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 Income Tax Addition Made Towards Unsubstantiated Share Capital Is Eligible For Section 80-IC Deduction: Delhi High Court

Capita India Private Ltd, Plant 6, Godrej & Boyce Complex, Pirojshahnagar, L.B.S. Marg, Vikhroli West, Mumbai 400 079.Vs. Asst. Commissioner Of Income- Tax-9(2)(1), Aayakar Bhavan, M.K. Marg, Mumbai-400 020.
December, 02nd 2015


                      SA Nos. 296 & 297/Mum/2015
            (Arising out of I.T.A. Nos.2810 & 2350/Mum/2015)

               (Assessment Years: 2009-2010 & 2010-2011)

Capita India Private Ltd,            Asst. Commissioner Of
Plant 6, Godrej & Boyce Complex,     Income- Tax-9(2)(1),
Pirojshahnagar, L.B.S. Marg,         Aayakar Bhavan, M.K. Marg,
Vikhroli West,                   Vs. Mumbai-400 020.
Mumbai 400 079.
     . /  . /PAN/GIR No. AABCE 7046A
        ( /Appellant)                     :           (    / Respondent)

         / Appellant by                   :    Shri Nitesh Joshi

          /Respondent by                  :    Shri B.D. Naik

                        /                 :    13/11/2015
                 Date of Hearing
                                          :    19/11/2015
          Date of Pronouncement

                                 / O R D E R

2.     These stay application arise out of ITA No. 2810/Mum/2015 and ITA No.
2350/Mum/2015 filed by the assessee respectfully for the Assessment Years 2009-10
and 2010-11. Through these stay applications, the assessee has sought for stay of
demand of Rs.6.85 crores in the assessment year 2010-11 and Rs. 14.40 crores in the
assessment year 2009-10.
2 SA Nos . 296 & 297/Mum/2015 (A.Ys. 09-10 & 10-2011) Capita India Private Ltd vs. Asst. CIT 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in providing Information Technology (IT) enabled services to the Capita group. It has undertakings claiming tax holiday benefits under Section 10A of the Act at Andheri, Thane, Vikhroli and Pune. While computing taxable income, the assessee had added the amount of goodwill written off to the total income of the Bangalore and Pune unit. Deduction under Section 10 A of the Act was claimed in respect of income of the Bangalore and Pune unit. Since the Goodwill was created on acquisition of Pune and Bangalore units, the assessee had duly added the amount of goodwill written off to the total income of Pune and Bangalore units. The amount of goodwill written off has been added to the total income as unexplained expenditure under Section 69 C of the Act. 4. We found that assessee has written off the goodwill in its Profit and Loss account in compliance with mandatory Accounting Standard. This goodwill had arisen pursuant to purchase of the Pune and Bangalore units of by the assessee. Thus, the transaction has been undertaken with an unrelated third party. Further, payment for the same has been made out of the bank account of the assessee. The acquisition of goodwill and its subsequent write off had been recorded by the assessee in its books of account. All the details pertaining to this acquisition and the subsequent write off of goodwill were disclosed by the assessee in its financial statements. Under these circumstances it was claimed by Ld. Authorized Representative that there is no reason to treat the same as unexplained expenditure u/s 69C of the Act. He further contends that assessee has already paid 50% of the total demand. We have considered rival contentions, without going into merit of the case and keeping into view totality of all the facts and circumstances vis-a-vis the facts that assessee has already paid 50% of the demand, we grant stay for six months or till date of passing of order whichever is earlier. The appeal is fixed for hearing on 06-01-2016. The date was announced in the open court.
3 SA Nos . 296 & 297/Mum/2015 (A.Ys. 09-10 & 10-2011) Capita India Private Ltd vs. Asst. CIT In the result, both the stay applications are allowed in terms indicated above. Order pronounced in the open court on November 19th, 2015 Sd/- Sd/- (Shailendra Kumar Yadav) (R.C.Sharma) / Judicial Member / Accountant Member Mumbai; Dated : 19.11.2015 Ashwini Gajakosh /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent 3. () / The CIT(A) 4. / CIT - concerned 5. , , / DR, ITAT, Mumbai 6. / Guard File / BY ORDER, / (Dy./Asstt. Registrar) , / ITAT, Mumbai
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