prpri Revised computation sufficient for mistake in currency conversion for computation of exemption U/s. 10A: HC Revised computation sufficient for mistake in currency conversion for computation of exemption U/s. 10A: HC

Case Law Details

Case Name : E-Funds International India Private Limited Vs PR. Commissioner of Income Tax (Delhi High Court)
Appeal Number : ITA 607 of 2015
Date of Judgement/Order : 06/10/2015
Related Assessment Year :

Brief of the Case

The Delhi High Court held  in the case of E-Funds International India Private Limited v. PR. CIT, while dismissing the appeals of the Revenue that revised computation was sufficient in the place of furnishing revised returns as there was only a minor technical fault as the figure of USDs was not changed into Rupees while computing the deduction under section 10A.

Facts of the Case

The Assessee is engaged in the business of software related services such as software design and development. Assessee is claiming exemption under Section 10A of the Act. Apart from this, the Assessee has established a Shared Service Centre at Gurgaon for rendering information technology related services and business process management services for which it claimed deduction under Section 80 HHE of the Act. The AO, in its order noted that the business activities at the SDC unit at Chennai had resulted in a loss of Rs.23,49,473 and, therefore, the Assessee was not eligible for exemption under Section 10A of the Act.

As regards the activities at the SSC unit at Gurgaon, the Assessee had earned an income of Rs.4,25,60,064. However, after adjustment of business losses the gross total income was “nil‟. Accordingly, the Assessee did not claim any deduction under Section 80HHE in the computation of the income. However, for computation of minimum alternate tax (“MAT‟), the Assessee claimed a deduction of Rs.4,20,31,476 under Section 80HHE of the Act. After making other adjustments in terms of Section 115 JA of the Act, the book profit was declared as “nil‟ and no MAT was paid. The AO, however, noticed that no Auditor’s report as required by Section 80HHE(4) of the Act, was filed with return of income.

The AO rejected the stand of the Assessee and noted that it had only filed a revised computation and not a revised return.

Order of the Commissioner

The ld. Commissioner held that while submitting a return “some bona fide omission, wrong statements may occur.” There was a distinction drawn between a revised return and a correction in the originally filed return. Since the Assessee had failed to file the revised return within the time period stipulated under Section 139(5) of the Act i.e. by 31st March 2002, the CIT (A) held that the AO was justified in rejecting the claim made by the Assessee under the revised computation.

Held by the Hon’ble Tribunal

The Hon’ble ITAT held that the only reason behind making revised computation was that the sum of Rs.23,49,473 was revised at an income of Rs.2,29,61,884 for the reason that a receipt by the Section 10A unit of a sum of 6,78,042 US Dollar was not converted into rupees while preparing the computation of income. It was merely a case where a loss determined on account of an incorrect adoption of a receipt was corrected and as a result, the Assessee became entitled to the deduction. It was held that the judgment of the Supreme Court in Goetze (India) Ltd. v. Commissioner of Income-Tax [2006] 284 ITR 323 (SC) did not debar the claim made by the Assessee.

Contention of the Revenue

The ld. Counsel for the Revenue contended that there was no option for the Assessee but to file a revised return within the time stipulated under Section 139(5) of the Act. He submitted that in Goetze (India) Ltd. (supra), the Supreme Court clarified that an Assessee could not amend a return for claiming a deduction. A revised return had to necessarily be filed.

Contention of the Assessee

The learned counsel for the Assessee, on the other hand, referred to some recent decisions of the Hon’ble High Court where the High Court has considered the effect of the decision of the Supreme Court in Goetze (India) Ltd. (supra).

Held by the Hon’ble High Court

The Hon’ble High Court observed that this is not a case where any new claim for deduction under Section 10A of the Act has been made by the Assessee. This claim had been made in the original return itself. It is only the figure of profit that was changed in the revised computation as a result of wrongly showing a receipt in USDs without converting it into rupees. The Hon’ble ITAT has, in fact, remitted the matter back to the file of the AO to compute the deduction in accordance with law. Further, it was held that the Court does not see any prejudice being caused to the Revenue as a result of the above directions. It is consistent with the law explained by this Court in the above decisions after considering the effect of the decision of the Supreme Court in Goetze (India) Ltd. (supra).

Accordingly, the appeals of the Revenue were dismissed.

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