Income Tax Appellate Tribunal - Mumbai
Innovsource Services Private ... vs Dcit, 14(1)(1), Mumbai on 29 January, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "C" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER)
ITA No. 3424/MUM/2024
Assessment Year: 2021-22
Innovsource Services Pvt. Ltd., DCIT, 14(1)(1),
501, Jolly Board Tower 1, I-Think Aayakar Bhavan, Maharshi Karve
Techno Campus Kanjurmarg-East, Vs. Road, New Marine Lines,
Mumbai-400042. Churchgate,
Mumbai-400020.
PAN NO. AAECI 0979 D
Appellant Respondent
Assessee by : Mr. Nitesh Joshi
Revenue by : Ms. Pradnya Gholap, Sr. DR
Date of He aring : 06/01/2025
Date of pronouncement : 29/01/2025
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 09.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) - Madurai [in short 'the Ld. CIT(A)'] for assessment year 2021-22 arising from order passed by the Central Processing Centre (CPC) Bengluru dated 22.09.2022 u/s 143(1) of the Income-tax Act, Innovsource Services Pvt. Ltd. 2 ITA No. 3424/MUM/2024 1961 (in short 'the Act'). The grounds raised by the assessee are reproduced as under:
1. Whether on facts and in the circumstances of the case and in law, the learned Additional/Joint Commissioner Commissioner of Income Income-tax (Appeals), Madurai ought to have appreciated that the appeal before him against the intimation under Section 143(1) dated date 22 September 2022 ought to be dismissed as infructuous owing to the fact an assessment order was passed on 29 Decemberr 2022.
2. Whether on facts and in the circumstances of the case and in law, the learned Additional/Joint Commissioner of Income Income-tax (Appeals), Madurai has erred in confirming the action of the Centralized Processing Center in restricting the amount of uction under section 80JJAA of the Act of Rs. 30,10,31,823 up deduction to business income of Rs. 6,22,44,206 instead of gross total income of Rs. 11, 12,68,378.
2. Thereafter, the assessee vide letter dated 30.08.2024 filed following additional grounds:
ground
3. That the adjustment as made by the CPC reducing the deduction allowable under section 80JJAA of the Act without giving an intimation in respect of the same in accordance with 1st proviso below section 143(1)(a) is illegal and bad in law.
4. That the CPC was not ju stified in reducing the appellant's claim justified for deduction under section 80JJAA in the Intimation issued under section 143(1) without specifying the sub sub-clause as per which the said adjustment has been made.
5. Assuming without admitting that sub-clause sub ii) off clause (a) of sub-section section (1) of section 143 has been applied in the present case, the quantum of deduction claimed by the appellant could not be regarded as 'an incorrect claim' and certainly not 'incorrect claim as apparent from any information in the return'
3. We have heard rival submissions of the parties on the admissibility of the additional ground. The additional ground raised being purely legal in nature, not requiring investigation of the fresh Innovsource Services Pvt. Ltd. 3 ITA No. 3424/MUM/2024 facts, same were admitted for adjudication in view of the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) and Jute Corporation of India Ltd. 187 ITR 688 (SC) (SC).
4. Briefly stated facts of the case are that the assessee is a ic private limited company and during year under reference domestic was engaged in the business of providing manpower services to other entities.. For the year under consideration, the assessee filed return of income on 30.03.2022 declaring total income at Rs. Nil. In the said return of income, the assessee declared income under the head 'profit and gains of business or profession' ( i.e. income from business of manpower supply) 6,22,44,207/ and income at Rs. 6,22,44,207/-
under the head 'income from other sources'( i.e. income other than business income may be in the nature of interest etc.) at Rs.
). After adding income from both these heads worked 4,90,24,172/-).
11,12,68,378/-.. Thereafter, the out gross total income to Rs. 11,12,68,378/ assessee computed deduction eligible u/s 80JJAA of the Act A Rs.30,10,31,823/ for the additional employee cost amounting to Rs.30,10,31,823/-
incurred, but restricted the claim to the extent of the 'gross total Rs.11,12,68,378/ resulting into 'Nil' total income. The income' of Rs.11,12,68,378/-
return of income filed by the assessee was processed u/s 143(1) of the Act on 22.09.2022 u/s 143(1) of the Act, Act wherein the deduction business income' claimed u/s 80JJAA was restricted to 'business income of Rs.6,22,44,207/- as against 'gross gross total income income' of Rs.11,12,68,378/- as claimed by the assessee. Aggrieved, the Innovsource Services Pvt. Ltd. 4 ITA No. 3424/MUM/2024 essee filed appeal before the Ld. CIT(A) but could not succeed. assessee Before the Ld. CIT(A), the assessee urged for merging the appeal against order u/s 143(1) of the Act with the appeal filed file against assessment order u/s 143(3) of the Act and to consider detailed submission filed during ongoing appeal proceedings against the said assessment order. The Ld. CIT(A) after considering the submission of the assessee dismissed the appeal observing as under:
OBSERVATION AND DECISION:
The appellant admits that the order u/s143(3) is passed on29 December 2022. The appellant has requested that In view of the above, we request your Honour to kindly merge captioned Appeal filed against the rectification order (Appeal no: NFAC/2020- NFAC/2020 21/10192468 2468 dated 21 October 2022) with latest appeal filed against the Assessment Order (Appeal no:
21/10201653 dated 27 January 2023) and NFAC/2020-21/10201653 consider detailed submission filed vide letter dated 23 February 2024 during ongoing appeal proceeding against the th assessment order.
The appeal against the 143(3) order lies with CIT(A) and against 143(1) lies with JCIT(A). Hence combining this appeals is not possible.
5.2 Ground 1 is against CPC restricting the claim under INR 30,10,31,823 to Section 80JJAA of the Act amounting to INR 6,22,44,207/ and not restricting the claim under the of Rs 6,22,44,207/-
Section 80JJAAto the gross total income of INR 11,12,68,378/-
11,12,68,378/ . In the 143(3) order the claim under Section 80JJAA itself is disallowed and a finding is given interpretation of law is always Prospective However, the interpretation unless stated otherwise. In the extant case, the amendment is applicable with effect from 01- 01 04-2019.
2019. While as per the above issue, the assessee has claimed deduction u/s 80JJAA Innovsource Services Pvt. Ltd. 5 ITA No. 3424/MUM/2024 of over Rs.30,10,31,823/-
Rs.30,10,31,823/ inter-alia, taking aking into account 2017-18. With appointments as shown to be taken place in FY 2017- respect to above amendment, appointments made in F.Y. 2018-19 19 would be eligible for the said provision of, "Provided further that where an employee is employed during the previous us year for a period of less than two hundred and forty days or one hundred and fifty days, as the case may be, but is employed for a period of two hundred and forty days or one hundred and fifty days, as the case may be, in the immediately succeeding year, year, he shall be deemed to have been employed in the succeeding year and the provisions of this section shall apply accordingly". Please note as per provisions of law, deduction u/s 80JJAA is allowable only for three years including the year of appointment anandd therefore, 2020 21 as done by there is no question of taking it to FY 2020-21 assessee.
11,12,68,378/- by the Since income declared is of Rs. 11,12,68,378/ Rs.11,12,68,378/ is being done assessee, disallowance of Rs.11,12,68,378/- u/s 80JJAA as claimed by the assessee.
5.3 In the 143(3) order order a finding is given that the appellant is not eligible for deduction u/s Section 80JJAA for this assessment year. But the issue whether the appellant is eligible for deduction under Section 80JJAAon the gross total income of INR 11,12,68,378/ 11,12,68,378/- or is to be e restricted to the 6,22,44,207/- will be relevant if the business income of Rs 6,22,44,207/ appellate authority in the appeal filed against the 143(3) order decide in favour of the appellant. Hence this issue is discussed in this order.
5.4 The claim of the appellant is that Section 80A(4) of the Act provides that where the amount of profit and gain is claimed and allowed as deduction i.e., profit linked deduction, the deduction under those section shall be restricted to the business income earned only. However, it isi pertinent to note that under Section 80JJAA of the Act, the Appellant is eligible to claim deduction of the additional employee cost incurred in the course of business and not does not provide for deduction of profit and gain from a business.
ision of Section 80A(4) of the Act shall not be Hence, provision Innovsource Services Pvt. Ltd. 6 ITA No. 3424/MUM/2024 applicable for claiming deduction under Section 80JJAA of the Act since the amount is the claimed as a deduction is the additional employee cost and not the profit from business.
Further, sub-section Section 80A of the Act was introduced section 4 of Section vide Finance Act (No. 2) Act, 2019. The intention of introduction the said sub-section section was to prevent abuse of tax incentive. The relevant extract of the Memorandum to Finance Bill 2009 wherein the intention is mentioned is provided below:
The profit linked deductions in Chapter VIA are prone to considerable misuse. Further, since the scope of the deductions under various provisions of Chapter VIA overlap, the taxpayers, at times, claim multiple deductions for the same profits.
