TMI Blog2015 (5) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... aitsical 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 progress reduced in the computation, which the Ld. CIT(A) directed to be enhanced by an amount of ₹ 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. - Decided in favour of assesse for staitsical purposes. Investment written-off disallowed - AO noted that investment written-off cannot be treated as an allowable deduction as it is not a revenue expenditure - Held 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kotaiah: These are cross-appeals by Revenue and assessee against the orders of the Commissioner of Income Tax(Appeals)-II, Hyderabad dated 03-01-2014. There are various issues on which Assessing Officer (AO) made disallowances/additions which CIT has partly allowed. Hence, cross appeals. Both assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate nor assessee has filed the relevant form 56F which quantifies Section 10A deduction which is pre-requisite for allowing 10A deduction. However, CIT(A) acknowledged that the mistake in claim was a typographical 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 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 seems to have been examined. Before us, Ld. Counsel filed a copy of form 56F which is stated to have been filed before the authorities but not acknowledged. Therefore, in the interest of justice and noting that assessee's claim was made in earlier years, we are of the opinion that matter requires re-examination by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts remitted and capitalization of receivables, Ld. CIT(A) concluded that the write-off does not satisfy the conditions prescribed. Before us, Ld. AR filed various annual reports in support that the amount was originally offered as income and receivable from subsidiary was converted to equity, in view of the FEMA provisions, 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 direction to examine the factual aspect of the contentions of assessee and then decide whether the amount can be allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 4.97 Crores was claimed under 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 organization-wise. Ld. CIT(A) extracted the information in para 7.1, 7.2 and 7.3 of the order. This information was also sent to AO in the Remand Report. In view of this, CIT(A) was of the opinion that the disallowance made by the AO is not warranted and accordingly deleted. We have also examined the claims and sought clarification from assessee about the claim of salaries. The note submitted by assessee with reference to this is as under: Note on Expenditure incurred towards Salaries (Rs.3.32 crores) : The company bids for various software services/Building of the products/Versions. Normally these billings will be done basin on the milestones spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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