2012 (10) TMI 411 - AT - Income Tax

Assessee's Appeals Dismissed: Section 80-IB, 80G Deductions, Foreign Travel Expenses, Interest Levy

The Tribunal dismissed the appeals filed by the assessee on all grounds, including the eligibility for deduction under section 80-IB, disallowance of ... Claim of deduction u/s 80-IA/IB - denial as there is no new article or thing which comes into existence as a result of the assessee’s activity - Held that:- In the present case, the assessee receives from its customers manuscripts which are either typed or handwritten ones. After receiving the same, the assessee converts the same into typed form by typing or scanning into the computer. Thereafter the same is edited and formatted into desired pages and also certain drawings are also scanned and redrawn by using computer. Thereafter the same is copied into the hard disc and supplied to the authors or clients.Practically the assessee is receiving some information on manuscript and converting the same into hard disc for using in the computer.Thus the above activity of the assessee neither amounts to manufacturing nor amounts to producing an article or thing - against assessee. Disallowance of foreign travel expenses - Held that:- No details were filed with regard to the foreign travel to show that the expenses were incurred wholly and exclusively for the purpose of the business and accordingly the ground raised by the assessee dismissed - against assessee. Issues Involved:1. Eligibility for deduction under section 80-IB of the Income Tax Act, 1961.2. Disallowance of foreign travel expenses.3. Deduction under section 80G of the Income Tax Act, 1961.4. Levy of interest under section 234B of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Eligibility for Deduction under Section 80-IB:The primary issue was whether the assessee's activities qualified as 'manufacturing or producing an article or thing' under section 80-IB of the Income Tax Act, 1961. The assessee, engaged in Information Technology Enabled Services, claimed deductions under section 80-IB, which were initially filed under section 80-IA by mistake. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected the claim, stating that the activities did not amount to manufacturing or producing an article or thing. The Tribunal examined the nature of the assessee's activities, which involved converting manuscripts into digital formats. It concluded that this process did not result in a new article or thing, as the content remained unchanged. Therefore, the Tribunal upheld the CIT(A)'s decision, denying the deduction under section 80-IB.2. Disallowance of Foreign Travel Expenses:For the assessment years 2000-01 and 2002-03, the AO disallowed foreign travel expenses of Rs. 9,14,278 and Rs. 1,12,806, respectively, due to the lack of evidence showing that these expenses were incurred exclusively for business purposes. The CIT(A) upheld the AO's decision, noting that the assessee failed to provide necessary details. The Tribunal also upheld this decision, as the assessee did not furnish any additional evidence to substantiate the claim.3. Deduction under Section 80G:For the assessment years 2000-01 and 2001-02, the assessee raised grounds relating to deductions under section 80G. However, during the hearing, the assessee's counsel did not press these grounds. Consequently, the Tribunal dismissed these grounds as not pressed.4. Levy of Interest under Section 234B:The assessee contested the levy of interest under section 234B, which pertains to interest for defaults in payment of advance tax. The Tribunal noted that this issue was consequential to the main issues and dismissed it accordingly.Conclusion:The Tribunal dismissed the appeals filed by the assessee on all grounds. The decision was pronounced on 28th August 2012, at Chennai.