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M/s. EIT Services India Pvt. Ltd. appealed against the final assessment order of the Deputy Commissioner of Income-tax, which included significant Transfer Pricing adjustments and disallowed deductions related to leave encashment. The Tribunal examined the functional comparability of companies used in the Transfer Pricing analysis and found that several were not comparable, leading to their exclusion. Regarding the leave encashment, the Tribunal noted that the assessee had paid the amount in the relevant assessment year and claimed it under section 43B of the Income Tax Act, following the Supreme Court's decision in the case of Exide Industries, which overruled the earlier High Court decision. The Tribunal remitted the issue back to the Assessing Officer to verify the claim and allow the deduction if found appropriate.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 302923 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-07-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
C
Next Hearing Date
20-06-2023
Assessment Year
2012-2013
Appeal Filed On
04-05-2023
Judgement Text
IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A No.932/Bang/2022 Assessment Year: 2018-19 M/s. EIT Services India Pvt. Ltd. 39/40, Electronics City Phase-2 Electronics City Bangalore 560 100 Karnataka PAN NO : AAACD4078L Vs. Deputy Commissioner of Income-tax Circle-2(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Shri Vishal Kalra, A.R. & Ms. Reema, A.R. Respondent by : Ms. Neera Malhotra, D.R. Date of Hearing : 12.07.2023 Date of Pronouncement : 18.07.2023 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against final assessment order of the Deputy Commissioner of Income-tax Circle-2(1)(1), Bangalore for the assessment year 2018-19 dated 28.7.2022. 2. Facts of the case are that the Assessee company is primarily engaged in the business of rendering Software Development Services ("IT"), Business Support Services ('BSS") and Information Technology enabled Services ("ITeS") to its Associated Enterprises ("AEs"). 2.1 For the impugned AY, the Assessee filed its return of income on November 29, 2018 declaring a total income of INR 824,64,56,450/-. The case was picked up for scrutiny assessment proceedings and the assessee was served notice under section IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 2 of 15 143(2) dated September 22, 2019. During the course of the assessment proceedings, the Assessing Officer ('AO") made - a reference of international transactions entered into by the Assessee to the Transfer Pricing Officer ("TPO") for determination of arm's length price ("ALP') under Section 92CA of the Act. 2.2 In furtherance to the same, the TPO passed order dated July 31, 2021 under section 92CA(3) of the Act making TP adjustment amounting to INR 300,41,80,000/-, wherein adjustment with respect to IT, ITeS and BSS segment amounted to Rs.215,25,00,000/-, Rs. 68,83,00,000/- and Rs.5,21,30,000/- respectively, Further, the TPO also made an adjustment on the overdue receivables to the extent of Rs.11,12.50,000/-. 2.3 Thereafter, the AO passed Draft Assessment Order ("DAO - ) dated September 09, 2021. In the DAO, the learned AO determined the total income of the Assessee at Rs.1125,06,36,450/-, after making an addition of Rs.300,41.80,000/- to the returned income of the Assessee. The assessed income as per the DAO is summarized as under: Particulars Amount (in INR) Total returned income 824,64,56,447 Add:TP adjustment determined by the learned TPO under Section 92CA of the Act: - SWD – INR 215,25,00,000 - ITeS -NR 68,83,00,000 - BSS – INR 5,21,30,000 - Interest on overdue receivables – INR 11,12,50,000 3,00,41,80,000 Total assessed income as per the DAO 1125,06,36,450 2.4 Thereafter, the Assessee filed objections before the Dispute Resolution Panel ("DRP"). The DRP allowed partial relief to the Assessee and directed the TPO to delete certain adjustments. The TPO passed order July 25. 2022 giving effect to the DRP directions IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 3 of 15 wherein the adjustments for the IT and ITeS segments were completely deleted and adjustment pertaining to BSS Segment was reduced to INR 3,66,21,000. 2.5 Consequently. the AO passed final assessment order dated July 27, 2022 assessing the returned income of the Assessee at INR 828,30,78,140 after adding the TP adjustment amounting to INR 3,66,21,000. 2.6 Aggrieved by the said order, the Assessee is in appeal before us. 3. Ground No.1, 2.1 & 2.2 are general in nature, which do not require any adjudication. 