With a view to preventing such misuse, it is proposed to amend the provisions of section 80A of the Income tax Act to Income-tax provide the following, namely:
namely:-
(i) deduction in respect of profits and gains shall not be allowed under any provisions of sectio section n 10A or section 10AA or section 10B or section 10BA or under any provisions of Chapter VIA under the heading "C. Deductions in respect of "C.-Deductions certain incomes" in any assessment year, if a deduction in respect of same amount under any of the aforesaid has been allowed in the same assessment year;
(ii) (ii) the aggregate of the deductions under the various provisions referred to in (i) above, shall not exceed the profits and gains of the undertaking or unit or enterprise or eligible business, as the case may be be;
(iii) no deductions under the various provisions referred to in (i) above, shall be allowed if the deduction has not been claimed in the return of income;
These amendments will take effect retrospectively from the 1st April 2003, and will accordingly apply apply in relation to assessment year 2003 2003-2004 and subsequent years 7.13. Hence, reading Section 80A(4) of the Act along with the intention, it is submitted that the restriction under Section 80A(4) is applicable for profit linked deduction and given that Innovsource Services Pvt. Ltd. 7 ITA No. 3424/MUM/2024 Section 80JJAA is not a profit linked deduction, the deduction under Section 80JJAA of the Act shall be allowed up to gross total income as per provision of Section 80A(2) of the Act.
5.5 It is correct that section 80JJAA is not a profit linked deduction and is linked with expenditure. The sections uses the words "gross total income of an assessee to whom section 44AB applies, includes any profits and gains derived from business and thus is applicable only to undertakings that have profits from business. T The he appellant has profit from business and is eligible for deduction if other conditions are satisfied. In the 143(3) order AO has given a finding that conditions are not satisfies and hence is not eligible for deduction.
5.6 Section 80A(4) is as under
(4)) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading "C.-- "C. Deductions in respect of certain incomes", where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shallshall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be.
The section is very clear that "any prov isions of this Chapter provisions "C. Deductions in respect of certain under the heading "C.--Deductions incomes", and section 80H to 80VV comes under heading "C.-- "C. Deductions in respect of certain incomes. Hence the provisions under section 80A(4) and shall in no case exceed the prof profits and gains of such undertaking or unit or enterprise or eligible business,is applicable to section 10A or section 10AA or section 10B or section 10BA and section 80H to 80VV. The action of CPC restricting the deduction under section 80JJAAto the business 6,22,44,207/- is correct as per law s income of Rs 6,22,44,207/ and facts. Ground 1 Is dismissed.
Innovsource Services Pvt. Ltd. 8 ITA No. 3424/MUM/2024
5. Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 74 including the intimation order u/s 143(1) of the Act dated 22.09.2022.
6. tly, we take up the additional ground No. 3 raised by the Firstly, ground it is submitted that no assessee. In the additional ground, intimation letter proposing adjustment was issued prior to issue of intimation order u/s 143(1)(a) of the Act and therefore, the intimation n order issued is illegal and bad in law.
6.1 We have heard rival submissions of the parties and perused record. The proviso below the section the relevant materials on record 143(1)(a) provides that before issuing intimation order u/s 143(1)(a) of the Act, the assessee shall be intimated the proposed adjustment. For ready reference, said proviso is reproduced( reproduced( bold portion) as under:
"143. 55[(1) Where a return has been made under section 139, orr in response to a notice 142, such return shall be processed in the following under sub-section (1) of section 142, manner, namely:--
(a) the total income or loss shall be computed after making the following adjustments, namely:--
namely:
(i) any arithmetical error in the return; 56[***]
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
57[(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub--section (1) of section 139;
(iv) disallowance of expenditure 58[or increase in income] indicated in the Innovsource Services Pvt. Ltd. 9 ITA No. 3424/MUM/2024 audit report but not taken into account in computing the total income in the return;
(v) disallowance of deduction claimed under 59[section 10AA or o under any of the provisions of Chapter VI-A VI A under the heading "C.--Deductions "C. in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section sub (1) of section 139;; or
(vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
made unless an intimation Provided that no such adjustments shall be made is given to the assessee of such adjustments either in writing or in electronic mode:
Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:] 60[Provided also that no adjustment shall be made under sub-clause sub (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018;]"
