The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) allowed the appeal of the assessee and delete the disallowance made under Sections 10A, 40(a)(ia) and 2(24)(x) of the Income Tax Act,1961, and directed the Assessing Officer (AO) to grant the credit of tax deducted at source (TDS).
The assessee Reuters India Pvt. Ltd is a wholly-owned subsidiary of Reuters Ltd., U.K. The Reuters group is a leading global provider of news, financial information, and technology solutions. The assessee distributes Reuter’s products within the territory of India.
During assessment scrutiny under Section 143(3) read with Section 144C (13) of the Income Tax Act, the AO passed an order disallowing;
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax Appeals [CIT(A)], which upheld the decision of the AO. The assessee then filed an appeal before the ITAT challenging the final assessment order of the AO.
The Authorized Representative of the assessee M.P. Lohia, contended that while computing deduction under Section 10A of the Income Tax Act, the AO has not added back the same to the income of the STP unit resulting in a reduction in the amount eligible for deduction under section 10A of the Income Tax Act.
Further, argued that the AO has ordered disallowance of expenditure, inter-alia, in the nature of training, office renovation, office equipment and property maintenance under section 40(a)(ia) of the Income Tax Act.
The AR stated that employees’ contribution to the superannuation fund was deposited on or before the due date of filing of return of income and the CIT(A) disallowed the claim of the assessee on the basis that said deposit was made after the due date prescribed in the relevant statute. And adding to this appealed for pertaining to grant of credit of tax deducted at source.
The Departmental Representative Vatsalaa Jha relied upon the orders passed by the lower authorities.
The Bench comprising of Ramod Kumar, Vice President and Sandeep Singh Karhail, Judicial Member while dealing with the disallowance of expenses for non-deduction of taxes under Section 40(a)(ia) of Income Tax Act, observed that, since these details were not examined by the lower authorities, therefore, it was appropriate to remand this issue to the file of Assessing Officer for de novo adjudication.
It was noted that since the issue is regarding the correct computation of deduction under section 10A of the Income Tax Act and regarding same assessee’s rectification application under Section 154 of the Income Tax Act is still pending, therefore, remanded the issue to the file of AO for necessary adjudication after consideration of all the details.
Further, the bench directed the Assessing Officer to delete the disallowance made under Section 2(24)(x) read with Section 36(1) (va) of the Income Tax Act, and to grant the credit of tax deducted at source after necessary verification and as per law.
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