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 :-
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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
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