Income Tax Appellate Tribunal - Pune
Ntrance Customer Services Pvt. Ltd., ... vs Department Of Income Tax on 17 October, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JM
AND SHRI R.K. PANDA, AM
ITA No. 40/PN/2011
(Assessment Year: 2007-08)
Dy. CIT Cir. 2, Pune .. Appellant
Vs.
M/s. Ntrance Customer
Services Pvt.Ltd.,
4 th floor, Tower 1, Wing 4A & B
Magarpatta, Hadapsar,
Pune-411 028
PAN AABCN 8825 A Respondent
Appellant by: Ms. Vinita Menon
Respondent by: Shri R. Murlidhar
Date of hearing: 17-10-2012
Date of pronouncement: 31-10-2012
ORDER
PER SHAILENDRA KUMAR YADAV, JM
This appeal by the Revenue is directed against the order of the Commissioner of Income-tax (Appeals)- II Pune dated 12-10-2010 for A.Y. 2007-08 on the following grounds:
1. The order of the learned CIT(A) is contrary to law and to the facts and circumstances of the case.
2. The learned CIT(A) that the CIT(A) erred in allowing the assessee's appeal by following the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd. in ITA No. 2426 of 2009 dated 23-6-2010 instead of confirming the assessment.
3. The CIT(A) erred in holding that the assessee was entitled to claim deduction u/s 10A of the Act in respect of the addition made on account of disallowance u/s 40(a)(ia) of the Act.2
ITA No 40/PN/11 Ntrance Customer A.Y. 2007-08
4. The learned CIT(A) erred in failing to appreciate that the said addition of disallowance u/s 40(a)(ia) made on account of non-deduction of TDS was not income derived from the export of software and, therefore, addition u/s 10A was not admissible to the assessee in respect of the said amount.
5. The learned CIT(A) erred in failing to appreciate that the reason behind inserting sec. 40(a) and thereby disallowing the deduction of expenditure which has been incurred for the business purpose is to forbid the assessee from non-payment or non-deduction of tax payable to the Govt. under chapter XVII-B that ought to be paid.
6. For these and such other grounds as may be urged at the time of hearing, the order of the learned CIT(A) may be vacated and that of the AO be restored."
2. The assessee has raised the issue of disallowance u/s 40(a)(ia) of the Act. The Assessing Officer held that the enhanced profit due to the disallowance could not be eligible for claim u/s 10A/10B of the act. The A.O has further held that since only the profit derived by the undertaking from export of article or things and computer software were to be allowed as deduction from the total income of the assessee, the disallowance u/s 40(a)(ia) which was only notionally increasing the income, cannot be treated as profit derived by the undertaking.
3. On appeal before the first appellate authority, the CIT(A), following the judgment of the Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd. in ITA No. 2426 of 2009 vide order dated 23-6- 2010 (330 ITR 175), and the decision of Bombay Bench of the Tribunal in the case of Saba Software 3 ITA No 40/PN/11 Ntrance Customer A.Y. 2007-08 Pvt. Ltd. Vs. ITO in ITA No. 1454/MUM/2009 dt. 27-1- 2010, allowed the claim of the assessee.
4. After hearing both the parties and perusing the material on record, we find that the CIT(A) was justified in allowing the claim of the assessee because assessee was eligible for additional claim u/s 10A of the Act due to enhancement of income on account of disallowance u/s 40(a)(ia) of the Act. Moreover, this conclusion is justified by decision of Hon'ble jurisdictional Bombay High court in the case of Gem Plus Jewellery India Ltd (supra). We therefore, do not find any infirmity in the order of the CIT(A) on this issue. In view of the above, issue raised by way of applicability of Rule 27 of ITAT Rules goes academic.
5. In the result, appeal of the Revenue is dismissed.
Decision pronounced in the open court on 31 st October 2012.
Sd/- sd/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, Dated:31 st October 2012 Ankam Copy to:-
1. Assessee
2. Department
3. The CIT (A) II Pune
4. The CIT II Pune
5. The D.R. B" Bench, I.T.A.T., Pune.
By Order //true copy// Sr. P.S. I.T.A.T., Pune 4 ITA No 40/PN/11 Ntrance Customer A.Y. 2007-08