The Pr. Commissioner of Income-tax-2, Chandigarh v. Vertex Infosoft Solutions Pvt. Ltd
[Citation -2017-LL-0719-19]

Citation 2017-LL-0719-19
Appellant Name The Pr. Commissioner of Income-tax-2, Chandigarh
Respondent Name Vertex Infosoft Solutions Pvt. Ltd.
Court HIGH COURT OF PUNJAB & HARYANA
Relevant Act Income-tax
Date of Order 19/07/2017
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags exchange fluctuation • additional evidence • foreign exchange • interest on fdrs • capital loss • royalty
Bot Summary: As the assessee requested for adjournments on one pretext or the other, the Assessing Officer was compelled to finalize the case and assessment was made under Section 144 of the Act. The Assessing Officer passed order under Section 154 dated 16.01.2013 reducing the income of the company to 1,36,80,537/-. As per records detailed reply was submitted to the office of CIT(A) by the Assessing Officer. During the assessment proceedings, the Assessing Officer had disallowed the exemption claimed by the assessee under Section 10B of the Act and some other disallowances were also made by the Assessing Officer. These submissions of the assessee were never filed before the Assessing Officer during the assessment proceedings and thus remained unexamined by the Assessing Officer. After perusing the narration of facts and the orders passed by the authorities below, we find that in the circumstances of the case, the matter requires to be remanded to the Assessing Officer for deciding it afresh after considering the additional evidence produced by the assessee. The order dated 18.9.2013 passed by the CIT(A) and order dated 18.11.2014, passed by the Tribunal, Annexures A.4 and A.5 4 of 5 ::: Downloaded on - 27-07-2017 10:28:39 ::: ITA No. 173 of 2015 5 respectively are set aside and the matter is remanded to the Assessing Officer for deciding it afresh in accordance with law after hearing the parties.


ITA No. 173 of 2015 (O&M) 1 IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 173 of 2015 (O&M) Date of decision: 19.07.2017 Pr. Commissioner of Income Tax-2, Chandigarh Appellant Vs. M/s Vertex Infosoft Solutions Pvt.Ltd, SCO-273, 2nd Floor, Sector-35-D, Chandigarh. ..Respondent CORAM: HON BLE MR. JUSTICE AJAY KUMAR MITTAL HON BLE MR. JUSTICE AMIT RAWAL Present: Ms. Urvashi Dhugga, Senior Standing Counsel for appellant. Mr. Pankaj Jain, Senior Advocate with Mr. Divya Suri, Advocate for respondent. Ajay Kumar Mittal,J. 1. appellant-revenue has filed instant appeal under Section 260A of Income Tax Act, 1961 (in short, Act ) against order dated 18.11.2014, Annexure A.5, passed by Income Tax Appellate Tribunal, Chandigarh Bench , Chandigarh (in short, Tribunal ) in ITA No. 1123/Chd/2013, for assessment year 2010-11, claiming following substantial questions of law:- 1 of 5 ::: Downloaded on - 27-07-2017 10:28:36 ::: ITA No. 173 of 2015 (O&M) 2 (i) Whether on facts and in circumstances of case and in law, Hon ble ITAT is justified in treating transfer of license to use software as sale , instead of royalty by relying on decision of Hon ble Supreme Court in case of Tata Consultancy Services Vs. State of Andhra Pradesh (2004) 141 Taxman 132(SC) given under Andhra Pradesh General Sales Tax Act, 1957? (ii) Whether on facts and in circumstances of case and in law, Hon ble ITAT is justified in not treating Usher charges on transfer of licenses as royalty in view of explanations (2) & (5) to Section 9 of Act? 2. few facts necessary for adjudication of controversy involved, as narrated in appeal, may be noticed. assessee company e-filed return of income for assessment year 2010-11 on 27.09.2010 declaring income of ` 12,83,680/-. As per computation submitted, profit as per profit and loss account was ` 1,09,86,979/-. After adjusting depreciation and interest on FDRs, profit on business was determined at ` 1,00,14,313/-. assessee company claimed exemption under Section 10B of Act at ` 97,60,732/-. During course of assessment proceedings, counsel for assessee sought number of adjournments, praying that assessment be kept pending till disposal of appeal in earlier assessment years by Tribunal. As assessee requested for adjournments on one pretext or other, Assessing Officer was compelled to finalize case and assessment was made under Section 144 of Act. In order under Section 144 dated 27.12.2012 income before deduction under Section 10B of Act was determined at ` 1,10,44,407/-. Additions of ` 6,98,603/- on account of foreign exchange fluctuation, ` 6,90,000/- on account of capital loss being shares written off, ` 6,12,380/- 2 of 5 ::: Downloaded on - 27-07-2017 10:28:39 ::: ITA No. 173 of 2015 (O&M) 3 on account of disallowance of travelling and local conveyance expenses considering same to be for non-business purposes and of personal nature, ` 20,26,197/- on account of Singapore living expenses, ` 33,867/- on account of short declaration of interest received from Axis Bank and ICICI Bank, ` 8,676/- on account of short receipt of professional and technical services fee and ` 6,96,000/- under Section 40A(2)(b) of Act on account of excess salary were made in case. Income was assessed at ` 1,58,10,130/-. Assessing Officer passed order under Section 154 dated 16.01.2013 reducing income of company to ` 1,36,80,537/-. Certain additions were made by Assessing Officer while finalising case of assessee under Section 144 of Act. assessment framed was subsequently rectified under Section 154 of Act vide order dated 16.01.2013 and addition of ` 20,26,197/- on account of Singapore living expenses was reduced to ` 2,02,620/- and income was finally assessed at ` 1,36,80,540/-. Aggrieved by order, assessee filed appeal before Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 18.09.2013, CIT(A) allowed appeal of assessee on all issues. It was recorded by CIT(A) that he had called comments of Assessing Officer on additional information furnished by assessee during course of appellate proceedings, but no reply was furnished by Assessing Officer. However, as per records detailed reply was submitted to office of CIT(A) by Assessing Officer. Against order passed by CIT(A), department filed appeal before Tribunal. Vide order dated 18.11.2014, Annexure A.5, Tribunal dismissed appeal of revenue and confirmed order passed by CIT(A). Hence instant appeal by appellant-revenue. 3. We have heard learned counsel for parties. 3 of 5 ::: Downloaded on - 27-07-2017 10:28:39 ::: ITA No. 173 of 2015 (O&M) 4 4. Admittedly, assessment in present case for assessment year 2010-11, was made ex-parte under Section 144 of Act as assessee did not submit requisite information despite being given various opportunities to do so. During assessment proceedings, Assessing Officer had disallowed exemption claimed by assessee under Section 10B of Act and some other disallowances were also made by Assessing Officer. Aggrieved by order, assessee filed appeal before CIT(A). assessee had also filed some additional evidences before CIT(A) in support of its claim of exemption under Section 10B of Act. These submissions of assessee were never filed before Assessing Officer during assessment proceedings and thus remained unexamined by Assessing Officer. Accordingly, CIT(A) called for comments of Assessing Officer. CIT(A) passed order dated 18.09.2013 to effect that no such remand report was received till date of passing of order and allowed appeal of assessee on this issue. According to revenue, Assessing Officer vide letter No.6735 dated 27.9.2013 i.e. after decision of appeal submitted his remand report to CIT(A). Therefore, remand report of Assessing Officer could not have been taken into consideration by CIT(A). Aggrieved against order of CIT(A), Department filed appeal before Tribunal which was dismissed and order passed by CIT(A) was upheld. 5. After perusing narration of facts and orders passed by authorities below, we find that in circumstances of case, matter requires to be remanded to Assessing Officer for deciding it afresh after considering additional evidence produced by assessee. Consequently, order dated 18.9.2013 passed by CIT(A) and order dated 18.11.2014, passed by Tribunal, Annexures A.4 and A.5 4 of 5 ::: Downloaded on - 27-07-2017 10:28:39 ::: ITA No. 173 of 2015 (O&M) 5 respectively are set aside and matter is remanded to Assessing Officer for deciding it afresh in accordance with law after hearing parties. Accordingly, appeal stands allowed. 6. (Ajay Kumar Mittal) Judge July 19, 2017 (Amit Rawal) gs Judge Whether speaking/reasoned Yes Whether reportable Yes 5 of 5 ::: Downloaded on - 27-07-2017 10:28:39 ::: Pr. Commissioner of Income-tax-2, Chandigarh v. Vertex Infosoft Solutions Pvt. Ltd
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