Espire Infolabs Private Ltd., New Delhi V. ITO, New Delhi

ITA 4242/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73978 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDEEP GUPTA
• Assessee Lawyers: SUMANT CHANDHA
• Keywords: Business income; Depreciation
• Section: 14A; 32

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI A.T.VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.4242/DEL/2013 (ASSESSMENT YEAR: 2008-09) ESPIRE INFOLABS PRIVATE LTD., A-41, M.E.I.E, DELHI MATHURA ROAD, NEW DELHI PAN:AABCE2107L VS. ITO, WARD-11(2), C.R. BUILDING, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SUMANT CHANDHA, ADV REVENUE BY: SUDEEP GUPTA, CIT DR DATE OF HEARING 21/01/2016 DATE OF PRONOUNCEMENT 12 / 04 /2016 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 VIDE ITA NO.4242/DEL/2013 AGAINST THE LEVY OF PENALTY U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 OF RS.92944/-. 2. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2008 DECLARED AN INCOME OF RS.856870/-. SUBSEQUENTLY, THE RETURN WAS REVISED ON 28.07.2009. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND PROVIDING ITES SERVICES. PROFIT DERIVED FROM EXPORT OF SOFTWARE IS EXEMPT/ DEDUCTIBLE U/S 10A OF THE INCOME TAX ACT. DURING THE YEAR THE ASSESSEE CLAIMED RS. 4,13,13,302/- U/S 10A WHEREAS THE NET BUSINESS INCOME WAS SHOWN OF RS. 4,10,39,859/-. THUS AS PER THE COMPUTATION THE ASSESSEE HAS SHOWN LOSS OF RS. 273442/- . THIS LOSS WAS REDUCED BY LD AO FROM THE ELIGIBLE DEDUCTION U/S 10A FOR THE REASONS THAT ACCORDING TO HIM SUCH LOSS WAS SUFFERED BY THE ASSESSEE FROM ITS DOMESTIC TARIFF AREA OPERATION AND HENCE CANNOT BE REDUCED FROM THE BUSINESS INCOME AND THEREFORE THE LD AO GRANTED THE DEDUCTION TO THE EXTENT OF RS.412191695/- ONLY AFTER DISALLOWANCE OF RS.251236/- U/S 14A OF THE ACT. THEREFORE IN A NUTSHELL THERE WAS AN ADJUSTMENT OF PROFIT FROM THE BUSINESS OF ELIGIBLE UNDERTAKING BY THE LOSS INCURRED BY THE ASSESSEE FROM ITS PAGE 2 OF 3 OPERATION UNDER DOMESTIC TARIFF AREA. THE DIFFERENCE OF THE DEDUCTION U/S 10A IS RS.273442/-. THE PENALTY ON THIS ADDITION U/S 271(1) (C) OF THE ACT HAS BEEN LEVIED. SAME IS ALSO BEEN CONFIRMED BY LD CIT (A). 3. WE HAVE HEARD THE RIVAL CONTENTION OF THE PARTIES AND WE NOTE THAT THE CLAIM OF DEDUCTION WAS BASED ON THE REPORT OF CHARTERED ACCOUNTANT SUBMITTED IN FORM NO.56F OF THE ACT. THE ASSESSEE HAS COMPUTED THE INCOME AS UNDER:- INCOME FROM BUSINESSJPROFESSION NET PROFIT AS PER PROFIT & LOSS ACCOUNT ATTACHED 37,935,226 ADD: 1 DEPRECIATION AS PER COMPANIES AC1, 1956 3,368,403 2 DEFERRED REVENUE EXP WIO 495.381 3 PRELIMINARY EXPENSES W/OFF 8.284 4 PROVISION FOR GRATUITY 2,987,884 5 PROVISION FOR LEAVE ENCASEMENT 1,991,947 6 CAPITAL ISSUE EXPENSES 975,000 7. DONATION 435,000 8 PRIOR PERIOD CHARGES 95,997 10,357,896 48,293.122 LESS: 1 DEPRECIATION AS PER SECTION 32 OF THE INCOME TAX ACT, 1961 (AS PER ANNEXURE ATTACHED) 5,124,553 2. LEAVE ENCASHMENT PAID 192,842 3. PROFIT ON SALE OF INVESTMENT CONSIDERED SEPARATELY 1,709,739 4. INTEREST INCOME TO BE CONSIDERED SEPARATELY 23,240 5. DIVIDEND INCOME TO BE CONSIDERED SEPARATELY 202889 72532631 TOTAL PROFIT 41039859 LESS DEDUCTION U/S 1OA (AS PER REPORT IN FORM NO 56 F ATTACHED) 41313302 PROFIT UNDER THE HEAD 'PROFIT & GAINS FROM BUSINESS' 3,368,403 4. THEREFORE IN VIEW OF THE COMPLETE INFORMATION FURNISHED BY THE ASSESSEE IN COMPUTATION OF TOTAL INCOME REGARDING VARIOUS ADJUSTMENTS MADE BY HIM WHILE COMPUTING ITS BUSINESS INCOME. NONE OF THE INFORMATION WAS FOUND TO BE FALSE, OR INACCURATE. MERELY BECAUSE OF THE REDUCTION IN DEDUCTION U/S 10A OF THE ACT WE ARE NOT OF THE VIEW THAT THE CLAIM WAS FALSE. IN THIS CIRCUMSTANCES AND FACTS PENALTY U/S 271(1) (C) OF THE ACT CANNOT BE LEVIED. HENCE, PENALTY CONFIRMED THE LD CIT(A) OF RS. 932277/- CANNOT BE UPHELD. HENCE WE REVERSE THE FINDING OF LD CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE DELETING PENALTY U/S 271(1)(C). 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/2016. -SD/- SD/- (A.T.VARKEY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER PAGE 3 OF 3 DATED: 12/04/2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI