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TMI Blog2015 (2) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner qua the disallowance u/s 40(a)(ia) of the Act is hereby set aside. - Decided in favour of assessee. - ITA No.1473/PN/2013 - - - Dated:- 4-2-2015 - Shri G. S. Pannu And Shri R. S. Padvekar,JJ. For the Petitioner : Mr. Farooq V. Irani For the Respondent : Mrs. M. S. Verma, CIT ORDER Per G. S. Pannu, AM The captioned appeal by the assessee is directed against an order of the Commissioner of Income Tax- I, Pune (in short the Commissioner ) dated 28.03.2013 which, in turn, has arisen from an order dated 27.09.2010 passed by the Assessing Officer u/s 143(3) r.w.s. 144(C(13) of the Income-tax Act, 1961 (in short the Act ) pertaining to the assessment year 2006-07. 2. In this appeal, assessee has raised the following Grounds of Appeal :- Based on the facts and circumstances of the case, BMC Software India Private Limited (hereinafter referred to as the 'Appellant') respectfully craves leave to prefer an appeal against the order dated 28 March 2013 passed by the learned Commissioner of Income Tax - I, Pune (hereinafter referred to as 'the learned CIT') under section 263 of the Income-tax Act, 1961 (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes deducted at source in a few instances and therefore the corresponding expenditure of ₹ 1,32,83,963/- was to be disallowed as per section 40(a)(ia) of the Act, which the Assessing Officer had failed to do. After allowing an opportunity to the assessee of being heard on the above aspects, the Commissioner ultimately set-aside the issue pertaining to admissibility or otherwise of the relocation expenses to the file of the Assessing Officer for deciding it afresh; and, on the aspect of disallowance in terms of section 40(a)(ia) of the Act, the Commissioner directed the Assessing Officer to modify the assessment order dated 27.09.2010 so as to disallow a sum of ₹ 1,32,83,963/- on this count. Against such an order of the Commissioner, assessee is in appeal before us on the aforestated Grounds of Appeal. 5. At the time of hearing, the Ld. Representative for the assessee has not agitated the issue relating to the admissibility or otherwise of the relocation expenses and therefore the order of the Commissioner on this aspect is affirmed. 6. Now, we may refer to the action of the Commissioner relating to the disallowance u/s 40(a)(ia) of the Act. In this context, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance to be made in the current year by invoking section 40(a)(ia) of the Act. Thus, as per the Commissioner, the Assessing Officer ought to have disallowed the expenses corresponding to the taxes deducted at source but not paid to the credit of the Central Government. With regard to the other plea that assessee was eligible for the deduction u/s 10A of the Act, the Commissioner did not accept the same. Firstly, according to him, the income of the assessee has to be first determined and the deduction u/s 10A of the Act comes next. As per the Commissioner, the Determination of income cannot be wished away merely on reference to the deduction which the assessee may become eligible for. He, therefore, concluded that the failure on the part of the Assessing Officer to apply the provisions of section 40(a)(ia) of the Act adversely effected the determination of income thereby rendering the assessment order as erroneous. The Commissioner further went on to hold that assessee was not eligible for claiming deduction u/s 40(a)(ia) of the Act with respect to the income being enhanced upon disallowance u/s 40(a)(ia) of the Act. In coming to such conclusion, the Commissioner has relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore there is no prejudice caused to the Revenue by the order of the Assessing Officer dated 27.09.2010 (supra) by not making the impugned disallowance u/s 40(a)(ia) of the Act in this year. 10. The Ld. CIT-DR appearing for the Revenue has defended the order of the Commissioner by relying on the reasoning taken in the impugned order, which we have already noted in the earlier paras and is not being repeated for the sake brevity. The sum and substance of the stand of the Ld. CIT-DR is the issue of determination of total income comes before considering assessee s eligibility for the claim of any deduction/exemption and if there is an error made in such determination of income, the same cannot be wished away merely on the ground that the resultant income is eligible for exemption. 11. We have carefully considered the rival submissions. Ostensibly, the claim setup by the assessee was that the non-invoking of section 40(a)(ia) of the Act by the Assessing Officer in the assessment order dated 27.09.2010 (supra) to disallow the impugned sum of ₹ 1,32,83,963/- does not result in any loss of tax to the Department. The aforesaid was based on the plea that the enhanced inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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