6.2 The ld counsel argued that any intimation order passed u/s 143(1)(a) of the Act without issuing intimation letter proposing adjustment, thus, would be in violation of principle of natural justice and void-ab-initio uring the course of the hearing, the initio. But, during Ld. counsel for the assessee submitted that assessee was unable to trace any intimation issued as per the said proviso below section 143(1)(a) of the Act with respect to the adjustment carried out. In Shri Amit Chitale', the affidavit dated 30.08.2024 filed by one 'Shri Chitale it is mentioned that despite thorough search, the said intimation letter couldn't be located/traced in their records. It is noted by us that in the affidavit it is not mentioned what is the designation of Shri Amit Chitale and in what capacity said deposition had been given. We are Innovsource Services Pvt. Ltd. 10 ITA No. 3424/MUM/2024 of the opinion that since it is tthe assessee,, who has raised additional ground challenging the fact that no intimation letter proposing adjustment was issued to the assessee, then onus is on the assessee to file an affidavit from the Principal Officer of the company or any other authorized person stating that such intimation letter was assessee.. But the assessee as never issued to the assessee has filed affidavit stating that said intimation letter was not e in the record of the assessee, and the authority of the traceable person making affidavit is also not clear. The assessee could have filed an application before the Income-tax Income tax Authority under Right to Information Act for collecting said intimation letter or confirming that any such intimation letter was never issued by the Income-tax Income Authorities. Since assessee is asserting the fact that said intimation i letter was never issued, issued the onus lies on the assessee to establish that said intimation letter was never issued. If assessee succeed in proving that said intimation letter was never issued issued, the burden would shift on to Revenue to substantiate that that any such intimation was ever issued and then issue in dispute could be decided in accordance with law as to whether non issue of intimation letter would be in the nature of 'illegality' of the order or a curable 'irregularity'. But in absence of any such confirmation of the fact such that no intimation letter was issued, the additional ground raised at serial No. 3, cannot be decided in favour of assessee. Accordingly, A we dismiss the same as infructuous.
Innovsource Services Pvt. Ltd. 11 ITA No. 3424/MUM/2024
7. In additional ground raised at Serial No. 4, the assessee as has again raised the issue that the Assessing Officer has not specified the clause of section 143(1) of the Act while making sub-clause adjustment. The Ld. Departmental Representative (DR) in this regard submitted that as per the practice said sub sub-clause is specified in the intimation letter proposing the adjustment. But since the intimation letter issued proposing the adjustment has not been traceable at the end of the assessee, this additional ground raised by the assessee is also dismissed as infructuous.
infructuous
8. In additional ground at S. No. 5, the assessee has raised the issue that quantum of deduction claimed by the assessee could not be recorded as 'incorrect claim' apparent from the information in incorrect claim the return. Before adjudication of this ground, we may like li to refer regular ground No.1 of the assessee (reproduced above), in which the assessee itself is requesting that appeal against the order passed under section 143(1) of the Act should be held as infructuous as subsequent to the order u/s 143(1) of the Act, A assessment order u/s 143(3) of the Act has been passed. In regular ground No. 2 , the assessee has challenged the merit of the addition for restricting the deduction u/s 80JJAA of the Act to the extent of the business income instead of gross total income.
income. The ld counsel submitted that section 80A(4) of the Act would apply to a profit linked deduction and can have no application to a case of present type , where deduction is linked to a certain percentage of the Innovsource Services Pvt. Ltd. 12 ITA No. 3424/MUM/2024 expenditure incurred by the assessee. The ld counsel referred to the decision of hon'ble Supreme Court in the case of CIT Vs Reliance Energy Ltd in Civil Appeal No. 1328 of 2021 and others and submitted that scope of sub section (5) of section 08IA of the Act is limited to determination of quantum of deduction under subsection (1) of section 80IA of the Act by treating 'eligible business' as the 'only source of income' and subsection (5) can't be pressed into service for reading limitation of deduction under subsection (1) only income'. The ld counsel also referred to commentary to 'business income'.
authored by sh AC Sampath Iyengar to emphasize that deduction u/s 80JJAA of the Act is quantified or computed based on expenditure incurred by the assessee for the purpose of creating employment opportunities.
8.1 The brief facts qua the issue in dispute are that after issue of the intimation order dated 22/09/2022,, the return of income filed by the assessee was selected for scrutiny assessment and during scrutiny assessment, the Assessing Officer examined the claim of deduction u/s 80JJAA of the Act. In the queries raised, the Assessing Officer raised question for taking into account appointment of the employees in the financial year 2017-18.
2017 The Assessing Officer further questioned that assessee was engaged in supply of the manpower services and those employees had worked for different entities and not work worked for the assessee company. The Assessing Officer further questioned that the assessee has not Innovsource Services Pvt. Ltd. 13 ITA No. 3424/MUM/2024 brought anything on record to prove that deduction u/s 80JJAA of the Act in respect of those persons had not been claimed by those entities.. The assessee did not respond to the queries issued by the Assessing Officer and therefore, he issued a final show cause notice on 20.09.2022. In response to final show cause, the assessee responded to query regarding considering appointment made in financial year 2017-18. The he assessee claimed that deduction was granted to the assessee in assessment year 2018 19 and 2020-21 2018-19 2020 but the ld DR pointed out that in those years, no scrutiny assessment was carried out. After examining the part documents filed by the assessee, the Assessing Officer in the order u/s 143(3) dated 29.12.2022 rejected the entire claim of deduction u/s 80JJAA of the Act holding that not only legally but on the facts also the claim had serious anomalies. A copy of the assessment order is placed on Paper Book page 36 to 54 of the Paper Book.
8.2 We have heard rival submissions of the parties on the issue of the merger of the intimation order u/s 143(1)(a) of the A Act with assessment order u/s 143(3) of the Act. We find that assessee filed rectification against the intimation order dated 22.09.2022 which was disposed off by the AO vide rectification order dated t assessee 21.10.2022. The Ld. CIT(A) has cited the submission of the in the impugned order wherein the assessee has requested to merge the appeal against the rectification order with the appeal filed against the assessment order. In our opinion, the assessee itself is Innovsource Services Pvt. Ltd. 14 ITA No. 3424/MUM/2024 accepting that the issue of adjustment made u/s 143(1)(a) of the Act and the rectification order merged with the assessment order. In the ground no. 1 raised before us also, the assessee is praying to this effect. In background of these facts and circumstances, we are of the opinion that , once, o the issue involved in intimation order gets merged with the assessment order, the present appeal becomes infructuous.. The irrespective of the fact of admission by the assessee, the law itself is clear on the concept of merger between an assessment has been dealt with by various intimation and the assessment Hon'ble Courts and the Benches of the Tribunal. The Hon'ble High Court of Madras in the case of Tamil Nadu, Magnesite Ltd. Vs. Commissioner of Income Tax Writ Petition tion No. 17819/2001 held that after passing of an order u/s 143(3) of the Act, the intimation u/s 143(1) of the Act get merged with the order u/s 143(3) of the Act and intimation order u/s 143(1)(a) of the Act does not Officer The survive independently for rectification by the Assessing Officer. Hon'ble High Court of Calcutta in the case of CESC Ltd. v. DCIT (2004) 134 Taxman 647 (Cal) held that when assessee accepted in the intimation has been reversed in the regular assessment and the erred appeal which is pending, the theory of assessee has preferred merger is bound to apply in the present case for the reason that the operative The intimation issued u/s 143(1)(a) of the Act is no longer operative. ordinate Bench of the Delhi Tribunal in South India Club v. Co-ordinate ITO (2024) 163 taxmann.com 479 (Delhi) held that exemption claimed u/s 11 of the Act was denied vide the intimation u/s 143(1) Innovsource Services Pvt. Ltd. 15 ITA No. 3424/MUM/2024 of the Act and subsequently the matter was picked up for scrutiny and the Assessing Officer also denied the same exemption in the Co ordinate Bench of the assessment order u/s 143(3) of the Act. The Co-ordinate Tribunal held that intimation order u/s 143(1) of the Act merges with the assessment order u/s 143(3) of the Act and the said intimation becomes inoperative and the appeal filed against such intimation int could also become infructuous. But if the subject matter of adjustment u/s 143(1) of the Act and section 143(3) are different then said concept of the merger may not apply. In the case of Areca Trust v. CIT(A), NFAC reported in (2024) 117 ITR (Trib) 264 (ITAT[Bang]), the Bengluru Bench of the Tribunal observed that the assessee filed return of income declaring total income at Rs. Nil which was processed by the Assessing Officer and in the intimation u/s 143(1) of the Act, the Assessing Officer considered an amount of Rs.23,29,62,417/-- as income chargeable to tax u/s 115JB of the Act. The assessee filed a rectification application against the said intimation u/s 154 of the Act. Subsequently, the case of the assessee was selected for scrutiny and assessment order u/s 143(3) of the Act was passed whereby assessing total income at Rs.23,29,63,417/- as per the intimation letter issued u/s 143(1) of the Act. The Assessing Officer merely repeated the figure of the intimation order, the assessee income which was mentioned in the intimation preferred appeal against the order u/s 143(3) of the Act before the Ld. CIT(A), the Ld. CIT(A) held that appeal filed by the assessee against the order u/s 143(3) of the Act was not maintainable since Innovsource Services Pvt. Ltd. 16 ITA No. 3424/MUM/2024 te the matter on merits and the Assessing Officer did not adjudicate merely concluded the assessment by incorporating adjustment from the intimation u/s 143(1) of the Act. Similarly, the Co-ordinate Co Bench of the Tribunal in the case of Orient Craft Ltd. v. Dy. CIT (2024) 158 taxmann.com 1124 (Delhi-Trib.) (Del also affirm the ordinate Bench of the Tribunal in the case of finding of the Co-ordinate Areca Trust (supra). From the above decisions, it is clear that an intimation order u/s 143(1) of the Act will not automatically merged with the assessment order u/s 143(3) of the Act in case where the issues dealt in the intimation order and the assessment order are different and in the assessment order u/s 143(3) of the Act merely the income adopted under the intimation order u/s 143(1) of the and no addition has been made separately.
Act has been accepted a separately The ld counsel referred before us to the decision of the Coordinate bench of Mumbai in the case of National Stock Exchange of India Limited vs DCIT in ITA No. 732/Mum/2023 for AY 2020-21 2020 and submitted that no appeal appeal lied against assessment order, but we find that in said case the adjustment which was made in intimation order, was not made in the assessment order passed after discussion. Thus, facts of that case are different from the facts of instant case before us.
8.3 In light of the above discussion, upon examining the facts of the present case, it is evident that the adjustment proposed in the order issued under Section 143(1) of the Act pertains to the Innovsource Services Pvt. Ltd. 17 ITA No. 3424/MUM/2024 deduction claimed under Section 80JJAA of the Act. Notably, the same issue has also been addressed in the order issued under Section 143(3) of the Act, which is currently under appeal before the Learned First Appellate Authority. The primary question in the order under Section 143(1)(a) is whether the deduction under Section 80JJAA should be restricted to the business income or extended to the gross total income. The assessee contends that the the expenditure incurred, deduction, being calculated based on the should not be limited to the business income. However, in the assessment order, the assessee did not provide complete responses to the queries raised by the Assessing Officer. Consequently, the Assessing Officer denied the entire d deduction eduction claim amounting to ₹30,10,31,823. Given that the issue of deduction is identical in both the order under Section 143(1) and the order under Section 143(3) of the Act, the former order effectively merges with the latter.
8.4 We further observe that the question of whether the deduction under Section 80JJAA of the Act should be restricted to the extent of the business income or extended to the gross total income is intrinsically linked to the larger issue of the assessee's eligibility under Section 80JJAA 0JJAA , which is presently sub-judice judice in the appeal filed against the order under Section 143(3) of the Act before the Learned First Appellate Authority. In the event that the First Appellate Authority upholds the findings of the Assessing Officer, ating this issue by us at this stage would lead to adjudicating Innovsource Services Pvt. Ltd. 18 ITA No. 3424/MUM/2024 complications and an anomalous situation for the subordinate authorities tasked with implementing the appellate orders.
8.5 Accordingly, we hold that the intimation order u/s 143(1) of ve and infructuous in the light of the scrutiny the Act as inoperative assessment completed u/s 143(3) of the Act. The ground no. 1 of the appeal is accordingly adjudicated as prayed by the assessee. In view of merger of intimation order with assessment order in the case, we are not required to adjudicate additional ground no. 5 and regular ground no. 2 of the appeal. However, we grant the liberty to both the assessee as well as to Revenue to raise this issue of limiting the deduction u/s 80JJAA to the extent gross total income vis business income by way of additional ground before the vis-à-vis Ld. First Appellate Authority in appeal pending against the order u/s 143(3) of the Act which may be decided by the ld First Appellate he grounds Authority in accordance with law. Accordingly, the ground raised by the assessee are adjudicated as discussed above.
above.
9. In the result, the appeal of the assessee is dismissed.
Order pronounced /01/2025.
nounced in the open Court on 29/01/2025.
Sd/
Sd/- Sd/-
Sd/
(RAJ KUMAR CHAUHAN)
CHAUHAN OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 29/01/2025
Rahul Sharma, Sr. P.S.
Innovsource Services Pvt. Ltd. 19
ITA No. 3424/MUM/2024
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai