2023 (12) TMI 985 - HC - Income Tax

Court Allows 430-Day Delay in Appeal on Deduction for Liquidated Damages; Tribunal's Decision Upheld, No Law Issue Found.

Commissioner Of Income Tax (International Taxation) -3 Versus UT Starcom Inc.

The court condoned a 430-day delay in re-filing the appeal to address the merits of the case. The appeal contested the Income Tax Appellate Tribunal's ... Deduction with regard to liquidated damages - CIT(A) examined the material on record and returned a finding of fact that the respondent/assessee had infact suffered damages to the extent of the provisions made in the preceding AY - CIT(A) found that the respondent/assessee had to make supplies to BSNL and MTNL. Since, there was a delay in making the supplies, liquidated damages were adjusted by the said entities against the invoices raised by the respondent/assessee - HELD THAT:- The Tribunal, was not impressed with the arguments advanced on behalf of the appellant/revenue, and hence sustained the findings returned by the CIT(A) with regard to the liquidated damages suffered by the respondent/assessee. We may note that there is nothing brought on record to suggest that the findings returned by the CIT(A) are perverse. Thus, having regard to the orders passed by the CIT(A) and the Tribunal, according to us, no substantial question of law arises for our consideration. Appeal closed. Issues Involved:1. Condonation of delay in re-filing the appeal.2. Claim of deduction for liquidated damages in Assessment Year (AY) 2008-09.Condonation of Delay:An application was filed seeking condonation of a 430-day delay in re-filing the appeal. Despite the significant delay, the court decided to condone it in order to proceed with deciding the appeal on its merits.Claim of Deduction for Liquidated Damages:The appeal focused on challenging an order by the Income Tax Appellate Tribunal regarding the deduction claimed for liquidated damages. The main issue was whether the respondent/assessee rightfully claimed deduction for liquidated damages. The respondent had made a provision for liquidated damages in the preceding Financial Year (F.Y.) 2006-07. In the AY 2008-09, the respondent claimed a deduction of Rs. 4,37,36,387, which included the provision made in the preceding year. The Assessing Officer (AO) disallowed the deduction for damages suffered in the preceding year but allowed a deduction for additional compensation paid. The Commissioner of Income Tax (Appeals) found that the respondent had indeed suffered damages as per the provisions made in the preceding year, which were adjusted against invoices raised by the respondent for delayed supplies to BSNL and MTNL. The CIT(A) provided detailed information on the damages suffered by the respondent. The Tribunal upheld the findings of the CIT(A) regarding the liquidated damages suffered by the respondent, and no substantial question of law was found to arise for consideration.Conclusion:The appeal was closed based on the orders passed by the CIT(A) and the Tribunal, with parties instructed to act based on the digitally signed copy of the order.