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M/s Cybermate Infotek Ltd & Others Versus Asstt Commissioner Of Income Tax & Others

2015 (5) TMI 897 - ITAT HYDERABAD

Claim of deduction u/s.10A - Held that:- this matter requires re-examination by the AO. It is stated that assessee was claiming 10A deduction in earlier years and as per the provisions, assessee is eligible for continuation of claim for a period of ten years. Therefore, it is necessary that the eligibility of assessee should be examined. As seen from the assessment order, the AO seems to have been carried away by the amount of claim made against export turnover and no other conditions/details se .....

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- Decided in favour of assesse for staitsical purposes.

Claim of capital work in progress - held that:- First of all, the entire amount of ₹ 6,75,96,165/- 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 ₹ 1,96,28,459/- and capital work in progre .....

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t:- 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 direction to examine th .....

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e purchases are on revenue account. Only for lack of proof of software purchase, AO disallowed the amount. The said proof was furnished before the Ld. CIT(A) which was also 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..- Decided in favour of assesse.

Non de .....

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y paid to overseas employees disallowed - Held that:- Before the Ld. CIT(A), assessee made detailed submissions and furnished various details including various contracts and man power employed organization-wise. This information was also sent to AO in the Remand Report. In view of this, CIT(A) was correctly of the opinion that the disallowance made by the AO is not warranted and accordingly deleted. - Decided against revenue. - ITA No.474/Hyd/2014, ITA No.631/Hyd/2014 - Dated:- 17-4-2015 - B Ram .....

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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 4,09,46,67 .....

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e a relief on disallowance of overseas employees, business promotion expenses and consultancy charges. Revenue is aggrieved only on the disallowance of ₹ 3.3 Crores towards overseas employees. Ld CIT(A) also enhanced the income on which assessee objected not only on merits but also on not giving an opportunity before enhancing. These are considered issue-wise. I. Claim of deduction u/s.10A of the Act: 4. Assessee had an export turnover of ₹ 1.53 Crores and had arrived at the deductio .....

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nnot be any claim of deduction u/s.10A at ₹ 6,75,96,165/- as against export turnover of ₹ 1.53 Crores. AO also gave a finding that all the pre-requisites for claiming 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 ₹ 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 s .....

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al error and therefore restricted the disallowance to the amount of ₹ 1,53,00,444/-. 4.2 On considering the rival submissions and perusing the Paper Book on record, we are of the opinion that this matter requires re-examination by the AO. It is stated that assessee was claiming 10A deduction in earlier years and as per the provisions, assessee is eligible for continuation of claim for a period of ten years. Therefore, it is necessary that the eligibility of assessee should be examined. As .....

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amine the eligibility of the claim and the amount claimed towards deduction, keeping in view the eligible unit and its profits as per the provisions of the Act. 4.3 Incidental to the above claim is the direction of CIT(A) to enhance the income by an amount of ₹ 6,75,96,165/- in the last para of the order, on the Remand Report sent by the AO. We are unable to understand the direction. First of all, the entire amount of ₹ 6,75,96,165/- was disallowed by the AO, therefore question of en .....

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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 and whether the claim can be allowed as per the provisions of the Act. For this purpose, this issue of claim of capital work in progress is also restored to the file of AO. Accordingly, Ground No. 2, 3, 8 and 9 of assessee's appeal are considered allowed for statistical purposes. II. Investment wri .....

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n of the RBI was obtained to convert the outstanding amount into equity. Later on in view of the RBI's circular No.69 dt. 25-07-2011, 22.5% of the amount invested was written-off during the year. Since the amount was originally offered as income, non-receipt of the same was eligible as deduction u/s.37(1). After obtaining the Remand Report from the AO and also noted down the amounts remitted and capitalization of receivables, Ld. CIT(A) concluded that the write-off does not satisfy the condi .....

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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 direction to examine the factual aspect of the c .....

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e balance amount as not substantiated. Before the Ld. CIT(A), assessee furnished all the vouchers which are listed in para 8.3. However, the Ld. CIT(A) treated the expenditure as capital expenditure and directed the AO to allow depreciation as per the schedules. Before us it was the contention that software purchased are not on capital account, but on revenue account in the business of software development and since vouchers are furnished before the CIT(A), which was also remanded to AO, the amo .....

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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 ₹ 1 Lakh: 7. AO noticed that assessee paid an amount of ₹ 1 Lakh on which TDS was not done. Invoking the provisions of Section 40(a)(ia) entire amount of ₹ 1 Lakh was disallowed. Befo .....

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er the head 'salaries'. Out of which an amount of ₹ 3,32,00,000/- was towards salaries to overseas employees. On the reason that assessee do not have any branches in USA or UAE and further assessee failed to produce the details of the alleged salaries paid to the foreign employees, an amount of ₹ 3,32,00,000/- was disallowed by the AO. Before the Ld. CIT(A), assessee made detailed submissions and furnished various details including various contracts and man power employed org .....

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