ITAT Hyderabad: Assessee's Appeals Allowed on Provident Fund, Depreciation, and Deductions

The tribunal allowed both appeals of the assessee, emphasizing the correct application of provisions and relevant case laws. The disallowance of employees' contribution to provident fund under section 36(1)(va) was deleted as the contribution was remitted within the due date. Depreciation on UPS was allowed at 60% as it was considered an integral part of the computer system. The treatment of internet charges and onsite expenses for deduction under section 10A required a reduction from both export and total turnover, as directed by the tribunal. The judgment was pronounced on June 3, 2015, by ITAT Hyderabad.

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Issues:
1. Disallowance of employees' contribution to provident fund under section 36(1)(va) of the Income-tax Act.
2. Restriction of depreciation on UPS at 15%.
3. Treatment of internet charges and onsite expenses in computing deduction under section 10A of the Act.

Analysis:
1. Employees' Contribution to Provident Fund Disallowance:
The appellant challenged the disallowance of Rs. 2,16,412 as employees' contribution to provident fund under section 36(1)(va) of the Act. The Assessing Officer disallowed the amount due to belated remittance. However, the appellant contended that if the contribution is remitted within the due date of filing the return, it should be deductible under section 43B. The tribunal agreed with the appellant, citing relevant case laws, and deleted the disallowance.

2. Depreciation on UPS:
The issue revolved around the restriction of depreciation on UPS at 15% instead of the claimed 60%. The tribunal held that UPS is an integral part of the computer system, allowing depreciation at 60% as prescribed for computers. The decision was supported by various ITAT benches, leading to the allowance of the appellant's claim for higher depreciation.

3. Treatment of Internet Charges and Onsite Expenses:
The appellant contested the reduction of internet charges and onsite expenses from export turnover without a similar reduction from total turnover while computing deduction under section 10A of the Act. Relying on precedent judgments, the tribunal directed the Assessing Officer to reduce these expenses from both export and total turnover to compute the deduction accurately under section 10A.

In conclusion, the tribunal allowed both appeals of the assessee, emphasizing the correct application of provisions and relevant case laws in determining the disallowance of employees' contribution to provident fund, depreciation on UPS, and treatment of internet charges and onsite expenses for deduction under section 10A. The judgment was pronounced on June 3, 2015, by the ITAT Hyderabad.

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