ACIT, CHENNAI V. Thinksoft Global Services Ltd., CHENNAI

ITA 466/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9371 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 19-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PATHLAVETH PEERYA IRS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Opportunity of being heard; Assessment record
• Section: 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO.466/MDS/2015 & C.O.NO.40 /MDS/2015 (IN ITA NO.466/MDS/2015) / ASSESSMENT YEAR : 2010-2011. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1) CHENNAI 600 034. VS. M/S. THINKSOFT GLOBAL SERVICES LTD, NO.6A, SIXTH FLOOR, PRINCE INFOCITY II, NO.283/3 & 283/4, RAJIV GANDHI SALAI, KANDANCHAVADI, OMR, CHENNAI 600 096. [PAN AABCT 0976G] ( / APPELLANT) ( /RESPONDENT/CROSS OBJECTOR ) ! ' # / APPELLANT BY : SHRI. PATHLAVETH PEERYA, IRS, CIT. $% ! ' # /RESPONDENT BY : SHRI. R. VIJAYARAGHAVAN, ADVOCATE & ' ' ( /DATE OF HEARING : 19-04-2016 ) ' ' ( /DATE OF PRONOUNCEMENT : -05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL OF THE REVENUE AND CROSS OBJECTION B Y THE ASSESSEE ARE DIRECTED AGAINST ORDER OF THE COMMI SSIONER OF INCOME-TAX (APPEALS)-III, CHENNAI IN ITA NO.1946/2013-14/CIT(A )-III, DT 31.10.2014 ITA NO.466/MDS/2015 AND C.O.NO.40/MDS/2015. :- 2 -: FOR THE ASSESSMENT YEAR 2010-2011 PASSED U/S.143(3 ) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 2.1 THE CIT(A) HAS ERRED IN DIRECTING THE ASSESS ING OFFICER TO FOLLOW THE DIRECTIONS OF THE ORDER OF HONBLE ITAT FOR IN ITA NO.1375/MDS/2014, DATED 8.08.2014 FOR A.Y. 2009-2010. 2.2 THE CIT(A) FAILED TO TAKE NOTE THAT THE GROUN DS ON WHICH THE ASSESSEE HAS WENT ON APPEAL FOR A.Y. 2009-2010 IS TOTALLY DIFFERENT FROM THE ISSUE OF HA ND FOR A.Y. 2010-2011. 2.3 THE CIT(A) FAILED TO CONSIDER THE FACT THAT T HE ONLY ISSUE FOR THE A.Y. 2010-2011 IS WHETHER THE ASSESSE E IS ELIGIBLE FOR DEDUCTION U/S.10A BEYOND 10 YEARS O R NOT. IT IS SUBMITTED THAT THE ASSESSEE HIMSELF HAS ACCEPTED THAT THE YEAR OF COMMENCEMENT OF OPERATION IS ASST. YEAR. 2000-01, WHICH IS EVIDENT FROM THE ORDER FOR A.Y. 2009-2010 U/S.154 DATED 30.10.2012. IT IS SUBMITTED THAT THE ASSESSEE HAS NOT APPEALED BEFORE THE APPELLATE AUTHORITY ON THE FACT BROUGHT OUT IN THE SAID ORDER DATED 30.03.2012 . 2.4 THE ASSESSEE HAVING ACCEPTED THAT THE 10 TH YEAR OF COMMENCEMENT OF MANUFACTURING OF SOFTWARE A.Y. 2009-2010 THE SAME CANNOT BE DISPUTED IN THE NEXT YEAR I.E. A.Y. 2010-11. 2.5 THE CIT(A) OUGHT TO HAVE DISMISSED THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2010-2011. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING OFFSHORE TESTING AND DOCUMENT ATION SERVICES FOR BANKING, FINANCIAL SERVICES AND INSURANCE AND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-2011 WITH TOTAL INCOME OF RS.1 ,34,14,879/- AND ITA NO.466/MDS/2015 AND C.O.NO.40/MDS/2015. :- 3 -: WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTL Y, NOTICE U/S.143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOTICES, TH E LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TI ME AND FURNISHED DETAILS. IN THE ASSESSMENT PROCEEDINGS, THE LD. AS SESSING OFFICER ALLEGED THAT ASSESSEE HAS CLAIMED DEDUCTION U/S.10A OF THE ACT RS.6,72,91,865/-. ON EXAMINATION AND PERUSAL OF RECORDS PERTAINING TO THE ASSESSMENT YEAR 2009-2010 BEING THE LAST YEAR OF CLAIM COVERED U/S .10A OF THE ACT, WERE THE COMPANY COMPLETED TEN YEARS OF STARTING OF MANU FACTURING COMPUTER SOFTWARE. THE LD. ASSESSING OFFICER BASED ON THE F ACTUAL FINDINGS WAS OF THE VIEW THAT DEDUCTION U/S.10A(1) OF THE ACT IS NO LONGER AVAILABLE TO THE ASSESSEE AND DISALLOWED A.6,72,91,865/- AND COMPLE TED ASSESSMENT VIDE ORDER U/S.143(3) OF THE ACT DATED 28.03.2013. AGGRI EVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INC OME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED RE PRESENTATIVE OF ASSESSEE ARGUED ON THE GROUNDS AND SUBMITTED THAT THE COMPANY WAS ESTABLISHED IN THE FINANCIAL YEAR 1998-1999 AND COM MENCED OPERATIONS ONLY FROM ASSESSMENT YEAR 2000-2001 AND CLAIMED E XEMPTION U/S.10A OF THE ACT FROM ASSESSMENT YEAR 2001-02 ONWARD AS PER PREVAILING LAW, WERE THE ASSESSEE WAS ALLOWED OPTION OF CLAIMING DE DUCTION U/S.10A OF THE ACT FOR FIVE ASSESSMENT YEARS OUT OF EIGHT ASS ESSMENT YEARS. THE PERIOD OF EIGHT YEARS SHALL BE CONSIDERED FROM THE COMMENCEMENT OF OPERATIONS. IN THE ASSESSMENT YEAR 2001-02 THERE W AS AMENDMENT TO THE ITA NO.466/MDS/2015 AND C.O.NO.40/MDS/2015. :- 4 -: PROVISIONS AND TAX HOLIDAY PERIOD WAS EXTENDED TO T EN YEARS AND THE ASSESSEE COMPANY HAS FOR THE FIRST TIME CLAIMED EXE MPTION U/S.10A FROM THE ASSESSMENT YEAR 2001-02 AND RIGHTLY WORKED OUT DEDUCTION U/S.10A OF THE ACT FOR THE ASSESSMENT YEAR 2010-2011. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS AND FACTS. THE ONLY DEBATABLE AND DISPUTED ISSUE IS CLAIM OF EXEMPTION U/S.10A OF THE ACT FROM ASSESSMENT YEAR 2001-2002 OR FROM COMMENCEMENT OF OPERATIONS I.E ASSESSMENT YEAR 2000-2001. THE ASSESSEE SUBMI TTED THAT IT HAS CLAIMED TAX HOLIDAY PERIOD FROM ASSESSMENT YEAR 200 1-02 AND 10 TH YEAR OR LAST YEAR WILL BE THE ASSESSMENT YEAR 2010-2011 . THE LD. AUTHORISED REPRESENTATIVE FURTHER RELIED ON THE ORDER OF ITAT IN ASSESSEES OWN CASE IN ITA NO.1375/MDS/2014 DATED 08.08.2014 FOR THE AS SESSMENT YEAR 2009-2010 WERE THE MATTER WAS REMANDED BACK FOR FRE SH CONSIDERATION AND OBSERVED AT PAGE 3 OF HIS ORDER AS UNDER:- 6. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CAS E FILE. FACTS OF THE CASE STAND NARRATED IN THE PRECEDING PARAGRA PHS. IT EMERGES THAT THOUGH THE ASSESSING OFFICER HAD ACCE PTED THE ASSESSEES CLAIM OF DEDUCTION U/S.10A IN RECTIFICAT ION, HE DID NOT ALLOW ITS GROUND PERTAINING TO EXPORT OF MANPOWER, FOREIGN TAX CREDIT, MAX CREDIT ETC (SUPRA). THE ASSESSEE PRODU CED BEFORE US A COPY OF THE COMMISSIONER OF INCOME TAX (APPEALS) S ORDER DATED 24.03.2013 PERTAINING TO THE PRECEDING ASSESS MENT YEAR 2008-09 AND SUBMITS THAT THE VERY ISSUES STAND DECI DED IN ITS FAVOUR RESULTING IN CONFLICTING VIEWS. THE REVENUE SUPPORT THE COMMISSIONER OF INCOME TAX (APPEALS)S ORDER. IN T HESE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE FACT THAT THE CIT(A) HAS NOT GONE INTO MERITS OF THESE ISSUES RAISED AT ALL, WE DEEM IT APPROPRIATE TO REMIT THE ASSESSEES GROUNDS BACK TO THE ASSESSING AUTHORITY WHO SHALL PASS A FRESH ORDER AS PER LAW. NEEDLESS TO SAY, HE SHALL TAKE INTO ACCOUNT THE COMMISSIONER OF INCOME TAX (APPEALS)S ORDER PERTAINING TO ASSESSMENT YEAR 200 8-09(SUPRA). ITA NO.466/MDS/2015 AND C.O.NO.40/MDS/2015. :- 5 -: THE ASSESSEE WOULD BE GRANTED SUFFICIENT OPPORTUNIT Y OF HEARING. THE ASSESSEES GROUNDS ARE ACCEPTED FOR STATISTICAL PURPOSES. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RELIED ON THE DECISION OF ITAT AND DIRECTED THE ASSESSING OFFICER TO VERIFY A SSESSEE CLAIM FOR THE ASSESSMENT YEAR 2010-2011 AND PARTLY ALLOWED THE AP PEAL. AGGRIEVED BY THE OF COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE REVENUE HAS ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARGU ED THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D IRECTING THE ASSESSING OFFICER TO FOLLOW THE EARLIER YEARS ORDER OF ITAT I.E THE ASSESSMENT YEAR 2009-2010. THE GROUNDS RAISED IN TH E ASSESSMENT YEAR 2009-2010 WAS ENTIRELY DIFFERENT AND THE CRUX OF TH E ISSUE BEING CLAIM OF EXEMPTION U/SEC.10A OF THE ACT. THAT WAS ALREADY C LAIMED IN ASSESSMENT YEAR 2009-2010 AS LAST YEAR AND SUBSTANTIATED HIS SUBMISSIONS ON THE FINDINGS OF THE ASSESSING OFFICER AND PRAYED FOR AL LOWING THE APPEAL. 6. CONTRA, THE LD. AUTHORISED REPRESENTATIVE OF ASSESS EE RELIED ON THE BASIC FACTS OF FIRST YEAR OF CLAIM OF EXEMPTION IN THE ASSESSMENT YEAR 2001-02. HENCE, THE ASSESSEE HAS RIGHTLY CLAIMED IN 10 TH YEAR EXEMPTION I.E. ASSESSMENT YEAR 2010-2011 AND THERE IS NO AMBI GUITY ON FACTS AND RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX ( APPEALS) AND PRAYED FOR DISMISSAL OF APPEAL. ITA NO.466/MDS/2015 AND C.O.NO.40/MDS/2015. :- 6 -: 7. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CONSIDERED THE FACTS O F 2009-2010 WHICH IS ON A DIFFERENT ASPECT OF CLAIM U/S.10A OF THE ACT AND IT PERTAINS TO OTHER ISSUES. THE ASSESSEE HAS CLAIMED TO HAVE COMMENCED ITS OPERATIONS IN THE ASSESSMENT YEAR 2000-2001 AND CLAIMED EXEMPTION U/S.10A OF THE ACT FOR THE FIRST TIME IN ASSESSMENT YEAR 2001-02 EVEN THOUGH OBTAINED REGISTRATION WITH STPI BEFORE 31 ST MARCH, 2000. THE LD. AUTHORISED REPRESENTATIVE CONTENTIONS BEING THOUGH THE ASSESSE E HAS COMMENCED ITS OPERATIONS IN THE FINANCIAL YEAR 1999-2000 BUT DID NOT CLAIM DEDUCTION U/S.10A IN ASSESSMENT YEAR 2000-2001. WE CONSIDER ING THE APPARENT FACTS, ASSESSMENT RECORDS AND SUBMISSIONS OF THE LD . DEPARTMENTAL REPRESENTATIVE AND THE ASSESSEE IS UNABLE TO EXPL AIN WITH EVIDENCE WHETHER DEDUCTION U/S.10A OF THE ACT CLAIMED FOR TH E FIRST TIME IN 2001-02 OR OTHERWISE AS ALLEGED BY THE REVENUE IN ASSESSMEN T YEAR 2000-2001. NEITHER OF THE PARTIES COULD SUBSTANTIATE THEIR ARG UMENTS WITH ANY REALISTIC EVIDENCE OF ASSESSMENT YEAR 2001-2002. WE ARE OF THE OPINION THAT THE MATTER HAS TO BE RE-EXAMINED ON THE ASPECTS OF CLAI M OF DEDUCTION BASED ON EARLIER RECORDS BY THE ASSESSING OFFICER. WE SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND DIRECT TH E ASSESSING OFFICER TO VERIFY THE FIRST YEARS CLAIM OF THE ASSESSEE AN D THE ASSESSEE SHALL BE ITA NO.466/MDS/2015 AND C.O.NO.40/MDS/2015. :- 7 -: PROVIDED WITH ADEQUATE OPPORTUNITY OF BEING HEARD B EFORE PASSING THE ORDER. THE APPEAL OF THE REVENUE IS ALLOWED FOR ST ATISTICAL PURPOSE. 8. SINCE THE ENTIRE ISSUE IS REMITTED BACK TO THE F ILE OF ASSESSING OFFICER FOR VERIFICATION. 9. THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMI SSED AS INFRUCTUOUS. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSE AND CROSS OBJECTION BY THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 11 TH DAY OF MAY, 2016 AT CHENNAI. SD/- SD/- ( . ! ' ) (A. MOHAN ALANKAMONY) $ % / ACCOUNTANT MEMBER ( & . ' ( ) (G. PAVAN KUMAR) ) % / JUDICIAL MEMBER *& / CHENNAI + / DATED:11TH MAY, 2016. VENU , ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 2. $% ! / RESPONDENT 3. 1' () / CIT(A) 4. 1' / CIT 5. /4 5 $'6 / DR 6. 5 7 8 & / GF