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M/s Numeric Power Systems Ltd. Now Known As M/s. Swelect Energy Systems Ltd. Versus The Income Tax Officer, Chennai

2016 (1) TMI 251 - ITAT CHENNAI

Denial of exemption claimed u/s.10B on export proceeds received after stipulated period and foreign exchange gains - Held that:- At the outset, RBI is the competent authority to give special permission in writing to the assessee to receive sale proceeds after the said date. In the present case ₹ 48,23,426/- was received in October, 2008 and February 2009, after a period of six months from the end of the previous year and the circular of the RBI is effective from 2011 onwards in respect of .....

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t pleaded for consideration of foreign exchange gains for deduction u/s.10B and it is also apparent from the facts of the case that ld.AR could not substantiate his ground with any material evidence. Therefore, we are inclined to uphold the order of the ld. Commissioner of Income Tax (Appeals) on this ground also. - Decided against assessee

Disallowance u/s.14A read with Rule 8D - Held that:- We find that facts and circumstances of the present case pertaining to holding and subsidiary .....

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llowance u/s.40(a) (ia) - Non deduction of TDS on contract payments - Held that:- the addition u/s.40a(ia) of the Act can be made if both the conditions are satisfied in respect of applicability of TDS under chapter XVII B and tax was not deducted by the assessee. In the present case, the assessee had deducted TDS at a lower rate, on perusing the case laws and decisions relied by the ld. counsel. We found that expenses are not liable to be disallowed u/s.40(a)(ia) of the Act on account of short .....

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e Act. It is also apparent from facts of the case the assessee has deducted TDS and remitted to the treasury and we direct the Assessing Officer to delete the impugned addition - Decided in favour of assessee.

Disallowance of interior decoration works - Held that:- The expenditure incurred by the assessee is only to upkeep the business enterprises to maintain wear and tear but not to increase the productivity or manufacturing activity. The change of flooring and other connected works .....

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irs in the previous year. Applying the principles of law of Jurisdictional High Court. We are of the opinion that such expenditure has to treated as revenue expenditure and we direct the Assessing Officer to allow the deduction accordingly. - Decided in favour of assessee. - ITA No. 1344/Mds/2012 - Dated:- 20-11-2015 - A. Mohan Alankamony, AM And G. Pavan Kumar, JM For the Appellant : Shri Philip George, Adv For the Respondent : Shri P Radhakrishnan, IRS, JCIT ORDER Per G Pavan Kumar, Judicial M .....

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me was processed u/s.143(1) of the Act on 22.02.2010. Notice u/sec 142(1) was issued and the assessee filed detailed information and submitted explanations duly supporting the return of income. The Assessing Officer completed the assessment u/s.143(3) of the Act by making additions and assessed income at ₹ 22,52,35,607/-. 3. The first ground raised by the assessee in appeal on denial of exemption claimed u/s.10B of the Act in respect of export proceeds received after stipulated period and .....

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overheads. The assessee has filed all statutory forms for claiming deduction u/s.10B and also copies of foreign inward remittances undertaken by the EOU division. Against the total turnover of ₹ 3,91,72,095/-, the foreign exchange received within stipulated time of six months from the end of financial year into country is ₹ 3,42,66,477/- and the balance sum of ₹ 48,23,426/- was received from subsidiary company after the due date. The ld. Assessing Officer has restricted the ded .....

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011 in extending inward remittances pertaining to assessment year 2011-2012 and after hearing the submissions, the ld Commissioner of Income Tax (Appeals) has confirmed the Assessing Officer disallowance by observing at page 7 of the order as under:- "As regards the circular of the RBI, a photocopy of which has been furnished by the appellant as Annexure II, it was pointed out to the AO of the appellant to show as to how the said circular was applicable to the period under consideration in .....

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reign exchange gain, nothing has been said or submitted during the appeal proceedings on this count. In view of the above, I do not find any infirmity in the action of the AO in restricting deduction under section 10B to the exports, the sale proceeds of which have been received by the appellant in convertible foreign exchange within the stipulated time. The grounds of appeal, therefore, are dismissed." Aggrieved by the order of CIT(A), assessee preferred an appeal before the Tribunal. The .....

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ange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf." At the outset, RBI is the competent authority to give special permission in writing to the assessee to receive sale proceeds after the said date. In the present case ₹ 48,23,426/- was received in October, 2008 and February 2009, after a period of six months from the end of the previous year and the circular of the RBI is effective f .....

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ot submitted any particulars but pleaded for consideration of foreign exchange gains for deduction u/s.10B and it is also apparent from the facts of the case that ld.AR could not substantiate his ground with any material evidence. Therefore, we are inclined to uphold the order of the ld. Commissioner of Income Tax (Appeals) on this ground also. 4. The second ground raised by the assessee for disallowance u/s.14A read with Rule 8D to the extent of ₹ 16,91,712/-. 4.1 The assessee company rec .....

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appeal before the Commissioner of Income Tax (Appeals). 4.2 The ld. Authorised Representative submitted that the provisions of Sec. 14A are not applicable for the assessment year 2008-09 and the ld.CIT(A) relying on High Court and Supreme Court decisions followed judicial precedent of Jurisdictional ITAT Bench in Southern Petro Chemical Industries vs. DCIT (93 TTJ 161) and concluded that Rule 8D is applicable to the present assessment year and there is no dispute or mistake by Assessing Officer .....

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wance has to be considered, it shall be proportionately and referred to page 39 of the Annual report of the assessee company and explained that dividend income is from 100% subsidiary company Numeric Lanka Technologies (Private) Limited, Sri Lanka. On the other hand ld. Departmental Representative relied on the findings of the lower authorities and objected to the submissions of information before the Tribunal regarding dividend income of Srilanka subsidiary company and prayed for dismissal of t .....

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ed to allow the claim after considering the satisfactory explanations and material evidence for dividend income. 5. The third ground raised by the assessee with regard to disallowance u/s.40(a) (ia) to the tune of ₹ 11,68,912/- 5.1. The assessee company is in the business of manufacturing and export of the UPS and electronic parts used for global networking and has entered into contracts with various communication channels which provides internet services including M/s.SAP India Pvt. Ltd f .....

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ct payments and not for any professional or technical services. After hearing the submissions, the ld.AO neither considered provisions of 194C or 194J of the Act but invoked disallowance under provisions u/s.40a(ia) of the Act for contract payments. Aggrieved by the order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 5.2 Before the ld.CIT(A), the assessee raised various grounds about the applicability of sec 40a(ia) of the Act and the provisions u/sec. 194C o .....

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Before us, the ld. Counsel has submitted that provisions of section 40a(ia) shall not be applicable in respect of short deduction of TDS and prime facie the assessee is following going concern practice of deducting TDS on contract payments and relied on the judgment of Calcutta High Court in the case of CIT vs. S.K. Tekriwal 260 CIT 0073 (Cal) and also on the decision of ITAT Delhi Tribunal in the case of ACIT vs. Pankaj Bhargava in ITA No.59/Del/2011, Dated 24th May, 2013 and pleaded for deleti .....

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source. The assessee has further complied with both the limbs of applicability of provisions by deducting TDS on payments and depositing the same with the Government, which is not disputed by the Assessing Officer. We are of the opinion, that if any difference in strategy of taxability or nature of payment arises, in such circumstances alternatively, the Assessing Officer can treat the assessee as defaulter u/s.201 of the Act but not by invoking provisions u/s.40(a)(ia) of the Act. It is also ap .....

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granite tiles and strips doors etc., The assessee company has treated such expenses as Revenue expenditure. In the assessment proceedings, it was explained that temporary partitions, fixation of glass, granite tiles etc on rented premises are considered as current repairs and 100% deduction claimed but the Assessing Officer allowed depreciation at the rate of 10% and disallowed expenditure of ₹ 16,05,120/-. Aggrieved by the order, the assessee preferred an appeal before the Commissioner of .....

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purpose and also tiles flooring does not give enduring benefit but necessarily increase the image of the business associates. The ld.CIT(A) after hearing the submissions overlooked the information and confirmed the addition of the Assessing Officer. Aggrieved by the order of CIT(A), the assessee assailed an appeal before the Tribunal. The ld. AR submitted that the company has global presence and the type of Revenue expenditure incurred compared to the total turnover of business is very small. Th .....

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