M/s. R System International Ltd., New Delhi V. DCIT, New Delhi

ITA 6249/DEL/2013

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5107 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 28-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Bad and doubtful debts; Revised return
• Section: 234B; 113; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.6249/DEL/2013 ASSESSMENT YEAR 2009-10 R. SYSTEMS INTERNATIONAL LTD., B-104A, GREATER KAILASH-I, NEW DELHI. V. DCIT, CIRCLE-15(1), NEW DELHI. TAN/PAN: AABCR9541B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATYEN SETHI, ADV. & SHRI A.T. PANDA, ADV. RESPONDENT BY: SHRI PARIKSHIT SINGH, SR.D.R. DATE OF HEARING: 11 02 2020 DATE OF PRONOUNCEMENT: 17 02 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 02.09.2013, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVIII, NEW DEL HI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2009-10. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A)-XVIII, NEW DELHI WAS JUSTIF IED IN UPHOLDING THE FINDINGS OF THE AO AS BELOW- A) DEDUCTING EXPENDITURE OF RS.7,66,46,785/- ON AC COUNT OF TRAVELING EXPENSES INCURRED IN FOREIGN CURRENCY AND I.T.A. NO.6249/DEL/2013 2 RS.30,43,099/- ON ACCOUNT OF TELECOMMUNICATION EXPE NSES (ISP) INCURRED BOTH IN INR AND FOREIGN CURRENCY, OUT OF E XPORT TURNOVER AS WELL AS TOTAL TURNOVER FOR THE PURPOSE OF CALCUL ATION OF DEDUCTION U/S 10A OF THE ACT, CONSIDERING THE SAME AS INCURRED FOR THE PURPOSE OF DELIVERY OF COMPUTER SOFTWARE. B) CHARGING OF INTEREST U/S 234B OF RS. 12,55,330/ - AND U/S. 234C RS.3,44,216/- ON THE TAX ON BOOK PROFIT WITHOU T KEEPING IN VIEW THE FACTS OF RETROSPECTIVE AMENDMENT ON THE BA SIS OF AMENDMENT BROUGHT INTO LEGISLATURE BY THE FINANCE A CT (NO.2), 2009 W..E.F. 01-04-2001. THE ARBITRARY, UNCALLED FOR AND UNWARRANTED ACTION OF THE LEARNED CIT (A) IS LIABLE AND URGED TO BE CANCELLED . 2. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT BOTH T HE GROUNDS NOW STANDS COVERED BY THE DECISION OF TRIBU NAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 , PASSED IN ITA NO.690/DEL/2013 WHEREIN GROUND NO.1(A) HAS B EEN REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER AND GROUND NO.2 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 3. LD. DR ALSO ACCEPTED THAT BOTH THE ISSUES ARE CO VERED BY THE ORDER OF THE ITAT. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS FIL ED RETURN OF INCOME ON 2309.2009 DECLARING INCOME AT RS.3,56,93, 528/- UNDER THE NORMAL PROVISIONS OF THE ACT AND BOOKS PR OFIT U/S.115JB AT RS.34,13,01,729/- WHICH WAS SUBSEQUENT LY REVISED AT BOOK PROFIT OF RS.37,18,54,455/- IN THE WAKE OF RETROSPECTIVE AMENDMENT BROUGHT BY THE FINANCE ACT (2), I.T.A. NO.6249/DEL/2013 3 2009, WHEREBY THE PROVISIONS FOR UNASCERTAINED LIAB ILITIES LIKE PROVISION FOR DOUBTFUL DEBTS AND ADVANCES, ETC., AR E NOT TO BE CONSIDERED FOR DETERMINATION OF BOOK PROFIT. HERE, IN THIS CASE, ASSESSING OFFICER FOLLOWING THE ASSESSMENT ORDER FO R ASSESSMENT YEAR 2008-09 HAS DISALLOWED THE EXPENDIT URE OF RS.7,66,46,785/- ON ACCOUNT OF TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY AND RS.30,43,099/- ON ACCOUNT O F TELECOMMUNICATION EXPENSES (ISP) OUT OF EXPORT TURN OVER FOR THE PURPOSE OF DEDUCTION U/S.10A AND ALSO LEVIED IN TEREST U/S.234B AND 234C CALCULATED ON THE TAX OF LOW PROF IT BASED ON RETROSPECTIVE AMENDMENT BROUGHT BY THE FINANCE A CT (2) 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2001. 5. LD. CIT (A) TOO FOLLOWING THE ORDER FOR THE ASSE SSMENT YEAR 2008-09 AND HAS CONFIRMED THE SAID ADDITION ON INTEREST. 6. WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS DEALT WITH EXACTLY SIMILAR GROUNDS OF APPEAL BEING GROUND NO.1(A) AND GROUND NO.3 WHICH IS REPRODUCED HEREUND ER:- WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A)-XVIII, NEW DELHI, WAS JUSTIFIED IN U PHOLDING THE CONTENTION OF THE AO A) DEDUCTION OF EXPENDITURE INCURRED IN INR AND FOR EIGN CURRENCY TOWARDS - I) TRAVELLING EXPENSES 76,307,974 II) COMMUNICATION EXPENSES 27,628,106 OUT OF EXPORT TURNOVER (ET) AS WELL AS TOTAL TURNOV ER (TT) FOR I.T.A. NO.6249/DEL/2013 4 CALCULATION OF DEDUCTION U/S.10A OF THE ACT. 7. THE TRIBUNAL HAS DEALT AND DECIDED THESE ISSUES IN THE FOLLOWING PARAGRAPH:- WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE SUBMISSIONS OF THE WORKING OF DEDUCTION UNDER SECTION 10A, THE LD. AR ADMITTED THAT THERE IS MISTAKE IN FIGURES PERTAINING TO ONE UNDERTAKING. THE LD. AR SUBMITTED THAT BY REVISED RETURN FILED O N 22.09.2009, DEDUCTION U/S 10A OF RS. 25,61,48,875/- WAS CLAIMED . DEDUCTION U/S 10A WAS CLAIMED IN RESPECT OF FOUR UN DERTAKING. AGAINST THE CLAIM OF DEDUCTION OF RS. 25,61,48,875/ -, THE ASSESSING OFFICER ALLOWED DEDUCTION OF RS.23,95,42, 286/- (DIFFERENCE OF RS. 1,66,06,589) AS UNDER: * PROFIT OF THE BUSINESS WAS TAKEN AT RS. 23,22,45, 490/- * EXPORT TURNOVER AND TOTAL TURNOVER WAS REDUCED BY RS. 3,08,53,780/- AND RS. 7,80,68,057/- ON ACCOUNT OF TELECOMMUNICATION EXPENSES AND TRAVEL EXPENSES. * THOUGH DEDUCTION OF RS. 23,95,42,286/- WAS ALLOWE D IN THE RESPECT OF FOUR UNDERTAKINGS HAVING PROFIT, HOWEVE R, BY MISTAKE ONLY THE FIGURES PERTAINING TO NOIDA IT WER E NOTED. THUS, THESE ASPECTS NEEDS TO BE VERIFIED AND SHOULD BE PUT BEFORE THE ASSESSING OFFICER FOR FRESH ADJUDICATION . IT WILL BE APPROPRIATE TO REMAND BACK THIS ISSUE TO THE FILE O F THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF N ATURAL JUSTICE. THUS, GROUND NO. 1(A) IS PARTLY ALLOWED FOR STATIST ICAL PURPOSE. XXXXXXX I.T.A. NO.6249/DEL/2013 5 AS REGARDS GROUND NO. 3 RELATING TO CHARGING OF INT EREST OF RS. 29,16,943/- U/S 234B OF TAX COMPUTED U/S 115JB. THE LD. AR SUBMITTED THAT PURSUANT TO AMENDMENT OF SECTION 115 JB BY THE FINANCE (NO.2) ACT 2009 WITH RETROSPECTIVE EFFECT O F 1.4.2001, THE ASSESSEE FILED REVISED COMPUTATION OF BOOK PROFIT A ND THEREBY, PROVISION FOR BAD DEBTS OF RS. 1,68,37,339/- AND PR OVISIONS FOR DOUBTFUL ADVANCES OF RS. 3,67,86,988/- WAS ADDED TO THE BOOK PROFIT. IT LED TO SHORTFALL IN ADVANCE TAX. THE LEG AL POSITION IS SETTLED THAT IN SUCH CASES, INTEREST U/S 234B CANNO T BE CHARGED. THE LD. AR RELIED UPON THE FOLLOWING DECISIONS: (I) EMAMI LTD. V. CIT [2011] 337 ITR 470 (CAL) (II) CIT VS. JUPITER BIO SCIENCE LTD. [2013] 352 IT R 113 (KARN) (III) CIT V. NATIONAL DIARY DEVELOPMENT BOARD (2017 ) 397 ITR 543 (GUJ) (IV) CIT V. GLENMARK PHARMACEUTICALS LTD., (2017) 3 98 ITR 439 (BOM) (V) PR. CIT V. NHPC LTD. (2017) 399 ITR 275 (P&H) (VI) CIT VS. KIRLOSKAR SYSTEMS LTD., (2014) 220 TAX MANN.1 (KARN.) 15. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF T HE RECORD IT CAN BE SEEN THAT AS THE AMENDMENT OF SECTION 1 15JB BY THE FINANCE (NO.2) ACT 2009 OPERATES WITH RETROSPECTIVE EFFECT FROM 1.4.2001, THE ASSESSEE FILED REVISED COMPUTATION OF BOOK PROFIT AND THEREBY, PROVISION FOR BAD DEBTS OF RS. 1,68,37 ,339/- AND PROVISIONS FOR DOUBTFUL ADVANCES OF RS. 3,67,86,988 /- WAS I.T.A. NO.6249/DEL/2013 6 ADDED TO THE BOOK PROFIT WHICH LED TO SHORTFALL IN ADVANCE LAX. THUS, ON SUCH INTEREST U/S 234B CANNOT BE CHARGED A S HELD IN VARIOUS DECISIONS. THE LEGAL POSITION IS SETTLED TH AT IN SUCH CASES, INTEREST U/S 234B CANNOT BE CHARGED. THEREFO RE, GROUND NO. 3 IS ALLOWED. 8. THUS, FOLLOWING THE EARLIER YEAR PRECEDENT, WE H OLD THAT IN SO FAR AS GROUND NO.1 IS CONCERN, THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DEC IDED AFRESH IN LINE OF THE EARLIER ORDER OF THE TRIBUNAL AFTER GIV ING DUE AND EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN SO FAR AS CHARGING OF INTEREST U/S.234B AND 2 34C IS CONCERN AS THE TAX COMPUTED U/S.115JB, THE SAME ARE DELETED FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) . ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2020. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH FEBRUARY, 2020 PKK: