Income Tax Appellate Tribunal - Hyderabad
Natco Pharma Limited,, Hyderabad vs Assessee on 2 May, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD "B" BENCH, HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.1679/Hyd/2012
Asst. Year 2009-10
ITO, Ward-11(3), Vs Sri Murali Krishna
Hyderabad. Chada, Hyderabad.
PAN: ABFPC 6402 L
(Appellant) (Respondent)
Appellant by : Sri Laxman Rao
Respondent by : Sri K. Sai Prasad
Date of hearing : 02-5-2013
Date of Pronouncement : 22-5-2013.
ORDER
PER SAKTIJIT DEY,JUDICIAL MEMBER.
This appeal preferred by the department is directed against the order passed by the CIT (A)-VI, Hyderabad passed in appeal No.0588/2011-12/CIT (A) -VI pertaining to the assessment year 2009-10.
2. The department has raised the following effective ground:-
"The ld CIT (A) had not provided an opportunity to the Assessing Officer as provided under Rule 46A and a 2 ITA No.1679 of 2012 Sri Muralikrishna Chada, Hyd..
================== relief was given to the appellant on the basis of fresh evidence filed by the appellant."
3. Briefly the facts are, the assessee an individual is carrying on its activity as a soft ware service provider. For the assessment year under dispute, the assessee filed its return of income on 24-9-2009 declaring a total income of Rs.2,76,430/- after claiming exemption u/s 10A of the Act of an amount of Rs.61,89,355/-. During the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee had entered into contract agreement with M/s. Hilton Hotel, New York, USA vide agreement dated 17-5-2006 as per which the assessee was required to provide services being 'people soft application development and support' stated as actually the 'remote maintenance' of the accounting software used by the Hotel in the running of the business at USA. The assessee stated before the Assessing Officer that earlier, the assessee was actually been providing services in USA itself. For personal reasons prior to the previous year relevant to the assessment year 2009- 10 came back to India and resumed his business connection with USA contractor for providing services as software export. In this connection, the assessee got itself registered with the Software Technology Parks of India, Hyderabad. The assessee also produced copy of the SOFTEX forms cleared by the STPI invoice wise which was shown as marked for the realisation of the respective banker so that the corresponding foreign exchange remittance is to be received and repatriated into India through the banker. The Assessing Officer further noticed that the bank account of the assessee reflect the deposit of foreign exchange in USA account and its transmission to the bank account in India by June, 2009. The Assessing Officer further 3 ITA No.1679 of 2012 Sri Muralikrishna Chada, Hyd..
================== noted the fact that the bank account extracts indicated the receipt of foreign exchange by the banker through the assessee's account viz., Citi Bank in USA to the Citi Bank in India both showing the names of the assessee. The Assessing Officer, however disallowed the claim of exemption u/s 10A of the Act by observing that the assessee failed to file the corresponding Foreign Exchange Inward Remittance Certificate (FIRC) and the invoice wise payments as per the SOFTEX forms are not reflected in the bank account corresponding to the contract amount claimed as received from the contract against the said invoices, totalling to US $1,29,000/- on which basis the claim of 10A exemption is based. The assessee being aggrieved of the disallowance of exemption u/s 10A of the Act preferred an appeal before the CIT (A).
4. The CIT (A) on examining the materials on record found that the assessee had raised 9 invoices on Hilton Hotels aggregating to a sum of US $1,29,000 It was further found that the copies of the invoices and the bank account copy of Citi Bank, Hyderabad indicated the remittance of USD 16800 on 17- 6-2008 and of USD 1,12,000 on 13-6-2009. The two FIRCs showing these two remittances and the bank account copy of the assessee in Bank of America, USA showed deposits of USD 51,000, USD 28,100 and USD 49,900 aggregating to USD 1,12,000 which was eventually remitted into his account of Citi Bank Hyderabad were also submitted. Only because in the FIRCs the assessee was shown as the remitter of foreign exchange of USD 1,12,000, the Assessing Officer disallowed the exemption u/s 10A of the Act. The CIT (A) further noted that the assessee had deposited a sum of USD 1,10,000 received from Hilton Hotels, USA in three instalments in his bank account 4 ITA No.1679 of 2012 Sri Muralikrishna Chada, Hyd..
================== in Bank of America, USA which exactly tally with the amounts in the invoices. The deposits in bank of America and subsequent remittance in his accounts in Citi Bank in India are also evidenced by the copies of bank accounts. It was further noted by the CIT (A) that the amounts have been brought into India within the specified period. The CIT (A) held that only because the assessee himself was shown as remitter in FIRC for a sum of USD 1,12,000, the Assessing Officer has disallowed the same. The CIT (A) was of the view that since the assessee had first deposited the receipts from Hilton Hotels in his accounts and since his remittance in his bank account in India has been made from his own bank account in USA. It was logical that the assessee's name should be reflected as remitter in FIRC. The CIT (A) further observed that even though the FIRC for a sum of USD 16800 shown Hilton Hotels as remitter, the Assessing Officer has disallowed the entire claim of exemption u/s 10A amounting to Rs.61,89,355/-
5. We have considered rival submissions of the parties and perused the material on record. From the assessment order, it is very much evident that the Assessing Officer admits the fact that the assessee's bank i.e., Citi Bank, Hyderabad reflects the deposit of foreign exchange in USA account and its transmission to the bank account in India by June, 2009. The only reason for which the Assessing Officer has disallowed the exemption is due to the fact that the FIRCs mentioned the assessee as remitter of the foreign exchange. This, in our view, cannot be a valid reason for rejecting the assessee's claim of exemption u/s 10A of the Act. When all documents like bank account copies, invoices and the FIRCs establishes the fact that the amount received from Hilton Hotels towards services provided by the 5 ITA No.1679 of 2012 Sri Muralikrishna Chada, Hyd..
================== assessee and which was deposited into the assessee's bank account in USA has in fact been remitted to the assessee's bank account in India, then the assessee's claim for exemption should not have been disallowed by raising purely technical and irrelevant issue. Apart from raising the technical defects if at all it can be called a defect, the Assessing Officer has shown no other valid reason for disallowing the assessee's claim of exemption. When the assessee has fulfilled all the conditions for claiming exemption u/s 10A of the Act, the same should be allowed to the assessee.
6. The learned Departmental Representative could not specifically point out what are the additional evidences produced by the CIT (A) and which were considered by her in violation of Rule 46A of IT Rules. Therefore, considering the totality of facts and the circumstances of the case, we do not find any infirmity in the order passed by the CIT (A) which is accordingly sustained. Therefore, the ground raised by the department is dismissed.
7. In the result, the appeal filed by the department stands dismissed.
Order was pronounced in the open Court on 22-05-2013.
Sd/- Sd/-
(CHANDRA POOJARI) (SAKTIJIT DEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 22nd May, 2013.
Jmr*
6 ITA No.1679 of 2012
Sri Muralikrishna Chada, Hyd..
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Copy forwarded to:
1. ITO Ward-11(3), D- Block, 5th Floor, IT Towers, AC Guards, Hyderabad.
2. Sri Murali Krishna Chada, 106, Jai Vayu Vihar, Kukatpally, Hyderabad.
3. CIT (A)-VI, Hyderabad.
4. CIT concerned, Hyderabad.
5. The DR, ITAT, Hyderabad 7 ITA No.1679 of 2012 Sri Muralikrishna Chada, Hyd..
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