Income Tax Appellate Tribunal - Bangalore
M/S Mphasis Limited , Bangalore vs The Joint Commissioner Of Income-Tax, ... on 16 October, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI B R BASKARAN, ACCOUNTANT MEMBER
MP No.104/Bang/2020
[in ITA No.65/Bang/2019]
Assessment year: 2009-10
Mphasis Ltd., Vs. The Joint Commissioner of
Bagmane World Technology Centre, Income Tax,
WTC 3, Block B, Special Range 4,
1st Floor, Wing A, K R Puram, Bangalore.
Marathahalli Outer Ring Road,
Mahadevapura,
Bangalore - 560 048.
PAN: AAACB 6820C
APPLICANT RESPONDENT
Applicant by : Shri Padam Chand Khincha, CA
Respondent by : Smt. R. Premi, Jt.CIT(DR)(ITAT), Bengaluru.
Date of hearing : 09.10.2020
Date of Pronouncement : 16.10.2020
ORDER
Per N.V. Vasudevan, Vice President This is a miscellaneous petition filed by the assessee u/s. 254(2) of the Income-tax Act, 1961 [the Act] praying for rectification of certain errors in the order of Tribunal dated 03.06.2020.
2. The issue that was considered by the Tribunal in the aforesaid appeal of the revenue was as to whether the CIT(Appeals) was right in allowing deduction u/s. 10A/10AA of the Act on the profits as enhanced by the disallowance u/s. 40(a)(i) of the Act. By the very same order of the MP No.104/Bang/2020 Page 2 of 5 CIT(Appeals), the validity of initiation of reassessment proceedings u/s. 147 of the Act was upheld. The assessee filed appeal against the order of CIT(Appeals) on the issue of validity of initiation of reassessment proceedings. The Tribunal dismissed the appeal of revenue upholding the order of CIT(Appeals) allowing deduction u/s. 10A/10AA of the Act on the income as enhanced by disallowance u/s. 40(a)(i) of the Act.
3. Insofar as the appeal of the assessee is concerned, the Tribunal dismissed the same with the following observations:-
"14. As far as appeal of the assessee is concerned, we are of the view that in view of the dismissal of the revenue's appeal, the issue with regard to question, whether the assessment was validly reopened or not whether the sum in question is chargeable to tax is purely academic, because there may not be any tax liability ultimately. The ld. counsel for the assessee has, however, drawn our attention to the decision of the Hon'ble High Court of Karnataka in WP No.55355/2019 (T-IT) dated 21.1.2020 in the case of assessee for the AY 2010-11 on identical reasons recorded. The Hon'ble High Court quashed the initiation of reassessment proceedings.
15. As we have already observed, by dismissal of revenue's appeal, there may not be any necessity for adjudicating the validity of initiation of reassessment proceedings in the present AY 2009-10. We, however, make it clear that the assessee will be at liberty to agitate this issue if circumstances so warrant. For the very same reason, we are of the view that it is not required to adjudicate the question as to, whether the sum in question is chargeable to tax under the Act or not. The issue is, however, left open without adjudication."
4. In this miscellaneous petition, the assessee has contended that the reason, as stated by the Hon'ble ITAT, for dismissing the petitioner's appeal is that there may not be any tax liability ultimately considering the dismissal of revenue's appeal. The ground for dismissing petitioner's appeal is factually incorrect. The total amount of disallowance under MP No.104/Bang/2020 Page 3 of 5 section 40(a)(i) of the Act made by the learned AO and upheld by the learned CIT(A) is Rs. 578,20,05,614. Against the said addition, the petitioner took an alternative ground for allowability of enhanced deduction under sections 10A/10AA/10B to the extent to which amounts are attributable to eligible units of the petitioner claiming deduction under the said sections. The learned CIT(A) rejected the grounds on validity of reassessment and disallowance under section 40(a)(i). The learned CIT(A) however agreed to the above alternate ground of the petitioner and held that the income of 10A/10AA/10B units enhanced due to disallowance under section 40(a)(i) would be eligible for deduction under the said section(s). Consequent to the order of the learned CIT(A), the assessing officer passed an order giving effect(OGE) to CIT(A)'s order on 02.07.2019. In such order, the assessing officer allocated the disallowance made under section 40(a)(i) to the eligible units for which deduction under sections 10A/10AA/10B were claimed. Accordingly, the enhanced deduction under sections 10A/10AA/10B was granted to the extent of Rs. 544,07,80,233. As it can be discerned from above, the net disallowance under section 40(a)(i) after enhanced deduction allowed under sections 10A/10AA/10B was Rs. 34,12,25,381 [Rs. 578,20,05,614 less Rs. 544,07,80,233]. The demand as per the OGE order is Rs. 86,66,67,610. Thus, tax liability exists even after the relief allowed by the CIT(A). Hence, it has been prayed that the reason for dismissal of petitioner's appeal and the finding of the Hon'ble ITAT that there may not be any tax liability ultimately, is factually incorrect and hence a mistake apparent from record under section 254(2) of the Income tax Act, 1961. The Assessee/petitioner has accordingly prayed for recalling the order of dismissal of the Assessee's appeal for hearing and decision on merits after affording opportunity of being heard to the parties.
5. We have heard the submissions of the ld. counsel for the assessee, who reiterated the stand of assessee as reflected in the miscellaneous MP No.104/Bang/2020 Page 4 of 5 petition. The ld. DR submitted that there is no mistake, much less an apparent mistake on the face of record.
6. We have given a careful consideration to the rival submissions. It is true that in para 14 of the order of Tribunal, there is a mention regarding the issue with regard to the validity of initiation of reassessment proceedings as 'academic', because ultimately there may not be any tax liability. In para 15 of the order of the Tribunal, it has been made clear that there may not be any necessity for adjudicating the issue of validity of initiation of reassessment proceedings, but liberty was given to assessee to agitate this issue, if circumstances so warrant. It appears to us that since one of the reasons given by the Tribunal in the order is that there may not be any ultimate tax liability and since that reason has been shown to be incorrect, the issue with regard to validity of initiation of reassessment proceedings assumes importance and ought to have been adjudicated by the Tribunal. Non-adjudication of the same is a mistake apparent on the face of record. We therefore recall the order in the assessee's appeal in ITA No.65/Bang/2019 for the limited purpose of adjudicating the grounds raised by the assessee in its appeal as far as validity of initiation of reassessment proceedings is concerned. The Registry is directed to fix the appeal for hearing in due course.
7. In the result, the miscellaneous petition by the assessee is allowed.
Pronounced in the open court on this 16th October, 2020.
Sd/- Sd/-
( B R BASKARAN ) ( N V VASUDEVAN )
ACCOUNTANT MEMBER VICE PRESIDENT
Bangalore,
Dated, the 16th October, 2020.
/Desai S Murthy /
MP No.104/Bang/2020
Page 5 of 5
Copy to:
1. Applicant 2. Respondent 3. CIT 4. CIT(A)
5. DR, ITAT, Bangalore.
By order
Assistant Registrar
ITAT, Bangalore.