2014 (2) TMI 463 - AT - Income Tax

ITAT allows deduction under sec. 10A, stresses documentation importance for tax claims.

Income Tax Officer Versus M/s Lepide Software Pvt. Ltd. Formerly Known As Nucleus Data Recovery. Com Pvt. Ltd.

The ITAT upheld the deduction claimed u/s. 10A, directing the Assessing Officer to allow it despite the non-furnishing of Form 56F, citing past ... Deduction claimed u/s 10A of the Act – Form No. 56F not furnished – Held that:- The assessee has furnished all the details in support of its claim of deduction u/s. 10A before the Assessing Officer and the only reason given by the Assessing Officer in the assessment order for non-allowing of the claim was the non-furnishing of Form 56F - The same Form was admitted by the Commissioner of Income Tax (A) in the appellate proceedings – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue. Addition made on account of depreciation – Held that:- The Assessing Officer has inter-alia noted that the bills of contractors for the construction were not produced before him - There is nothing on record to show that these submissions of the assessee were put before the Assessing Officer - the Assessing Officer has noted that assessee has not produced any bill of contractor for construction - interest of justice demands in the case that Assessing Officer be given an opportunity to go through these bills and satisfy himself about the veracity of the same – the matter remitted back to the AO for fresh adjudication. Deletion of addition on account of unexplained sundry creditors - The Assessing Officer in this regard has noted that assessee has failed to produce the confirmation certificate from sundry creditors – it was not produced before the CIT(A) - the addition on account of sundry creditors was unjustified - Commissioner of Income Tax (A) has erred in this regard - Assessing Officer wanted to examine the sundry creditors - But the assessee did not provide the confirmation certificate - CIT (A) has not himself made the verification - the veracity of sundry creditors is not established – the matter remitted back to the AO for fresh adjudication – Decided in favour of Revenue. Issues:1. Deduction claimed u/s. 10A without submitting Form 56F.2. Addition made on account of depreciation.3. Deletion of addition on account of unexplained sundry creditors.Deduction claimed u/s. 10A:The case involved a dispute regarding the deduction claimed u/s. 10A without submitting Form 56F. The Assessing Officer disallowed the deduction citing non-furnishing of the form. However, the Ld. Commissioner of Income Tax (A) noted that the assessee had provided all necessary details supporting the claim, except for Form 56F. The Ld. Commissioner referred to a relevant High Court decision and directed the Assessing Officer to allow the deduction, considering past assessments where the deduction was allowed. The ITAT upheld the Ld. Commissioner's decision, stating that the assessee had submitted all necessary details, and the non-furnishing of Form 56F was not sufficient to disallow the deduction.Addition made on account of depreciation:The Assessing Officer disallowed a depreciation claim of Rs. 16,62,525 based on incomplete documentation regarding building construction. The Ld. Commissioner of Income Tax (A) accepted the assessee's submission that the bills were submitted, and the building was renovated, not newly constructed. The Ld. Commissioner allowed the depreciation claim, noting that any disallowance would not affect the taxable income due to the deduction u/s. 10A. However, the ITAT remitted the issue back to the Assessing Officer for verification, emphasizing the need for proper examination and verification of the submitted bills to establish the veracity of the claim.Deletion of addition on account of unexplained sundry creditors:The Assessing Officer disallowed Rs. 6,68,351 on account of unexplained sundry creditors due to the lack of confirmation certificates. The Ld. Commissioner of Income Tax (A) disagreed with this disallowance, stating that since the expenses were accepted in the profit and loss account, adding them back as sundry creditors was unjustified. The ITAT, however, found that the veracity of the sundry creditors was not established as confirmation certificates were not provided. The issue was remitted back to the Assessing Officer for a fresh examination, emphasizing the importance of verifying the creditors' details properly.In conclusion, the ITAT upheld the deduction claimed u/s. 10A, remitted the issue of depreciation back to the Assessing Officer for verification, and remitted the issue of unexplained sundry creditors for a fresh examination. The judgments were based on the need for proper documentation and verification to support the claims made by the assessee.