Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (5) TMI AT This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2022 (5) TMI 90 - AT - Income Tax


Issues Involved:
1. Disallowance of the claim for deduction under section 80-IC of the Income Tax Act, 1961.
2. Determination of whether the appellant is rendering services in the ICT industry.
3. Evaluation of the appellant's business model and its classification as manpower recruitment and supply.
4. Determination of whether the appellant's business is carried out within the State of Uttarakhand.
5. Assessment of whether the appellant's business is a mere reconstruction of an existing business.
6. Levying interest under section 234B of the Act.

Detailed Analysis:

1. Disallowance of Deduction under Section 80-IC:
The primary issue was the disallowance of the deduction claimed under section 80-IC of the Income Tax Act, 1961, amounting to INR 1,84,28,269/-. The Assessing Officer disallowed the deduction based on findings from the initial assessment year (A.Y. 2007-08). However, the Tribunal had previously allowed the deduction for A.Ys 2007-08 to 2010-11, establishing a precedent.

2. Rendering Services in the ICT Industry:
The Tribunal examined whether the appellant was engaged in the Information and Communication Technology (ICT) industry. The appellant provided various services such as Application Development & Support, Customer Care Services, and Technical Help Desk Support to clients like IBM, Nokia, and Wipro. These services were rendered through the appellant’s employees, who were accountable to the appellant and not to the clients, thereby qualifying the appellant's operations under the ICT industry as per the Fourteenth Schedule of the Act.

3. Business Model Classification:
The Tribunal analyzed the appellant's business model, which involved providing technically skilled personnel to clients. The agreements with clients like Tech Mahindra and Nokia indicated that the appellant was responsible for salaries, taxes, and other statutory obligations, confirming that the business model was not merely manpower recruitment but involved substantial ICT services.

4. Business Operations within Uttarakhand:
The Tribunal confirmed that the appellant’s business operations were carried out within the State of Uttarakhand. Evidence included the appellant’s registered office in Dehradun, electricity bills, and a certificate from BSNL regarding broadband connections used for software development. The appellant’s registration with the Software Technology Parks of India (STPI) and the Provident Fund Office in Dehradun further supported this claim.

5. Reconstruction of Existing Business:
The Tribunal found no evidence to support the claim that the appellant’s business was a mere reconstruction of an existing business. The appellant had established its operations in Dehradun, fulfilling the conditions for claiming the deduction under section 80-IC.

6. Levying Interest under Section 234B:
The Tribunal did not provide a detailed discussion on this issue, but the primary focus was on the main contention regarding the deduction under section 80-IC.

Conclusion:
The Tribunal, following the findings of the co-ordinate bench, directed the Assessing Officer to allow the appellant's claim for deduction under section 80-IC of the Income Tax Act, 1961. The appeals filed by the appellant for A.Ys 2011-12, 2012-13, and 2013-14 were allowed, setting aside the orders of the CIT(A), Muzaffarnagar. The judgment emphasized the appellant’s eligibility for the deduction based on its business operations in the ICT industry within Uttarakhand, and the comprehensive evidence provided.

 

 

 

 

Quick Updates:Latest Updates