Income Tax Appellate Tribunal - Bangalore
Ibm India Private Limited , Bangalore vs Deputy Commissioner Of Income Tax, ... on 11 July, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH : BANGALORE
BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND
SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER
IT(TP)A No. Assessment Year DIN Number
1036/Bang/2024 2010-11 ITBA/AST/M/143(3)/2023-24/1063460567(1)
1037/Bang/2024 2011-12 ITBA/GEA/M/254/2023-24/1063512355(1)
1038/Bang/2024 2012-13 ITBA/AST/M/143(3)/2023-24/1063506602(1)
1039/Bang/2024 2016-17 ITBA/AST/M/143(3)/2023-24/1063501996(1)
M/s. IBM India Pvt. Ltd., Vs. DCIT,
No.12, Subramanya Arcade, Circle - 3(1)(1),
Bannerghatta Road, Bengaluru.
Bengaluru - 560 029.
PAN :AAACI4403 L
APPELLANT RESPONDENT
Assessee by : Shri. Ajay Rotti, CA
Revenue by : Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru.
Date of hearing : 04.07.2024
Date of Pronouncement : 11.07.2024
ORDER
Per Bench :
All the above appeals of the assessee are arising from separate final orders of the Assessing Officer (AO) dated 27.03.2024 and relates to respective Assessment Years (AY) as mentioned in the title of the present appeals. Here it is pertinent to mention that this is the second round of litigation. In the first round, the Coordinate Benches vide their orders, mentioned below, have restored some issues to the file of AO and some issues to file of DRP for deciding a fresh.
IT(TP)A Nos.1036 to 1039/Bang/2024
Page 2 of 16
A.Y ITA No Date of the Order
2010-11 773/Bang/2016 18.07.2022
2011-12 2041/Bang/2016 18.07.2022
2012-13 625/Bang/2017 14.02.2022
2016-17 868/Bang/2022 11.11.2022
2. Facts of the case vis-à-vis all the years are as under:
Assessee Company is engaged in the business of trading, leasing and financing of computer hardware, maintenance of computer equipment and IT enabled services. Filed its Return of Income (ROI) declaring substantial income for the all the years. These returns were scrutinized by the AO and DRP as per the procedure and the assessments were framed by the AO. Afterwards, the assessee had gone in appeals before the First Appellate Authority {herein after referred to as CIT (A)}. Then finally the matters came up before the Coordinate Benches of the ITAT and the predecessor Benches have restored certain issues to the file of AO and certain to the file of DRP for deciding a fresh as per law. For the sake of convenience the issues raised by assessee before us in these appeals are described in tabular form as under:-
Issues AY 2010-11 AY 2011-12 AY2012-13 AY2016-17
ITA -1036/24 ITA- 1037/24 ITA-1038/24 ITA-1039/24
Relief under NA NA Ground -2 NA
section 10AA Sub-grounds 2.1 & 2.2(Rs
7,82,06,908/-
Payments Made to NA NA Gr. No- 3.1 to 3.5 (Rs 2,92,25,47,936/-) NA
IBM Singapore Note- Similar issue is decided by ITAT
in assessee's own case in AY 2010-11,
(Software
whereby the ITAT has delted the
Purchased) Shrink addition and 2013-14 the ITAT has
Wrapped Software- restored the issue to the file of AO for
examining a fresh considering the
Whether Royalty
order of the ITAT for AY 2010-11.
Assignee related Gr No-2.4 NA Gr no 3.6 NA
payments
IT(TP)A Nos.1036 to 1039/Bang/2024
Page 3 of 16
Payments made to Gr No-2.5 to NA NA NA
IBM (GS) 2.8
Payments to Gr No-2.9 Gr no-2 Gr no-3.7 & 3.8 NA
entities having no to 2.10
PE in India
Payment to IBM NA Gr No 2 NA NA
phillipen
Foreign Exchange Gr no-3 Gr no-3 NA NA
Loss
Disallowance of Gr no-4 NA Gr no-4 NA
amt u/s 37 of the
Act
3. IT(TP)A No.1038/Bang/2024 for AY 2012-13
In this round, assessee has raised total 5 grounds of appeal for the impugned year. These main grounds are further divided into sub grounds. At the time of hearing, the learned AR has not pressed general grounds. In the rest of the grounds, following issues requires consideration of the Bench :
a. Denial of deduction under section 10AA of the Income Tax Act, 1961 (hereinafter called 'the Act') in respect of residual amounts, admittedly not brought back to India, amounting to Rs.7,82,06,298/-.
b. Disallowance of payments made to IBM, Singapore, amounting to Rs.2, 92,25,47,936/- for the purchase of shrink wrapped software. c. Disallowance of payment related to assignee to the tune of Rs.6,92,40,175/- d. Disallowance of payments made to non-residents having no Permanent Establishments (PE) in India to the tune of Rs.10,54,20,822/-. e. Disallowance of expenses on the ground that expenses incurred failed when examined on the touch stone of principles governed to section 37(1).
4. With respect to the issue marked as (a), the learned Counsel for the assessee at the outset submitted that in 2nd round of assessment proceedings, the learned AO has accepted that assessee has brought back 96.66% of the foreign receipts in India and allowed deduction under section 10AA of the Act.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 4 of 16 However, the AO disallowed deduction under section 10AA on the balance 4.4% which the assessee failed to bring back in India.
5. Learned DR supported the order of the authorities below and contended that AO has correctly disallowed deduction u/s 10AA of the Act on the remaining foreign receipts as the assessee failed to bring the foreign receipts back in India.
6. After considering the rival submissions we observed that counsel for the assessee has raised following arguments:
i. Assessee has been given approval by RBI dated 28.02/2014 vis-a-vis foreign receipts. And RBI has directed to adhere with the FEMA guidelines.
ii. Though assessee has not deposited the foreign receipt in any RBI recognized bank outside India yet as per the guidelines of FEMA And RBI. The assessee can avail benefits up to threshold limit of 30% receipts of the total receipts outside India on account of onsite expenses.
7. Counsel for the assessee has drawn the attention of the Bench towards the approval of RBI dated 28.02.2014 as extracted by the Tribunal in ITA No.2588/Bang/2019 for Assessment Year 2006-07. Counsel for the assessee further pointed out that in this approval, the RBI has advised the assessee to ensure compliance in respect of FEMA guidelines while operating its accounts. Learned Counsel further submitted that in the letter of RBI dated 08.03.2013 with respect to the advice of foreign receipts parked in bank abroad is relevant for the claim of 10AA on residual amounts. This letter of RBI dated 08.03.2013 has also been considered by the Coordinate Bench in its Order for Assessment Year 2006-07 (See Page number 24 of ITAT order for AY 2006-07).
8. Letter of RBI dated 08.05.2013 would show that RBI has directed the assessee to strictly follow the guidelines of FEMA, with respect to the foreign receipts. In letter dated 08.05.2013, RBI has referred to Para(iii) of AP DIR Circular No-54 dated 29.06.2002, which says "the overseas office/branch of software exporter company may repatriate to India 100% of the contract value of each 'off site' contract as also at least 30% of the contract value of each 'on site' IT(TP)A Nos.1036 to 1039/Bang/2024 Page 5 of 16 contract may utilize the balance amount (70%) of the contract value of each 'on site' contracts for contract related expenses including office/ branch expenses abroad. A duly audited yearly statement showing receipts under 'off-site' and 'on site' contracts undertaken by the overseas office, expenses and repatriation thereon may be sent to the authorized dealer". As per AR this letter provides that an assessee who is claiming deduction in respect of foreign receipts, can utilize 30% of the receipts towards onsite expenses. However, we don't find any discussion on this aspect in the orders of authorities below.
9. We further observed thtat following the order of AY 2006-07 the Co- ordinate Bench in assessee's own case for AY 2013-14 in ITA Number 399/Bang/20123 vide order dated 27.07.2023 has observed as under:-
"4.2 The Ld.AR placed reliance on the decision of Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2006-07 wherein it was held as under:
"10.7 The assessee has produced letter of RBI dated 28/02/2014, the Competent Authority, mentioned u/s. 10B(3) of the Act. In the said letter, it is been clearly stated that the assessee is granted post facto extension. The assessee company has subsequently also realized the said amount. The assessee has obtained post facto approval from RBI coupled with the fact that it has also realized the said amounts, it entitled to the deduction u/s. 10A/10B of the Act on the said amounts. Accordingly, this ground raised by assessee stands allowed. Emphasis applied"
4.3 The Ld.AR submitted that in response to the letter filed by the assessee before the RBI on 30.07.2012, the RBI granted permission to hold and maintain the Foreign Currency Account in its own name for a period of one year from 24.08.2012. It is submitted that the RBI vide its letter dated 04.01.2013, clarified that the lapse on part of the company in not obtaining renewal of permission of RBI to maintain the Foreign Currency Account was condoned from the last renewal given by RBI. Copy of the letters from RBI dated 24.08.2012 and 04.01.2013 are placed at pages 532 & 533 of paper book
2. 4.4 The Ld.AR submitted that, subsequently, realization of sale proceeds of the assessee was audited by an independent auditor (Deloitte Haskins and Sells) appointed by the authorized dealer and a report was furnished to the RBI, wherein the auditors concluded that no variances were observed in Foreign Currency Account maintained by assessee.
4.4.1 Accordingly, the RBI vide its letter dated 28.02.2014, restored the Foreign Currency Account facility to the company. Copy of the letter dated 28.02.2014 restoring the FCA facility by RBI is placed at page 528 of paper book 2. The Ld.AR submitted that the RBI condoned the lapse on the part of the assessee in not obtaining the renewal of permission IT(TP)A Nos.1036 to 1039/Bang/2024 Page 6 of 16 to maintain the Foreign Currency Account placed as Annexure 3 at page 528 of paper book 2.
4.5 The Ld.AR thus submitted that, the Ld.AO and the DRP erred in concluding that the requirements of section 10AA are not fulfilled in respect of the amounts that have not been brought back into India in convertible foreign exchange, even though condonation was granted by the RBI in relation to the account maintained outside India.
4.6 On the contrary, the Ld.DR placed reliance on orders passed by authorities below. However, he submitted that the issues may be remanded to the Ld.AO for verification. We have perused the submissions advanced by both sides in the light of records placed before us.
4.7 Based on the submissions of both sides and the observation of this Tribunal in assessee's own case for A.Y. 2006-07, we direct the Ld.AO to verify the RBI approval restoring the FCA facility to the assessee and to consider the claim in accordance with law."
10. Following the view of the coordinate Bench in assessee's own case for AY 2013-14 & 2006-07, we remit this issue of 10AA deduction to the file of AO, for deciding a fresh with respect to the residual amounts only.
11. With respect to the issue regarding disallowance of payments made to IBM Singapore for the purchase of shrink-wrapped software (AO held this payment in the nature of royalty), the learned Counsel for the assessee has relied upon the findings of Co-ordinate Bench in assessee's own case for Assessment Year 2010-11. (Ground number-3.1 to 3.4)
12. We observe that similar issue has been decided by the Co-ordinate Bench in assessee's own case for AY 2013-14(Supra), wherein the predecessor bench has observed as under:-
"5.1 The Ld.AR submitted that the disallowance of Rs.460,49,70,453/- pertains to payments to IBM Singapore Pte Ltd ('IBM Singapore'), a foreign company located in Singapore for purchase of off-the-shelf copies of shrink-wrapped computer software, for which assessee the non-exclusive distributor, for onward sale to Indian end-users under a 'Remarketer Agreement'. The Ld.AR relied on the decision of Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT reported in (2021) 432 ITR 471 wherein Hon'ble Court. 5.2 It is submitted that, the Remarketer Agreement with IBM Singapore has been examined in detail and Hon'ble Supreme Court reviewed the taxability IT(TP)A Nos.1036 to 1039/Bang/2024 Page 7 of 16 of the transaction and held that payments made by assessee to IBM Singapore for purchase of software cannot be considered as royalty and accordingly are not taxable in India. It is submitted that Hon'ble Supreme Court further held that if a transaction is not taxable, the question of deduction of tax at source u/s. 195 does not arise. The relevant extract of the judgment has been produced below..............................
"7.4 We heard ld D.R and perused the record. The Hon'ble Supreme Court has held in the assessee's own case (referred supra) that the payments made for purchase of shrink wrapped software are not royalty within the meaning of India
- Singapore DTAA. We noticed that the Ld DRP has confirmed the disallowance by following the decision rendered by Hon'ble Karnataka High Court in the case of Samsung Electronics (supra), which has been overruled by Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence (supra). Accordingly, we direct the AO to delete the disallowance of Rs.278.68 crores.
Emphasis applied"
5.5 The Ld.AR thus submitted that, the payments to IBM Singapore amounting to Rs.460,49,70,453/- is not chargeable to tax and the provisions of section 195 of the act are not applicable.
5.6 On the contrary, the Ld.DR placed reliance on orders passed by authorities below. However, he submitted that the issues may be remanded to the Ld.AO for verification. We have perused the submissions advanced by both sides in the light of records placed before us.
5.7 Based on the above discussion and the submissions of both sides, we direct the Ld.AO to consider the claim as per the observations of the Hon'ble Supreme Court and Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2010-11 in accordance with law."
13. Respectfully following the view of the predecessor bench for AY 2013-14. This issue is also restored to the file of AO for examining a fresh.
14. Next issue which requires consideration is the taxability of reimbursement of payments related to assignees (ground number-3.6). In respect to this addition, the AR of the assessee relied on the order of the ITAT in assessee's own case for Assessment Year 2013-14(Supra) and averted that the issue may be restored to the file of AO for fresh examination. Learned DR relied on the order of the DRP and AO.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 8 of 16
15. We observe that Coordinate Bench of the ITAT in assessee's own case for AY 2013-14 has observed as under:-
"5.8 The Ld.AR submitted that the authorities below disallowed Rs.240,54,71,743/- pertaining to outbound assignee related payments without taking into consideration of our submissions. He submitted that the revenue concluded that the seconded employees continue to be on the payroll and that all expensesrelated to outbound assignees are charged to the profit and loss account of the assessee.
5.9 The Ld.AR submitted that the assessee has not claimed any deduction on account of the said payments while computing the total income for the subject Assessment Year and that such payments have not been part of the profit and loss account. It is submitted that the said payment does not represent the expenditure in the books of accounts of the assessee in arriving at the taxable income. It is thus submitted that as no deduction was claimed by the assessee on the said payment, there should not be any disallowance of the same.
5.10 The Ld.DR relied on the orders passed by the authorities below. However he submitted that the submissions of the Ld.AR needs verification.
We have perused the submissions advanced by both sides in the light of records placed before us.
5.11 Based on the above discussion, we direct the Ld.AO to verify the submissions of the assessee and consider the claim in accordance with law."
16. Following the view of the predecessor bench as extracted above, we set- aside this issue to the file of AO fresh consideration.
17. So far as the fourth issue (Gr No- 3.7 & 3.8) that is payment made to non- resident having no PE in India. Learned Counsel for the assessee has drawn the attention of Bench towards Page number 956 of PB -2 to contend that break-up of these expenses has been duly given to AO, similarly the counsel for the assessee drew the attention of Bench towards Page number 957-967 of PB-2 to submit that the parties to whom payments were made have filed declarations, declaring that they don't have any PE in India. Lastly he contended that similar issue has been decided by the Tribunal in its Order dated 27.07.2023 in ITA No.399/Bang/2023 in assessee's own case for Assessment Year 2013-14.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 9 of 16
18. The learned DR also averted that the issue may be restored to the file of the AO for deciding afresh.
19. After considering the rival submissions, we observe that the predecessor Bench in assessee's own case for Assessment Year 2013-14 (supra) has observed as under:
"5.12 The Ld.AR submitted that assessee had filed voluminous submissions with regard to the payments made to entities who do not have a PE in India. It is submitted that, the payments are made to these entities towards legal and relocation charges, which do not attract provisions of the TDS as per the Double Taxation Avoidance Agreement.
5.13 It is the submission of the Ld.AR that the payments made by assessee to the entities amounts to profits of such entities and as they do not have a PE in India, such amount cannot be deemed to have been accrued in India in order to be taxable under the Income Tax Act. He thus prayed for the issue to be verified by the Ld.AO/TPO.
5.14 The Ld.DR on the contrary relied on the orders passed by the authorities below did not object for the issue to be verified. We have perused the submissions advanced by both sides in the light of records placed before us.
5.15 We note that the evidences filed by the assessee has not been considered by the authorities while giving effect to the Tribunal's order. In the interest of justice, we remand this issue to the Ld.AO to verify all the necessary evidences and to consider the claim of assessee in accordance with law. D. Disallowance of payments made to IBM Philippines 5.16 The Ld.AR submitted that the Ld.AO has not considered the submissions with regard to the payments made by assessee to IBM, Philippines. He submitted that assessee had rendered certain payroll related services in the course of issue of salary related TDS forms, viz., Form 16 and Form 24 with respect to the employees of P&G India. Such service were outsourced by IBM India to IBM Philippines."
20. In view of the above findings of the Co-ordinate Bench in assessee's own case, we hereby restore this issue to the file of AO for deciding afresh in accordance with law. We, however, direct the assessee to place all the material before the AO during the course of set aside proceedings. We also direct the AO to provide reasonable opportunity to the assessee.
21. Next issue is in respect of disallowance of expenses amounting to Rs 19,71,74,322/- under section 37(1) of the Act. The main contention of the IT(TP)A Nos.1036 to 1039/Bang/2024 Page 10 of 16 assessee in respect of these disallowances is that the provisions made by the assessee has been reversed in next year and the same has been offered for taxation also. Learned Counsel drew the attention of the Bench towards page number 968 to 976 and pointed out that these expense provisions are reversed in subsequent year. He submitted that it would be amounting to double taxation of the same amount in the impugned year as well as it has been already offered for taxation in next year.
22. The DR contended that under Income Tax Act, mere provision is not allowable and hence to be taxed in the year in which it is made.
23. After considering the rival submissions, we are of the view that contention of the learned DR is correct. However, in case the assessee has reversed this amount in next Assessment Year, then to avoid double taxation of the same amount, the AO is directed to give consequential effect. Therefore, this issue is restored to the file of AO to decide in accordance with law.
24. IT(TP)A No.1037/Bang/2024 for Assessment Year 2011-12
25. In this year, the issues which arise for consideration of the Bench are (a) payments made to non-residents having no PE in India (b) payments made to IBM, Philippines c) foreign exchange loss. The above issues are emanating from ground No.2 and ground number 3 of the appeal.
26. At the outset, the learned Counsel for the assessee again referred to the judgment of Co-ordinate Bench for Assessment Year 2013-14 (supra) and requested that the issue related to the payments made to such non residents having no PE in India, may be restored to the file of AO for deciding afresh. Learned DR has also agreed that the matter may be restored to the file of AO for deciding afresh.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 11 of 16
27. After considering the rivals submissions, we observe that as far as the first issue that is payment to the NRIs having no PE in India is concerned, the same has already been dealt with by us in the appeal for Assessment Year 2012-13 in preceding paragraphs. Following the same, we restore this issue to the file of AO for deciding afresh in accordance with law.
28. Now coming to the issue of payments made to IBM, Philippines, we observe that similar issue had come up for consideration before the predecessor Bench in Assessment Year 2013-14. The predecessor Bench has also observed as under:
"5.16 The Ld.AR submitted that the Ld.AO has not considered the submissions with regard to the payments made by assessee to IBM, Philippines. He submitted that assessee had rendered certain payroll related services in the course of issue of salary related TDS forms, viz., Form 16 and Form 24 with respect to the employees of P&G India. Such service were outsourced by IBM India to IBM Philippines.
5.17 He submitted that the services rendered by IBM Philippines are restricted to payroll related processing services and do not qualify as Fees for Technical Services ('FTS') u/s. 9(vii) of the act since it cannot be regarded as 'managerial', 'consultancy' or 'technical' in nature, accordingly, in the absence of a business connection in India, the said amount is not liable to tax under the provisions of the Act.
5.18 Reliance was placed on the decision of Hon'ble jurisdictional High Court in case of IBM India in the 201 proceedings in ITA No. 218 of 2014 c/w ITA No. 220 of 2014, ITA No. 222 of 2014 and ITA No. 224 of 2014 vide order dated 16.01.2023 placed as Annexure - 13 to the compilation filed in the paper book. 5.19 On the contrary, the Ld.DR placed reliance on orders passed by authorities below.
We have perused the submissions advanced by both sides in the light of records placed before us.
5.20 We note that various details filed by assessee has not been considered by the Ld.AO before making such disallowance. The invoices and form 15CB in respect of the payments made are to be considered and looked into in respect of this issue. We direct the Ld.AO to verify all these details and consider the claim of assessee in accordance with law.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 12 of 16 Accordingly, ground no. 3 raised by assessee stands allowed for statistical purposes."
29. Following the above view of the predecessor Bench, we restore this issue to the file of AO for deciding afresh in accordance with law.
30. In ground No.3, assessee has contested foreign exchange loss issue. However, at the time of hearing, learned AR has fairly conceded that he does not want to press this ground. The learned AR has also acknowledged this averment by putting his signature on the grounds of appeal. In view of this the ground number 3 has been dismissed as not pressed.
31. The present appeal is partly allowed for statistical purposes.
32. IT(TP)A No.1039/Bang/2024 for Assessment Year 2016-17
33. In the impugned appeal for Assessment Year 2016-17, the solitary issue which has been raised by the assessee before us is regarding the disallowance of certain expenses under section 40(a)(ia) of the Act with respect to certain payments made to those non-residents who were not having any PE in India. The learned Counsel for the assessee at the outset submitted that the payments made to those non-residents do not have PE in India and hence provisions of section 40(a)(ia) of the Act are not applicable in this case. The learned AR once again reiterated the Order of the Co-ordinate Bench for Assessment Year 2013- 14 (supra) and requested that this issue may also be restored to the file of AO for deciding afresh and learned DR could not controvert the arguments of the learned Counsel for the assessee.
34. After considering the rival submissions we observe that similar issue has been dealt with by us in Para-20 of this order while deciding the appeal of AY 2012-13, observations made therein would mutatis mutandis apply here and hence the issue is restored to the file of AO.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 13 of 16
35. IT(TP)A No.1036/Bang/2024 for Assessment Year 2010-11
36. In this year, following issues arises for consideration of the Bench.
(a) Reimbursement of assignee related payments.
(b) Payments made to IBM(GS)
(c) Payments made to non-residents having no PE in India.
(d) Foreign Exchange loss- ground number -3
(e) Disallowance of amounts under section 37 on account of failure of assessee to provide necessary details.
37. So far as the issue of assignee related payments is concerned, we observe that similar issue has been dealt with by us in ITA No 1038 of 2024, the observations made by us in preceding para(s) would mutatis mutandis apply here also. And hence the issue is restored to the file of AO for deciding a fresh.
38. So far as this issue 'payment made to IBM GS Technical'is concerned, the counsel for the assessee submitted that learned DRP and AO have simply relied on the order of Hon'ble ITAT rendered in ITA Number 2041/Ban/2016 for AY 2011-12. Counsel for the assessee submitted that it is true that in AY 2011-12, assessee failed to lead any evidence in support of these transactions and the Hon'ble ITAT has rightly disallowed the claim of the assessee. Counsel for the assessee next submitted that for the year under consideration, the assessee has duly filed voluminous evidences, running from Page Number 793 to 828 of the Paper Book. However, neither the DRP nor the AO considered these evidences. Learned AR prayed that this issue may also be restored to the file of AO for deciding a fresh.
39. Learned DR relied on the orders of authorities below and contended the order AO may be upheld.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 14 of 16
40. After considering the rival submissions, we observe that in set-aside proceedings, the assessee has filed evidences before the AO vis-à-vis the transactions pertaining to IBM (GS). These documents are placed at Page number 793 to 828 of the Paper Book. The lower authorities have not pondered upon these documents and disallowed the claim by simply relying on the decision of Hon'ble ITAT for AY 2011-12(Supra). Principles of Res-judicata are not applicable in Income Tax Proceedings, settled position of law, each year is separate and it is incumbent on the authorities below to examine each year, in the light of new facts. Therefore, considering the totality of facts and circumstances we restore this issue to the file of AO for examining a fresh.
41. Next issue in this year is the disallowance of payments made to non residents having no PE in India. Learned Counsel for the assessee contended that assessee has filed party wise break-up of these expenses (Page Number 829-830 of PB-2). Counsel for assessee drew the attention towards Page Number 831-844 of PB- and pointed out that the entities have filed declaration declaring that they don't have any PE in India.
42. Learned DR relied on the orders of authorities below.
43. After considering the rival submissions we observe we have already decided this issue in appeal of AY 2012-13, the observations made there would mutatis mutandis apply here. Hence the issue is restored to the file of AO for fresh adjudication.
44. Next issue is the disallowance of expenses under section 37(1). Learned Counsel for the assessee referring to page No.945 to 952 of Paper Book 2, argued that the expense provision entries are reversed in subsequent years to the extent the expenses that are not incurred / invoices are received etc.
45. Learned DR relied on the orders of the authorities below.
IT(TP)A Nos.1036 to 1039/Bang/2024 Page 15 of 16
46. After considering the facts of the case we observe that the AO has not deliberated upon the reversal of the entries in subsequent year. We are of the view that in case the amounts are reversed and offered for taxation in next year that double addition shall not be made and direct the AO to examine the matter afresh.
47. So far as the issue of foreign exchange loss emanating from ground No.3 is concerned, the learned Counsel for the assessee has fairly considered this ground and has not pressed this ground before us. Therefore, this ground is dismissed as not pressed.
48. In view of the above, appeal of the assessee for AY 2010-11 is partly allowed for statistical purposes.
49. In the result, appeals for Assessment Years 2010-11, 2011-12, 2012-13 and 2016-17 are partly allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page.
Sd/-
Sd/- Sd/-
(LAXMI PRASAD SAHU) (PRAKASH CHAND YADAV)
Accountant Member Judicial Member
Bangalore.
Dated: 11.07.2024.
/NS/*
IT(TP)A Nos.1036 to 1039/Bang/2024
Page 16 of 16
Copy to:
1. Appellants 2. Respondent
3. DRP 4. CIT
5. CIT(A) 6. DR,ITAT, Bangalore.
7. Guard file
By order
Assistant Registrar,
ITAT, Bangalore.