WORLDQUANT RESEARCH (INDIA) PVT LTD,MUMBAI V. DCIT, CIRCLE -15(3)(1), MUMBAI

ITA 6275/MUM/2024

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The case involves WorldQuant Research (India) Private Limited, which appealed against the order of the Additional Commissioner of Income Tax/Joint Commissioner of Income Tax (Appeals)-2, Surat, concerning the assessment year 2022-23. The primary issue was the inclusion of a GST refund amounting to Rs.1,86,58,736 in the taxable income by the Central Processing Centre (CPC). The assessee argued that since the GST paid on expenses was never claimed as an expense in the profit and loss account, the refund should not be added to the taxable income. The CIT(A) upheld the CPC's decision, referencing Section 145A(ii) of the Income Tax Act, which the Tribunal interpreted to mean that if the GST refund is included in taxable income, the related GST expenses should also be included, maintaining tax neutrality.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469875 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2022-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH; DR
• Assessee Lawyers: CHANDNI SHAH; HARDIK NIRMAL; TEJAL SARAF; ARS

Judgement Text

"| आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 6275/Mum/2024 Assessment Years: 2022-23 WorldQuant Research (India) Private Limited 1102, 11th Floor Hiranandani Knowledge Park Technology Street Hiranandani Gardens Mumbai - 400076 [PAN: AAACW8197K] Vs Additional Commissioner of Income Tax/ Joint Commissioner of Income Tax (Appeals)-2, Surat, DCIT- 15(3)(1), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Ms. Chandni Shah, C.A. & Hardik Nirmal & Ms. Tejal Saraf, C.A., A/Rs Revenue by : Shri Bhangepatil Pushkaraj Ramesh, Sr. D/R सुनवाई की तारीख/Date of Hearing : 30/01/2025 घोषणा की तारीख /Date of Pronouncement: 30/01/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the Addl./JCIT(A)-2, Surat [hereinafter ‘the ld. CIT(A)’] dated 01/10/2024, pertaining to AY 2022-23. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in upholding the action of the CPC in making adjustments of the refund of GST amounting to Rs.1,86,58,736/-. 3. Briefly stated the facts of the case are that during the year under consideration, the assessee received a refund of tax paid on export of services aggregating to Rs.1,86,58,736/- pertaining to F.Y. 2019-20, relevant to AY 2020-21. 4. The assessee recorded GST paid on expenses under “Loans and Advances” as Current Assets - Balance with Government Authorities in I.T.A. No. 6275/Mum/2024 2 the balance sheet at the time of its increments in the respective years. The same was not claimed as expenses while computing the taxable income for the respective years. Upon receipt of GST refund, the asset account was credited by the said amount. Since there was no element of income in the said GST refund, the same was not credited to the statement of P&L account. 5. The tax auditor reported such GST refund under clause 16(b) of the Tax Audit Report (TAR) for AY 2022-23 as any amount not credited to the P&L Account. 6. The CPC while processing the return of income has added this amount of GST refund for this the assessee preferred appeal before the ld. CIT(A) and vehemently contended that since no part of GST expenses was credited to the P&L account and since it was not charged to profit, the refund should not have been added as income. 7. Though the ld. CIT(A) was convinced that the said GST was not charged to profit, but drawing support from the provisions of Section 145A(ii) of the Act, the ld. CIT(A) was of the firm belief that GST refund shall result in increase in taxable income of the assessee and upheld the order of the CPC. 8. Before us, the ld. Counsel for the assessee, reiterated what has been stated before the ld. CIT(A). The ld. D/R strongly supported the findings of the ld. CIT(A). 9. We have given a thoughtful consideration to the orders of the authorities below. It is an undisputed fact that the assessee has never claim the GST payment as expenses and charged to its profit and loss account. It is equally true that the provisions of Section 145A(ii) of the Act, squarely apply in the facts of the present case. We are of the I.T.A. No. 6275/Mum/2024 3 considered view that, if refund of GST is added to the taxable income of the assessee then, the GST expenses should also be charged to the profit and loss account and this exercise would be tax neutral. Therefore, in our considered opinion, since the assessee is following exclusive method of accounting the same cannot be faulted with and the AO is directed to delete the impugned addition. 10. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 30th January, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 30/01/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0015ितिलिप अ\u001aेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001c / The Appellant 2. \u0015\u001dथ\u001c / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "