TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 324
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.... by the assessee, the AO observed that Rs. 3,08,47,120/- was received from transport department of Government of Gujarat, vide Govt. of Gujarat order dated 27.3.2006. From this order of the Govt. of Gujarat, the AO found that the transport department of Govt. of Gujarat has released the amount for modernization and implementation of I.T. as well as new services for office automation and computerization methodology. He further noted the contents of annual report (page no.2), which states as under: "The company being appointed as Nodal Agency for all IT related activities of the Transport Department had finalized the vendor for issuance of Card Based Driving Licence in Gujarat State on BOO Basis. The Company is carrying out the activities like SMS Based Gateway, IT Road Map till 2011, Info-Kiosk for RTOs, RTO Check post Application, Document Management System and procurement of hardware etc. Commissioner of Transport has been awarded to GIPL for the work of Data Migration & Data Porting Work for the issuance of Smart Card Driving License in Sarathi & Vahan Software of the Transport Department. The work is almos....
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....4,400/- Office Order No. 193 of 2005/06 21.03.2006 30,00,000/- Total 3,33,04,400/- The copy of these GR/ Office Order is submitted in Annexure D. (d) The RTO offices, Government of Gujarat had utilized a sum of Rs. 24,57,280/- and Rs. 14,83,508/- during the F.Y. 2006-07 and 2007-08 respectively out of above referred advances towards the cost of Hardware/ Software. In accordance with the terms in GR as above referred in Para 3.2, GIPL, the appellant had earned the consultancy charges for Rs. 86,005/- and Rs. 1,25,641/- during F.Y. 2006-07 and 2007-08 respectively and considered under the head "Income from Consultancy Charges, Operation & Maintenance & Software Department" in the Profit & Loss Account of the Company in the respective years. The detail in this respect is submitted in Annexure E. (e) The Ld. Assessing Officer in Para 4.2 of the assessment order has referred the page 2 of Annual Report of the Company for the year in which conveyed that: "Comm....
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....thod of accounting consistently followed and accepted in the past assessments. Secondly, the Assessing Officer without prejudice to these contentions even if had any inclination to tax this amount, he should have taxed only an amount to the extent representing the income of the appellant as explained in earlier part of this submission. Lastly, the action of the Assessing Officer is not justified because he has not found any, defect in maintenance of accounts after due verification of books of accounts of the appellant and therefore, he has not rejected books of the appellant and as such amount which was held by the appellant in fiduciary capacity and which was in the nature of liability till the services are provided to the customers cannot be held to be income of the appellant. The Assessing Officer has not found any deficiency in accounting policies consistently followed for recognition of income and disclosed in the annual report which has been made basis for making addition. The appellant, therefore, requests your honour to delete unwarranted addition of Rs. 3,08,47,120/-." 6. The CIT(A) accepted the appeal of the assessee by observing as under: ....
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....tion by observing that the accounts of the assessee were audited by various agencies, and he had no reason to doubt the same and the Directors' report was explained satisfactorily. 11. Before us, the DR relied upon the order of the AO. 12. On the other hand, the AR of the assessee stated at Bar that as per the agreement, the assessee was entitled to consultancy fees on the basis of work completed as under: 1st Year : 3.5% of cost of project incurred. 2nd, 3rd, 4th Year : 3% of cost of project incurred. 13. He submitted that as per the above agreement, the assessee is duly booked its income on the basis of work completed in the relevant year. He explained that a total of Rs. 3,77,85,913/- was received by the assessee as nodal agency. Out of this, work of Rs. 24,57,280/- and Rs. 14,83,508/- was completed in the financial year 2006-07 and 2007- 08 respectively towards the cost of hardware/software and consultancy charges thereon of Rs. 86,005/- and Rs. 1,25,641/- was booked by the assessee as its income in financial year 2006-07 and 2007-08 respectively. The balance amount of Rs. 3,08,47,120/- was shown as liability in the balance sheet. He further explained tha....
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.... business of the appellant under the provision of section 80IA (10) of the Act without any basis or substantive evidence ignoring various submissions, explanations and documents on record. This unilateral act of Id. CIT (A) being illegal, bad in law and uncalled for deserves to be quashed. 16. The CIT(A) has observed as under: 4.2 I have considered the arguments of the A.O., the facts of the case and the submissions of the appellant. The following four issues, one technical and three on merits are required to be discussed and decided separately, for deciding this ground: 4.2.1 Technical ground of appellant having not filed audit report in Form No. 10CCB either with the Income Tax Return or before the AO; and its request in Appeal proceedings to admit it There is no dispute on the fact that appellant had not filed audit report in Form No. 10CCB either with the Income Tax Return or before the AO; and requested in Appeal proceedings to admit it. The appellant is claiming that (0 it was issued by the tax auditor well before furnishing of r....
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....ITR307 (Kar.) In the case of CIT v Panama Chemical Works [2000] 113 Taxman 717(MP) it was held that filing of the audit report during the assessment proceedings by the assessee amounts to substantial compliances with the statutory requirement, and that it would be too technical to disallow the deduction merely on the ground that the audit report was not attached to the return of income when the existence of such a report was not in doubt and when it was brought on record during the assessment proceedings. For these reasons, the High Court held that no question of law would arise from the Tribunal's order allowing deduction to such a case, However, the Supreme Court in v, Panama Chemicals Works [200 1]250 ITR 661/118 Taxman 886 held that a referable question of law would arise in such a case. Final decision is awaited." After considering the above decisions I am of the opinion that filing of audit report before ITO is mandatory, but filing of report alongwith the return is not mandatory. If in a given case, an assessee fails to file such report alongwith the return but files it subsequently before completion of assessment, it would not be fatal to the claim of the assessee, an....
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....t Telephony Services dated 21st March, 2002. The appellant begs to submit that what has been referred to t. the Assessing Officer in the assessment order is nothing but supplements~. documents executed by the appellant with the DOT time to time in accordance with the guidelines issued by TRAI and which includes payment of licence fee/ charges to the DOT in pursuance to principal licence agreement referred hereinabove. The appellant submits that principal licence agreement has never been revoked or cancelled by the DOT at any point of time and, therefore, remained valid in the period covered by this assessment year. I agree with the appellant that there is no case that the assessee was prevented from doing the business because of absence of license, or that the principal license agreement was ever revoked or cancelled by the DOT at any point of time. Even if the license is accepted to be renewed for the period though afterwards as noted by the A.O., then also the business conducted is validated. Further, the A.O. has not alleged any pending proceedings on this account against the assessee by the DOT. The deduction u/s. 80IA cannot be denied to the appellant on this basis. &n....
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..... Thus, GIPL has become a subsidiary of GSPC. It is further observed from the Auditors Report that GIPL is "primarily engaged in the marketing and distribution of bandwidth and other value added services to various organization in Gujarat." vi. It is also observed that inspite of having major investments in Satellite equipments etc. being made by GSPC, the assessee (GIPL) has entered into a peculiar revenue sharing arrangements with GSPC, by which GIPL is selling the bandwidth generated by the assets owned by the GSPC and revenue arising from such activities are shared with GSPC in the ratio of 90:10 (90% being GIPL share). vii. From the above discussion, it is crystal clear that owing to close connection between GSPC and GIPL, the course of business between them is so arranged that GIPL is receiving much more than the ordinary profits expected from such business as outlined in the Sec.80IA(10) of the Act. The submissions of the appellant on these are summed up as follows: a....
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.... by the GSPC Ltd. and has been examined by the auditors thrice including by the auditors of CAG independent of each other. f) The plant & machinery such as Radio Link/ Modems; Optical Fiber Cables; Router & Other Hardwares; UPS / Portable Power Generators; Fiber Optic Transceivers; ISP Equipments; Modems; Computers and Software's are of owned by appellant. The appellant submits that no other equipments, plant & machinery etc. were required to carry on this business and, therefore, merely saying that the appellant has no major investment in plant & machinery is " not sufficient. In absence of any corroborative statement or indication of equipments which were not in possession of appellant to carry on bandwidth service by the Assessing Officer, the appellant submits that allegation made by the Assessing Officer remain unsubstantiated and therefore, deduction denied on this ground is not justified. From the above, it is clear that the appellant GIPL is a subsidiary of GSPC ltd and the two were closely connected in the Assessment year in question. The assessee has clearly admitted that important equipment Satellite equipments, navi....
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....ial on record. We find that in the instant case, the assessee claimed deduction under section 80IA of Rs. 1,56,59,743/- in respect of profit derived from internet telephony service business. The AO did not accept the claim for want of audit report in prescribed Form No.10CCB. The assessee filed the said audit report for the first time before the CIT(A). The CIT(A) refused to admit the said audit report and confirmed the disallowance of the claim made by the assessee. We find that Hon'ble Gujarat High Court in the case of Mayur Foundation Vs. CIT, (2015) 274 ITR 562 (Guj) held that the appeal would be continuation of the assessment proceedings. The Court approved the decision of the Tribunal under section 11(2) of the Act when necessary support for the claim was presented at the appellate stage before the Tribunal. Further, the Hon'ble Madras High Court in the case of CIT Vs.Medicaps Ltd., (2010) 323 ITR 554 held that furnishing of audit-report for claim of deduction under section 80IA of the Act was not mandatory and the same can be filed even at the appellate stage. Still further, the Hon'ble Apex Court in the case of Aurangabad Electricals Ltd vs Commissioner Of Central Excise & ....