BRISTLECONE INDIA LTD., MUMBAI V. CIT(A) - 4, MUMBAI

ITA 5904/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5745 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKIYEN
• Assessee Lawyers: PRASAD BAPAT
• Keywords: Set aside
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI BEFORE S HRI B.R. BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 5904/MUM/2016 ASSESSMENT Y EAR: 2009 - 10 M/S BRISTLECONE INDIA LIMITED, 2 ND FLOOR, TECHNIPLEX - 1, TECHNIPLEX COMPLEX, OFF VEE R SAVARKAR FLYOVER, GOREGAON (WEST), MUMBAI - 400062 PAN: AAACM5186E VS. THE COMMISSIONER OF INCOME TAX (APPEALS) - 4, AAYKAR BHAVAN, M.K. ROAD, MUMBAI - 20 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRASAD BAPAT ( AR ) REVENUE BY : SHRI ABI RA MA KARTIKIYEN (DR ) DATE OF HEARING: 06 /09 /201 8 DATE OF PRONOUNCEMENT: 03 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27.07.2 016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 4 (FOR SHORT THE CIT (A) , MUMBAI, FOR THE ASSESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER PASSED BY AO U/S 271 (1)(C) OF THE IN COME TAX ACT, 1961 (FOR SHORT THE ACT). 2. AGGRIEVED BY THE ORDER OF LD. CIT (APPEAL S ), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN LEVYING THE PENALTY U/S 271 (1) (C) OF RS. 42,88,680/ - WHICH ORDER IS BAD IN LAW AND VOID AB INITIO. 2 ITA NO. 5904/ MUM/2016 ASSESSMENT YEAR: 2009 - 10 WITHOUT PREJUDICE TO THE GENERALITY OF THE ABOVE GROUND, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNE D CIT (A) ERRED IN IMPOSING PENALTY WITHOUT PARTICULARLY SPECIFYING THE PROVISIONS/CLAUSES OF SECTION 271 (1)(C) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN IMPOSING PENALTY IN COMPLETE DISREGARD O F THE FACTUAL AND LEGAL POSITION, THE DETAILED SUBMISSIONS MADE BEFORE HIM IN QUANTUM AND PENALTY PROCEEDINGS AS ALSO THE VIEW TAKEN BY THE ASSESSING OFFICERS IN ALL EARLIER ASSESSMENT YEARS IN THE MATTER OF ELIGIBILITY OF THE APPELLANTS ACTIVITIES TO DED UCTION U/S 10A OF THE ACT IN RESPECT OF INCOME DERIVED THEREFROM 3. THE ORDER PASSED BY THE LEARNED CIT (A) LEVYING PENALTY U/S 271 (1) (C) BE CANCELLED. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N THE PRESENT CASE, THE LD. CIT (A ) DISMISSED THE QUANTUM APPEAL AND CONFIRMED THE ADDITIONS MADE BY THE AO . AGAINST THE SAID ORDER, THE ASSESSEE FILED APPEAL BEFORE THE ITAT. THE LD. COUNSEL FURTHER SUBMITTED THE ITAT HAS RESTORED THE QUANTUM APPEAL BACK TO THE FILE OF LD. CIT (A) FOR ADJ UDICATING THE SAME AFRESH. SINCE, THE QUANTUM APPEAL HAS BEEN RESTORED BACK, THE PENALTY APPEAL CONFIRMED BY THE LD. CIT (A) DOES NOT SURVIVE. ACCORDINGLY, THE SAME IS ALSO REQUIRED TO BE SET ASIDE OR TO BE RESTORED TO THE FILE OF LD. CIT (A) FOR DECIDIN G THE SAME AFRESH , IF NEEDED , AFTER DECIDING THE QUANTUM APPEAL IN TERMS OF THE DIRECTIONS ISSUED BY THE ITAT. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) DID NOT CONTROVERT THE FACT THAT THE TRIBUNAL HAS RESTORED THE ISSUES RAISED BY THE ASSESSEE IN QUANTUM APPEAL TO THE FILE OF LD. CIT (A) FOR FRESH ADJUDICATION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE MATERIAL ON RECORD IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE. THE COORDINATE BENCH OF THE TRIBUNAL H AS RESTORED THE ISSUES RAISED BY THE ASSESSEE IN ITS APPEAL ITA 3 ITA NO. 5904/ MUM/2016 ASSESSMENT YEAR: 2009 - 10 NO. 4282/MUM/2016 TO THE FILE OF THE CIT (A) FOR DECIDING THE SAME AFRESH HOLDING AS UNDER: - 5.4 IN THE ABOVE BACK DROP, WE FIND THAT THE NATURE OF SERVICES BEING RENDERED BY THE ASSESSEE DU RING IMPUGNED AY HAS BEEN EXPLAINED BY THE ASSESSEE WHILE REPLYING TO QUESTION NO. 2 AND THE SAME HAS BEEN EXTRACTED ON PAGE NUMBERS 9 TO 11 OF THE IMPUGNED ORDER. THE ASSESSEES PRIME CONTENTION IS THAT IT WAS ENGAGED IN THE BUSINESS OF PRODUCTION OF CO MPUTER SOFTWARE AND ALSO ENGAGED IN RENDERING 4 TYPES OF NOTIFIED IT ENABLED SERVICES VIZ. BACK OFFICE OPERATIONS, ENGINEERING & DESIGN, REMOTE MAINTENANCE AND SUPPORT CENTERS WHICH ARE DULY COVERED IN THE AFORESAID NOTIFICATION ISSUED BY CBDT. ON THE OTHE R HAND, THE MAIN THRUST OF LD. CIT (A) IN REJECTING THE ASSESSEES CLAIM IS THAT THE ASSESSEE FAILED TO DEMONSTRATE ANY EVIDENCE OF MANUFACTURING OF ANY COMPUTER SOFTWARE/PROGRAM/CUSTOMIZED ELECTRONIC DATA/PROJECT OR SERVICES OF SIMILAR NATURE AND FURTHER , THE SERVICES RENDERED AS AFORESAID DO NOT REVEAL PRODUCTION OF ANY COMPUTER SOFTWARE OR RELATED SERVICES OF SIMILAR NATURE. THE OTHER ARGUMENT OF LD. CIT (A) IS THAT THE ASSESSEE HAS ONLY RENDERED MANAGERIAL OR CUSTOMER ORIENTED SERVICES WHICH WERE BASED ON SOFTWARE PRODUCED/PROVIDED BY ITS SISTER CONCERNS AND THAT TOO, ON SUB - CONTRACT BASIS. HOWEVER, AS NOTED BY US AS ABOVE, MANUFACTURE OF COMPUTER SOFTWARE OR PROGRAM WAS NOT AN ESSENTIAL CONDITION RATHER THE CBDT NOTIFICATION COVERED WIDE SPECTRUM OF NO TIFIED SERVICES WHICH WERE ELIGIBLE FOR DEDUCTION U/S 10A. WE FIND THAT LD. CIT (A) HAS NOT APPRECIATED THE CLAIM OF THE ASSESSEE VIS - - VIS AFORESAID CBDT INSTRUCTIONS. IT IS ALSO NOTED THAT OTHER YEARS HAVE BEEN REOPENED BY THE REVENUE TO DENY THE SAID DE DUCTION TO THE ASSESSEE. FURTHER, THE ASSESSEES CLAIM AS RAISED IN GROUND NUMBERS 8 TO 11 HAVE NOT BEEN ADJUDICATED BY THE LD. CIT (A). THEREFORE, KEEPING IN VIEW THESE MULTIPLE FACTORS, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. CIT (A) FOR RE - APPRECIATION OF ASSESSEES CLAIM AND RE - ADJUDICATE THE SAME AS PER LAW WITH A DIRECTION TO ASSESSEE TO SUBSTANTIATE HIS CLAIM. 4 ITA NO. 5904/ MUM/2016 ASSESSMENT YEAR: 2009 - 10 6 . SINCE, THE QUANTUM APPEAL HAS BEEN RESTORED BACK TO THE FILE OF THE LD. CIT (A) FOR ADJUDICATING THE ISSUES AFRESH, THE PENALTY ORDER CONFIRMED BY THE LD. CIT(A) DOES NOT SURVIVE. ACCORDINGLY, WE SEND THE PENALTY ORDER BACK TO THE LD. CIT (A) FOR DECIDING THE SAME AFRESH, IF NEEDED , AFTER ADJUDICATING THE QUANTUM APPEAL. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FO R ASSESSMENT YEAR 2009 - 2010 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER , 2018. SD/ - SD/ - ( B.R. BASKARAN ) ( RAM LAL N EGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 03 / 12 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI