2018 (6) TMI 1038 - AT - Income Tax

Entitlement for deduction u/s 10B - assessee company is engaged in the business of providing business process outsourcing services onsite/offshore - Held that - We noticed that the Tribunal has consistently held that the assessee is eligible for deduction under Section 10B of the Act. The same view has been expressed by the Coordinate Bench in assessee s own case relating to A.Y. 2010-11 Claim under Section 10B on interest income and miscellaneous income - Held that - As relying on assessee s own case we hold that the assessee is eligible for deduction 10B of the Act in respect of interest income earned from bank deposits and also miscellaneous income relating to sundry balance written back. Accordingly we uphold the order passed by the CIT(A) on this issue. Eligibility of the assessee to claim deduction under Section 10AA of the Act in respect of interest income from FDI and sundry balances written back to be allowed MAT computation - computation of book profit under Section 115JB - AO refused to deduct the profit arising from Unit located in SEZ from the net profit for the purpose of computing book profit under Section 115JB - Held that - the profit arising from the Unit located in SEZ is liable to be excluded as per provisions of Section 115JB(6) of the Act. He also submitted that an identical issue was considered by the Coordinate Bench in A.Y. 2010-11 and the same was decided in favour of the assessee by following the decision rendered by another Coordinate Bench in the case of Genesys International Corporation Ltd. (2016 (1) TMI 77 - ITAT MUMBAI) - we uphold the order passed by the learned CIT(A) in holding that the profit arising from Unit located in SEZ is eligible to be excluded for the purpose of computing book profit under Section 115JB as per sub-section (6) of sec. 115JB. Disallowance of belated payment of employees contribution of PF and ESIC - amounts paid beyond the due date prescribed in the respective Acts. Held that - As the assessee has however, paid the amount before the due date prescribed for filing the return of income. Accordingly, following the decision rendered by the by the Hon ble Bombay High Court in the case of CIT vs. Hindustan Organic Chemicals Ltd. 2014 (7) TMI 477 - BOMBAY HIGH COURT disallowance be deleted. - Revenue appeal dismissed.

Summary

Issues involved:
1. Entitlement for deduction under Section 10B of the Income Tax Act.
2. Eligibility for deduction under Section 10B of the Act on specific incomes.
3. Claim for deduction under Section 10AA of the Act.
4. Computation of profit under Section 115JB of the Act.
5. Disallowance of belated payment of employees' contribution to PF and ESIC.

Issue 1: Entitlement for deduction under Section 10B of the Income Tax Act:
The AO initially rejected the claim under Section 10B, citing reasons related to the nature of work and restructuring. However, the CIT(A) allowed the claim based on previous Tribunal orders. The ITAT upheld the CIT(A)'s decision, noting consistent Tribunal rulings in favor of the assessee regarding eligibility under Section 10B.

Issue 2: Eligibility for deduction under Section 10B on specific incomes:
Regarding interest and miscellaneous income, the AO disallowed the deduction under Section 10B, arguing they were not derived from export business. The ITAT, following a Coordinate Bench decision, ruled in favor of the assessee, allowing the deduction for interest income from bank deposits and miscellaneous income from sundry balance written back.

Issue 3: Claim for deduction under Section 10AA:
The ITAT found the assessee entitled to deduction under Section 10B for interest income and sundry balances written back, upholding the CIT(A)'s decision based on previous rulings.

Issue 4: Computation of profit under Section 115JB:
The AO refused to exclude profits from a unit in SEZ for computing book profit under Section 115JB. The ITAT, following precedent and provisions of Section 115JB(6), upheld the CIT(A)'s decision to exclude SEZ profits.

Issue 5: Disallowance of belated payment of employees' contribution to PF and ESIC:
The AO disallowed the claim due to late payment, but the CIT(A) reversed this based on payments made before the income tax return due date. Citing High Court decisions, the ITAT upheld the CIT(A)'s ruling, dismissing the Revenue's appeals.

The ITAT, in a detailed judgment, addressed various issues related to deduction entitlements under different sections of the Income Tax Act, consistently upholding the CIT(A)'s decisions based on previous Tribunal and High Court rulings. The assessee's eligibility for deductions under Sections 10B and 10AA, treatment of specific incomes, exclusion of SEZ profits for book profit computation, and disallowance of belated employee contribution payments were all analyzed and decided in favor of the assessee, resulting in the dismissal of the Revenue's appeals.