IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER Assessment Year: 2017-18 Azure Knowledge The Deputy Commissioner Corporation Private of Income Tax, Limited, Circle – 1(1)(1), Azure House, Ahmedabad, Nr. Town Hall, Vs. Income Tax Office, Ahmedabad – 380 006. Vejalpur, (Gujarat). Ahmedabad – 380 051 [ PAN – AAFCS 3464 A] (Gujarat).

(Appellant) (Respondent)

Assessee by Shri Biren Shah, AR Revenue by Shri B.P. Srivastava, Sr. DR Date of Hearing 14.08.2025 Date of Pronouncement 04.09.2025

O R D E R

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 09.10.2024 for the Assessment Year (A.Y.) 2017-18 in the proceedings under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2. The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2017-18 on 28.11.2017 declaring total income of Rs.45,19,410/-. The case was selected for scrutiny under CASS. The assessment was completed under Section 143(3) on 27.11.2019 at total income of Rs.2,23,88,384/-. In the course of assessment, the Assessing Officer had made additions on account of disallowance of subsidy on intangible asset, disallowance of depreciation on intangible asset, disallowance under Section 36(1)(iii) of the Act and disallowance under Section 36(1)(va) of the Act.

3. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

4. Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal: -

“1. In law and in the facts and circumstances of the appellant's case, the order passed by the learned CIT(A) u/s. 250 of the Income-tax Act is void ab initio being bad in law.

2. In law and in the facts and circumstances of the appellant's case, Order u/s.143(3) is void-ab-initio since the Assessment Order was passed without passing draft Assessment Order.

3. In law and on the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred in upholding the addition of Rs.71,00,000/- treating capital subsidy as revenue receipt, instead of deleting entire adjustment made by AO.

4. In law and on the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred upholding disallowance of depreciation of Rs.71,25,000.

5. In law and on the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred in upholding disallowance of Interest Expense of Rs.35,76,692 u/s.36(1)(iii) on the basis of interest free advances given to BCCL, instead of deleting entire adjustment made by AO.

6. In law and on the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred in not providing video hearing before adjudicating the case, especially when Appellant specifically asked for the same to explain the case.

7. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”

5. The first two grounds taken are general in nature and were not pressed by the Ld. AR. Hence, the same are dismissed.

6. The 3^rd ground pertains to addition of Rs.71,00,000/- treating the capital subsidy received by the assessee as revenue receipt. Shri Biren Shah, Ld. AR of the assessee explained that subsidy of Rs.71,00,000/- was received from the Government of Gujarat under the scheme to promote the capital investment in plant & machinery, under IT/ITES policy. He explained that the assessee is engaged in the business of providing information and technology enabled services in the sector of Knowledge Process outsourcing (KPO) and Business Process outsourcing (BPO). The