M/s Mphasis Limited , Bangalore V. The Joint Commissioner Of Income-Tax, Special Range 4, Bangalore

MA 104/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4923 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI JT BENGALU RU
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Reassessment proceedings
• Section: 254(2); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER MP NO.104/BANG/2020 [I N IT A NO. 65/BANG/2019 ] ASSESSMENT YEAR: 2009 - 10 MPHASIS LTD., BAGMANE WORLD TECHNOLOGY CENTRE, WTC 3, BLOCK B, 1 ST FLOOR, WING A, K R PURAM, MARATHAHALLI OUTER RING ROAD, MAHADEVAPURA, BANGALORE 560 048. PAN: AAACB 6820C VS. THE JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE 4, BANGALORE. APPLIC ANT RESPONDENT A PPL IC ANT BY : SHRI PADAM CHAND KHINCHA, CA RESPONDENT BY : SMT. R. PREMI, JT.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 09.10. 2020 DATE OF PRONOUNCEMENT : 1 6 .10 .2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS A MISCELLANEOUS PETITION FILED BY THE AS SESSEE U/S. 254(2) OF THE INCOME-TAX ACT, 1961 [THE ACT] PRAYING FOR RECT IFICATION OF CERTAIN ERRORS IN THE ORDER OF TRIBUNAL DATED 03.06.2020. 2. THE ISSUE THAT WAS CONSIDERED BY THE TRIBUNAL IN THE AFORESAID APPEAL OF THE REVENUE WAS AS TO WHETHER THE CIT(APP EALS) WAS RIGHT IN ALLOWING DEDUCTION U/S. 10A/10AA OF THE ACT ON THE PROFITS AS ENHANCED BY THE DISALLOWANCE U/S. 40(A)(I) OF THE ACT. BY THE VERY SAME ORDER OF THE MP NO.104/BANG/2020 PAGE 2 OF 5 CIT(APPEALS), THE VALIDITY OF INITIATION OF REASSES SMENT PROCEEDINGS U/S. 147 OF THE ACT WAS UPHELD. THE ASSESSEE FILED APPEAL A GAINST THE ORDER OF CIT(APPEALS) ON THE ISSUE OF VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS. THE TRIBUNAL DISMISSED THE APPEAL OF REVENUE UPHOLDING THE ORDER OF CIT(APPEALS) ALLOWING DEDUCTION U/S. 10A/1 0AA OF THE ACT ON THE INCOME AS ENHANCED BY DISALLOWANCE U/S. 40(A)(I) OF THE ACT. 3. INSOFAR AS THE APPEAL OF THE ASSESSEE IS CONCERN ED, THE TRIBUNAL DISMISSED THE SAME WITH THE FOLLOWING OBSERVATIONS: - 14. AS FAR AS APPEAL OF THE ASSESSEE IS CONCERNED , WE ARE OF THE VIEW THAT IN VIEW OF THE DISMISSAL OF THE REVENUES APPEAL, THE ISSUE WITH REGARD TO QUESTION, WHETHER THE ASSESSME NT WAS VALIDLY REOPENED OR NOT WHETHER THE SUM IN QUESTION IS CHAR GEABLE TO TAX IS PURELY ACADEMIC, BECAUSE THERE MAY NOT BE ANY TA X LIABILITY ULTIMATELY. THE LD. COUNSEL FOR THE ASSESSEE HAS, HOWEVER, DRAWN OUR ATTENTION TO THE DECISION OF THE HONBLE HIGH C OURT OF KARNATAKA IN WP NO.55355/2019 (T-IT) DATED 21.1.202 0 IN THE CASE OF ASSESSEE FOR THE AY 2010-11 ON IDENTICAL RE ASONS RECORDED. THE HONBLE HIGH COURT QUASHED THE INITI ATION OF REASSESSMENT PROCEEDINGS. 15. AS WE HAVE ALREADY OBSERVED, BY DISMISSAL OF R EVENUES APPEAL, THERE MAY NOT BE ANY NECESSITY FOR ADJUDICA TING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS IN THE PRESENT AY 2009-10. WE, HOWEVER, MAKE IT CLEAR THAT THE AS SESSEE WILL BE AT LIBERTY TO AGITATE THIS ISSUE IF CIRCUMSTANCE S SO WARRANT. FOR THE VERY SAME REASON, WE ARE OF THE VIEW THAT IT IS NOT REQUIRED TO ADJUDICATE THE QUESTION AS TO, WHETHER THE SUM IN Q UESTION IS CHARGEABLE TO TAX UNDER THE ACT OR NOT. THE ISSUE IS, HOWEVER, LEFT OPEN WITHOUT ADJUDICATION. 4. IN THIS MISCELLANEOUS PETITION, THE ASSESSEE HAS CONTENDED THAT THE REASON, AS STATED BY THE HON'BLE ITAT, FOR DISMISSI NG THE PETITIONER'S APPEAL IS THAT THERE MAY NOT BE ANY TAX LIABILITY U LTIMATELY CONSIDERING THE DISMISSAL OF REVENUE'S APPEAL. THE GROUND FOR DISMI SSING PETITIONER'S APPEAL IS FACTUALLY INCORRECT. THE TOTAL AMOUNT OF DISALLOWANCE UNDER MP NO.104/BANG/2020 PAGE 3 OF 5 SECTION 40(A)(I) OF THE ACT MADE BY THE LEARNED AO AND UPHELD BY THE LEARNED CIT(A) IS RS. 578,20,05,614. AGAINST THE SA ID ADDITION, THE PETITIONER TOOK AN ALTERNATIVE GROUND FOR ALLOWABIL ITY OF ENHANCED DEDUCTION UNDER SECTIONS 10A/10AA/10B TO THE EXTENT TO WHICH AMOUNTS ARE ATTRIBUTABLE TO ELIGIBLE UNITS OF THE PETITIONER CL AIMING DEDUCTION UNDER THE SAID SECTIONS. THE LEARNED CIT(A) REJECTED THE GROU NDS ON VALIDITY OF REASSESSMENT AND DISALLOWANCE UNDER SECTION 40(A)(I ). THE LEARNED CIT(A) HOWEVER AGREED TO THE ABOVE ALTERNATE GROUND OF THE PETITIONER AND HELD THAT THE INCOME OF 10A/10AA/10B UNITS ENHANCED DUE TO DISALLOWANCE UNDER SECTION 40(A)(I) WOULD BE ELIGIBLE FOR DEDUCT ION UNDER THE SAID SECTION(S). CONSEQUENT TO THE ORDER OF THE LEARNED CIT(A), THE ASSESSING OFFICER PASSED AN ORDER GIVING EFFECT(OGE) TO CIT(A )'S ORDER ON 02.07.2019. IN SUCH ORDER, THE ASSESSING OFFICER ALLOCATED THE DISALLOWANCE MADE UNDER SECTION 40(A)(I) TO THE ELIGIBLE UNITS FOR WHICH DE DUCTION UNDER SECTIONS 10A/10AA/10B WERE CLAIMED. ACCORDINGLY, THE ENHANCE D DEDUCTION UNDER SECTIONS 10A/10AA/10B WAS GRANTED TO THE EXTENT OF RS. 544,07,80,233. AS IT CAN BE DISCERNED FROM ABOVE, THE NET DISALLOW ANCE UNDER SECTION 40(A)(I) AFTER ENHANCED DEDUCTION ALLOWED UNDER SEC TIONS 10A/10AA/10B WAS RS. 34,12,25,381 [RS. 578,20,05,614 LESS RS. 54 4,07,80,233]. THE DEMAND AS PER THE OGE ORDER IS RS. 86,66,67,610. TH US, TAX LIABILITY EXISTS EVEN AFTER THE RELIEF ALLOWED BY THE CIT(A). HENCE, IT HAS BEEN PRAYED THAT THE REASON FOR DISMISSAL OF PETITIONER'S APPEAL AND THE FINDING OF THE HON'BLE ITAT THAT THERE MAY NOT BE ANY TAX LIABILITY ULTIMA TELY, IS FACTUALLY INCORRECT AND HENCE A MISTAKE APPARENT FROM RECORD UNDER SECT ION 254(2) OF THE INCOME TAX ACT, 1961. THE ASSESSEE/PETITIONER HAS ACCORDINGLY PRAYED FOR RECALLING THE ORDER OF DISMISSAL OF THE ASSESSEES APPEAL FOR HEARING AND DECISION ON MERITS AFTER AFFORDING OPPORTUNITY OF B EING HEARD TO THE PARTIES. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WHO REITERATED THE STAND OF ASSESSEE AS REFLECTED I N THE MISCELLANEOUS MP NO.104/BANG/2020 PAGE 4 OF 5 PETITION. THE LD. DR SUBMITTED THAT THERE IS NO MI STAKE, MUCH LESS AN APPARENT MISTAKE ON THE FACE OF RECORD. 6. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS. IT IS TRUE THAT IN PARA 14 OF THE ORDER OF TRIBUNAL, THER E IS A MENTION REGARDING THE ISSUE WITH REGARD TO THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS AS ACADEMIC, BECAUSE ULTIMATELY THERE MAY NOT BE ANY TAX LIABILITY. IN PARA 15 OF THE ORDER OF THE TRIBUNAL , IT HAS BEEN MADE CLEAR THAT THERE MAY NOT BE ANY NECESSITY FOR ADJUDICATING THE ISSUE OF VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS, BUT LIBERTY WAS GIVEN TO ASSESSEE TO AGITATE THIS ISSUE, IF CIRCUMSTANCES SO WARRANT. I T APPEARS TO US THAT SINCE ONE OF THE REASONS GIVEN BY THE TRIBUNAL IN THE ORD ER IS THAT THERE MAY NOT BE ANY ULTIMATE TAX LIABILITY AND SINCE THAT REASON HAS BEEN SHOWN TO BE INCORRECT, THE ISSUE WITH REGARD TO VALIDITY OF INI TIATION OF REASSESSMENT PROCEEDINGS ASSUMES IMPORTANCE AND OUGHT TO HAVE BE EN ADJUDICATED BY THE TRIBUNAL. NON-ADJUDICATION OF THE SAME IS A MI STAKE APPARENT ON THE FACE OF RECORD. WE THEREFORE RECALL THE ORDER IN T HE ASSESSEES APPEAL IN ITA NO.65/BANG/2019 FOR THE LIMITED PURPOSE OF ADJU DICATING THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL AS FAR AS VALI DITY OF INITIATION OF REASSESSMENT PROCEEDINGS IS CONCERNED. THE REGISTR Y IS DIRECTED TO FIX THE APPEAL FOR HEARING IN DUE COURSE. 7. IN THE RESULT, THE MISCELLANEOUS PETITION BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH OCTOBER, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 16 TH OCTOBER, 2020. / DESAI S MURTHY / MP NO.104/BANG/2020 PAGE 5 OF 5 COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.