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2015 (11) TMI 1727 - AT - Income TaxDisallowance of deduction u/s 10A - Held that - As regards the deduction u/s. 10A, similar issue came up for consideration in assessee s own case for AY 2006-07 2013 (8) TMI 1069 - ITAT HYDERABAD wherein the Tribunal has held as uphold the order of the CIT(A) in directing the assessing officer to reduce foreign travel expenses, cost of service and professional charges from total turnover and dismiss the ground raised by the revenue in this regard. Disallowance u/s. 36(1)(va) - payment towards employees contribution on account of PF & ESI - Held that - Deduction of payment towards employees contribution on account of PF & ESI cannot be disallowed if the same is paid before the due date of filing of return. Accordingly, we uphold the order of the CIT(A) in allowing the assessee s claim of EPF & ESI deduction and dismiss the ground raised by the revenue.
Issues:
1. Disallowance u/s. 10A of the Income Tax Act 2. Disallowance of belated PF & ESI payments 3. Disallowance of income tax for prior years Analysis: Issue 1: Disallowance u/s. 10A of the Income Tax Act The appellant, a company involved in software development and export, claimed exemption u/s. 10A for the entire income earned from software exports. However, the Assessing Officer (AO) disallowed an expenditure of &8377; 13,51,75,916 from the export turnover, reducing the eligible exemption u/s. 10A. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the assessee's appeal based on a previous decision of the Income Tax Appellate Tribunal (ITAT) for AY 2006-07, directing the exclusion of the expenditure from both export turnover and total turnover. The ITAT upheld the CIT(A)'s decision, citing precedents from the ITAT, Special Bench of the Chennai Tribunal, and the Karnataka High Court. The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s order. Issue 2: Disallowance of belated PF & ESI payments The AO disallowed belated payments of PF & ESI contributions made by the assessee, citing non-compliance with due dates under the Income Tax Act. However, the CIT(A) allowed the assessee's appeal, following a decision of the ITAT in a similar case for AY 2008-09. The ITAT upheld the CIT(A)'s order, referencing judicial precedents such as CIT v. Desh Rakshak Aushdhalaya Ltd. and CIT v. AIMIL Ltd., emphasizing that if the employees' share of contribution is paid before the due date of filing the return, no disallowance can be made. The ITAT dismissed the revenue's appeal, supporting the CIT(A)'s decision. Issue 3: Disallowance of income tax for prior years The assessee did not pursue the ground regarding income tax for prior years, leading to its dismissal by the authorities. This issue was not further deliberated upon by the ITAT as the assessee did not press the ground. In conclusion, the ITAT dismissed the revenue's appeal, affirming the CIT(A)'s orders on both disallowance u/s. 10A and belated PF & ESI payments. The decisions were supported by various judicial precedents and interpretations of relevant provisions of the Income Tax Act. The judgment highlights the importance of timely compliance with due dates and the exclusion of specific expenditures for accurate computation of exemptions under the Act.
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