ITAT restored the matter to AO to verify assessee’s stand
ITAT restored the matter to AO to verify assessee’s stand
Assessee declared its income at NIL. It had entered into a 50:50 JV, and 50% of value of purchases and sale proceeds were declared by assessee. AO held that assessee failed to establish the JV, and added balance 50% profit as income of assessee. Assessee had received a sum from a purchaser, which the AO added to its income. CIT(A) upheld AO’s order. ITAT restored the matter to AO to verify assessee’s stand.
1. The Revenue appealed against CIT(A)'s decision on the reduction of telecommunication charges from export turnover and total turnover for computing deduction under Section 10A of the Income-tax Act, 1961. It also challenged the disallowance of 5% of gross dividends received by the assessee, as expenditure.
2. The ITAT held as under:
“In fact, the Special Bench of this Tribunal in Saksoft Ltd. (supra), after examining the provisions of law, found that both numerator and denominator should be of same figure. Therefore, once the telecommunication charges are excluded from the export turnover, the same shall be excluded from total turnover. The only contention of the Ld. D.R. is that an appeal is pending before the Apex Court against the order of the Special Bench of this Tribunal in Saksoft Ltd. (supra). Mere pendency of an appeal before the Apex Court cannot be a reason to take a different view. Therefore, the CIT(Appeals) has rightly followed the decision of the Special Bench of this Tribunal in Saksoft Ltd. (supra). Accordingly, the same is confirmed....
The assessment years under consideration are 2006-07 and 2007-08. Rule 8D came into operation from the year 2008. Therefore, this Tribunal is of the considered opinion that Rule 8D is not applicable for the years under consideration. Therefore, the expenditure relatable to earning the exempted income, which does not form part of total income, has to be estimated on the basis of material available on record. This Tribunal is estimating the disallowance 2% to 5% for earning exempted income depending upon the facts of the case. The CIT(Appeals), by placing his reliance on the decision of this Tribunal in Celebrity Fashions (supra), estimated the disallowance at 5% of gross dividend income. Since the CIT(Appeals) rightly placed his reliance on the decision of this Tribunal, we do not have any reason to interfere with his order. This Tribunal is of the considered opinion that mere pendency of appeal before the High Court cannot be a reason to take a different view. Therefore, the order of the CIT(Appeals) is confirmed.”
Case Reference-Before Shri P.M. Jagtap, Accountant Member I.T .A. No. 703/KOL/ 2013 Assessment Year: 2008-2009 M/s. Loknath Properties & Developers Pvt. Ltd v Income Tax Officer
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'SMC' BENCH, KOLKATA
