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2014 (1) TMI 1226 - AT - Income TaxDeduction granted u/s 10A of the Act Failure to produce FIRCs Held that - CIT(A) held that The AO had not given even one week time to the assessee to produce FIRCs and the same was produced before the CIT(A) - The claim was duly examined by the CIT(A) and found correct thus, the AO directed to grant the deduction after due verification of the FIRCs - The CIT(A) has given a categorical finding that the assessee has produced the FIRCs from the Bank to show that the funds have been brought into India in convertible foreign exchange Revenue is not able to controvert the finding of the CIT(A) order of the CIT(A) upheld Decided against Revenue. Disallowance of vehicle maintenance and general expenses Disallowance of conveyance and travelling expenses - Held that - The assessee is a public limited company whose accounts are audited by statutory auditors and approved by its General Body and there cannot be any expenditure of personal nature - Unless and until the AO points out any specific discrepancy on the expenses incurred by the assessee, any amount on this count cannot be disallowed the order of the CIT(A) reversed Decided in favour of Assessee. Withdrawal of deduction granted u/s 10A as per section 154 of the Act - Whether the deduction granted to the assessee u/s. 10A can be be withdrawn u/s. 154 on the reason that the assessee filed return of income belatedly Held that - Relying upon ACIT vs. Dhir Global Industries (P) Ltd 2010 (7) TMI 619 - ITAT, DELHI An issue when it is debatable, it cannot be dealt with by the proceedings u/s. 154 of the Act - The AO in his order u/s. 154 of the Act is very much debatable and a debatable issue cannot be considered in the proceedings u/s. 154 of the Act thus, the CIT(A) is justified in annulling the order u/s. 154 of the Act Decided against Revenue.
Issues Involved:
1. Granting of deduction under Section 10A of the Income Tax Act, 1961. 2. Disallowance of vehicle maintenance and general expenses. 3. Disallowance of conveyance and traveling expenses. 4. Rectification under Section 154 for disallowing deduction under Section 10A due to late filing of return. Issue-wise Detailed Analysis: 1. Granting of Deduction under Section 10A: - Revenue Appeal (ITA No. 1380/Hyd/2012 for A.Y. 2009-10): The Assessing Officer (AO) disallowed the exemption claimed by the assessee under Section 10A amounting to Rs. 24,01,97,731 due to the failure to produce Foreign Inward Remittance Certificates (FIRCs). The CIT(A) observed that the AO did not provide sufficient time to the assessee to produce FIRCs, which were later presented before the CIT(A). The CIT(A) verified and found the claim correct, directing the AO to grant the deduction after due verification of FIRCs. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this ground. - Assessee Appeal (ITA No. 340/Hyd/2013 for A.Y. 2009-10): The assessee contested the CIT(A)'s decision to grant a deduction of Rs. 15,25,10,970 instead of the claimed Rs. 24,01,97,731. The Tribunal clarified that the CIT(A) directed the AO to verify FIRCs and allow the deduction accordingly, without limiting it to Rs. 15,25,10,970. This ground raised by the assessee was dismissed. 2. Disallowance of Vehicle Maintenance and General Expenses: - The AO disallowed 10% of vehicle maintenance and general expenses amounting to Rs. 11,73,590 due to incomplete evidence and self-made vouchers. The CIT(A) confirmed this disallowance. The Tribunal, considering that the assessee is a public limited company with audited accounts, found no basis for disallowance without specific discrepancies pointed out by the AO. The Tribunal reversed the CIT(A)'s order, allowing the assessee's ground. 3. Disallowance of Conveyance and Traveling Expenses: - The AO disallowed 10% of conveyance and traveling expenses amounting to Rs. 22,47,657 for similar reasons of incomplete evidence and self-made vouchers. The CIT(A) confirmed this disallowance. The Tribunal, reiterating that the assessee's accounts are audited and approved by its General Body, found no basis for disallowance without specific discrepancies. The Tribunal reversed the CIT(A)'s order, allowing the assessee's ground. 4. Rectification under Section 154 for Disallowing Deduction under Section 10A Due to Late Filing of Return: - Revenue Appeal (ITA No. 1379/Hyd/2012 for A.Y. 2008-09): The AO treated the late filing of the return as a mistake apparent from the record and passed a modification order under Section 154, withdrawing the deduction under Section 10A. The CIT(A) observed that the AO cannot withdraw the deduction via Section 154 proceedings as the issue is debatable. The Tribunal upheld the CIT(A)'s decision, citing various judgments that support the view that a debatable issue cannot be rectified under Section 154. The Tribunal dismissed the Revenue's appeal. Conclusion: - Both the appeals of the Revenue in ITA No. 1380/Hyd/2012 and ITA No. 1379/Hyd/2012 are dismissed. - The assessee's appeal in ITA No. 340/Hyd/2013 is partly allowed. Order Pronounced: - The order was pronounced in the open Court on 22nd January, 2014.
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