DCIT Corporate Circle 3(1) , CHENNAI V. Tidel Park Ltd. , CHENNAI

ITA 2640/CHNY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2367 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 16-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS R ANITHA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Earning of tax free income; Bad and doubtful debts; Set aside
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , , BEFORE SHRI V DURGA RAO, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2640/CHNY/2019 /ASSESSMENT YEAR: 2013-14 THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-3(1), CHENNAI. VS. M/S. TIDEL PARK LTD., NO.4, RAJIV GHANDI SALAI, TARAMANI, CHENNAI-600 034. [PAN: AABCT 0666R ] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS. R. ANITHA, JCIT /RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE /DATE OF HEARING : 08.03.2021 / DATE OF PRONOUNCEMENT : 21.04.2021 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R : THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI, IN ITA NO.140(T)/C IT(A)/2016-17 DATED 28.06.2019 FOR THE ASSESSMENT YEAR 2013-14. 2. M/S. TIDEL PARK LTD., THE ASSESSEE, IS PROMOTED BY TIDCO & ELCOT (GOVERNMENT OF TAMIL NADU UNDERTAKINGS) AND IS ENGA GED IN THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING INFORMATION T ECHNOLOGY PARK (SOFTWARE TECHNOLOGY PARK STP) WHICH IS APPROVED BY THE GOV ERNMENT OF INDIA AND CENTRAL BOARD OF DIRECT TAXES (CBDT). WHILE MAKING THE ASSESSMENT FOR A.Y 2013-14, THE AO, INTER ALIA, DISALLOWED REVERSAL OF PROJECT CONSULTANCY INCOME ITA NO.2640/CHNY/2019 :- 2 -: AND MADE CERTAIN DISALLOWANCES U/S. 43B OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT) AND COMPLETED THE ASSESSMENT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A). THE LD. CIT(A) ALLOWED THE AP PEAL. AGGRIEVED AGAINST THAT ORDER, THE REVENUE FILED THIS APPEAL W ITH THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A) ERRED IN CONSIDERING THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAD RECOGNIZED RS.7.5 CRORES IN ITS BO OKS OF ACCOUNT TILL THE FY:2011-12 AND DIRECTING THE A.O. TO DELET E ADDITION MADE EVEN WHILE NOT GRANTING AN OPPORTUNITY TO THE A.O. TO VERIFY THE CLAIM OF THE ASSESSEE SUBMITTED BEFORE THE CIT(A) U NDER RULE 46A? 3. THE LD.CIT(A) ERRED IN APPRECIATING THE FACT THA T THE ASSESSEE HAD RECOGNIZED RS.7.5 CRORES AS REVENUE IN ITS BOOK S OF ACCOUNT TILL THE FY:201 1-12 AND HAD CLAIMED EXEMPT INCOME U/S.8 01A TILL THE AY:2012-13 AND WHEN THE DEDUCTION CLAIM U/S.801A WA S NOT ALLOWABLE DURING THE AY:2013-14, THE SAME REVENUE R ECEIPT IS REVERSED AND SET OFF AGAINST THE CURRENT YEAR TAXAB LE REVENUE RECEIPT TO REDUCE THE REAL TAX LIABILITY OF THE COM PANY? 4. THE LD.CIT(A) ERRED IN CONSIDERING THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAD ALREADY DISALLOWED EXCESS PRO VISIONS OF EARNED LEAVE & GRATUITY IN THE EARLIER YEARS RETURN S OF INCOME AND ALSO THE CLAIM OF DISALLOWANCE OF PROVISION FOR BON US IN THE CURRENT YEAR AND DIRECTING THE A.O. TO DELETE ADDITION MADE EVEN WHILE NOT GRANTING AN OPPORTUNITY TO THE A.O. TO VERIFY THE C LAIM OF THE ASSESSEE SUBMITTED BEFORE THE CIT(A) UNDER RULE 46A ? 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED : 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. T HE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED BOTH THE TRANSACTIONS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. HO WEVER, THE LD. CIT(A) WITHOUT GIVING AN OPPORTUNITY TO THE AO ON T HE BASIS OF ASSESSEES ITA NO.2640/CHNY/2019 :- 3 -: CLAIM MADE BEFORE HIM FOR THE FIRST TIME AS A BAD D EBT ALLOWED THE APPEAL. SIMILARLY, THE ASSESSEE HAS NOT FURNISHED THE PARTICULARS OF PROVISIONS MADE UNDER THE HEAD OF EARNED LEAVE, GRA TUITY, EXGRATIA, BAD DEBT ETC. BEFORE THE AO AND HENCE, HE DISALLOWED TH E ASSESSEES CLAIM U/S. 43B OF THE ACT. THE LD. CIT(A) WITHOUT GRANTIN G AN OPPORTUNITY TO AO TO VERIFY THE CLAIM MADE BEFORE THE LD. CIT(A), DIR ECTED THE AO TO TAKE COGNIZANCE OF THE MATERIAL AND DELETE THE ADDITIONS . THEREFORE, THE LD. D.R SUBMITTED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THE ORDER OF THE AO MAY BE RESTORED. 4. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE HAS EXPLAINED THAT THE ASSESSEE-COMPANY HAS PROVIDED SERVICES TO M/S.TAMIL NADU COIMBATORE LTD. (TNCL) FOR DESIGN, CONTRACTING AND CONSTRUCTIO N OF THE COIMBATORE INFORMATION TECHNOLOGY PARK BY AN AGREEMENT DATED 2 1.08.2008. SINCE, TPCL WAS FACING FINANCIAL DIFFICULTIES, REVISED SUP PLEMENTARY AGREEMENTS WERE ENTERED INTO FOR REDUCING THE CONSULTANCY FEES . BASED ON SUCH AGREEMENTS, THE INCOME RECOGNIZED IN THE BOOKS IN T HE EARLIER YEARS AND OFFERED FOR TAX IN THE RESPECTIVE ASSESSMENT YEARS BASED ON THE ORIGINAL AGREEMENT WAS REVISED AND ACCORDINGLY CERTAIN INCOM E WAS NOW REVISED AND REDUCED AND THE EFFECT WAS GIVEN IN THE BOOKS A ND HENCE, THE INCOME OFFERED FOR IN THE EARLIER YEARS WERE TO BE TREATED AS BAD DEBTS WRITTEN OFF AS IRRECOVERABLE, WHICH IS ALLOWABLE U/ S. 36(I)(VII) R/W S. 36(II) OF ITA NO.2640/CHNY/2019 :- 4 -: THE ACT. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE PAPER BOOK AND SUPPORTED THE ORDER OF THE LD. CIT(A ) . 5. WE HEARD THE RIVAL PARTIES, AND GONE THROUGH THE RE LEVANT MATERIAL AVAILABLE ON RECORD. IT IS CLEAR FROM THE ASSESSME NT ORDER THAT THE IMPUGNED TRANSACTIONS HAVE NOT BEEN PROPERLY EXPLAI NED BEFORE THE AO, THE FACTS AND THE ASSOCIATED CIRCUMSTANCES HAVE NOT BEEN EXAMINED PROPERLY. THEREFORE, WE DEEM IT FIT TO REMIT THESE ISSUES BACK TO THE AO FOR FRESH EXAMINATION. THE ASSESSEE SHALL FURNISH R ELEVANT MATERIAL IN SUPPORT OF ITS CONTENTION AND COMPLY WITH THE REQUI REMENTS OF THE AO IN ACCORDANCE WITH LAW. THE AO ON DUE EXAMINATION AND AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE DECIDE THE ISSUES IN AC CORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE DAY OF 21 ST APRIL, 2021 IN CHENNAI. SD/ - SD/ - ( ) (V DURGA RAO) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 21 ST APRIL, 2021 . EDN, SR. P.S /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF