TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 2060
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..../2012 are the cross appeals filed by the assessee and the revenue respectively against the order dated 12.01.2012 pertaining to the assessment year 2008-09, whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against assessment order passed u/s 143 (3) of the Act. Vide ITA No. 7003/Mum/2011, the revenue has challenged the order dated 13.07.2011 passed by the CIT (A), pertaining to the assessment year 2006-07 whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against assessment order passed u/s 143 (3) read with section 147 of the Act. Vide ITA No. 1844/Mum/2014 the assessee has challenged the order dated 27.12.2013 passed by the Commissioner of Income Tax (Appeals) pertaining to the assessment year 2007-08, whereby the Ld. CIT (A) has confirmed the penalty levied by the AO u/s 271 (c) of the Act. 2. Since, all these appeals pertain to the same assessee for the different assessment years, the same were clubbed, heard together and are being disposed of by this common and consolidated order for the sake of convenience. ITA No. 2413/MUM/2011 (Assessment Year: 2007-2008) 3. Brief facts of the case are that the assessee ....
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....loyee developing new clients in US and other business development related expenses including travelling and hospitality. However, the authorities below rejected the contention of the assessee and disallowed the claim. As pointed out by the Ld. counsel, the co-ordinate Bench of the Tribunal has dealt with the identical issue in the assessee's own case for the assessment year 2006-07 aforesaid. The co-ordinate Bench has decided this issue in favour of the assessee holding as under:- "11.2 It is clear from the plain reading of this sub, sec. 1&4 of sec. 10A that the deduction is allowable on the profits and gains delivered by the undertaking and such profit derived from export of articles shall be the amount which bears profits of the business of the undertaking in the proportion as the export turnover bears to the total turnover of the business carried on by the undertaking. Accordingly, the total turnover of the undertakings has to be taken into consideration for the purpose of the profits derived from the export of articles or things or computer software as per sub. Sec. (1) of sec. 10A and not the total turnover of the business of the assessee. Therefore, in our the CIT (A) has ....
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.... allow this ground of appeal of the assessee. Accordingly, we direct the AO to allow the claim of the assessee and delete the addition. ITA No. 2848/MUM/2011 (Assessment Year: 2007-2008 9. The revenue has raised the following effective grounds of appeal against the impugned order passed by the Ld. CIT (A):- On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in allowing relief to the assessee to the extent impugned in the ground enumerated below:- 1. The order of the CIT (A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case and in law, the ld. CIT (A) erred in deleting the disallowance of Rs. 18.26 crores under section 10A, ignoring the fact that business done in the New STP unit was a continuation of the business done by Non STP unit and hence ineligible for deduction u/s 10A. 10. Before us, the Ld. Departmental Representative (DR) submitted that the Ld. CIT (A) has wrongly deleted the disallowance of Rs. 18.26 crores u/s 10A of the Act ignoring the fact that business done in the new STPI Unit was a continuation of business done by the non STIP Unit, therefore, ineligible for de....
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....nt to the Engineering Service Agreement. Similar is the case with most of the other cases relied upon by the Assessing Officer. In the Appellant's case, it is clear, different job on a different scale is being done by different persons at all levels and accordingly, in terms of the tests laid out in these cases, splitting up/reconstruction has not taken place in the Appellant's case. 4.3.2 In line with the foregoing, I do not find justification in the denial of the exemption. Accordingly, the Assessing Officer is directed to restore the exemption. The ground of appeal is accordingly, allowed". 12. The Ld. CIT (A) has pointed out that the AO has denied the deduction mainly on the ground that by setting up the STPI Unit, the appellant had not started a new business. The Ld. CIT (A) has further observed that findings of the AO are based on an inadequate premise as the AO has based his findings on the purchase order dated 15.10.2004 and the nature of services in the pre existing non STPI unit and the comparable rates of pre STPI and STPI jobs. We find that the observations of the Ld. CIT (A) are based on the evidence on record. As observed by the Ld. CIT (A) the purchase order dat....
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....ative of the assessee attended the assessment proceedings and submitted the details called for by the AO after hearing the assessee the AO inter alia made disallowance of Rs. 15,82,113/- on account of foreign exchange, fluctuation loss holding it as notional loss, disallowance of Rs. 57,34,179/- on account of business development expenses and disallowance of Rs. 4,01,126/- u/s 14A of the Act. In the first appeal, the Ld. CIT (A) confirmed all the three disallowances made by the AO. 16. Aggrieved by the impugned order aforesaid, the assessee has filed the present appeal raising the following effective grounds:- 1. "On the facts and circumstances of the case and in law, the learned CIT (A) erred in confirming disallowance of foreign exchange fluctuation loss of Rs. 15,82,113 by wrongly concluding it as notional loss. 2. On the facts and circumstances of the case and in law, the learned CIT (A) erred in confirming disallowance of business development expenses to the tune of Rs. 57,34,179 without appreciating that these were marketing expenses and revenue in nature. 3. On the facts and circumstances of the case and in law, the learned CIT (A) erred in ....
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....the AO. 21. We have perused the material on record in the light of the rival submissions. Since, we have allowed the identical ground in the assessee's own case, ITA No. 2413/M/2011 for the A.Y. 2007-08 discussed above, consistent with our findings in the assessee's case aforesaid, we allow this ground of appeal of the assessee for the same reasons. 22. The Third ground pertains to disallowance of expenditure u/s 14A to the tune of Rs. 4,01,126/-. The Ld. counsel for the assessee submitted that AO has not recorded any satisfaction to the appellant's contention that there was no expenditure incurred for earning exempt income. The Ld. counsel further relied on the decision of ITAT, Mumbai in the case of Lina Kasbaker vs. ACIT ITA No. 5620 and 5621/M/2013. 23. On the other hand, the Ld. DR submitted that since the AO has calculated the disallowance u/s 14A read with Rule 8D of the Income Tax Rules, there is no infirmity in the findings of the Ld. CIT (A) to interfere with the same. 24. We have perused the material on record in the light of the rival submissions, we notice that the AO has calculated the disallowance as per the provisions of Rule 8D of the Income Tax ....
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....nd delete the addition. 28. The third ground pertains to disallowance u/s 40(a)(ia) of Rs. 26,46,002/- made by the AO. The Ld. DR relying on the assessment order submitted that the Ld. CIT (A) has wrongly deleted the disallowance u/s 40(a)(ia) to the tune of Rs. 26,46,002/- ignoring the fact that the assessee had made less deduction of source at source and failed to appreciate that section 40(a)(ia) is applicable for lower deduction of tax at source. 29. On the other hand, counsel for the assessee relying on the order passed by the CIT (A) submitted that since the issue under consideration is covered in favour of the assessee by the decision of the Kolkata Bench of ITAT passed in DCIT vs. S.K. Tekriwal ITA No. 1135/Kol/2010, there is no merit in the appeal of the revenue. 30. We have perused the material on record in the light of the rival submissions. The Ld. CIT (A) has decided this issue in favour of the assessee relying on the decision of the ITAT, Kolkatta in the case of M/s S.K. Tekriwal ITA No. 1135/Kol/2010. The observations of the Ld. CIT (A) are reproduced as under:- "B ITAT, Kolkata in the case of M/s S.K. Tekriwal (ITA No. 1135/Kol/10) held....
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....on declaring the total income of Rs. 71,76,710/-. The assessment was completed u/s 143(3) of the Act determining the total income of Rs. 2,07,15,209/- after allowing deduction of Rs. 2,20,66,616/- u/s 10A of the Act out of the total amount of Rs. 3,29,17,544/- claimed by the assessee. Subsequently, the assessment was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on the ground that assessee's claim u/s 10A has been rejected in the assessment year 2007-08 as the assessee's new undertaking (STP unit) was formed by splitting up/reconstruction of business already in existence and therefore the new undertaking does not fulfill the second condition in section 10A(2)(ii) of the Act. 33. In response to the notice u/s 148 of the Act the authorized representative of the assessee attended the proceedings and submitted the details called for. The assessee contended that the action of reopening is bad in law. The assessee further contended that since basic eligibility conditions have been examined and deduction has been allowed u/s 10A of the Act, reopening of the assessment is invalid and void ab initio. However, the AO disallowed the deduction holding th....