Media Net Software Services Ltd. Versus DCIT, Mumbai

Parties Involved

Facts Summary

Media Net Software Services India Private Limited, a company engaged in the business of information technology and IT enabled services, filed its return of income for the Assessment Year 2014-15 on 25/11/2014 at a total income of Rs. 30,599,429/– after setting off of brought forward business losses of Rs. 44,963,298/– and claim of deduction under section 10 AA of the act of Rs. 9,033,777/–. The return of income was picked up for scrutiny and notice under section 143 (2) was issued on 28/8/2015. The claim of the assessee of deduction under section 10 AA of the act was verified. The assessing officer found that the claim of the assessee was without setting of the brought forward business loss of Rs. 15,956,392/– against the eligible profits of the undertaking. Therefore, the claim of the assessing officer is that if the brought forward business loss of Rs. 15,956,392/– is set off against the business income, no profit derived from the industrial undertaking was left eligible for deduction under section 10 AA of the act and therefore such deduction was disallowed. The assessee’s claim that circular number 279 dated 16/7/2013 does not apply to the facts of the case. The tax audit report also shows that assessee has debited interest on late payment of tax deduction at source of Rs. 163,711/– and interest on delay in filing of companies return of Rs. 5063/– and penalty for renewal of custom license of Rs. 21,000/– aggregating to Rs. 189,774/– the learned assessing officer found tha…

Legal Issues

• 1. Additions made by the Ld Assessing Officer (AO) of INR 3,82,04,3944 to the returned income of the Appellant
• 2. Deduction of INR 90,33,777 under section 10AA of the Income-tax Act, 1961
• 3. Disallowing the interest paid of INR 1,53,711 on delayed payment of Tax Deducted at Source (TDS) under section 37 of the Act
• 4. Restricting the setoff of the business loss to INR 1,59,56,392 as against the business loss of INR 440,63,298 claimed by the Appellant in its Return of Income.
• 5. Expenditure incurred on Leasehold improvements amounting to INR 2,17,55,379 during that year is revenue and not capital in nature

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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