TMI Blog2014 (5) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... of amendment to S.144C of the Act, by the Finance Act, 2012 with effect from 1.4.2009, whereby it has been explained that 'the power of the DRP to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee - Relying upon Aurobindo Pharma Ltd. V/s. Asstt. Commissioner of Income-tax[2014 (4) TMI 27 - ITAT HYDERABAD] - There was no infirmity in the action of the AO, in sustaining the addition, not in terms of S.14A of the Act, but on grounds of absence of evidence brought on record by the assessee to substantiate its claim as to the genuineness of the expenditure, as held by the DRP – Decided against Assessee. Addition of professional charges made u/s 40(a)(ia) of the Act – Held that:- DRP had followed the decision in Merilyn Shipping & Transports Versus Assistant Commissioner of Income-tax, Range-1, Visakhapatnam [2012 (4) TMI 290 - ITAT VISAKHAPATNAM], and the same decision is being pending in the High Court – thus, the matter is remitted back to the AO for fresh adjudication – Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.9.2012. 2. The first effective ground of the assessee in this appeal relates to additions made on account of delayed remittance of Employees Provident Fund Contributions collected from employees of Rs.11,78,679 and ESI Subscriptions of Rs.52,463 under S.36(1)(va) read with S.2(24)(x) of the Act. 3. We heard both sides and perused the orders of the Revenue authorities. There is no dispute with regard to the delay in the remittance of the above amounts to the concerned authorities by the assessee, but it is the contention of the assessee that since such remittances have been made before the filing of the return of income, it is an allowable expenditure and no addition is called for. In support of this contention, reliance is placed on the following decisions- (a) ACIT V/s. Shakti Bhog Foods Pvt. Ltd. (ITA No.2777 to 2781/Del/2010) (b) ACIT V/s. Ranbaxy Laboratories limited (ITA No.3599/Del/2009 (c) CIT V/s. Sabari Enterprises (298 IUTR 141)-Kar. (d) CIT V/s. AIMIL Ltd. (1887 Taxman 265)-Del. 4. On careful consideration of the rival submissions on this issue, we find that the issue under consideration, is covered in favour of the assessee by the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act including Section 36(1), Clause (va) of the Act, even prior to the insertion of that clause the assessee is entitled to get statutory benefit of deduction of payment of tax from the revenue. If that provision is read along with the first proviso of the said Section which was inserted by Finance Act, 1987 which came into effect from 1-4-1988, the letters numbered as Clause (a) or (c) or (d) or (e) or (f) are omitted from the above proviso and, therefore, deduction towards the employer's contribution paid can be claimed by the assessee. The Explanation Clause (va) of Section 36 of the Income Tax Act further makes it very clear that the amount actually paid by the assessee on or before the due date applicable in this case at the time of submitting returns of income under Section 139 of the Act to the revenue in respect of the previous year can be claimed by the assessees for deduction out of their gross income. The abovesaid statutory provisions of the Income Tax Act abundantly make it clear that, the contention urged on behalf of the revenue that deduction from out of gross income for payment of tax at the time of submission of returns under Section 139 is permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee furnished the details of payments made to various entities, but could not substantiate with any evidence in support of services rendered by those entities in order to claim so much of amount as expenditure. In this view of the matter, the DRP upheld the disallowance proposed by the Assessing Officer in the following manner- .....The onus is on the assessee to discharge with reasonable evidence about the nature and the requirement of such expenditure in the course of business carried on by it. The assessee failed to furnish even the invoices raised by the foreign entities in order to verify the services rendered by them and the genuineness of the claim made by the assessee. Even though the AO has made addition by invoking Sec.14A by treating these expenses as linking them with exempted income, the basic requirement for allowing such deduction has not been fulfilled by the assessee. We do not agree with the contention of the Assessing Officer to bring these professional charges under the purview of S.14A in the absence of any income which does not form part of total income of the assessee. Provisions of Sec.14A can be invoked in a case where any assessee having any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges under S.115JB, whereas the DRP has considered the disallowance under the normal provisions of the Act. It is submitted that the jurisdiction of the DRP is confined to the adjudication on the point in dispute alone. Consequently, it is submitted that the order of the DRP in so far as it related to allowability of deduction for expenditure otherwise than by invoking the provisions of S.14A or while computing income under the normal provisions of the Act, is beyond its jurisdiction. In support of this proposition, he placed reliance on the decision of the Mumbai Bench 'D' of the Tribunal in the case of Dredging International N.V., Mumbai V/s. Asstt. Director of Income-tax(International Taxation)-1(2), Mumbai (ITA No.8035/Mum/2010 for assessment year 2006-07, duly furnishing a copy thereof before us. 9. The Learned Departmental Representative on the other hand, strongly supported the orders of the Revenue authorities. 10. We heard both sides and perused the orders of the Revenue authorities and other material available on record. It is an undisputed fact that the Assessing Officer in the draft assessment order made the addition of Rs.3,28,24,150, invoking the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the claim. ....... Consistent with the view taken by the coordinate bench of the tribunal in the above case, we do not find any infirmity in the action of the Assessing Officer, in sustaining the addition of Rs.3,28,24,150, not in terms of S.14A of the Act, but on grounds of absence of evidence brought on record by the assessee to substantiate its claim as to the genuineness of the expenditure, as held by the DRP. We accordingly uphold the same and reject the grounds of the assessee on this issue. 12. Next ground of the assessee in this appeal relates to addition of Rs.33,77,101 made by the Assessing Officer on account of professional charges, invoking the provisions of S.40(a)(ia) of the Act. 13. During the financial year 2007-08, relevant to the assessment year under appeal, assessee has paid the following amounts by way of professional charges- Sree Software Solutions Rs.28,25,902 Ad Astra Media Rs. 3,00,000 M. Bhaskar Rs. 1,80,000 Venture Creating Careers Rs. 40,300 American Quality Accessorie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is now pending adjudication before the jurisdictional High Court. In this view of the matter, we deem it fit to set aside the impugned orders of the Revenue authorities on this aspect and restore the matter to the file of the Assessing Officer with a direction to redecide the same afresh, in consonance with the view that the Hon'ble High Court may take in the matter. He shall accordingly redecide this issue in accordance with law, after giving reasonable opportunity of hearing to the assessee. Assessee's grounds on this issue are allowed for statistical purposes. 16. The next grievance of the assessee in this appeal, contained in grounds No.5 to 8 relate to relates to disallowance out of depreciation claimed by the assessee. It is the contention of the assessee in ground No.5 that while calculating the profits of the undertaking for the purpose deductions under S.10A of the Act, the Assessing Officer has made depreciation adjustment to the profit as per Profit Loss Account, i.e. added back the depreciation as per Companies Act and deducted the depreciation as per the IT Act, 1961 from the profit as per Profit Loss Account. It is contended that in the draft assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n derived from the export of articles. But it is not the end of the mater. The expression 'profits derived from export of articles or things or computer software' as employed in sub-section (1) or (1A) has been given a specific meaning in sub-section (4). The sub-section (4) states that the 'profits derived from export of articles or things or computer software' shall be the amount which bears to the 'profits of the business of the undertaking', the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. By providing for considering the 'profits of the business of the undertaking', the position has been made clear that the restricted general meaning given to eligible profits as derived from the export of articles in sub-section (1) has been given a go by in subs-section (4) and the scope of the benefit has been expanded by extending to the all profits of the business carried on by the undertaking. Once the expression 'derived from' having restricted scope has been specifically defined in the same section, then the meaning of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries, the same has to be considered as forming part of the eligible profit for the purpose of deduction under S.10A. In support of this contention, reliance is placed on the decision of the Chennai Bench of the Tribunal in the case of Chancepond Technologies Pvt. Ltd. V/s. Asstt. Commissioner of Income-tax in ITA No.73/Mds/2007 for assessment year 2003-04 and the decision of the Bombay High Court in the case of Gem Plus India Ltd. (194 Taxman 192). 21. We have heard both sides and perused the material available on record. We find that the issue in dispute relating to eligibility of foreign exchange gain to the relief under S.10A of the Act, is covered in favour of the assessee by the decision of the Bombay High Court in the case of Gem Plus India Ltd. (supra) wherein it has been held that an assessee would be eligible for relief under S.10A in respect of foreign exchange gain earned on realisation of export receipts in the year of export. We accordingly accept the grounds of the assessee on this issue, and setting aside the impugned order of the DRP on this aspect, direct the Assessing Officer to recompute the relief under S.10A of the Act, by taking into account even foreign e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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