|The Tax Publishers2020 TaxPub(DT) 4223 (Del-Trib)
INCOME TAX ACT, 1961
Once separate books of account maintained by assessee have been accepted, the quantum of the claim cannot be tinkered with on surmises and conjectures by alleging in a vague manner that expenditure or revenue had been diverted to another unit and also mere add back of certain expenses from eligible profits of eligible unit, which was accepted in the order of assessment, cannot be a business to assume that the resources of non-SEZ units have been used for earning the revenue in SEZ units.
Deduction under section 10AA - Allowability - Alleged addition of non-SEZ units expenses and undertaking formed by splitting up or reconstruction of business already in existence -
Assessee was a wholly-owned subsidiary of Ebix Singapore Pvt. Ltd. and was engaged in the business of rendering information technology/information technology enabled services (IT/ITES). It filed its return of income declaring nil income after claiming deduction under section 10AA. The AO, after considering the various replies given by the assessee, rejected the claim of deduction under section 10AA made by the assessee in respect of income from six SEZ units. CIT(A) deleted the additions made by the AO. Held: Assessee had furnished unit-wise computation of deduction under section 10AA out of the four eligible units, only in respect of Noida SEZ and Coimbatore SEZ, the assessee had added back expenses of Rs. 19,14,995 and Rs. 3 lakhs respectively. The above figure represents expenses which were added back while computing the unit-wise computation for determining the profit eligible for deduction under section 10AA. Therefore, once the expenditure had been added back which claim had also been accepted by the AO in the order of assessment, then, this, becomes a non-issue. The allegation of the AO that the entire expenses had not been added back and it was a clear admission on the part of the assessee that resources of non-SEZ units had been used for earning of revenue in SEZ units, this also, was a vague finding without any basis. Mere add back of certain expenses from eligible profits of eligible unit which was accepted in the order of assessment cannot be a basis to assume that the resources of non-SEZ units have been used for earning the revenue in SEZ units. Assessee had not claimed the loss of Hyderabad and Chennai unit while computing the income. Once separate books of account have been maintained for each of the undertakings, there was no basis for the assessing officer to allege that any of the expenses of non-SEZ units pertained to revenue of eligible units. Once such expenses had also not been claimed, the same was of no consequences. At best, the AO could have reduced the net expenditure claimed from the deduction under section 10AA and nothing more but the same could not be a reason for the AO to deny the claim of deduction under section 10AA. Therefore, to suggest that there was fictitious arrangement and the entire resources of Chennai unit or Hyderabad unit had been utilised for earning tax free income of SEZ unit was not justified. Once the deduction had been allowed in the year of formation of the unit, then, the AO was not entitled to re-examine the eligibility of claim of deduction in the succeeding year. So far as the question as to whether amalgamation of the Noida SEZ and Nagpur SEZ with the assessee company can be a ground to suggest that the same amounts to splitting up or reconstruction of business already in existence is concerned, Tribunal found the provisions of section 10AA(5). Is an enabling provision to enable an assessee to claim deduction desite transfer of the eligible unit in a scheme of amalgamation of demerger. Once separate books of acount maintained by assessee have been accepted, the quantum of the claim cannot be tinkered with on surmises and conjectures by alleging in a vague manner that expenditure or revenue had been diverted to another unit. Even if the undertaking is established by transfer of building, plant or machinery, but it was not formed as a result of such transfer, the assessee could not be denied the benefit. In view of the above and in view of the detailed reasoning given by the CIT(A), there was no infirmity in his order allowing the claim of deduction under section 10AA.
Relied:CIT v. Excel Industries Ltd., (2013) 358 ITR 295 (SC) : 2013 TaxPub(DT) 2414 (SC), ITO v. Last Peak Data Pvt. Ltd., ITA Nos. 154 & 155/Kol/2013 : 2015 TaxPub(DT) 4375 (Kol-Trib), Samsung India Software Operations (P) Ltd. v. Addl. CIT, ITA No. 399/Bang/2012, Bajaj Tempo Ltd. v. CIT (1992) 196 ITR 188 (SC) : 1992 TaxPub(DT) 1271 (SC), Addl. CIT v. Delhi Press Samachar Patra (P) Ltd. (2006) 103 TTJ 578 (Del-Trib) : 2006 TaxPub(DT) 1521 (Del-Trib), CIT v. Excel Industries 358 ITR 295 (SC), CIT v. Delhi Press Samachar Patra (P) Ltd. (2013) 355 ITR 14 (Del-HC) : 2013 TaxPub(DT) 1873 (Del-HC), CIT v. Western Outdoor Interactive (P) Ltd., (2012) 349 ITR 309 (Bom-HC) : 2012 TaxPub(DT) 3202 (Bom-HC)Saraswati Industrial Syndicate, (1990) 186 ITR 278 (SC) : 1990 TaxPub(DT) 1328 (SC).
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FAVOUR : In assessee's favour.
A.Y. : 2013-14 & 2014-15
INCOME TAX ACT, 1961
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