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TMI Blog2014 (11) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... in substantial additions on various grounds was made under section 144 of the Act after affording several opportunities to the assessee to furnish the reply and the information called for which the assessee failed to avail. 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in deleting the additions made under section 144 by accepting additional evidence under rule 46A of the Income-tax Rules especially when the Assessing Officer at the time of assessment has afforded sufficient opportunities to the assessee to furnish the required details which he failed to comply with when courts/Tribunal have held that the Commissioner of Income-tax (Appeals) should not invariably accept additional evidence when the Assessing Officer has afforded sufficient opportunities to the assessee. 4. The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in passing the appellate order by accepting the additional evidences submitted by the assessee without providing suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax (Appeals) has erred in law and in facts in deleting the addition of Rs. 6,96,000 made by the Assessing Officer while framing order under section 144 of the Income-tax Act on account of failure of the assessee to substantiate the genuineness of the salaries paid to persons specified under section 40A(2)(b). 10. The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in deleting the addition of Rs. 6,98,603 made by the Assessing Officer while framing order under section 144 of the Income-tax Act on account of failure of the assessee to substantiate the genuineness of claim of exchange rate fluctuations." 3. After hearing both parties we find that the assessment was completed on ex parte basis under section 144. The main reason for the same is that earlier the dispute has arisen regarding grant of exemption under section 10B and the assessee requested the Assessing Officer that sometime may be given because the issue regarding exemption under section 10B was pending before the Tribunal. Since the assessment was getting time barred, therefore assessment was completed on ex parte basis. In the absence of relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of software export transaction is duly reported to the Reserve Bank of India by the appellant. The appellant had duly filed Form 56G along with detailed calculation before the Assessing Officer also. In fact, the Assessing Officer had sufficient material on record and there was no reason for not allowing the exemption under section 10B of the Act. In view of this discussion, it is held that the appellant is duly eligible for exemption under section 10B of the Act and the Assessing Officer is directed to allow the same. Ground of appeal No. 2 is allowed. 5.3 I have considered the submission of learned counsel for the assessee. The net export turnover was correctly taken by the auditors at Rs. 3,89,76,026 in Form 56G after deducting the domestic turnover from total turnover and the Assessing Officer was not right in taking the export turnover at Rs. 3,43,58,299. In fact, the amount of Rs. 44,38,257 deducted by the Assessing Officer is the amount of export of software maintenance and software training and installation. The Assessing Officer has wrongly treated this amount as domestic turnover and applied the net profit rate on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the appellant has been allowed benefit of exemption under section 10B of the Act. Ground of appeal No. 5 is allowed. 8.3.2 I have considered the submissions of learned counsel. The Assessing Officer has reduced the claim of the salaries paid to relatives of the company's directors from Rs. 25,000 per month to Rs. 18,000 and from Rs. 29,000 to Rs. 20,000 per month. No cogent reason has been given by the Assessing Officer for reducing the amount of salary paid to the relatives and no material has been brought on record, leave aside the justification for reducing claim of salary. Moreover, the salaries paid are not excessive keeping in view the fact that persons working in information technology industry are getting hefty packages. The disallowance has been made by the Assessing Officer in an arbitrary manner and so the same is deleted. 8.4 Regarding the disallowance of claim of deduction of Rs. 6,98,603 on account of exchange rate fluctuation, it appears that the disallowance was made because the Assessing Officer could not verify the rate which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. As learned counsel for the assessee has accepted the mistake, the addition made of Rs. 8,676 is confirmed." The above clearly show that the learned Commissioner of Income-tax (Appeals) has mainly deleted the addition by observing that if these expenses are disallowed, the profits of the assessee would increase which would mean that the assessee would become entitled to enhanced deduction under section 10B of the Income-tax Act. 6. Before us, the learned Departmental representative for the Revenue strongly supported the order of the Assessing Officer. 7. On the other hand, learned counsel for the assessee submitted that as far as issue regarding grant of exemption is concerned, the Tribunal has already decided the issue in the case of the assessee in I. T. A. No. 1023/ Chd/2008, etc., (reported in Vertex Infosoft Solutions P. Ltd. v. Asst. CIT [2014] 30 ITR (Trib) 607 (Chandigarh)). As far as other expenses deleted by the learned Commissioner of Income-tax (Appeals), even if the addition is confirmed, deduction under section 10B is to be allowed on the enhanced income and in this regard he relied on the decisions of CIT v. Allied Industries [2010] 229 CTR (HP) 462, Deputy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of sales tax. The test to ascertain whether a property is "goods" for the purposes of sales tax is not whether the property is tangible or intangible or incorporeal. The test is whether the concerned item is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed, etc. In the case of software, both canned and uncanned, all of these are possible. Intellectual property when it is put on a media becomes goods. A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in the programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in the case of painting) or computer discs or cassettes, and marketed would become "goods". There is no difference between sale of a software programme on a compact disc/floppy disc and sale of music on a cassette/compact disc or sale of a film on a video cassette/compact disc. In all such cases, the intellectual propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Income surrendered by assessee-Assessee firm offered a sum of Rs. 2,50,000 for taxation to cover up certain dis crepancies-It is not the case of the Revenue that this was income derived from undisclosed sources-Also there is no finding of any unexplained expenditure-Addition of Rs. 2,50,000 was made to the income of the business itself -Therefore said addition would result in enhancement of income of the business and is entitled for deduction under section 80-IB- Kedar Nath Modi v. CIT [1993] 109 CTR (Delhi) 112; [1993] 200 ITR 685 (Delhi) distinguished." Similarly the hon'ble Bombay High Court in the case of CIT v. Gem Plus Jewellery India Ltd. [2011] 330 ITR 175 (Bom) also took a similar view and held as under (page 182) : ". . . As a matter of fact the question of law which is formulated by the Revenue proceeds on the basis that the assessee income was enhanced due to the disallowance of the employer's as well as the employees' contribution towards provident fund/employees State insurance corporation and the only question which is canvassed on behalf of the Revenue is whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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