Delhi High Court

Cit vs Aspentech India Pvt Ltd on 28 November, 2011

Author: Sanjiv Khanna

*               IN THE HIGH COURT OF DELHI AT NEW DELHI

+                ITA NO.1232/2011


%                         Date of Decision : 28th November, 2011.

       CIT                                                  ..... Appellant
                               Through Mr. Abhishek Maratha, sr. standing
                               counsel with Ms. Anshul Sharma, Adv.

                      versus

       ASPENTECH INDIA PVT LTD                            ..... Respondent

Through None

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE R.V. EASWAR

1. Whether Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporters or not ?

3. Whether the judgment should be reported in the Digest?

SANJIV KHANNA,J: (ORAL) The present appeal under Section 260A of the Income Tax Act,

1961 (Act, for short) is directed against the order dated 21.4.2011 passed

by the Income Tax Appellate Tribunal (tribunal, for short) in the case of

Aspentech India Pvt. Ltd. (respondent-assessee). The assessment year

involved is 2004-05.

2. The assessee had claimed commission expenses of Rs.61,27,865/-,

which was disallowed by the Assessing Officer vide order dated

31.10.2006 on the ground that it was inadmissible expense under Section

43B of the Act for the year in question.

3. Subsequently, the assessee filed an application under Section 154

of the Act for rectification. It was pointed out that an amount of

Rs.2,17,913/- out of the aforesaid amount of Rs.61,27,865/- was paid by

the respondent-assessee to their employees on 31st July, 2003. It was

further stated that payment voucher No.44 dated 31.7.2003 was already

on record and available with the Assessing Officer but this fact was

overlooked at the time of assessment. It was stated that an amount of

Rs.18,48,772/- was paid to the employees on or before 31st October, 2004,

which is the due date for filing of the return of tax for the assessment year

2004-05. The application further states that these details were available

on record of the Assessing Officer, when he had passed the original

assessment order. Thus, there was an error/mistake which was apparent

and required rectification.

4. The Assessing Officer rejected the said application vide order dated

5.8.2008 without discussing the factual aspects and whether or not the

said details/vouchers were already on record. He simply stated that

contention of the assessee was not correct. Thus, the application was

dismissed.

5. The CIT(Appeals) examined the said aspect and has recorded that

the assessee had repeatedly filed rectification applications dated 14.12.2007,

15.1.2008, 25.2.2008 and 11.7.2008. He has referred to the ledger account

of commission, which was filed before the Assessing Officer during the

course of the original assessment proceedings. Observations and findings

recorded by the CIT(Appeals), in this regard are as under :

"4) Even copy of the ledger account of commission of Rs.61,27,865/- shows that out of this a sum of Rs.2,17,913/- was paid within the Financial Year 2003-04 itself on 31.07.2003. Copy of the ledger account is enclosed at the page no.18 of the paper book filed on 02.04.2009 and copy of the payment voucher of Rs.8,86,291/- including the commission amount of Rs.2,17,913/- is enclosed at page no.16 of the paper book filed on 02.04.2009. Further payments amounting to Rs.18,48,772/- towards commission were made to employees of the assessee company on 21.05.04. and 22.07.04 i.e. well before the due date of filing of the return of income for the year A.Y.2004-05 which was 31.10.04 and hence, the payment of Rs.18,48,772/- in addition to payment of Rs.2,17,913/- mentioned earlier were allowable to Appellant Company u/s 43B of the Income Tax Act, 1961. Complete details of these

payments alongwith copies of payment vouchers and even copy of Standard Chartered Bank account statement of the Appellant Company wherein all these payments have been duly appearing under „withdrawal column‟ are enclosed in the paper book filed on 02.04.2009 at page nos.33 to 50.

Complete details of commission payment of Rs.20,66,685/- made by The assessee company to its employees are once again given hereunder :

     DATE           PARTICULARS                         AMOUNT
                                                        (Rs.)
     31.07.2003     Commission Payment                         2,17,913
     21.05.2004     Payment to Naveen Kumar                      15,118
     21.05.2004     Payment to Ramamurthy Palepu               2,04,807
     21.05.2004     Payment to Indranath Majumdar                66,371
     21.05.2004     Payment to Mary Fernandes                    75,811
     21.05.2004     Payment to Alok Pandit                     1,90,811
     21.05.2004     Payment to Deepak Seth                    2,03,2048
     21.05.2004     Payment to Shailesh Sakarkar               1,32,457
     21.05.2004     Payment to Hemchandra Bachal               1,51,623
     22.07.2004     Payment to Naveen Kumar                      32,494
     22.07.2004     Payment to Indranath Majumdar                52,314
     22.07.2004     Payment to Alok Pandit                     3,83,220
     22.07.2004     Payment to Deepak Seth                       82,317
     22.07.2004     Payment to Shailesh Sakarkar               1,13,742
     22.07.2004     Payment to Ramamurthy Palepu               1,44,639
                    TOTAL                                     20,66,685

     5)       All the aforesaid payment details for Commission of

Rs.2,17,913/- and Rs.18,48,772/- paid by the Assessee Company to its employees before the due date of filing its return of income were intimated to the Assessing Officer vide letters dated 25.10.2006 (copy enclosed at page 17 and 18 of the paper book filed on 02.04.2009) and 30.10.2006 (copy enclosed

at page nos.85 to 114 of the paper book filed on 02.04.2009).

6) On payment of commission of Rs.2,17,913/- to employees during the Financial Year 2003-04 (i.e. Assessment Year 2004-05) and Rs.18,48,772/- to employees during the period 01.04.2004 to 31.10.2004 (i.e. Financial Year 2004-05 and Assessment Year 2005-06) the assessee company has deducted TDS under the head salary u/s 192 of Income Tax Act, 1961 and deposited the same in the Government Account. The statements of computation of taxable salary inclusive of these commission payments made to employees of the assessee company are enclosed at page nos.109 to 114 of the paper book filed on 02.04.2009."

6. In view of the aforesaid factual position and after referring to the

amendment made to Section 43B w.e.f. 1.4.2004, the appeal filed by the

respondent-assessee has been allowed. The CIT(Appeals) also referred to

circular 669 dated 25.10.1993 in which the Board has observed as under :

"2. The Board have reconsidered the matter and are of the opinion that where the sums referred to in the first proviso under section 43B had in fact been paid on or before the due dates mentioned therein, but the evidence therefore had been omitted to be furnished alongwith the return, the Assessing Officer can entertain applications under section 154 for rectification of the intimations under section 143(1)(a) or orders under section 143(3), as the case may be, and decide the same on merits."

7. The tribunal in view of the findings recorded by the CIT(Appeals)

did not find any merit in the appeal preferred by the Revenue and has

rightly dismissed the same by the impugned order.

8. Ld. counsel for the petitioner has submitted that in the original

assessment proceedings vide order sheet dated 25.10.2006 the respondent

assessee was required to explain why claim for commission of

Rs.61,27,846/- should not be disallowed. The respondent-assessee vide

letter dated 27.10.2006 had stated that the commission was claimed on

accrual basis due to oversight and same was offered for taxation. The

statement may have been made but it did not prevent the assessee from

filing an application for rectification, if the ledger account of commission

payment was on record and a factually wrong statement/concession had