2016 (9) TMI 1547 - AT - Income Tax

Tribunal dismisses appeal on deduction claims under Income Tax Act, allows some deductions.

The Assistant Commissioner of Income Tax, Special Range, Trivandrum Versus US Technology International Private Limited And Vice-Versa.

The Assistant Commissioner of Income Tax, Special Range, Trivandrum Versus US Technology International Private Limited And Vice-Versa. - TMI Issues Involved:1. Addition of unbilled revenue.2. Deduction under Section 10B of the Income Tax Act.3. Deduction under Section 10A of the Income Tax Act.4. Deduction of bonus payment under Section 43B of the Income Tax Act.5. Initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act.Issue-wise Detailed Analysis:1. Addition of Unbilled Revenue:The assessee contested the addition of Rs. 7,93,47,506 as unbilled revenue, arguing it was already included in the total revenue of Rs. 1,97,49,30,133 for AY 2007-08. The Assessing Officer and CIT(A) rejected this claim due to lack of evidence showing the unbilled revenue as part of the total revenue. The tribunal upheld this decision, noting the absence of supporting documents like bills or vouchers and the failure to include the amount in the receivable or sundry debtors account. Thus, the ground raised by the assessee was dismissed.2. Deduction under Section 10B of the Income Tax Act:The assessee claimed a deduction of Rs. 26,94,61,666 under Section 10B, which was disallowed by the Assessing Officer based on a Delhi High Court judgment in CIT vs. Regency Creations Ltd. The judgment stated that approval for 100% EOU should come from the Central Government, not STPI. The CIT(A) upheld this disallowance. The tribunal agreed, emphasizing that the correct income must be assessed each year independently, and previous errors do not bind the department. Consequently, the ground raised by the assessee was dismissed.3. Deduction under Section 10A of the Income Tax Act:The assessee's alternative claim for deduction under Section 10A was allowed by the CIT(A), despite the Department's objection that the claim was not made in the original return and lacked Form 56F. The tribunal upheld the CIT(A)'s decision, distinguishing it from the Goetze (India) Ltd. case, as the assessee had filed a revised return with Form 56F during appellate proceedings. The tribunal referenced similar cases where alternative claims under Section 10A were permitted when Section 10B claims were denied.4. Deduction of Bonus Payment under Section 43B of the Income Tax Act:The Department argued against the deduction of Rs. 1,17,47,167 for bonus payments due to lack of evidence. The CIT(A) allowed the deduction, reasoning that the bonus provision was already debited in the profit and loss account and then adjusted for actual payments. The tribunal found no error in the CIT(A)'s decision and dismissed the Department's ground.5. Initiation of Penalty Proceedings under Section 271(1)(c) of the Income Tax Act:The assessee's appeal included a ground against the initiation of penalty proceedings under Section 271(1)(c). However, this issue was not elaborated upon in the tribunal's decision, implying it was not a focal point of the judgment.Conclusion:The appeals of both the assessee and the Revenue were dismissed, and the Cross Objection filed by the assessee became infructuous. The tribunal's order was pronounced in the open court on 26-09-2016.