Nuance BPO Matrix Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 700/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0862 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SH. SUDHANSHU SRIVASTAVA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO .700 /DE L/ 2015 ASSESSMENT YEAR: 2008 - 09 M/S. NUANCE BPO MATRIX PVT. LTD., D - 4, COMMERCIAL COMPLEX, VASANT VIHAR, NEW DELHI VS. INCOME TAX OFFICER, WARD - 13(3), NEW DELHI PAN : AACCN0050G (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 19/11/2014 PASSED BY THE LD. COMMISS IONER OF INCOME - TAX (APPEALS) - 6 , DELHI [IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR 2008 - 09 IN RELATION TO PENALTY LEVIED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS OF THE INCOME. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: ASSESSEE BY SH. RAVI KHANNA, CA & MS. VASUNDHRA DHARNI , CA DEPARTMENT BY SH. GAURAV SHARMA, SR.DR DATE OF HEARING 30.08.2018 DATE OF PRONOUNCEMENT 11.09.2018 2 ITA NO. 700/DEL/2015 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT BE DELETED. 2. THE APPELLANT PRAYS THAT THE PENALTY IMPOSED UNDER SECTION 271(1)( C) OF THE INCO ME TAX ACT BE DELETED. 3. THE APPELLANT COMPANY CRAVES TO ADD, AMEND, ALTER, VARY AND/OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. 2. T HE BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THE CASE OF THE ASSESSEE SUBSEQUENT TO FILING O F RETURN OF INCOME, ASSESSMENT UNDER SECTION 143(3) OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) WAS COMPLETED ON 26/11/2010 AFTER MAKING CERTAIN DISALLOWANCES/ADDITIONS. THE ASSESSING OFFICER ALSO INITIATED PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C) OF THE A CT. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AGAINST THE ADDITIONS MADE. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE S OF EXEMPTION UNDER SECTION 10 A OF THE ACT OF RS.12,85, 778/ - . IN VIEW OF THE DISALLOWANCES SUSTAINED BY THE LD. CIT(A), THE AS SESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE , AS TO WHY THE PENALTY UNDER SECTION 271(1)(C) OF THE A CT BE NOT BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE DISALLOWANCES SUSTAINED BY THE LD. CIT(A). NONE ATTENDED B EFORE THE ASSESSING OFFICER AND ACCORDINGLY , HE LEVIED PENALTY OF RS. 4,01,684/ - VIDE ORDER DATED 28/03/2013. ON FURTHER APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL. 3. AT THE OUTSET, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE DISALLOWANCES IN RESPECT OF WHICH THE PENALTY WAS LEVIED 3 ITA NO. 700/DEL/2015 BY THE ASSESSING O FFICER HAS BEEN DELETED BY THE T RIBUNAL V IDE ORDER DATED 19/04/2016 IN IT A NO. 4307/ D EL/2011 AND , THUS , HE R EQUESTED THAT THE PENALTY SUSTAINED BY THE LD. CIT(A) CANNOT SURVIVE. THE LEARNED DR ALSO COULD NOT CONTROVERT THE CONTENTION OF THE LEARNED COUNSEL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER IN QUANTUM PROCEEDINGS DID NOT CONSIDER THE RECEIPTS BY WAY OF RENT, OFFICE AND OTHER MAINTENANCE EXPENSES INCLUDING POWER AND FUEL EXPENSES AS PART OF THE INCOME FROM EXPORT OF ARTICLES/THINGS / SOFTWARE AND ACCORDINGLY DE NIED DEDUCTION UNDER SECTION 10 A O F THE ACT ON THE SAID SUM OF R E C E I P T . HE LEVIED PENALTY IN DISPUTE IN RESPECT OF THE SAID DISALLOWANCE S OF EXEMPTION UNDER SECTION 10 A OF THE A C T. THE T RIBUNAL IN IT A NO. 4307/D EL/2011 DELETED THE QUANTUM ADDITION OBSERVING AS UNDER: 6. WE HAVE PERUSED THE DOCUMENTS PLACED BEFORE US AND ORDERS PASSED BY THE AUTHORITIES BELOW AND THE JUDGMENT RELIED UPON BY THE LEARNED AR. 6.1. ADMITTEDLY THE ASSESSEE IS A REGISTERED STPJ. UNIT. IN THE RETURNS FILED FOR THE YEARS UNDER CONSIDERATION THE ASSESSEE HAD CLAI MED CERTAIN INCOME, AS EXEMPT FROM TAX U/S 10A OF THE ACT. THESE INCLUDED RENT RECEIPT FROM M/S. PROLOGIC FIRST INDIA P. LTD., POWER AND FUEL EXPENSES, OFFICE AND OTHER MAINTENANCE MADE IN CONNECTION WITH THE BUSINESS PROCESSING AND OUTSOURCING ACTIVITY CA RRIED ON BY THE ASSESSEE. IT IS ALSO NOT DISPUTED THAT DURING THE RELEVANT YEARS, THE ASSESSEE HAD NOT PROVIDED SERVICES OF DATA MINING, CHARGES FOR RECRUITMENT PROCESS, AIRLINE CONTRACT ENTRY, SOFTWARE DEVELOPMENT, SUPPORT, CUSTOMER SERVICES AND CALL SEAT CHARGES. THE ID.AO DISALLOWED THE CLAIM OF EXEMPTION IN RESPECT OF THE RENTAL INCOME RECEIVED AND THE EXPENSES INCURRED BY THE ASSESSEE, BY WAY OF FUEL AND POWER OFFICE MAINTENANCE ETC., ON THE GROUND THAT THEY WERE NOT DIRECTLY DERIVED FROM THE EXPORT BU SINESS ACTIVITY. 4 ITA NO. 700/DEL/2015 6.2. LET US FIRST ANALYSE THE EXPENSES INCURRED AND INCOME RECEIVED FROM CALL SEAT CHARGES IN RESPECT OF LOCAL OPERATIONS. AS RIGHTLY CONTENDED BY THE LD.AR, THE AMOUNT PAID IS NOT FOR ACQUIRING ANY LEASEHOLD RIGHT BY WAY OF ANNUAL LEAS E RENT. THESE AMOUNTS ARE PAID TO M/S HINDUSTAN POWER, BY ASSESSEE FOR CONTINUING TO ENJOY THE LEASEHOLD RIGHTS. IN SUCH A SITUATION THE ASSESSEE HAS NOT ACQUIRED ANY NEW CAPITAL ASSET, BUT MERELY MAINTAINS THE CAPITAL ASSET ALREADY ACQUIRED. 6.3. AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND M/S PROLOGIC FIRST INDIA P. LTD., THE ASSESSEE, RECOVERED TOWARDS ELECTRICITY, WATER AND GENERATOR MAINTENANCE BY WAY OF REIMBURSEMENT. THE ASSESSEE HAD INCURRED CERTAIN EXPENSES ON BEHALF OF M/S. PROLOGIC FIRS T INDIA P. LTD., WHICH WAS REIMBURSED IN THE FORM OF CORPORATE CHARGES AND SUCH RECEIPTS CANNOT BE REDUCED, SINCE THE EXPENSES ARE DEBITED THROUGH P&L ACCOUNT WHILE COMPUTING PROFITS OF ELIGIBLE UNDERTAKING. THE LD.AR SUBMITTED THAT THE AMOUNT RECEIVED BY WAY OF REIMBURSEMENT THUS, CANNOT BE REDUCED FROM THE PROFITS OF THE BUSINESS OF ELIGIBLE UNDERTAKING. THESE AMOUNTS DID NOT REPRESENT ANY INCOME OR REVENUE WHICH WAS BEING GENERATED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF C1T VS. PEROTT SY STEMS TSI INDIA LTD. (SUPRA), WE HOLD THAT THE LEASE RENT PAID BEING REVENUE IN NATURE IS ALLOWABLE. 7.2. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED NOT TO REDUCE THE PROFITS OF THE BUSINESS BY THE AMOUNT OF RS.2,38,210/ - AND RS.13,55,072/ - FOR ASSESSM ENT YEARS 2007 - 08 AND 2008 - 09 RESPECTIVELY, RECEIVED FROM M/S PROLOGIC FIRST INDIA. 7.3.ACCORDINGLY, THE GROUND NUMBERS 3,3. LAND 3.2 FOR ASSESSMENT YEAR 2007 - 08 AND GROUND NUMBERS 2, 3 AND 3.1, FOR ASSESSMENT YEAR 2008 - 09 RAISED BY THE ASSESSEE STANDS AL LOWED. 5. W E FIND THAT THE T RIBUNAL HAS ALREADY DIRECTED THE ASSESSING OFFICER TO GRANT EXEMPTIO N IN RESPECT OF THE SAID RECEIP TS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WHEN THE QUANTUM ADDITION HAS ALREADY BEEN DELETED, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) , CANNOT SURVIVE. ACCORDINGLY , WE CANCEL THE SAME. THE GROUNDS OF THE APPEAL ARE ACCORDINGLY ALLOWED. 5 ITA NO. 700/DEL/2015 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUN CED IN THE OPEN COURT ON 1 1 T H SEPT. , 201 8 . S D / - S D / - (SUDHANSHU SRIVASTAVA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 T H SEPTEMBER , 201 8 . RK / - (D.T.D . ) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI