ACIT.,-8(1), MUMBAI V. DATACOM WEB TECHNOLOGIES (INDIA) PVT. LTD., MUMBAI

ITA 467/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88315 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Opportunity of being heard
• Section: 10B; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI . . , , . , , BEFORE SHRI H.L.KARWA , PRESIDENT AND SHRI D.KARUNAKARA RAO , AM ITA NO. 467 /MUM/201 3 : ASST.YEAR 2006 - 2007 ITA NO.468 /MUM/201 3 : ASST.YEAR 2007 - 2008 THE DY.COMMISSIONER OF INCOME - TAX RANGE 8(1) MUMBAI. / VS. M/S.DATACOM WEB TECHNOLOGIES (INDIA) PRIVATE LIMITED 2 ND FLOOR, TECHNIPLEX II JN.VEER SAVARKAR FLYOVER & SV ROAD, GOREGAON (WEST), MUMBAI 400 062. PAN : AABCD1668B. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI AKHILENDRA YADAV /RESPONDENT BY : --- NONE --- / DATE OF HEARING : 16.02.2015 / DATE OF PRONOUNCEMENT : 20 .02.2015 / O R D E R PER H.L.KARWA ( PRESIDENT ) : THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF THE COMMI SSIONER OF INCOME - TAX (APPEALS) 16 , MUMBAI, DATED 31.10.2012 , CANCELLING THE PENALTY OF RS. 6,31,320 AND RS.7,58,390, LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) , FOR THE ASSESSMENT YEARS 2006 - 2007 AND 20 07 - 2008, RESPECTIVELY . ITA NO S . 467 & 468 /MUM/201 3 . M/S.DATACOMP WEB TECHNOLOGIES (INDIA) PVT.LTD. 2 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF DEVELOPMENT / ASSISTANCE OF COMPUTER SOFTWARE AND ALSO HAVING A SEPARATE DIVISION, WHICH IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT ON BEHA LF OF OVERSEAS COMPANY AND ACCORDINGLY THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBMIT SEPARATE PROFIT AND LOSS ACCOUNT FOR THE UNIT ELIGIBLE FOR DEDU CTION U/S 10 AND OTHER UNITS. HOWEVER, THE A.O. NOTICED THAT THE ASSESSEE DID NOT APPORTIONED DIRECTORS TRAVELLING EXPENSES, TELEPHONE EXPENSES, ETC. TO THE UNIT ELIGIBLE FOR DEDUCTION U/S 10A. THE A.O. TOOK A VIEW THAT A PORTION OF THEM SHOULD HAVE BEEN A LLOCATED TO THE UNIT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT AND ACCORDINGLY ALLOCATED A PORTION OF GENERAL EXPENSES IN ALL THE THREE YEARS, WHICH RESULTED IN REDUCTION OF THE PROFIT FROM THE UNIT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT AND CONSEQUENTL Y REDUCTION OF DEDUCTION UNDER THAT SECTION. ON APPEAL, THE CIT(A) UPHELD THE ORDERS OF THE A.O. FOR BOTH THE YEARS UNDER CONSIDERATION. IT IS WORTH MENTIONING THAT AFTER SUCH REAPPORTIONMENT, THE ASSESSING OFFICER RECALCULATED THE DEDUCTION U/S 10A OF THE ACT AND ALLOWED THE D EDUCTION U/S 10A AT RS.94,04,431 AS AGAINST ASSESSEE S CLAIM OF RS.1,12,80,019 FOR ASSESSMENT YEAR 2006 - 2007 AND DEDUCTION OF RS.93,47,386 AS AGAINST ASSESSEE S CLAIM OF RS. 1,16,00,470 FOR ASSESSMENT YEAR 2007 - 2008. THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, FOR BOTH THE YEARS UNDER CONSIDERATION AND LEVIED MINIMUM PENALTY OF RS.6,31,320 AND RS.7,58,390 FOR ASSESSMENT YEARS 2006 - 2007 AND 2007 - 2008, RESPE CTIVELY. ITA NO S . 467 & 468 /MUM/201 3 . M/S.DATACOMP WEB TECHNOLOGIES (INDIA) PVT.LTD. 3 3. THE TRIBUNAL VIDE ITS ORDER DATED 16 TH JULY, 2014 IN THE QUAN TUM APPEAL S IN ITA NOS.526 AND 5 27/MUM/2011 FOR ASSESSMENT YEARS 2006 - 2007 AND 2007 - 2008, HELD AS UNDER: - 8. HAVING HEARD RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THE PLEA MADE BY THE LD.AR FOR DEDUCTION U/S 10B NEEDS TO BE EXAMINED AFRESH AT THE END OF THE AO, SINCE THE CRITERIA FOR ALLOWING DEDUCTION U/S 10A AND 10B ARE DIFFERENT. ACCORDINGLY, WE SET ASIDE TH E ORDER OF LD.CIT(A) ON THIS ISSUE IN ALL THE THREE YEARS AND RESTORE THE SAME TO THE FILE OF AO WITH A DIRECTION TO CONSIDER THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT IN PLACE OF SECTION 10A OF THE ACT. IN THE SET ASIDE PROCEEDINGS, THE A O IS FREE TO EXAMINE THE QUESTION OF ALLOCATION OF GENERAL EXPENSES TO THE ELIGIBLE UNIT BY DULY CONSIDERING THE INFORMATION / EXPLANATION THAT MAY BE FURNISHED BY THE ASSESSEE. AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE AO M AY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 4. WE HAVE HEARD SHRI AKHLENDRA YADAV, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE, AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NONE APPEARED ON BEHALF OF THE ASSESSEE. IT IS OBSERVED THAT THE LEARNED CIT(A), VIDE HIS SEPARATE ORDERS DATED 31 ST OCTOBER, 2012, CANCELLED THE PENALTY FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. HOWEVER, IT IS OBSERVED THAT WHILE DECIDING THE QUANTUM APPEALS OF THE ASSESSEE FOR THESE TWO YEAR S, THE TRIBUNAL HAS SET ASIDE THE IMPUGNED ORDERS AND RESTORED THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO CONSIDER THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT IN PLACE OF SECTION 10A. IT IS WELL SETTLED LAW THAT WHERE AN ASSESSME NT ORDER ITSELF HAS BEEN SET ASIDE BY THE APPELLATE OR REVISIONAL AUTHORITY, THERE REMAINED NO `ASSESSED TAX AS THE SAME VANISHED. IN SUCH A CASE, NO QUESTION COULD ITA NO S . 467 & 468 /MUM/201 3 . M/S.DATACOMP WEB TECHNOLOGIES (INDIA) PVT.LTD. 4 AROSE FOR LEVYING PENALTY U/S.271(1)(C) OF THE ACT. IN THAT VIEW OF THE MATTER, WE HOLD TH AT NO PENALTY U/S 271(1)(C) OF THE ACT COULD BE VALIDLY LEVIED IN THESE CASES. 5 . IN THE RESULT, REVENUE S APPEAL S ARE DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF FEBRUARY, 2015 . SD/ - SD/ - ( D. KARUNAKARA RAO ) ( H.L.KARWA ) / ACCOUNTANT MEMBER / PRESIDENT MUMBAI; DATED : 20 TH FEBRUARY, 2015 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 16 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI