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Income Tax Appellate Tribunal - Bangalore

Talisma Corporation Pvt Ltd, Bangalore vs Joint Commissioner Of Income Tax (Osd), ... on 4 September, 2019

             IN THE INCOME TAX APPELLATE TRIBUNAL
           BANGALORE BENCHES " C " BENCH: BANGALORE

        BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER
                             AND
         SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

                            ITA. No.1635/Bang/2017
                           (Assessment Year: 2010-11)

M/s. Talisma Corporation Private         Vs.    Jt. Commissioner of Income
Limited,                                        Tax (OSD),
3rd Floor, Olympia / Building No.1,             Circle 7(1)(1),
Bagmane Tech Park,                              Bangalore.
C V Raman Nagar, Byrasandra Post,
Bangalore-560 093
PAN: AABCT 1052F
              (Appellant)                               (Respondent)


Assessee By:     Shri Sharath Rao, C.A.
Revenue By:      Smt. P. Renuga Devi, Addl. CIT (D.R)


Date of Hearing :                27.08.2019
Date of Pronouncement :          04.09.2019


                                   ORDER



PER SHRI PAVAN KUMAR GADALE, JM :

The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals)-7, Bangalore passed u/s. 143(3) r.w.s. 144C and u/s. 250 of the Income Tax Act, 1961 (the Act) and raised the following grounds of appeal :

2. The Brief facts of the case are that the assessee is engaged in Software Development and software products, sales and service and filed the Return of Income for the Asst. Year 2010-11 on 5.10.2010 disclosing NIL income after claiming deduction under Section 10AA of the Act and set off brought forward losses. Subsequently, the assessee filed a revised return on 31.3.2012 and the Return of Income was processed and the case was selected for scrutiny and Notice under Section 143(2) and 142(1) of the Act were issued. In response, the learned Authorised Representative of the assessee appeared from time to time and furnished the clarifications. Since the assessee has international transactions the ld.

Assessing Officer with the prior approval of the CIT, Bangalore referred to Transfer Pricing Officer (TPO) and the TPO has passed the order under Section 92CA of the Act on 30.01.2014 with no adjustment in respect of international transactions entered with Associated Enterprises (AEs). The Assessing Officer on perusalof the financial statements found that the assessee has not deducted TDS required under Section 194J of the Act on Audit fee and made addition applying the provisions of Section 40a(ia) of the Act and with other adjustments determined the total income of Rs.NIL after adjusting the depreciation / loss and passed the order under Section 143(3) r.w.s. 144C of the Act dt.17.3.2014. Aggrieved by the 4 ITA No.1635/Bang/2017 order, the assessee filed an appeal with the learned CIT (Appeals) whereas the learned CIT (Appeals) concurred with the action of the Assessing Officer and dismissed the assessee's appeal. Aggrieved by the order of the learned CIT (Appeals), the assessee filed an appeal before the Tribunal.

3. At the time of hearing, the ld. AR submitted that the learned CIT (Appeals) has not adjudicated Grounds of appeal No.1 & 3 in respect of proportionate disallowance of TDS credit and carry forward of losses because the assessee has submitted application for rectification before the Assessing Officer. Similarly CIT (Appeals) confirmed the disallowance of provision for audit fees for non- deduction of tax. The learned Authorised Representative emphasized that the assessee has not paid the amount and accounting entry was reversed in the subsequent assessment year and hence there is no requirement of deduction of TDS and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of CIT (Appeals).

4. We heard the rival submissions and perused the material on record. On the first ground of appeal, the ld. AR submitted that the learned CIT (Appeals) has not adjudicated Ground Nos.1 and 3. The assessee has filed an application for rectification before Assessing Officer and is of the opinion that the assessee intend to withdraw the appeal on above grounds of appeal whereas the learned Authorised Representative vehemently argued that there is no such mention of withdrawal and the assessee has prima facie good case and prayed for one more opportunity before the CIT (Appeals) to substantiate the facts with evidence. We considering the submissions and the findings of the CIT (Appeals), are inclined to provide one more opportunity to the assessee as the CIT (Appeals) has not adjudicated the grounds of appeal in respect of proportionate disallowance of TDS and carry forward of unabsorbed depreciation. Accordingly, we restore these 5 ITA No.1635/Bang/2017 grounds of appeal raised to the file of CIT (Appeals) to adjudicate on merit and pass a reasonable order and further the assessee should be provided adequate opportunity of hearing and co-operate in submitting the information for early disposal of appeal and the grounds of appeal of assessee are allowed for statistical purposes.

5. On the other disputed issue of disallowance of provision for audit fees, the learned Authorised Representative's contention that the Assessing Officer has disallowed the expenditure as no tax has been deducted (TDS) on provision for Audit fee the learned Authorised Representative submitted that TDS is deductible only when income is chargeable to tax and by making the provision in the Books of Account no income is accrued to the payee and therefore the TDS provisions are not applicable. Further the provision made in the present assessment year has been reversed in a subsequent assessment year as no income is accrued to the payee in the assessment year under consideration. The learned Authorised Representative referred to page 110 of Paper Book where the assessee has substantiated that the provision of audit fees of Rs.7 lakhs and Rs.2 lakhs as on 31.3.2010 was reversed in April, 2010 and supported with evidence in paper book. We on perusal of the order of Assessing Officer find at page 2 para 5, the Assessing Officer has made above addition as the assessee could not produce any details. The contentions of the learned Authorised Representative that no income has accrued to the payee therefore no TDS is deducted cannot be accepted. But the facts are clear that the assessee has claimed deduction in the Profit and Loss account and was not added in the computation of income, we find learned CIT (Appeals) having considered the facts and circumstances and legal provisions and submissions has taken a reasonable view and confirmed the addition which we are not inclined to interfere 6 ITA No.1635/Bang/2017 and upheld the same. Accordingly the ground of appeal of the assessee is dismissed.

6. In the result, the assessee's appeal is partly allowed for statistical purposes.

Order pronounced in the open court on 4th September, 2019.

             Sd/-                                                   Sd/-
   (JASON P BOAZ)                                  (PAVAN KUMAR GADALE)
  ACCOUNTANT MEMBER                                   JUDICIAL MEMBER

Dated: 04.09.2019.

*Reddy GP

Copy to

                           1.   The appellant
                           2.   The Respondent
                           3.   CIT (A)
                           4.   Pr. CIT
                           5.   DR, ITAT, Bangalore.
                           6.   Guard File

                                                         By order


                                                     Assistant Registrar
                                                Income-tax Appellate Tribunal
                                                        Bangalore