJARI ) VICE-PRESIDENT ACCOUNTANT MEMBER BANGALORE ; DATED : 27/4/2020. DEVADAS G* COPY TO: 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A)-7, BENGALURU. 4. THE PR.CIT-7, BENGALURU. 5. THE DR, ITAT, BENGALURU. 6. GUARD FILE. ASST.REGISTRAR/ITAT, BANGALORE