4. Ground No.2.3 of the assessee’s appeal is reproduced below: “2.3 That on the fact and circumstances of the case and in law, the AO/TPO/DRP have erred in arbitrarily selecting functionally non-comparable companies, namely, Goldmine Advertising Ltd., Scarecrow Communications Ltd., Confluence Integrated Services Pvt. Ltd., Axience Consulting Pvt. Ltd., Dun & Bradstreet Information Services Pvt. Ltd., Pressman Advertising Ltd., Lintas India Pvt. Ltd., Cheil India Pvt. Ltd. as comparable for benchmarking the international transaction pertaining to provision of services”. 4.1 At the time of hearing, assessee has pressed only following comparables: a) Axience Consulting Pvt. Ltd. b) Dun & Bradstreet Information Services Pvt. Ltd. c) Pressman Advertising Ltd. d) Lintas India Pvt. Ltd. & e) Cheil India Pvt. Ltd. The other comparable companies in ground No.2.3 were not pressed. Accordingly, dismissed as not pressed. IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 4 of 15 (a) Axience Consulting Pvt. Ltd.: 5. The ld. A.R. submitted that the assessee company is engaged in business of rendering software development, software maintenance technology, call centre services, primarily to it’s AEs and it’s specialization includes application of development services, maintenance, support services and network management services for software development and maintenance services and voice based support. As against this, Axience Consulting Pvt. Ltd. is engaged in KPO services providing consultancy and advisory services in the field of finance, market research and business administration to corporates and non-corporates. He drew our attention to the annual report of that company placed in volume-2 pages 108 & 125 of the paper book. Further, it was submitted that as per website review, it is evident that Axience specializes in business intelligence and renders the following services: • Financial analytics • Modelling and • Data services. 5.1 More so, no segmental data is available in the financials. 5.1.1 The ld. D.R. relied on the order of ld. DRP. 6. We have heard the rival submissions and perused the materials available on record. Similar issue came for consideration before this Tribunal in the case of Levi Strauss (India) Pvt. Ltd. Vs. ACIT (2022) 144 taxmann.com 161, wherein held as under: 34. “The assessee is seeking exclusion of the above company from the list of comparables as the said company functionally different as the same is engaged the business of providing consultancy and advisory services in the field of finance, market research and business administration. Whereas the assessee is not in the business of market research. Market research could pertain to various fields including research for manufactured products, IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 5 of 15 various types of services, customer satisfaction research etc. Further Axience cannot be compared with the assessee who is merely providing sourcing support services. It is merely using its knowledge acquired while doing its marketing and distribution services and cannot be said to be related to market research. 35. The DRP held that the said company is functional comparable to the assessee as the business of Axience is comparable to the support services rendered by the assessee. Axience passes through all the filters applied by the TPO and has been correctly included in the set of comparables. 36. We have heard rival submissions and perused the material on record. As per page 1143 of paper book, Axience is engaged in the business of providing consultancy and advisory services in the field of finance, market research and business administration to corporate and non-corporate. The segmental break up of revenue between above different kinds of services is not available in annual report. Therefore, in the absence of segmental data, we direct the TPO to exclude Axience from the final list of comparables. It is ordered accordingly. 37. In the result, ground 5(d) is allowed.” 6.1 In view of the above order of the Tribunal we direct the AO/TPO to exclude this company from the list of comparables. (b) Dun & Bradstreet Information Services India Pvt. Ltd.: 7. The ld. A.R. submitted that this comparable to the assessee’s case is functionally different on the following reasons: a) D&B is engaged primarily in the business of providing risk management and sales and marketing solutions, providing learning and economic insight services and the company offers a wide suite of information solutions, and its services are used extensively by banks, financial institutions, multinationals, corporate entities, public sector undertakings, exporters and importers. b) D&B India provides solutions sets that meet a diverse set of customer needs like Risk Management Solutions (RMS) to mitigate risk, increase cash flow and drive increased profitability. RMS includes sale of Business Information IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 6 of 15 Reports, Customized Credit Assessment Models and other services, D&B Sales & Marketing Solutions (S&MS) to analyse markets, locate prospects and increase revenue from new and existing customers. S&MS includes sale of data and related services. D&B Learning and Economic Insight Group (LEIG) provides a platform for organizations to create brand awareness and give them an opportunity to showcase their products, services, strengths and capabilities, amongst current and potential customers, investors, suppliers, government bodies, regulators and other stakeholders. LEIG includes professional trainings, educational courses, cutting edge knowledge forums, publication release and conferences. Thus, the ld. A.R. submitted that the business model of D&B India includes both sale of products and provision of services and no segmental data is available. Hence, considering the above, the ld. A.R. submitted that D&B India is not functionally comparable to the assessee and ought to be rejected. 7.1 The ld. D.R. relied on the order of ld. DRP. 8. We have heard the rival submissions and perused the materials available on record. In our opinion, it is appropriate to remit this issue for re-examination of the functions of Dun & Bradstreet Information Services India Pvt. Ltd. with that of the assessee company. The issue is remitted back to the AO/TPO for reconsideration. (c) Pressman Advertising Ltd. 9. The ld. A.R. submitted that Pressman Advertising Ltd. is engaged in business activities such as advertising, selling of space for advertisement in the print media and public relations business unlike assessee which provides business support IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 7 of 15 services. He drew our attention to the annual report at pages 2424, 2449 compiled in Vol.III of paper book. Further, he submitted that no segmental data is available regarding various activities carried on by the Pressman Advertising Ltd. He drew our attention to the paper book page 2461 of the annual report which is placed in Volume 3 of the paper book. 9.1 The ld. D.R. relied on the order of ld. DRP. 10. We have heard the rival submissions and perused the materials available on record. This issue was considered in the case of Radisys India Ltd. (2022) TS-823-ITAT-2022 in para 12.3 of that order, wherein held as under: “12.3. We have perused the submissions advanced by both the sides in the light of records placed before us. From the Director’s report at page 4045 of PB, we note that the business over view of this company is shown to be advertising, public relation, design and digital. As there is no segmental details available, it is difficult to analyse the revenue generated by this company from the advertising segment. Therefore, in our view, cannot be considered to be functionally comparable with that of assessee.” 10.1 In view of the above order of the Tribunal, we direct the AO/TPO to exclude this company Pressman Advertising Ltd. from the list of comparables. (d) Lintas India Pvt. Ltd. (“Lintas India”): 11. The ld. A.R. submitted that the turnover of this company is at INR 238.95 Cr. in the assessment year 2018-19. As per the annual report placed in page 1231 of the paper book volume 2 as against assessee’s turnover of Rs.121 crores for the assessment year 2018-19. He submitted that this company is engaged in the business of advertising & marketing communications. Further, Lintas India also earns revenue from publishing/display of advertisements and as retainer fees from its clients and earns IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 8 of 15 commission on media spends from media agencies. He drew our attention to the paper book page 1171, 1181 of the annual report compilation vol.II of the paper book. 11.1 The ld. D.R. relied on the order of ld. DRP. 12. We have heard the rival submissions and perused the materials available on record. As discussed in immediate earlier para, the turnover of the assessee company is only Rs.121 crores as against turnover of Rs.238.95 crores. 12.1 In the case of CME India Technology Support Services Pvt. Ltd. Vs. ITO reported in 148 taxmann.com 148 (Bang-Trib), wherein held as under: “9. We heard the rival submissions and perused the material on record. The coordinate bench of the Tribunal in the case of Autodesk India Pvt.Ltd. Vs. DCIT (2018) 96 Taxmann.com 263 (Bangalore-Tribunal), took note of all the conflicting decision on the issue and rendered its decision and in paragraph 17.7. of the decision held as that high turnover is a ground for excluding companies as not comparable with a company that has low turnover. The following were the relevant observations: 17.7. We have considered the rival submissions. The substantial question of law (Question No.1 to 3) which was framed by the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors (India) Pvt.Ltd., (supra) was as to whether comparable can be rejected on the ground that they have exceptionally high profit margins or fluctuation profit margins, as compared to the Assessee in transfer pricing analysis. Therefore as rightly submitted by the learned counsel for the Assessee the observations of the Hon'ble High Court, in so far as it refers to turnover, were in the nature of obiter dictum. Judicial discipline requires that the Tribunal should follow the decision of a non-jurisdiction High Court, even though the said decision is of a non-jurisdictional High Court. We however find that the Hon'ble Bombay High Court in the case of CIT Vs. Pentair Water India Pvt.Ltd. Tax Appeal No.18 of 2015 judgment dated 16.9.2015 has taken the view that turnover is a relevant criterion for choosing companies as comparable companies in determination of ALP in transfer pricing cases. There is no decision of the jurisdictional High Court on this issue. In the circumstances, following the principle that where two views are available on an issue, the view favourable to the Assessee has to be adopted, we respectfully follow the view of the Hon'ble Bombay High Court on the issue. Respectfully following the aforesaid decision, we uphold the order of the DRP excluding 5 IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 9 of 15 companies from the list of comparable companies chosen by the TPO on the basis that the 5 companies turnover was much higher compared to that the Assessee. 17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) was the earliest decision rendered on the issue of comparability of companies on the basis of turnover in Transfer Pricing cases. The decision was rendered as early as 5.8.2011. The decisions rendered by the ITAT Mumbai Benches cited by the learned DR before us in the case of Willis Processing Services (supra) and Capegemini India Pvt.Ltd. (supra) are to be regarded as per incurium as these decisions ignore a binding co-ordinate bench decision. In this regard the decisions referred to by the learned counsel for the Assessee supports the plea of the learned counsel for the Assessee. The decisions rendered in the case of M/S.NTT Data (supra), Societe Generale Global Solutions (supra) and LSI Technologies (supra) were rendered later in point of time. Those decisions follow the ratio laid down in Willis Processing Services (supra) and have to be regarded as per incurium. These three decisions also place reliance on the decision of the Hon’ble Delhi High Court in the case of Chriscapital Investment (supra). We have already held that the decision rendered in the case of Chriscapital Investment (supra) is obiter dicta and that the ratio decidendi laid down by the Hon’ble Bombay High Court in the case of Pentair (supra) which is favourable to the Assessee has to be followed. Therefore, the decisions cited by the learned DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action in excluding companies by following the ratio laid down in the case of Genisys Integrating (supra). 10. Respectfully following the above decision of the coordinate Bench, we hold that the above list of comparables whose turnover is more than 200 crores should be excluded from the list of comparables.” 12.2 In view of this discussion, M/s. Lintas India Pvt. Ltd. is to be excluded from the list of comparables. Ordered accordingly. IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 10 of 15 (e) Cheil India Pvt. Ltd. 13. The ld. A.R. submitted that this company fails turnover filter as this company’s turnover is Rs.363.22 crores as reflected in its annual report, which is placed in record at paper book page 597 of the annual report compilation volume 1 as against asessee’s turnover of Rs.121 crores as reported in annual accounts placed at 528 of paper book for TP study. 13.1 The ld. D.R. relied on the order of ld. DRP. 14. We have heard the rival submissions and perused the materials available on record. Admittedly, the turnover of Cheil India Pvt. Ltd. exceeds Rs.200 crores i.e. at Rs.363.22 crores. Being so, as held by the coordinate bench in the case of CME India & Technology Support Services (P) Ltd. Vs. ITO (2023) 148 taxmann.com 148, this company is to be excluded from the list of comparables. Ordered accordingly. 15. Ground Nos.2.4 to 2.8 of the assessee’s appeal were not pressed and hence, these grounds are dismissed as not pressed. 16. Ground No.3 of the assessee’s appeal is reproduced below: “3. Corporate Tax Ground: 3.1 That on the facts and circumstances of the case and in law, the AO/DRP have erred in not granting deduction of leave encashment of INR 7,80,75,273 paid during the AY 2018-19 towards accrual of AY 2013-14, under the provisions of section 43B(f) of the Act, having denied the Appellant’s claim for provision for leave encashment on accrual basis for AY 2013-14.” 16.1 The ld. A.R. submitted that during the impugned AY, the Assessee has made payment towards leave encashment of INR 25,20,80,727. The same has been duty disclosed in Clause 26 of the Tax Audit Report ('TAR") filed in Form 3CD for the impugned AY. The Assessee placed reliance on the Calcutta High Court decision IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 11 of 15 in the case of Exide Industries vs Union of India, [2007] 164 Taxman 9 and. claimed deduction of provision of leave encashment on accrual basis. However, the claim was not allowed by the Assessing Officer and CIT(A). Thereafter, an appeal was filed before this Tribunal, 16.2 The ld. A.R. further submitted that pursuant to the decision of Hon'ble Supreme Court in the case of Union of India vs Exide Industries Ltd., [2020) 425 ITR 1 (SC) overruling the decision of the Calcutta High Court the position was settled and the deduction of leave encashment was to be allowed on payment basis. Thus, since the Hon’ble Supreme Court upheld the disallowance of provision of encashment, the assessee settled the issue of addition of INR 7,80,75,273 made in AY 2013-14 towards provision of leave encashment under section 43B of the Act under the Vivad se Vishwas Scheme, 2020 ("VSV Scheme"). Pursuant to the said settlement, the Company has discharged the tax liability in respect of subject addition. Accordingly received the full and final settlement order in Form 5. However, the AO erred in not granting deduction in respect of amount paid towards leave encashment of INR 7.80,75,273 during the AY 2018-19 paid towards AY 2013-14, under the provisions of section 43B of the Act, after having denied the Assessee's claim of provision for leave encashment on accrual basis for AY 2013-14, 16.3 Thereafter, on appeal the ld. DRP accepted that the Assessee had not claimed the deduction towards leave encashment during the impugned AY however, erred in not allowing deduction in respect of the amount of leave encashment actually paid during the impugned AY and shown on accrual basis in AY 2013-14. Furthermore, the ld. A.R. submitted that the ld. DRP erred in holding that the claim made in the AY 2013-14 on IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 12 of 15 accrual basis was withdrawn under VSV Scheme by paying corresponding disputed liability and has no bearing on subject AY. 16.4 He further submitted that the DRP clearly failed to appreciate that the Assessee had only paid the tax liability arising in the AY 2013-14 in view of the Hon’ble Supreme Court decision and did not forego the claim under section 43B of the Act at the time of actual payment. Thus, in the present settled legal scenario, the claim of the Assessee to the extent of payment amounting to INR 7,80,75,273 made in the impugned AY must be allowed as per the section 43B of the Act. 16.5 The ld. A.R. further submitted that the present case is covered by the decision of this Tribunal in the case of Global E- Business Operations Pvt. Ltd. vs DCIT, (2022) 145 taxmann.com 413 (Bang- Trib.) wherein it has been held that the assessee is liable to claim deduction in the year of actual payment even if the deduction had been previously disallowed when claimed on accrual basis. Similar finding has been upheld in following decision of Global E-Business Operations Pvt, Ltd. vs DCIT [2021] 133 taxmann.com 530 (Bang. - Trib.) Thus, he submitted that following the present legal position under section 43B(f) of the Act, Exide Industries (supra) and above decisions it is clear that the claim of deduction on actual payment basis in AY 2018-19 should be allowed. 16.6 Further, the ld. A.R. placed reliance on the following: Circular No. 7/2020 (Vivaad so Vishwas FAQs) wherein under question number 52, it is clearly clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a part in appeal or writ or in SLP to contend IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 13 of 15 that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute. 16.7 Thus, in the light of the above, the ld. A.R. submitted that the Assessee cannot be thrown into a disadvantageous position for duty following one of the two possible interpretations of law owing to the decision of Hon'ble High Court of Calcutta and claiming the deduction at the time of payment pursuant to decision of Hon’ble Supreme Court setting the position in law. The fact that Assessee had made the payment for leave encashment in AY 2018-19 and showed in profit and loss account in AY 2013-14 is not sufficient to deny the claim made by the Assessee, especially, when the DRP has already accepted that the Assessee has not claimed the deduction in the impugned AY. Thus, he submitted that clearly the case of department is not that there is double deduction. Therefore, in the light of facts and circumstances, the ld. A.R. submitted that it is clear that in the absence of impugned claim for deduction by the Assessee in any other AY, the claim of the Assessee must be allowed in the impugned AY. Without prejudice to above submissions, he submitted that it is a settled position in law that it is open for assessee to raise a fresh claim before the first Appellant Authority even if not made in the return of income. 16.8 In this regard, the ld. A.R. placed reliance on the decision of this Hon'ble Bench in the case of FNF India (P) Ltd. vs ACIT, (2021) 133 taxmann.com 251 (Bang. - Trib.) wherein he relying on the decisions of various High Courts it was held that the first appellate authority has powers to entertain additional claims, even if the same was not made in the return of income. 16.9 The ld. A.R. submitted that similar position has been uphold in following cases: IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 14 of 15 • Kotak Mahindra Bank Ltd. vs ACIT, [2021] 130 taxmann.com 352 (Karnataka) • Siva Equipment (P.) Ltd. vs ACIT, [2020] 423 ITR 20 (Bombay) • Director of Income Tax vs Arunodya, [2006] 286 ITR 383 (Delhi) • Riddhi Steel & Tubes vs ACIT, [2013] 144 ITD 397 (Ahmedabad - Trib.) 17. On the other hand, the ld. D.R. relied on the order of ld. DRP. 18. We have heard the rival submissions and perused the materials available on record. The main contention of the assessee is that in earlier assessment year 2013-14, assessee has claimed this expenditure relating to leave encashment on accrual basis. Same has been disallowed by the lower authorities and finally settled the dispute by opting VSV Scheme. In the assessment year under consideration, assessee has actually paid this amount of Rs.7,80,75,273/- and in view of the actual payment made in this assessment year, the same has been claimed u/s 43B of the Act at the time of actual payment. In our opinion, the lower authorities disallowed it on the reason that assessee has not made this claim in the return of income. The plea of the assessee is that at the time of filing of return of income, the issue was subject matter of appeal before First Appellate Authority as well as before Income Tax Appellate Tribunal. As such, the same was not claimed by the assessee. Now the issue was settled by availing VSV Scheme and paid tax on the same and disallowing the same even on actual payment amounts to double disallowance and the ld. A.R. prayed that addition is to be deleted. In our opinion, this issue requires verification at the end of AO to see that the same amount has been disallowed earlier by the department on account of non-actual payment and clamed by the assessee only on the basis of making IT(TP)A No.932/Bang/2022 M/s. EIT Services India Pvt. Ltd., Bangalore Page 15 of 15 provisions in the books of accounts. In the assessment year under consideration, if it was paid actually by the assessee, the same is to be allowed in view of the various decisions cited by the assessee before us. Accordingly, the issue is remitted to the file of AO for fresh consideration after giving opportunity of hearing to the assessee. 19. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 18 th July, 2023 Sd/- (Beena Pillai) Judicial Member Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 18 th July, 2023. VG/SPS Copy to: By order Asst. Registrar, ITAT, Bangalore. 1. The Applicant 2. The Respondent 3. The CIT 4. The DRP-1 5. The DR, ITAT, Bangalore. 6. Guard file
Other Referred Cases
Levi Strauss (India) Pvt. Ltd. Vs. ACIT, Radisys India Ltd. Vs. ITO, CME India Technology Support Services Pvt. Ltd. Vs. ITO, Global E-Business Operations Pvt. Ltd. vs DCIT, FNF India (P) Ltd. vs ACIT, Kotak Mahindra Bank Ltd. vs ACIT, Siva Equipment (P.) Ltd. vs ACIT, Director of Income Tax vs Arunodya, Riddhi Steel & Tubes vs ACIT, Autodesk India Pvt.Ltd. Vs. DCIT, Pentair Water India Pvt.Ltd. Tax Appeal No.18 of 2015, Chryscapital Investment Advisors (India) Pvt.Ltd.,, NTT Data, Societe Generale Global Solutions, LSI Technologies
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