ACIT circle 7 (1), v. UGS India (P) Ltd,

ITA 943/DEL/2008 | 2004-2005
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 94320114 RSA 2008
Bench Delhi
Appeal Number ITA 943/DEL/2008
Duration Of Justice 7 year(s) 1 month(s) 18 day(s)
Appellant ACIT circle 7 (1),
Respondent UGS India (P) Ltd,
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-04-2015
Date Of Final Hearing 20-04-2015
Next Hearing Date 20-04-2015
Assessment Year 2004-2005
Appeal Filed On 12-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH JUDICIAL MEMBER AND SH. I.R.RAO ACCOUNTANT MEMBER I.T.A .NO. - 322 /DEL/20 07 (ASSESSMENT YEAR - 200 3 - 0 4 ) UGS INDIA PVT. LTD. B - 26 QUTAB INSTITUTIONAL AREA NEW DELHI - 110016 (APPELLANT) VS ACIT CIRCLE - 7(1) C. R. BUILDING NE W DELHI (RESPONDENT) I.T.A .NO. - 943 /DEL/20 08 (ASSESSMENT YEAR - 200 4 - 0 5 ) ACIT CIRCLE - 7(1) C. R. BUILDING NE W DELHI (APPELLANT) VS UGS INDIA PVT. LTD. 20 COMMUNITY CENTRE PUSHP VIHAR MADANGIR NEW DELHI - 110016 (RESPONDENT) APPELLANT BY S H.K.M.GUPTA ADV. RESPONDENT BY SH.SANJAY PRASAD CIT DR ORDER PER DIVA SINGH JM THE SE TWO APPEALS OF THE ASSESSEE AND THE REVENUE IN 2003 - 04 AND 2004 - 05 ASSESSMENT YEARS AGAINST THE ORDERS OF CIT(A) - X DATED 15.11.2006 AND 19.12.2007 RESPECTIVELY HAVE BEEN REMITTED BY THE HON BLE HIGH COURT BACK TO THE TRIBUNAL VIDE THEIR CONSOLIDATED ORDER DATED 01.06.2007 IN ITA NOS. - 322/DEL/2007 124/2008 133/2008 155/2008 AND 1283/2010 ON ONE ISSUE ONLY. ACCORDINGLY FOR THE SAKE OF CONVENIENCE THE ISSUES ARE BEING DEC IDED BY A COMMON ORDER. T HE HON BLE HIGH COURT VIDE THE ABOVE ORDER WAS PLEASED ONLY TO RESTORE THESE TWO APPEALS ADDRESSED IN ITA NO. - 124/2008 & 1283/2010 FOR 2003 & 2004 - 05 ASSESSMENT YEAR S WITH THE FOLLOWING OBSERVATIONS: - ITA - 124/2008 9. INSOFAR AS CLAIM OF FOREIGN TRAVELLING EXPENSES IN THIS YEAR IS CONCERNED THE ORDER OF THE TRIBUNAL REVEALS THAT THE TRIBUNAL HAS SIMPLY FOLLOWED THE ORDER IN THE EARLIER ASSESSMENT YEAR AND THERE IS NO DISCUSSION AND NO FINDING OF FACT ON THE BASIS OF MATERIAL ON R ECORD IS RECORDED AS TO WHETHER ANY FOREIGN TRAVEL EXPENSES WERE INCURRED FOR THE DATE OF HEARING 20 .0 4 .2015 DATE OF PRONOUNCEMENT 2 9 .0 4 .2015 I.T.A .NO S . - 322 /DEL/20 07 & 943/DEL/2008 2 PURPOSE OF BUSINESS IN THIS YEAR OR NOT. THEREFORE THE MATTER NEEDS TO BE REMITTED BACK TO THE TRIBUNAL TO EXAMINE THIS ISSUE AFRESH. ITA - 1283/2010 19. AS FAR AS ISSUE RELATING TO EXPENDITURE ON FOREIGN TRAVEL IS CONCERNED THE ORDER OF THE TRIBUNAL REVEALS THAT THE TRIBUNAL HAS SIMPLY FOLLOWED THE ORDER IN THE EARLIER ASSESSMENT YEAR AND THERE IS NO DISCUSSION AND NO FINDING OF FACT ON THE BASIS OF MATERIAL ON RECORD IS RECORDED AS TO WHETHER ANY FOREIGN TRAVEL EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS INT HIS YEAR OR NOT. THEREFORE THE MATTER NEEDS TO BE REMITTED BACK TO THE TRIBUNAL TO EXAMINE THIS ISSUE AFRESH. 2. IT WAS A COMMON STAND OF THE PARTIES BEFO RE THE BENCH THAT THE ISSUE WILL HAVE TO GO BACK TO THE AO AS THE RELEVANT FACTS HAVE NOT BEEN DISCUSSED BY THE A SSESSING O FFICER . FOR READY - REFERENCE ATTENTION WAS INVITED TO THE ASSESSMENT ORDER IN 2003 - 04 ASSESSMENT YEAR. THE SAME IS REPRODUCED HEREU NDER FOR READY - REFERENCE: - 2. THE ASSESSEE COMPANY CONTINUES TO DERIVE INCOME FROM THE BUSINESS OF SALE AND SERVICE OF COMPUTER SOFTWARE DEVELOPMENT OF SOFTWARE AND RENDERING CONSULTANCY AND OTHER SERVICES. THE ASSESSEE COMPANY WAS GRANTED REGISTRATION UNDER STP - I VIDE ORDER DATED 21.03.2000 FOR DEVELOPMENT CENTER AT PUNE. THE ASSESSEE COMPANY IS DEVELOPING SOFTWARE FOR SELLING IT TO ITS PARENT COMPANY M/S UNIGRAPHICS SOLUTIONS INC. USA. 4. THE ASSESSEE COMPANY HAS INCURRED AN EXPENDITURE OF RS.51 71 028/ - ON FOREIGN TRAVELLING IN THE UNITS OTHER THAN THE STP - I UNIT. THE ASSESSEE WAS SPECIFICALLY REQUIRED TO FURNISH THE DETAILS OF FOREIGN TRAVEL ALONG WITH PURPOSE OF THE TRAVELLING. IN ITS EXPLANATION THE ASSESSEE COMPANY HAS CLAIMED THAT ALL THE J OURNEYS HAVE BEEN UNDERTAKEN FOR THE PURPOSE OF BUSINESS AND HAS PROVIDED REASONS THEREOF VIDE ITS SUBMISSION DATED 14.11.2005. THE ASSESSEE COMPANY IS ALSO RUNNING AN STP - I UNIT ON WHICH IT HAS CLAIMED DEDUCTION U/S 10A OF THE IT ACT 1961 AND THE EXPEND ITURE ON TRAVEL CANNOT BE PROPERLY BIFURCATED. THIS ISSUE HAS BEEN DISCUSSED AT LENGTH DURING ASSESSMENT PROCEEDINGS FOR THE ASSESSING YEARS 2001 - 02 AND 2002 - 03 WHEREIN 50% OF THE EXPENSES OF TRAVELLING WERE DISALLOWED. THE ADDITIONS HAS BEEN CONFIRMED B Y THE LD. CIT(A). I HAVE NO REASON TO DIFFER WITH THE FINDINGS OF THE EARLIER YEARS AND 50% OF THE EXPENSES IS DISALLOWED AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF NON STP - I UNITS. ACCORDINGLY AN ADDITION OF RS.25 85 514/ - I S MADE ON THIS ACCOUNT. IN VIEW OF THE ABOVE DISCUSSION I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS CONCEALED ITS INCOME WITHIN THE MEANING OF INCOME AND HAS CONCEALED ITS INCOME WITHIN THE MEANING OF EXPLANATI ON 1 TO SECTION 271(1)(C) OF THE I. T. ACT. ACCORDINGLY PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH SECTION 274 ARE BEING INITIATED SEPARATELY ON THIS ISSUE. (EMPHASIS PROVIDED) 3. MORE OR LESS SIMILAR FINDINGS IT IS SEEN HAS BEEN RECORDED BY THE AO IN 2004 - 05 ASSESSMENT YEAR VIDE ITS ORDER DATED 21.12.2006 : - I.T.A .NO S . - 322 /DEL/20 07 & 943/DEL/2008 3 4. THE ASSESSEE COMPANY HAS INCURRED AN EXPENDITURE OF RS.63 32 763/ - ON FOREIGN TRAVELLING IN THE UNITS OTHER THAN THE STP - I UNIT. THE ASSESSEE WAS SPECIFICALLY REQUIRED VIDE ORDER SHEET ENTRY DATED 15.11.2006 TO FURNISH THE DETAILS OF FOREIGN TRAVEL ALONG WITH PURPOSE OF THE TRAVELLING. IN ITS EXPLANATION THE ASSESSEE COMPANY HAD CLAIMED THAT ALL THE JOURNEYS HAVE BEEN UNDERTAKEN FOR THE PURPOSES OF BUSINESS AND HAS PROVIDED REASONS THEREOF VIDE ITS SUBMISSION DATED 22.09.2006. THE ASSESSEE COMPANY IS A LSO RUNNING AN STP - I UNIT ON WHICH IT HAD CLAIMED DEDUCTION U/S 10A OF THE IT ACT 1961 AND THE EXPENDITURE ON TRAVEL CANNOT BE PROPERLY BIFURCATED. THIS ISSUE HAS BEEN DISCUSSED AT LENGTH DURING THE PROCEEDINGS FOR THE AY 2001 - 02 AND 2002 - 03 AND 2003 - 04 WHEREIN 50% OF THE EXPENSES OF TRAVELLING WERE DISALLOWED. THE ADDITIONS HAS BEEN CONFIRMED BY THE LD. CIT(A). I HAVE NO REASONS TO DIFFER WITH THE FINDINGS OF HE EARLIER YEARS AND 50 % OF THE EXPENSES IS DISALLOWED AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF NON STP - I UNIT. ACCORDINGLY AN ADDITION OF RS.31 66 382/ - IS MADE ON THIS ACCOUNT. (EMPHASIS PROVIDED) 4. ACCORDINGLY IN VIEW OF THE ABOVE CONSIDERING THE FACTS IN THE LIGHT OF THE PLEADINGS OF THE PARTIES BEFORE THE BENCH WE FIND THAT IN THE ABSENCE OF ANY DISCUSSION ON FACTS IN THE ASSESSMENT ORDERS FOR THE YEARS UNDER CONSIDERATION THE ISSUE NECESSARILY HAS TO BE RESTORED TO THE AO. ACCORDINGLY THE APPEAL OF THE ASSESSEE AND THE REVENUE IN THE RESPECTIVE ASSESSMENT YEA R S ARE BEING RESTORE D BACK TO THE AO WITH THE DIRECTION TO DECIDE THE ISSUE RAISED THEREIN QUA THE ADDITION MADE BY WAY OF A DISALLOWANCE DISCUSSING THE RELEVANT FACTS IN THE RESPECTIVE YEARS. NEEDLESS TO SAY THAT BEFORE PASSING THE ORDER THE ASSESSEE S HALL BE AFFORDED A REASONABLE OPPORTUNITY OF BEING HEARD. 5 . IN THE RESULT BOTH THE APPEAL OF THE ASSESSEE AND THE APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES . THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL 2015. SD/ - SD/ - ( I.R.RAO ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 29 TH APRIL 2015 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI