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2016 (11) TMI 1044 - AT - Income TaxClaim of assessee u/s. 80HHE - not having any knowledge about the development of software and the appellant firm had no previous expertise in development and export of software's - Held that:- Both the allegations of AO that no business could be carried on without having any previous knowledge for the same as well as the business proposition should come only through efforts or knowledge are baseless. The Assessing Officer has not brought on record any material fact to disbelieve the fact that technical aspect of the deal were being looked after by late Shri Deshpande. In the present age, execution of such specialised work can be completed with the help of IT professionals and therefore, it is not essential requirement of the partners to be conversant with technicalities of such job. With regard to disclosure voluntarily declared ₹ 7 Crores in his statement dated 24.03.05, which was subsequently retracted vide his affidavit dated 30.08.05 was prompted by an alleged mistaken claim u/s. 80HHE of the Act without analyzing merit of claim. It is for that reason that in the answer to question 78 Mr R.R. Chaturvedi made the disclosure. Subsequently, in consultation with Chartered accountants, when it was realized by Shri R. R. Chaturvedi that the claim made by the assessee firm was very much in accordance with law, the statement was retracted by filing an affidavit dated 30-8-05 which is forming part of paperbook page no 232 - 235. The CIT(A) has rightly accepted the justification of assessee in para 7.2 page 27 of his order by stating that "No addition could be made on the basis of such statement unless and until it is corroborated with the evidence. In other words, the retraction can be made on the basis of validity of claim. In the instant case, LNSEL is eligible to issue disclaimer certificate, as it is an exporting company. Further LNSEL claimed deduction u/s.10B of the Act on the value addition. LNSEL issued disclaimer certificate in form 10CCAG to assessee company with respect to appellant company's share in software export. The copy of Form 10CCAG is forming part of paperbook page nos. 44-60. In this regard, during the appellate proceedings, CIT(A) had corresponded with the Assessing Officer of LNSEL, Kolkata wherein he was intimated vide letter dated 10.12.2008 that there was no dispute pending with regard to the claim of deduction u/s.10B of the Act and no recourse was taken to the provision of section 147 for AYs 2000-01 to 2002-03. The source code information was already in the possession of the income tax authorities and the appellant firm was handicapped on account of the seizure from producing the relevant source code. CIT(A) in para 7.7 page 30 of his order has accepted the assessee's justification of non-furnishing of source code. Nothing prevented the Assessing Officer from verifying the contentions of the assessee as the relevant material was in the possession of the Department from the date of the search Operations itself. This fact has been completely overlooked by the Assessing Officer, which is not justified. So, CIT(A) was justified on taken favourable view. The assessee firm was never in direct touch with M/s. Aapkidukaan.com Corporation and hence to providing such information was beyond the scope of assessee firm. CIT(A) rightly held that the report of FTD does not falsify the claim of export made by LNSEL and it concerns itself more about the business activities of Aapkidukan and its existence as an entity. On both these counts the report of the FTD confirms the existence and business activities. Accordingly, it was rightly held that the point raised by Assessing Officer does not carry significance vis-à-vis the appellant, so long as the export made by LNSEL have been accepted to be genuine by Assessing Officer in its case. In view of above discussion, this object was rightly noted out by CIT(A) while granting relief to assessee. The assessing officer has also overlooked the fact that TDS was duly deducted and paid to the government account. Nothing has been brought on record to suggest that all such facts borne from the books of account were bogus or incorrect as the books of account have not been rejected. Moreover, there is nothing to show that the appellant was allowed the opportunity to cross examine the said persons as per request made during the assessment proceedings though the statement of the said persons were used against the appellant and in a way, they were used as witnesses of the department, which is not justified. - CIT(A) was justified in allowing the claim of deduction as claimed by assessee u/s.80HHE of the Act. Addition u/s 68 - Held that:- Assessee has merely stressed upon the fact that the transaction was entered through banking channels which meets the test of Section 68 of the Act. But this contention was not accepted by Revenue authorities as transactions through cheques cannot be considered to be sacrosanct in the absences of failure of assessee to prove the creditworthiness of lender as also the genuineness of transaction. The burden is on assessee to rebut the same, but assessee has not discharged the burden cast upon him in this regard to addition is question. Taking all facts and circumstances into consideration, even though transaction is through banking channel, as assessee could not prove the same with cogent evidence, so, CIT(A) was justified in confirming the same Estimation of business income - Held that:- As regards the letter to STPI, it was found evident that only certain ad hoc figures of exports were stated therein, as actual exports were done in the earlier years and the books of account did reflect the actual sales turnover which were also duly disclosed in the returns of income of the relevant assessment years and the said exports were duly accepted to be genuine in the original assessment orders. No business activity, not to speak of any export has been carried on during the relevant year. Moreover, there was no corroborative evidence to show that assessee was running any such business activity during the relevant year. Each year is independent in its facts and circumstances. Thus, not much importance can be attributed to such a declaration which also appears to have been made on estimate and ad hoc basis only with a bona fide business expediency. Accordingly, addition deleted by CIT(A) needs no interference from our side.
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