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UGS India Pvt. Ltd., B-26, Qutab Institutional Area, New Delhi-110016 Vs. ACIT, Circle-7(1), C. R. Building, New Delhi
May, 04th 2015
                 IN THE INCOME TAX APPELLATE TRIBUNAL
                       DELHI BENCH: `B' NEW DELHI

               BEFORE SMT DIVA SINGH, JUDICIAL MEMBER
                                  AND
                   SH. I.R.RAO, ACCOUNTANT MEMBER

                          I.T.A .No.-322/Del/2007
                       (ASSESSMENT YEAR- 2003-04)
          UGS India Pvt. Ltd.,           vs ACIT,
          B-26, Qutab Institutional         Circle-7(1), C. R.
          Area,                             Building,
          New Delhi-110016                  New Delhi
          (APPELLANT)                       (RESPONDENT)

                             I.T.A .No.-943/Del/2008
                         (ASSESSMENT YEAR- 2004-05)
          ACIT,                          vs UGS India Pvt. Ltd.,
          Circle-7(1), C. R. Building,      20, Community Centre,
          New Delhi                         Pushp Vihar, Madangir,
                                            New Delhi-110016
          (APPELLANT)                       (RESPONDENT)

                 Appellant by        Sh.K.M.Gupta, Adv.
                 Respondent by       Sh.Sanjay Prasad, CIT DR

                       Date of Hearing             20.04.2015
                    Date of Pronouncement          29.04.2015

                                  ORDER
PER DIVA SINGH, JM
     These two appeals of the assessee and the Revenue in 2003-04 and 2004-
05 Assessment Years against the orders of CIT(A)-X dated 15.11.2006 and
19.12.2007 respectively have been remitted by the Hon'ble High Court back to
the Tribunal vide their consolidated order dated 01.06.2007 in ITA Nos.-
322/Del/2007, 124/2008, 133/2008, 155/2008 and 1283/2010 on one issue
only. Accordingly for the sake of convenience the issues are being decided by a
common order. The Hon'ble High Court vide the above order was pleased only to
restore these two appeals addressed in ITA No.-124/2008 & 1283/2010 for 2003
& 2004-05 assessment years with the following observations:-
                                   ITA-124/2008
     9.     "Insofar as claim of foreign travelling expenses in this year is
     concerned, the order of the Tribunal reveals that the Tribunal has simply
     followed the order in the earlier assessment year and there is no
     discussion and no finding of fact on the basis of material on record is
     recorded as to whether any foreign travel expenses were incurred for the
                                                                  I.T.A .Nos.-322/Del/2007 &
                                                                                943/Del/2008
      purpose of business in this year or not. Therefore, the matter needs to be
      remitted back to the Tribunal to examine this issue afresh."




                                   ITA-1283/2010
      19.    "As far as issue relating to expenditure on foreign travel is
      concerned, the order of the Tribunal reveals that the Tribunal has simply
      followed the order in the earlier assessment year and there is no
      discussion and no finding of fact on the basis of material on record is
      recorded as to whether any foreign travel expenses were incurred for the
      purpose of business int his year or not. Therefore, the matter needs to be
      remitted back to the Tribunal to examine this issue afresh."


2.    It was a common stand of the parties before the Bench that the issue will
have to go back to the AO as the relevant facts have not been discussed by the
Assessing Officer. For ready-reference, attention was invited to the assessment
order in 2003-04 assessment year. The same is reproduced hereunder for ready-
reference:-
      2.     "The assessee company continues to derive income from the
      business of sale and service of computer software, development of
      software and rendering consultancy and other services. The assessee
      company was granted registration under STP-I vide order dated
      21.03.2000 for development center at Pune. The assessee company is
      developing software for selling it to its parent company M/s Unigraphics
      Solutions Inc., USA.
      4.     The assessee company has incurred an expenditure of
      Rs.51,71,028/- on foreign travelling in the units other than the STP-I unit.
      The assessee was specifically required to furnish the details of foreign
      travel along with purpose of the travelling. In its explanation, the
      assessee company has claimed that all the journeys have been
      undertaken for the purpose of business and has provided reasons thereof
      vide its submission dated 14.11.2005. The assessee company is also
      running an STP-I unit on which it has claimed deduction u/s 10A of the IT
      Act, 1961 and the expenditure on travel cannot be properly bifurcated.
      This issue has been discussed at length during assessment
      proceedings for the Assessing Years 2001-02 and 2002-03 wherein
      50% of the expenses of travelling were disallowed. The additions
      has been confirmed by the Ld. CIT(A). I have no reason to differ
      with the findings of the earlier years and 50% of the expenses is
      disallowed       as not incurred wholly and exclusively for the
      purpose of business of non STP-I units. Accordingly, an addition of
      Rs.25,85,514/- is made on this account. In view of the above discussion,
      I am satisfied that the assessee has furnished inaccurate particulars of
      income and has concealed its income within the meaning of income and
      has concealed its income within the meaning of Explanation 1 to section
      271(1)(c) of the I. T. Act. Accordingly, penalty proceedings u/s 271(1)(c)
      read with section 274 are being initiated separately on this issue."
                                                             (emphasis provided)
3.    More or less similar findings it is seen has been recorded by the AO in
2004-05 assessment year vide its order dated 21.12.2006 :-







                                                                                          2
                                                                  I.T.A .Nos.-322/Del/2007 &
                                                                                943/Del/2008
      4.      "The assessee company has incurred an expenditure of
      Rs.63,32,763/- on foreign travelling in the units other than the STP-I unit.
      The assessee was specifically required vide order sheet entry dated
      15.11.2006 to furnish the details of foreign travel along with purpose of
      the travelling. In its explanation, the assessee company had claimed that
      all the journeys have been undertaken for the purposes of business and
      has provided reasons thereof vide its submission dated 22.09.2006. The
      assessee company is also running an STP-I unit on which it had claimed
      deduction u/s 10A of the IT Act, 1961 and the expenditure on travel
      cannot be properly bifurcated. This issue has been discussed at
      length during the proceedings for the AY 2001-02 and 2002-03
      and 2003-04 wherein 50% of the expenses of travelling were
      disallowed. The additions has been confirmed by the ld. CIT(A). I
      have no reasons to differ with the findings of he earlier years and 50% of
      the expenses is disallowed as not incurred wholly and exclusively for the
      purpose of business of non STP-I unit. Accordingly an addition of
      Rs.31,66,382/- is made on this account."
                                                             (emphasis provided)

4.    Accordingly in view of the above considering the facts in the light of the
pleadings of the parties before the Bench, we find that in the absence of any
discussion on facts in the assessment orders for the years under consideration
the issue necessarily has to be restored to the AO. Accordingly the appeal of the
assessee and the Revenue in the respective assessment years are being restored
back to the AO with the direction to decide the issue raised therein qua the
addition made by way of a disallowance discussing the relevant facts in the
respective years. Needless to say that before passing the order the assessee shall
be afforded a reasonable opportunity of being heard.
5.    In the result both the appeal of the assessee and the appeal of the Revenue
are allowed for statistical purposes.
      The said order was pronounced in the Open Court on 29th April, 2015.

    Sd/-                                                                       Sd/-
(I.R.RAO)                                                                (DIVA SINGH)
ACCOUNTANT MEMBER                                                   JUDICIAL MEMBER
Dated: the 29th April, 2015
*Amit Kumar*
Copy forwarded to:
1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(Appeals)
5.    DR: ITAT

                                                                ASSISTANT REGISTRAR
                                                                      ITAT NEW DELHI


                                                                                          3

 
 
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