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Claim of the assessee u/s 10AA (of Income Tax Act, 1961) upheld by ITAT & CIT(A) after denied by AO.
Claim of the assessee u/s 10AA (of Income Tax Act, 1961) upheld by ITAT & CIT(A) after denied by AO.
"Assessee Co. was into Data Processing, Software Development & BPO. AO denied claim of Assessee for deduct'n u/s.10AA (of Income Tax Act, 1961) on several counts. On appeal CIT(A) reversed it. On appeal ITAT held, Court was of view that dispute in this appeal is only on head of income. There is no tax implication because claim of Assessee for set off of this income against carried forward business loss has already been accepted. Appeal Dismissed."-500546
Facts in Brief:
1. Assessee is a company.
2. It is engaged in the business of Data Processing, Software Development and business processing outsource.
3. The Assessee has a unit at Salt Lake City, Kolkata which is registered with Software Technology Park, Kolkata as 100% Export Oriented Unit for computer software.
4. The AO required the assessee to show cause as to why its claim should not be disallowed as the provisions of section 115JB (of Income Tax Act, 1961), amended w.e.f. 1.4.2008, do not permit the deduction u/s. 10A (of Income Tax Act, 1961).
5. In this respect the assessee submitted that the provisions of section 115JB(6) (of Income Tax Act, 1961) exempted the assessee from taxability u/s. 115JB (of Income Tax Act, 1961). The assessee further took the plea that the provisions of section 115JB(6) (of Income Tax Act, 1961) exempted all units situated in Special Economic Zones from its rigors.
6. AO denied the claim of the Assessee for deduction u/s.10AA (of Income Tax Act, 1961) on several counts.
7. On appeal, CIT(A) reversed the order of the AO.
On appeal ITAT held,
8 The Assessee made available to its own bankers its funds as money on call. These were not fixed deposit but certificates of deposit that were callable at the option of the Assessee depending on market conditions and its exigencies of business as it perceived.
9. The Assessee made these sums available as money's call against certificates of deposit as part of its normal business dealings activities and being its own treasury management function.
10. Having regard to the volatility of the money market as the Assessee perceived and having regard to its liquidity on account of the buoyancy dollar vis-vis a falling rupee, the Assesse thought it prudent to negotiate special rates with its own bankers for extending moneys on call to them at different rates that were advantageous to the Assessee.
11. The Assessee claimed that the activity was part of its treasury options and an integral part of liquidity management of the Assessee and ell within the normal ambit of the Assessee's business and was to be regarded as income from business though not income derived from the Sec.10AA (of Income Tax Act, 1961) unit. The AO did not agree with the submissions of the Assessee.
12. The CIT(A) without giving any independent reasons agreed with the submissions made by the Assessee.
13. We are of the view that the dispute in this appeal is only on the head of income. There is no tax implication because the claim of the Assessee for set off of this income against the carried forward business loss has already been accepted.
14. We therefore leave the question open without adjudication and uphold the conclusions of the CIT(A).
15. In the result the appeal of the revenue is dismissed.
Case Reference- Income Tax Appellate Tribunal - Kolkata Last Peak Data Pvt Ltd., Kolkata vs Department Of Income Tax
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