IT : Where in appellate proceedings, assessee raised an alternative contention that in case its income was found positive, it would be entitled to deductions under sections 80HHC and 80-IA and Commissioner having accepted said contention, remanded proceedings for verification of facts to Assessing Officer, there was no error in said order and, therefore, it was to be upheld
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[2013] 35 taxmann.com 513 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax - IV
v.
Shree Rama Multi Tech Ltd.*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
TAX APPEAL NO. 503 OF 2012†
APRIL 16, 2013
Section 251, read with sections 80HHC and 80-IA, of the Income-tax Act, 1961 - Commissioner (Appeals) - Powers of [Power to remand] - Assessment year 2002-03 - For relevant assessment year, assessee filed its return declaring loss - Assessing Officer, in a scrutiny assessment made certain additions, pursuant to which, income assessed was on positive side - On appeal, apart from questioning additions, assessee raised an alternative contention that, if income was positive, it would be entitled to deduction under sections 80HHC and 80-IA - Commissioner (Appeals), in principle, agreed with assessee but remanded proceeding keeping it open to Assessing Officer to examine facts and grant deduction, as available - Tribunal upheld order of Commissioner (Appeals) - Whether since Commissioner (Appeals) only entertained alternative contention of assessee and remanded proceedings for verification of facts to Assessing Officer, there was no error in impugned order and, therefore, same was to be upheld - Held, yes [Para 3.1] [In favour of assessee]
Ms. Paurami B. Sheth for the Appellant. B.S. Soparkar for the Respondent.
ORDER
Ms. Sonia Gokani, J. - Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal (the Tribunal for short) dated 06.01.2012 raising following questions of law for our consideration:
| "1. | Whether the Tribunal is right in rejecting the revenues appeal filed against the decision of the CIT(A) in deleting the disallowance of claim of depreciation on intangible assets, being software? | |
| 2. | Whether the Tribunal is right in upholding the decision of the CIT(A) in directing the Assessing Officer to examine the claim of the assessee u/s 80HHC and 80-IA of the Act when the assessee had not made any such claim in the return of income?" |
2. Counsel for the Revenue candidly stated that question No.1 gets covered by our order dated 16.4.2013 passed in Tax Appeal No. 507 of 2012 in case of this very assessee. We notice that we had not entertained a similar question in the said order making following observations:
"Regarding question No.1, Tribunal followed its own order in case of very assessee for the assessment year 2002-2003 to hold in favour of the assessee. For the assessment year 2002-2003 while confirming the order of CIT (Appeals), the Tribunal made the following observations :
"The learned CIT (A) on proper examination of evidences and material rightly came to the conclusion that software is intangible asset and was loaded in the system of machine. The learned CIT (A) also rightly held that installation of software could be checked by the technical person whether it was loaded in the system or not. Therefore, the finding in the survey cannot be relied upon. Even the AO has accepted the fact that some of the software were developed locally and installed in the system. The finding of fact recorded by learned CIT (A) find support from the valuation report of assets prepared by Dalai Mott Macdonald which was found in survey which indicated that software developed and installed by the assessee in the system. The assessee produced all the vouchers and receipt for the same which was also examined by learned CIT(A). Nothing is produced before us during the course of arguments to rebut the findings of learned CIT(A). Considering the facts and circumstances of the case in the light of the material on record, we do not find any justification to interfere with the order of the learned CIT(A) in allowing depreciation in respect of all the software purchased and installed during the year."
The Tribunal in the present case allowed the claim of the assessee, by confirming the order of CIT(Appeals) by setting aside the order of the Assessing Officer on the very issue. Both CIT(Appeals) and the Tribunal have concurrently held in favour of the assessee. Unless perversity is pointed out, no question of law arises for this Court to interfere as both have dealt with the issues elaborately giving sound and cogent reasons. The issue therefore, merits no further consideration."
Question no.1 accordingly, merits no consideration.
3. Insofar as question No. 2 is concerned brief facts are thus:
3.1 Respondent-assessee had filed a return of income for the assessment year 2002-03 disclosing loss. Assessing Officer, however, in a scrutiny assessment made certain additions, pursuant to which, the income assessed was on the positive side. Assessee took the matter in appeal before the Commissioner. In addition to questioning such additions, the assessee raised an alternative contention that, if the income is positive, the assesssee - would be entitled to deduction under Section 80HHC and 80-IA of the Act. Commissioner, in principle, agreed with the assessee but remanded the proceeding keeping it open to the Assessing Officer to examine the facts and grant deduction, as available.) Such order was carried in appeal before the Tribunal. Tribunal, by the impugned order, dismissed the revenues appeal making following observations:
"7. The revenue on ground No. 2 challenged the order of the learned CIT(A) in directing the AO to allow deduction u/s. 80HHC and 80-IA of the IT Act. The assessee has not claimed these deductions at the time of filing of the return for the reasons that the income computed was at loss. However, when various additions were made and income is computed at profit, the assessee made claim of deduction under section 80-IA and 80HHC of the IT Act, because the assessee fulfilled all the conditions for grant of deduction under the above provisions. The claim of the assessee was not allowed by the AO because it was not claimed in the return of income. The learned CIT(A) found that claim of the assessee should be considered because the income is computed ultimately at profit due to the additions. It was also found that assessee fulfilled all the conditions for claiming deduction under these provisions. The AO was, therefore, directed to examine this issue and allow the claim as per law.
8. The learned DR relied upon the order of the AO. On the other hand, the learned counsel for the assessee reiterated the submissions made before the authorities below.
9. On consideration of the above facts, we do not find any merit in this ground of appeal of the revenue. Since the assessee filed return of income at losses, therefore, there was no reason for the assessee to make a claim of deduction under these provisions when income is computed at profit. The learned CIT(A), therefore, rightly directed the AO to consider this issue particularly when the assessee fulfilled conditions under these provisions. The learned CIT(A) merely directed the AO to allow the claim of the assessee as per law. We, therefore, do not find any merit in this ground of appeal of the revenue. The same is accordingly dismissed."
3.1 Having heard learned counsel for the parties, we have no reason to interfere in this respect. As already noted, the assessee raised the claim in somewhat peculiar circumstances as the assessees original return was filed disclosing loss. In that view of the matter, there would be no question of claiming any deduction either under Section 80HHC or under Section 80IA of the Act. Such deduction would be available only there was positive income. The Assessing Officer, while framing the assessment, made certain additions and thereby converted the return of the assessee of one of loss into the assessment order computing positive income. Only at that stage, the question of the assessee pressing for the deductions under Sections 80HHC or 80-IA of the Act arose. This would be known and available to the assessee only once the Assessing Officer passes his order. Under the circumstances, the assessee in the appeal before the Commissioner in addition to questioning the validity of the additions themselves, also raised an alternative legal contention of deductions under the said provisions.
4. To our mind, the Commissioner committed no error He only entertained such an contention but remanded ,the proceedings for verification of facts to the Assessing Officer. In the present case, the occasion to press for deduction under the said provision arose only when once the Assessing Officer passed an order of assessment.
5 . In the result, no question of law arises. Tax appeal is, therefore, dismissed.
SUNILRegards
Prarthana Jalan
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