DCIT, CHENNAI V. Ajuba Solutions India P Ltd., CHENNAI

ITA 793/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8402 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS. 792 & 793/MDS/2016 ( )( / ASSESSMENT YEARS : 2009-10 & 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1(1), CHENNAI - 600 034. V. M/S AJUBA SOLUTIONS INDIA PVT. LTD., 12-02, TIDEL PARK, 4, CANAL BANK ROAD, TARAMANI, CHENNAI - 600 113. PAN : AACCA 8448 D (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI SUPRIYO PAL, JCIT -.+, / 0 / RESPONDENT BY : SH. R. VIJAYARAGHAVAN, ADVOCAT E 1 / 2% / DATE OF HEARING : 10.08.2016 3') / 2% / DATE OF PRONOUNCEMENT : 23.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGA INST RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, DATED 19.01.2016 AND PERTAIN TO ASSESSMENT YEARS 2009- 10 AND 2010-11. SINCE COMMON ISSUE ARISES FOR CONS IDERATION IN 2 I.T.A. NOS.792 & 793/MDS/16 BOTH THE APPEALS, WE HEARD BOTH THE APPEALS TOGETHE R AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS PROVI SION FOR GRATUITY NOT ALLOWABLE UNDER SECTION 40A(7) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS TAKEN AS INCOME OF TH E ASSESSEE. 3. SHRI SUPRIYO PAL, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT FOR THE ASSESSMENT YEAR 2009-10, PRO VISION FOR GRATUITY, WHICH WAS NOT ALLOWABLE UNDER SECTION 40A (7) OF THE ACT, WAS CLAIMED AS EXPENDITURE TO THE EXTENT OF ` 26,68,379/-. SIMILARLY, FOR ASSESSMENT YEAR 2010-11, A SUM OF ` 20,13,939/- WAS CLAIMED AS INCOME DERIVED FROM UNDERTAKING FOR THE PURPOSE OF EXEMPTION UNDER SECTION 10A OF THE ACT. THE CIT(APPEALS) ALL OWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT DISALLOWANCE MAD E UNDER SECTION 40A(7) OF THE ACT NEEDS TO BE RECONSIDERED WHILE ARRIVING AT PROFIT FOR THE PURPOSE OF DEDUCTION UNDER SECTION 8 0-IA OF THE ACT. REFERRING TO THE DECISION OF AHMEDABAD BENCH OF THI S TRIBUNAL IN DCIT V. RAMESHBHAI C. PRAJAPATI (2013) 140 ITD 488, THE LD. D.R. SUBMITTED THAT ONE OF THE MEMBERS, NAMELY, THE LD. ACCOUNTANT MEMBER, IS A PARTY TO THE ORDER. ON IDENTICAL SET OF FACTS, THIS 3 I.T.A. NOS.792 & 793/MDS/16 TRIBUNAL FOUND THAT THE DISALLOWANCE MADE UNDER SEC TION 40(A)(IA) OF THE ACT CANNOT BE TAKEN AS PROFIT FOR THE PURPOS E OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THIS DECISION OF AHMEDABAD BENCH OF THIS TRIBUNAL WAS NOT BROUGHT TO THE NOTIC E OF BOTH THE AUTHORITIES BELOW. 4. ON THE CONTRARY, SH. R. VIJAYARAGHAVAN, THE LD.C OUNSEL FOR THE ASSESSEE, SUBMITTED THAT PROVISION FOR GRATUITY , WHICH WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT, HAS TO B E NECESSARILY TREATED AS PROFIT FOR THE PURPOSE OF DEDUCTION UNDE R SECTION 10A OF THE ACT. THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS DISALLOWED THE PENALTY PAID UNDER THE C USTOMS ACT FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 10A OF THE ACT. THE PROVISION FOR LEAVE ENCASHMENT WAS ALSO TAKEN A S PROFIT FOR THE PURPOSE OF COMPUTING ELIGIBLE PROFIT UNDER SECTION 10A OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) FOUN D THAT THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER HAS TO B E NECESSARILY TREATED AS INCOME OF THE ASSESSEE AND ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT, THEREFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 4 I.T.A. NOS.792 & 793/MDS/16 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE INTEREST PAID UNDER SECTION 201(1A) OF THE ACT, PROVISION FOR GRATUITY WHICH WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT, PROVISION FOR LEAVE ENCASHMENT, DONATIONS, AMOUNT PAID ON FRINGE BENEFIT TAX, WEALTH TAX, REDE MPTION FINE UNDER CUSTOMS ACT AND PENALTY UNDER CUSTOMS ACT. THIS WA S NOT TAKEN AS PROFIT FOR THE PURPOSE OF COMPUTING DEDUCTION UN DER SECTION 10A OF THE ACT. HOWEVER, THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE. AS RIGHTLY SUBMITTED BY THE LD. D.R., BO TH THE AUTHORITIES BELOW DID NOT CONSIDER THE DECISION OF AHMEDABAD BE NCH OF THIS TRIBUNAL IN RAMESHBHAI C. PRAJAPATI (SUPRA). AS RI GHTLY SUBMITTED BY THE LD. D.R., ONE OF US, THE LD. ACCOUNTANT MEMB ER IS A PARTY TO THIS ORDER. THEREFORE, THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THE ASSESSING OFFICER HAS TO EXAMINE THE CLAIM OF T HE ASSESSEE IN THE LIGHT OF THE DECISION TAKEN BY AHMEDABAD BENCH OF THIS TRIBUNAL IN RAMESHBHAI C. PRAJAPATI (SUPRA). ACCORDINGLY, T HE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND ALL THE ISSUES ARE REMITTED BACK TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OF FICER SHALL RE- EXAMINE THE ISSUES IN THE LIGHT OF THE DECISION OF AHMEDABAD BENCH OF THIS TRIBUNAL IN RAMESHBHAI C. PRAJAPATI (SUPRA) AND THEREAFTER 5 I.T.A. NOS.792 & 793/MDS/16 DECIDE THE ISSUES, IN ACCORDANCE WITH LAW, AFTER GI VING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 23 RD SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 23 RD SEPTEMBER, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-1, CHENNAI 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.