DCIT, New Delhi V. Sh. Alok Gupta, New Delhi

ITA 4384/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4312 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: S KRISHNAN
• Section: 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F , NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI MAHARISHI PRASHANT, ACCOUNTANT MEMBER ITA NO. 4384 /DEL/201 5 AY: 20 11 - 12 DY.CIT, CIRCLE 27(2) NEW DELHI VS . SH. ALOK GUPTA E 177, G.K.PART I NEW DELHI PAN: AAGPG4604A (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SURENDER PAL, SR. D.R. ASSESSEE BY : S H. S. KRISHNAN, ADV. DATE OF HEARING : 30.10.2018 DATE OF PRONOUNCEMENT : 31.10.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER OF LD.CIT(APPEALS) - 22 , NEW DELHI DATED 22.04.2015 FOR A.Y 20 11 - 12 ON THE FOLLOWING GROUNDS OF APPEAL: 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO RS.1,03,35,632/ - ON ACCOUNT OF EXEMPTION U/S 10B WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS ITA NO. 4384 /DEL/201 5 A.Y.20 11 - 12 DY.CIT VS. SH. ALOK GUPTA 2 FAILED TO FULFIL ALL CONDITIONS TO CLAIM THE ABOVE DEDUCTION AS THE UNIT WAS LOCATED AT PALAM AND NOT AT STPI NOIDA. 2 . THE APPELLANT CRAVES LE AVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND ( S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL . 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED RETURN OF INCOME ON 20/09/11 DECLARING TOT AL INCOME OF RS.46,09,400/ - . THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (THE ACT) AND SUBSEQUENTLY SELECTED FOR SCRUTINY. ACCORDINGLY NOTICE UNDER SECTION 143 (2) OF THE A CT WAS ISSUED TO ASSESSEE IN RESPONSE TO WHICH R EPRESENT ATIVE OF ASSESSEE APPEARED BEFORE LD. AO FROM TIME TO TIME AND FILED NECESSARY DETAILS AS CALLED FOR. 2.1 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD.AO OBSERVED THAT ASSESSEE HAS CLAIMED DEDUCTION/EXEMPTION UNDER SECTION 10 B OF THE ACT FOR AN AMOUNT OF RS.1,03,35,632/ - . LD.AO OBSERVED THAT THE COMPUTERS HELD BY ASSESSEE WAS TO AN EXTENT OF RS.17,150/ - AT THE BEGINNING OF THE YEAR AND RS.6,860/ - AT THE END OF THE YEAR. HE ALSO NOTED THAT THE A CCOUNTANT S REPORT IN FORM 56 G DO NOT CONTAIN ANNEXURE A . ACCORDINGLY, ASSESSEE WAS CALLED UPON TO FURNISH STPI CERTIFICATE, BASED UPON WHICH DEDUCTION/EXEMPTION UNDER SECTION 10 B HAS BEEN CLAIMED. IN RESPONSE TO QUERY RA IS ED, ASSESSEE SUBMITTED THAT ENTIRE TURNOVER OF ASSESSEE IS BY WAY OF ONLINE SALE, WHERE ASSESSEE VIEWS THE ITEM ON NET, CHOOSES THE SAME AND MAKES PAYMENT THROUGH HIS CHOSEN PAYMENT GATEWAY. IT WAS SUBMITTED THAT THE SOFTWARE IS DOWNLOADED BY ASSESSEE ON THE NET AND ONLY THE LICENSE KEY IS ITA NO. 4384 /DEL/201 5 A.Y.20 11 - 12 DY.CIT VS. SH. ALOK GUPTA 3 TRANSMITTED TO HIM BY E - MAIL ONCE HE MAK