Datacom Web Technologies (India) Pvt. ... vs Department Of Income Tax

Before Shri H.L.Karwa, President and Shri D.Karunakara Rao, AM

ITA No.467/Mum/2013 : Asst.Year 2006-2007 ITA No.468/Mum/2013 : Asst.Year 2007-2008

The Dy.Commissioner of Income-tax M/s.Datacom Web Technologies Range 8(1) बना म/ (India) Private Limited Mumbai. Vs. 2nd Floor, Techniplex II Jn.Veer Savarkar Flyover & SV Road, Goregaon (West), Mumbai -400 062. PAN : AABCD1668B. (अपी लाथ /Appellant) ( यथ/Respondent)

अपी लाथ क ओरसे /Appellant by : Shri Akhilendra Yadav यथ क ओरसे /Respondent by : --- None ---

सन ुवा ई क ता रख / घोषणाक ता रख/ Date of Hearing : 16.02.2015 Date of Pronouncement : 20.02.2015

आदे श/ ORDER

Per H.L.Karwa (President) :

These two appeals filed by the Revenue are directed against the separate orders of the Commissioner of Income-tax (Appeals) -16, Mumbai, dated 31.10.2012, cancelling the penalty of Rs.6,31,320 and Rs.7,58,390, levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (in short "

the Act"

), for the assessment years 2006-2007 and 2007-2008, respectively.

2 ITA Nos.467 & 468/Mum/2013. M/s.Datacomp Web Technologies (India) Pvt.Ltd.

2. Briefly stated the facts of the case are that the assessee is in the business of development / assistance of computer software and also having a separate division, which is engaged in the business of software development on behalf of overseas company and accordingly the assessee had claimed deduction u/s 10A of the Act. During the course of assessment proceedings, the Assessing Officer required the assessee to submit separate profit and loss account for the unit eligible for deduction u/s 10 and other units. However, the A.O. noticed that the assessee did not apportioned Directors travelling expenses, telephone expenses, etc. to the unit eligible for deduction u/s 10A. The A.O. took a view that a portion of them should have been allocated to the unit eligible for deduction u/s 10A of the Act and accordingly allocated a portion of general expenses in all the three years, which resulted in reduction of the profit from the unit eligible for deduction u/s 10A of the Act and consequently reduction of deduction under that section. On appeal, the CIT(A) upheld the orders of the A.O. for both the years under consideration. It is worth mentioning that after such reapportionment, the Assessing Officer recalculated the deduction u/s 10A of the Act and allowed the deduction u/s 10A at Rs.94,04,431 as against assessee' s claim of Rs.1,12,80,019 for assessment year 2006-2007 and deduction of Rs.93,47,386 as against assessee' s claim of Rs.1,16,00,470 for assessment year 2007-2008. The A.O. initiated penalty proceedings u/s 271(1)(c) of the Act, for both the years under consideration and levied minimum penalty of Rs.6,31,320 and Rs.7,58,390 for assessment years 2006-2007 and 2007- 2008, respectively.

3 ITA Nos.467 & 468/Mum/2013. M/s.Datacomp Web Technologies (India) Pvt.Ltd.

3. The Tribunal vide its order dated 16th July, 2014 in the quantum appeals in ITA Nos.526 and 527/Mum/2011 for assessment years 2006-2007 and 2007-2008, held as under:-

"8. Having heard rival contentions, we are of the view that the plea made by the ld.AR for deduction u/s 10B needs to be examined afresh at the end of the AO, since the criteria for allowing deduction u/s 10A and 10B are different. Accordingly, we set aside the order of ld.CIT(A) on this issue in all the three years and restore the same to the file of AO with a direction to consider the claim of the assessee for deduction u/s 10B of the Act in place of section 10A of the Act. In the set aside proceedings, the AO is free to examine the question of allocation of general expenses to the eligible unit by duly considering the information / explanation that may be furnished by the Assessee. After affording necessary opportunity of being heard to the Assessee, the AO may take appropriate decision in accordance with law."

4. We have heard Shri Akhlendra Yadav, the learned Departmental Representative for the Revenue, and have also perused the material available on record. None appeared on behalf of the assessee. It is observed that the learned CIT(A), vide his separate orders dated 31st October, 2012, cancelled the penalty for both the assessment years under consideration. However, it is observed that while deciding the quantum appeals of the assessee for these two years, the Tribunal has set aside the impugned orders and restored the matter to the file of the A.O. with a direction to consider the claim of the assessee for deduction u/s 10B of the Act in place of section 10A. It is well settled law that where an assessment order itself has been set aside by the appellate or revisional authority, there remained no `assessed tax' as the same vanished. In such a case, no question could 4 ITA Nos.467 & 468/Mum/2013. M/s.Datacomp Web Technologies (India) Pvt.Ltd.

arose for levying penalty u/s.271(1)(c) of the Act. In that view of the matter, we hold that no penalty u/s 271(1)(c) of the Act could be validly levied in these cases.

5. पर णामतःर ाज व क अपी ल खार ज क जा तीह ै। In the result, Revenue' s appeals are dismissed.

Order pronounced on this 20th day of February, 2015.

आदे श क घो षणा दना क ंः कोक गई ।

Sd/- Sd/- (D. Karunakara Rao) (H.L.Karwa) ले खासद य/ ACCOUNTANT MEMBER अ य / PRESIDENT

मं ब ुईMumbai; दना क ं Dated : 20th February, 2015. Devdas*

आदेशक ितिलप अ े षत/Copy of the Order forwarded to : 1. अपी लाथ / The Appellant 2. यथ / The Respondent. 3. आयकरआयु(अपी ल) / The CIT, Mumbai. 4. आयकरआयु / CIT(A) - 16, Mumbai 5. वभागी य ि तिनि ध, आयकरअपीली य अि धकर ण, मु बई / DR, ं ITAT, Mumbai 6. गाड फा ईल / Guard file.

आदे शानु सार / BY ORDER, स यापत ि त//True Copy//

उप/सहा यक पं जीका र(Dy./Asstt. Registrar) आयकरअपी लीय अि धकर ण, मु बई/ ITAT, Mumbai ं