2023 (1) TMI 723 - HC - Income Tax

Deduction u/s 80-IB - sub-licence fee - reallocating expenditure/income on account of royalty from Jammu Unit to Corporate Division - HELD THAT- As decided in 2018 (9) TMI 1629 - DELHI HIGH COURT Montage Enterprises Pvt. Ltd matter requires reexamination by the Tribunal on the question, whether the Jammu Unit had utilized the technical know-how provided to the respondent assessee company under the MoUs. Till this core and important aspect and question is decided, we cannot proceed and decide, the other question whether the expenditure on royalty was incurred by the Jammu Unit or the Corporate Office. In view of the aforesaid finding in the appeal filed by the Assessee, the Tribunal did not decide the cross appeal filed by the Revenue challenging order passed by Commissioner of Income Tax (Appeals), allowing netting of royalty received from royalty paid for computation of deduction under Section 80-IB of the Act. As we have remanded the issue of deduction under Section 80-IB, it will be open to the Assessee to press their cross appeal before the Tribunal in case of an adverse finding against the assessee on the first issue. The directions contained in Montage Enterprises Pvt. Ltd. will apply mutatis mutandis in respect of the instant appeals as well. The matters are, thus, remitted to the Tribunal for a fresh adjudication.

Summary

Issues:
Delay in refiling the appeal, Challenge to a common order by the Income Tax Appellate Tribunal, Substantial questions of law regarding reallocation of expenditure/income and deduction under Section 80-IB of the Income Tax Act, 1961.

Delay in Refiling the Appeal:
The appellant/revenue filed an application seeking condonation of a 64-day delay in refiling the appeal, which was granted by the court based on the reasons provided in the application.

Challenge to a Common Order by the Income Tax Appellate Tribunal:
The appeals, ITA 236/2019 for AY 2009-10 and ITA 308/2019 for AY 2008-09, challenged a common order dated 29.06.2018 passed by the Income Tax Appellate Tribunal. The parties submitted a hard copy of a judgment in a related case, and the court noted substantial questions of law that were addressed in the previous judgment.

Substantial Questions of Law Regarding Reallocation of Expenditure/Income and Deduction under Section 80-IB:
The court highlighted the questions of reallocating expenditure/income on account of royalty and the entitlement to deduction under Section 80-IB of the Income Tax Act, 1961. The court referred to the directions issued by a coordinate Bench in a related case, stating that the matters required reexamination by the Tribunal for fresh adjudication.

Conclusion:
The appeals were disposed of in terms of the operative directions from the related case, and the matters were remitted to the Tribunal for a fresh adjudication. Both parties agreed that the issue decided in the related case also applied to the current appeals. The Tribunal was directed to hear the parties on a specified date and fix a hearing date as per convenience.