2020 (11) TMI 214 - AT - Income Tax

Disallowance u/s 80JJAA - assessee is not engaged in manufacture or production of an article or thing as per the conditions laid down under section 80JJAA and the condition of 300 days to be fulfilled by the regular workmen as per the provisions does not stand fulfilled - AR submitted that, this is the 3rd year of claim by assessee - HELD THAT - AO regarding nonsatisfaction with respect to additional wages paid to new employees in the 1st year of employment is concerned, this Tribunal has expressed following view in case of Texas Instruments (India) Pvt.Ltd 2020 (3) TMI 1195 - ITAT BANGALORE - There is no doubt that assessee cannot be denied deduction under section 80JJAA of the Act, provided that, such employees fulfils the condition of being employed for 300 days for year under consideration , even though such employees do not fulfil the condition of being employed for 300 days in the immediately preceding assessment year. Details fulfilment of number of days of such employees, on whose salary deduction has been claimed by assessee, are not available on record. Therefore, we are unable to verify, whether necessary condition of 300 days stands fulfilled. We also agree with Ld.CIT.DR that nothing on record placed before us reveals that this is the 3rd year of claim by assessee as has been submitted - issue needs to be remanded to Ld.AO to verify these details in terms of new employees having satisfied the 300 days criteria during the year. We direct assessee to provide all details regarding number of regular workmen/employees, number of new workmen/employees added for each of the immediately three preceding assessment years to Ld.AO. Ld.AO is then directed to analyse fulfilment of the condition in respect of new employees/workmen against whom the claim has been made by assessee under section 80JJAA of the Act. Ld.AO is then directed to allow deduction under section 80 JJAA Foreign Tax credit - HELD THAT - AO rejected the claim as assessee had made the additional FTC, by way of written submission without any evidences. In our view this issue needs to be remanded to Ld.AO to consider the claim of assessee in light of evidences/documents filed by assessee. Accordingly, the issue too is remanded to Ld.AO. Assessee is directed to file all requisite details in support of its claim in accordance with law which shall be considered by Ld.AO upon verification. Appeal filed by assessee stands allowed for statistical purposes.

Summary

Issues Involved:
1. Disallowance under section 80JJAA
2. Foreign Tax Credit
3. Levy of Interest u/s 234B

Analysis:

Issue 1: Disallowance under section 80JJAA
The appellant contested the disallowance under section 80JJAA, claiming that the conditions for the deduction were met. The Assessing Officer (AO) rejected the claim based on non-fulfillment of conditions related to the employment of new workmen for 300 days in the relevant year. The appellant argued that the employees met the necessary conditions and cited relevant case law to support their claim. The Tribunal observed discrepancies in the record regarding the fulfillment of the 300-day criteria and directed the AO to verify the details for the new employees. The Tribunal remanded the issue to the AO for further examination and allowed the ground raised by the appellant for statistical purposes.

Issue 2: Foreign Tax Credit
The appellant raised a ground regarding the incremental foreign tax credit that was not allowed during the assessment proceedings. Both parties acknowledged that the details supporting the claim were not adequately verified by the AO. The Tribunal noted that the claim was rejected due to lack of evidence and directed the appellant to provide all necessary details to the AO for consideration. The issue was remanded to the AO for proper evaluation based on the evidence submitted by the appellant. The ground raised by the appellant was allowed for statistical purposes.

Issue 3: Levy of Interest u/s 234B
The appellant challenged the levy of interest under section 234B, claiming it was unjustified and should be quashed. However, the judgment did not provide detailed analysis or resolution regarding this issue.

In conclusion, the Tribunal allowed the appeal filed by the appellant for statistical purposes on both the disallowance under section 80JJAA and the incremental foreign tax credit issues. The judgment emphasized the importance of providing sufficient evidence and details to support claims during assessment proceedings, highlighting the need for thorough verification by the tax authorities.