ES PAYMENT TO THE PAYMENT GATEWAY. IT WAS SUBMITTED BEFORE LD. AO THAT THERE IS NO INVOICE THAT IS GENERATED OR SHIPMENT OF SOFTWARE INVOLVED. SINCE A LARGE NUMBER OF PARTIES ARE INVOLVED THE PAYMENT IS RECEIVED IMMEDIATELY BY THE PAYMENT GATEWAY NO PARTY WISE LEDGER IS ALSO MAINTAINED. IT WAS ALSO SUBMITTED THAT THE GATEWAYS ON THEIR PART, DEDUCT THE COMMISSION, KEEP A DEPOSIT FOR CHARGE BACKS AND REMIT THE AMOUNT PERIODICALLY DEPENDING UPON THE SALE VOLUME. 2.2. LD. AO HOWEVER REJECTED ASSESSEE S SUBMIS SIONS BY OBSERVING THAT THE UNIT IS LOCATED AT PALAM AND NOT STPI NOIDA AND THEREFORE IS NOT ESTABLISHED THAT ASSESSEE S UNIT IS LOCATED AT STPI WHICH IS PRIMARY FOR ALLOWING THE DEDUCTION/EXEMPTION CLAIMED UNDER SECTION 10 B OF THE A CT. LD. AO ALSO OBSER VED THAT THERE IS NO MENTION ABLE HARDWARE INFRASTRUCTURE INVOLVED AND THERE IS NO INTERNET CHARGES , CONNECTIVITY CHARGES OR LEASE LINE CHARGES THAT HAS BEEN DEBITED TO THE P&L ACCOUNT WHICH ARE ESSENTIAL FOR ONLINE ACTIVITIES VIS - A - VIS THE VOLUME OF BUSI NESS RECORDED BY ASSESSEE. 2.3. HE THUS MADE THE ADDITION OF RS.1,04,92,978/ - IN THE HANDS OF ASSESSEE. 2.4. AGGRIEVED BY THE ADDITION MADE BY LD. AO, ASSESSEE P REFERRED APPEAL BEFORE LD.CIT(A). LD.CIT(A) WHILE GRANTING RELIEF TO ASSESSEE OBSERVED THAT AS PER THE STPI CERTIFICATE THE UNIT WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 10 B OF THE ACT AND ALSO THAT ASSESSEE HAD AMPLE NUMBER OF COMPUTERS TO CARRY ON THE BUSINESS ACTIVITY AS CLAIMED. ITA NO. 4384 /DEL/201 5 A.Y.20 11 - 12 DY.CIT VS. SH. ALOK GUPTA 4 3. AGGRIEVED BY THE ORDER OF LD. CIT (A) REVENUE IS IN APPEAL BEFORE US NOW. 4. LD. SR.D R SUBMITTED THAT THE EXPENSES DO NOT COMMENSURATE WITH THE TURNOVER AND THE CERTIFICATE ISSUED BY A SSISTANT COMMISSIONER OF CENTRAL E XCISE , JANAKPURI WHEREAS ASSESSEE HAS ITS STPI UNIT AT PALAM. HE PLACED RELIANCE UPON THE ORDER PA SSED BY LD. AO. 5. ON THE CONTRARY LD. C OUNSEL APPEARING FOR ASSESSEE SUBMITTED THAT ASSESSEE HAS EARNED THE ENTIRE TURNOVER BY WAY OF ONLINE SALE WHERE THE ITEMS ARE VIEWED ON THE NET AND CHOSEN ON WHICH PAYMENTS ARE MADE THROUGH PAYMENT GATEWAY. HE SUBMITTED THAT THE SOFTWARE EXPORTED ARE MAIN LY DOWNLOADED FROM INTERNET SITES HOSTING THE SAME AND THE SERVER HOSTING THE SITES ARE LOCATED ELSEWHERE WHICH IS NOT OWNED BY ASSESSEE OR LOCATED IN ITS PREMISES. HE SUBMITTED THAT THE DISALLOWANCE HAS BEEN MADE BY LD. AO UNDER SECTION 10 B ON THE GROUN D THAT ASSESSEE S UNIT WAS LOCATED OUTSIDE STPI NOIDA AT PALAM, NEW DELHI . C ONTROVERT ING THE OBSERVATIONS OF LD. AO LD. C OUNSEL SUBMITTED THAT THE CONCLUSION IS NOT CORRECT BECAUSE THE UNIT COULD BE LOCATED OUTSIDE THE STPI IN DOMESTIC TARIFF AREA , THE ONLY REQUIREMENT IS THAT THE UNIT GETS ITS WAREHOUSE CUSTOM BONDED. 5.1 . I T HAS BEEN SUBMITTED BY LD. C OUNSEL THAT THE STPI HAS ASSESSED THE UNIT FOR ADEQUACY OF EQUIPMENT, CAPITAL , INFRASTRUCTURE ETC AND ONLY THEREAFTER THAT CERTIFIED IT OF BEING HUNDRED PERCENT EXPORT ORIENTED UNIT. THE C ERTIFICATE ISSUED BY CENTRAL EXCISE AUTHORITY DATED 17/04/08 ITSELF WITH THE APPROVAL OF THE PA L AM ADDRESS TO BE A HUNDRED PERCENT EOU UNIT. PLACING ITA NO. 4384 /DEL/201 5 A.Y.20 11 - 12 DY.CIT VS. SH. ALOK GUPTA 5 RELIANCE UPON THE STPI C ERTIFICATE DATED 11/02/08 , LD. C OUNSEL SUBMITTED THAT WHILE ISSUING THE SAID C ERTIFICATE STPI NOIDA IS WELL AWARE ABOUT THE C ERTIFICATE BEING ISSUED TO THE ASSESSEE HAVING ADDRESS AT PALAM. HE SUBMITTED THAT THE COST OF COMPUTERS IS WRITTEN DOWN VALUE SO THERE WERE ADEQUATE COMPUTERS. HE ALSO SUBMITTED THAT INTERNET EXPENSES HAVE BEEN WRONGLY TYPED AS INTEREST EXPENSES. HE ALSO SHOWED SALARY EXPENSES. HE SUBMITTED THAT LD. AO HAS NOT DOUBTED ANY OF THE AFORESTATED CERTIFICATES AND ON SURMISES AND CONJUNCTURES HAS DISALLOWED THE DEDUC TION/EXEMPTION CLAIMED BY ASSESSEE UNDER SECTION 10 B OF THE A CT. 6. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES , IN LIGHT OF RECORDS PLACED BEFORE US. 7. ON PERUSAL OF STPI C ERTIFICATE DATED 11/02/08 IT IS CLEAR THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10 B OF THE A CT. FURTHER UPON A QUERY BEING RAISED BY THE B ENCH REGARDING ANNEXURE A TO FORM 56G , LD. COUNSEL REFERRED TO THE C ERTIFICATE ISSUED BY C HARTERED A C COUNTANT WHICH IS DATED 01/09/2011, PLACED IN PAPER BOOK, QUANTIFYING THE DEDUCTION THAT IS AVAILABLE TO ASSESSEE UNDER SECTION 10 B OF THE ACT. ACCORDING TO THAT CERTIFICATE, UNIT STARTED CLAIMING DEDUCTION U/S 10B W.E.F. 17.01.2008. THE IMPUGNED APPEAL IS FOR A.Y. 2011 - 12, THEREFORE, THIS IS NOT THE FIRST YEAR OF CLAIM. FURTHER, THE ACTIVITIES OF THE ASSESSEE HAVE BEEN EXPLAINED BY THE ASSESSEE SHOWING ADEQUATE INFRASTRUCTURE SUCH AS COMPUTERS AND INTERNET CONNECTIVITY AND STAFF. ON PERUSAL OF ORDER O F LD.CIT(A), NO INFIRMITY WAS POINTED OUT BY LD.SR.D.R. AND WE ALSO DID NOT FIND ANY. ITA NO. 4384 /DEL/201 5 A.Y.20 11 - 12 DY.CIT VS. SH. ALOK GUPTA 6 7.1. CONSIDERING THE TOTALITY OF FACTS, WE DO NOT FIND ANY INFIRMITY IN THE OBSERVATIONS OF LD. CIT (A). 7.2. ACCORDINGLY GROUNDS RAISED BY REVENUE STANDS DISMISSED. 8. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2018 . S D / - S D / - (MAHARISHI PRASHANT) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 31 ST O CTOBER, 2018 * GMV COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO. 4384 /DEL/201 5 A.Y.20 11 - 12 DY.CIT VS. SH. ALOK GUPTA 7 DATE DRAFT DICTATED ON 30.10.18 DRAFT PLACED BEFORE AUTHOR 31.10.18 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.