Itta/18/2012 Of Commissioner Of Income Tax-Iii v. M/S. Sankhya Infotech Limited

I.T.T.A. NO.18 OF 2012 DATED:27.1.2012 Between:Commissioner of Income Tax-IIIIT Towers, A.C. GuadrsHyderabad … Appellant And M/s. Sankhya Infotech Limited1-1-39, 2[nd] Floor, 7[th] Hills PlazaSD Road, Secunderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKURANDTHE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. NO.18 OF 2012 JUDGMENT:(per the Hon’ble the Chief Justice Shri Madan B. Lokur) The Revenue is aggrieved by an order dt.21.4.2011 passed by theIncome Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad, inI.T.A. No.320/H/2010, relevant for the assessment year 2006-07. 2. The assessee is engaged in software development and it hadprepared some software for parties outside the country. In respect of thework done by the assessee, it was entitled to certain payments. 3. Part payments were received and the assessee capitalized thereceivables in the form of investments in a fully owned subsidiary set upby it in France in terms of the approval given by the Reserve Bank ofIndia (RBI) 4. The Assessing Officer sought to tax the inward remittances on theground that they were not received within the period of six monthsprescribed by Section 10A(3) of the Income Tax Act, 1961 (for short, ‘theAct’). The Assessing Officer was also not satisfied that the assesseehad invested the receivables in a fully owned subsidiary in France. Accordingly, the Assessing Officer denied exemption to the assessee inrespect of the amounts said to have been covered by Section 10A of theAct. 5. Feeling aggrieved, the assessee preferred an appeal which wastaken up for consideration by the Commissioner of Income Tax(Appeals). Before the Commissioner, the assessee moved anapplication for leading additional evidence and that application wasallowed. The additional evidence led by the assessee was to the effect that it had received inward remittances within the extended timeprescribed by the RBI. The assessee also produced evidence withregard to the investments made in France. The Commissioner called fora report from the Assessing Officer in respect of the additional evidenceproduced by the assessee and in his report, the Assessing Officer statedthat the assessee had not produced the necessary evidence in thecorrect form and therefore it deserved to be rejected. 6. The Commissioner accepted the view canvassed by the assesseenotwithstanding the objection raised by the Assessing Officer andallowed the appeal. 7. Feeling aggrieved, the Revenue preferred an appeal which cameto be partly allowed by the Tribunal by the order under challenge. 8. In our opinion, whether the inward remittances were actuallyreceived by the assessee is a question of fact. Similarly, whether theassessee invested those amounts by capitalizing the receivables in awholly owned subsidiary is also a question of fact. Therefore, nosubstantial question of law arises in this appeal. 9. We may note that the Tribunal while disposing of the appealobserved that the assessee had received the inward remittances inrespect of some invoices within the time prescribed by the RBI. Withregard to the remaining invoices, the Tribunal noted that if the assesseereceived the amounts within the extended time prescribed by the RBI,then the assessee would be entitled to exemption under Section 10A ofthe Act, if the other conditions are met. The assessee was required toreconcile the accounts with regard to the works in progress and theinvestment of the receivables in the fully owned subsidiary, to avail adeduction under Section 10A of the Act. 10. We are of the view that not only does the appeal not raise anyquestion of fact but even on merits there is no reason to interfere withthe order passed by the Tribunal since liberty has been granted to theassessee to satisfy the Assessing Officer in respect of grant of deductionunder Section 10A of the Act that the amounts are received within the 10. We are of the view that not only does the appeal not raise anyquestion of fact but even on merits there is no reason to interfere withthe order passed by the Tribunal since liberty has been granted to theassessee to satisfy the Assessing Officer in respect of grant of deductionunder Section 10A of the Act that the amounts are received within the time prescribed or the extended period prescribed by the RBI. 11. There is no merit in this appeal and it is accordingly dismissed. __________________MADAN B. LOKUR, CJ __________________ SANJAY KUMAR, J27-1-2012bnr