2016 (1) TMI 1286 - AT - Income Tax

Tribunal revises tax deductions, orders prompt processing of rectification, dismisses premature penalty proceedings

The Tribunal partially recalled its earlier order regarding the exemption under section 10A of the Income Tax Act, favoring the assessee in treating ... Exemption u/s. 10A - Held that:- Issue stands decided in favour of the assessee by the order of the Hon’ble High Court in assessee's own case for previous AY [2012 (9) TMI 1097 - BOMBAY HIGH COURT] as relying on case of CIT vs. Gem Plus Jewellery India ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] thus held the communication charges, professional fees and expenses incurred in foreign exchange for travelling should be reduced from the total turnover as well as from export turnover for applying the provisions of Section 10A Non granting credit of taxes deducing at source and charging of interest u/s. 234B and 234C - AR stated that the assessee filed rectification application in that regard - Held that:- We find that the assessee had filed application u/s.154 of the Act before the AO on 27.2.2013 and it has not been disposed by him till date. We direct that the rectification application filed by the assessee should be disposed within six weeks of receipt of our order. Grounds allowed for statistical purposes. Issues involved:1. Exemption under section 10A of the Income Tax Act.2. Credit of taxes deducted at source and charging of interest under sections 234B and 234C of the Act.3. Initiating penalty proceedings under section 271(1)(c) of the Act.Detailed Analysis:Issue 1: The first issue involved the exemption under section 10A of the Income Tax Act. The Tribunal partially recalled its earlier order as certain grounds remained un-adjudicated. The Assessing Officer did not exclude communication charges and expenses incurred in foreign currency from the total turnover while computing the deduction under section 10A. The Dispute Resolution Panel directed the AO to verify and compute the deduction as per law, but the expenses were not excluded. The Tribunal noted that in previous years, the issue had been decided in favor of the assessee, and the High Court had upheld the Tribunal's order for certain assessment years. Referring to previous court decisions, the Tribunal decided in favor of the assessee regarding the treatment of expenses under section 10A.Issue 2: The next issue revolved around the credit of taxes deducted at source and the charging of interest under sections 234B and 234C of the Act. The assessee had filed a rectification application, which had not been disposed of by the AO. The Tribunal directed the AO to dispose of the rectification application within six weeks of receiving the order. Grounds related to this issue were allowed for statistical purposes.Issue 3: The final issue concerned the initiation of penalty proceedings under section 271(1)(c) of the Act. The Tribunal deemed this issue premature and dismissed ground no.17, rejecting the initiation of penalty proceedings. Consequently, the appeal filed by the assessee was partly allowed, with the Tribunal delivering the order on 1st January 2016.