9911796707
TMI Blog2015 (5) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... and Revenue have raised corresponding grounds on various issues which are dealt, with after hearing the Ld. Counsel for assessee and Ld. DR for the Revenue. 2. Briefly stated, assessee filed return of income belatedly on 30-03- 2011 for AY.2009-10. AO selected the case for scrutiny and on the reason that assessee has not substantiated many of the claims and has not furnished complete details, made various disallowances as under: Rs. a. Disallowance of deduction under section 10A 6,75,96,165 b. Disallowance of investments written off 4,09,46,675 c. Disallowance of overseas employees 3,32,00,000 d. Disallowance of software purchase 59,03,400 e. Disallowance of business promotion expenses 73,05,795 f. Disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming deduction u/s.10A has not been fulfilled and FIRCs filed in support of the export turnover is not complete. Since, assessee claim is not substantiated, the entire amount of Rs. 6,75,96,165/- was disallowed and added to the total income returned. 4.1 Before the CIT(A), assessee submitted that this claim was wrongly shown in the computation whereas the actual claim was only Rs. 1,96,28,459/-. In support it filed the relevant certificates of FIRCs and permission from STPI and stated to have filed form 56F in support of the claim. However, Ld. CIT(A) noticed that there is no renewal of STPI certificate nor assessee has filed the relevant form 56F which quantifies Section 10A deduction which is pre-requisite for allowing 10A deduction. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96,165/- was disallowed by the AO, therefore question of enhancing the amount does not arise. The issue whether capital work in progress can be reduced or not was not an issue before the AO and this aspect was not examined at all. Since the AO put it to CIT(A), with reference to claim of Rs. 1,96,28,459/- and capital work in progress reduced in the computation, which the Ld. CIT(A) directed to be enhanced by an amount of Rs. 6,75,96,165/- , that too without giving opportunity to assessee as contended, we are of the opinion that this capital work in progress issue also requires re-examination. AO is directed to take the revised computation filed by the assessee and determine the exact amount claimed by assessee and why this claim was made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions, and then by virtue of RBI circular written-off the amount. Since the amount was originally offered as income, subsequent write-off is allowable as revenue expenditure, it was contended. 5.1. Without going into the merits of the claim, we are of the opinion that this claim also requires re-examination. Assessee's claim that amounts are originally offered as income, subsequently converted to equity of the subsidiary and written-off on the basis of the circulars of RBI requires examination by AO, as none of the figures are comparable on the basis of the annual reports filed before us. In order to examine the issue and to give one more opportunity to assessee to substantiate the claim, matter is restored to the file of AO with a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent on Remand Report to the AO. We are surprised to see that Ld. CIT(A) directing the AO to treat as capital purchase which issue not all raised by AO nor by assessee. In view of this, we modify the order of CIT(A) and direct the AO to allow the amount as revenue expenditure. Ground No. 5 & 6 are allowed. IV. Issue of audit fee Rs. 1 Lakh: 7. AO noticed that assessee paid an amount of Rs. 1 Lakh on which TDS was not done. Invoking the provisions of Section 40(a)(ia) entire amount of Rs. 1 Lakh was disallowed. Before the Ld. CIT(A), assessee submitted that amount of TDS paid of Rs. 87,857/- on 27-08-2008 involves TDS on audit of fee of Rs. 1 Lakh. Ld. CIT(A) directed the AO to verify and allow the amount. Since the CIT(A)'s direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise it will be kept in Inventory (Closing WIP i.e., unbilled amount). During the year as most of the works were not completed as per the specification we are not in a position to bill even though we incurred the expenditure on salaries and other things that is the reason this year increase in the inventory is around 19 Crores. The expenditure we incurred i.e., Rs. 3.32 crores for the salaries of the persons outside India, the amount we incurred for the salaries is included in increase in the inventory in the Profit & Loss account". In view of the clarification given and information furnished on record, we did not see any reason to interfere with the findings of Ld. CIT(A). Revenue's grounds on this, are therefore dismissed. 9. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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