DATAMATICS FINANCIAL SERVICES LTD, MUMBAI V. ACIT RG 8(1), MUMBAI

ITA 100/MUM/2011

• Counselvise Citation: 10019914 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: SATISH R MODI
• Section: 143(3); 10B

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. . . .. . . .. . !' !' !' !' , ! ! ! ! BEFORE S/SH.I.P.BANSAL, JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. /./. /. ITA NO.100/MUM/2011, $ % $ % $ % $ %/ // / ASSESSMENT YEAR-2006-07 DATAMATICS FINANCIAL SERVICES LTD. PLOT NO. A-16 & 17, PART B CROSS LANE MIDC, ANDHERI (E) MUMBAI- 400093 VS. ACIT 8(1) 2 ND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AAACD2538D ( &' / // / APPELLANT ) ( ()&' / RESPONDENT ) $ *+ , ! $ *+ , ! $ *+ , ! $ *+ , ! / // / ASSESSEE BY : SHRI SATISH R. MODI - , ! / REVENUE BY : SHRI SANJEEV JAIN $ - + $ - + $ - + $ - + / // / DATE OF HEARING : 21-10-2013 ./% - + / DATE OF PRONOUNCEMENT : 21-10-2013 $ $ $ $ , 1961 - - - - 254 ) )) ) 1 ( (( ( ! +2+ !3 ! +2+ !3 ! +2+ !3 ! +2+ !3 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 25.10.2010 OF THE CIT(A )-16,MUMBAI,ASSESSEE-COMPANY HAS RAISED FOLLOWING GROUNDS OF APPEAL: GROUND NO. 1 THE HON. CIT (APPEALS) ERRED IN CONFIRMING THE ORDER PASSED BY THE LEARNED ACIT, MUMBAI, UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, SINCE IT IS PASSED WITHOUT A PROPER CONSIDERATION AND APPRAISAL OF THE FACTS OF THE CASE. AN INCORRECT AND IMPROPER ORDER HAS BEEN PASSED WITHOUT CONSIDERING THE APPELLANTS CONTENTIONS. IT IS CAPRICIOUS IN NATURE AND HAS BEEN MADE IGNORING THE GENUINE FACTS WITH AN INTENTION TO PUNISH THE APPELLANT, AND SHOULD BE QUASHED AND ANNULLED. GROUND NO.2 THE HON,CIT (APPEALS) ERRED IN CONFIRMING THE FOLLOWING ADDIT IONS TO THE TOTAL INCOME OF THE APPELLANT, BY THE LEARNED ACIT ,WHICH MUST BE DELETED, BEING CONTRARY TO THE F ACTS OF THE CASE AND THE UNDERLYING PROVISIONS OF THE LAW :- RS. I) DISALLOWANCE U/S. 1 4A 9,93,999.00 II) DISALLOWANCE OF 1OA DEDUCTION 46,90,694.00 GROUND NO.3 THE HON. CIT (APPEALS) ERRED IN CONFIRMING THE DEDUCTION WHICH WA S ERRONEOUSLY CALCULATED BY THE LEARNED ACIT U/S.10A ON PAGE NO.6 OF THE ASSESSMENT ORDER. THE CORRECT AMOUN T OF DEDUCTION SHOULD HAVE BEEN RS.995916/- INSTEAD OF RS.99592I~ AS WORKED OUT BY HIM. THIS AMOUNT OF DEDU CTION WAS ALSO OMITTED WHILE CALCULATING REVISED INCOME FROM BUSINESS ON PAGE NO.7 OF THE ASSESSMENT ORDER. GROUND NO.4 THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND THE AFORES AID GROUNDS OF APPEAL, IF CALLED FOR, BEFORE THE DISPOSAL OF THE APPEAL. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF COMPUTE R DATA PROCESSING AND EXPORT OF I.T. ENABLED SERVICES FILED ITS RETURN OF INCOME ON 29.1 1.2006 DECLARING A LOSS OF RS. 80.75 LACS. ASSESSING OFFICER (AO) FINALISED THE ASSESSMENT ON 24.12.2008 U/S. 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 22.52 LACS. 2 ITA NO. 100/MUM/2011 DATAMATICS FINANCIAL SERVICES LTD 2. DURING THE COURSE OF HEARING BEFORE US,AUTHORISED R EPRESENTATIVE (AR) OF THE ASSESSEE DID NOT PRESS GROUND NO. 1, 2 AND 4. THEREFORE, SAME ARE DI SMISSED AS NOT PRESSED. GROUND NO.3,THE ONLY EFFECTIVE GROUND IS ABOUT DEDU CTION CLAIMED U/S. 10A OF THE ACT AND THE WORKING MADE UNDER THE SAID SECTION. ASSESSEE-COMPA NY HAD CLAIMED DEDUCTION OF RS. 46.90 LACS U/S.10A FOR THE FIRST TIME DURING THE YEAR UNDER CO NSIDERATION.IT WAS SUBMITTED THAT THE ASSESSEE HAD NOT OPTED TO CLAIM THE DEDUCTION BECAUSE OF LOS S IN EARLIER YEARS.AO FOUND THAT IT HAD ADJUSTED THE LOSS DERIVED FROM THE 10A UNIT AGAINST THE OTHE R INCOME, THAT DURING THE YEAR IT HAD NOT ADJUSTED 10A PROFITS AGAINST THE INCOME OF THE OTHE R UNITS.REFERRING TO THE DECISION OF SPECIAL BENCH OF ITAT,AHMEDABAD DELIVERED IN THE CASE OF G OLDMINE SHARE & INVESTMENT PVT. LTD. IT WAS HELD THAT DEDUCTION U/S. 80IA WOULD BE COMPUTED WITH RESPECT TO PROFITS OF THE ELIGIBLE UNIT UNAFFECTED BY THE LOSS SUFFERED IN THE OTHER UNITS, THAT 10A PROFIT WAS TO BE ADJUSTED AGAINST THE NOTIONAL LOSS OF THE EARLIER YEARS, THAT NO DEDUCTI ON UNDER THE SAID SECTION WAS ALLOWABLE TO THE ASSESSEE.AO FURTHER NOTICED THAT ASSESSEE HAD APPOR TIONED COMMON EXPENSES AGAINST THE 10A UNIT ON THE BASIS OF AREA USED, THAT IT HAD NOT APPORTIO NED MANAGERIAL REMUNERATION AGAINST THE 10A UNIT.AO WAS OF THE OPINION THAT EXPENSES SHOULD HAV E BEEN APPORTIONED ON THE BASIS OF TURN-OVER. HE RECALCULATED THE CLAIM DEDUCTIBLE U/S.10A IN RES PECT OF OTHER INCOME AND FINALLY HELD THAT ALLOWABLE DEDUCTION U/S. 10A COULD BE DETERMINED AT RS. 99,592/-. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER ,HE HELD THAT AO HAD FOLLOWED THE DECISION OF GOLDMINE SHARE & INVESTMENT PVT.LTD.,THAT THE LOSSE S OF NON-ELIGIBLE UNIT WOULD NOT BE SET OFF AGAINST THE PROFIT OF THE UNDERTAKING ELIGIBLE FOR DEDUCTION U/S. 10ATHAT THE AO HAD COMPUTED THE INCOME OF THE ASSESSEE BY ADJUSTING THE BROUGHT FOR WARD LOSS OF EARLIER YEARS AND SET OFF THE SAME FROM THE CURRENT YEARS INCOME. FINALLY,HE HELD THAT ACTION OF THE AO WAS ABSOLUTELY CORRECT AND NO DEDUCTION WAS ADMISSIBLE TO THE ASSESSEE AS IT DID NOT HAD ANY INCOME UNDER THE RELEVANT HEAD. HE FURTHER REFERRED TO THE ORDER OF THE SPECIAL BENCH OF CHENNAI DELIVERED IN THE CASE OF SCIENTIFIC ATLANTA INDIA(ITA NO.536/MDS/2007- 05.02.2010). WIT H REGARD TO THE ALTERNATIVE SUBMISSION OF THE ASSESSEE,ABOUT METHOD OF ALLOCATION OF EXPENSES BETWEEN THE ELIGIBLE/NON-ELIGIBLE UNIT BASED ON THE TURN-OVER,HE HELD THAT IT WAS ACADEMIC IN NA TURE,HE DID NOT ADJUDICATED THE ISSUE. 2.2. BEFORE US,AR SUBMITTED THAT ISSUE UNDER CONSIDERATI ON WAS DECIDED BY THE HONBLE BOMBAY HIGH COURT,IN THE CASE OF GALAXY SURFACTANTS LTD (3 43 ITR 108), THAT FAA DID NOT ADJUDICATE THE ISSUE OF AVAILABLE DEDUCTION U/S. 10A, THAT ASSESSE E WAS ENTITLED TO DEDUCTION IS CLAIMED BY IT IN FULL.DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE ISSUE U/S. 10B OF THE ACT, HONBLE HIG H COURT OF BOMBAY IN THE CASE OF GALAXY SURFACTANTS LTD.(SUPRA)HAS DECIDED THE ISSUE THAT F AVOURS THE STAND TAKEN BY THE ASSESSEE. IN OUR OPINION, BOTH THE SECTIONS;SECTION 10A AND 10B;HAVE TO BE ANALYSED IN THE SAME MANNER.AO/FAA DID NOT HAVE THE BENEFIT OF THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT.THEREFORE, IN THE INTEREST OF JUSTICE,MATTER IS RESTORED BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN LIGHT OF THE ABOVE REFERRED DECISION OF THE HONBLE HIGH COU RT.HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.WHILE FINALI SING THE ASSESSMENT HE SHOULD ALSO CALCULATE THE AVAILABLE DEDUCTION AS PER THE PROVISIONS OF LAW.GR OUND NO.3IS DECIDED IN FAVOUR OF THE ASSESSEE- COMPANY IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE-COMPANY ST ANDS PARTLY ALLOWED. * 4 $ *+ - 3 4 ! 5 - + 67. ORDER PRONOUNCED IN TH E OPEN COURT ON 21 ST OCTOBER,2013 . 3 ITA NO. 100/MUM/2011 DATAMATICS FINANCIAL SERVICES LTD !3 - ./% ! 8 9$ 21 <= 5 , 2013 / - 2 > SD/- SD/- ( . .. . . / I.P.BANSAL ) ( !' !' !' !' / RAJENDRA) / JUDICIAL MEMBER ! ! ! ! /ACCOUNTANT MEMBER / MUMBAI, 9$ /DATE: 21 .10. 2013 SK !3 - (+? @!?%+ !3 - (+? @!?%+ !3 - (+? @!?%+ !3 - (+? @!?%+/ COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ A B , 4. THE CONCERNED CIT/ A B 5. DR D BENCH, ITAT, MUMBAI / ?C2 (+$ , . . . 6. GUARD FILE/ 2 D )?+ (+ )?+ (+ )?+ (+ )?+ (+ //TRUE COPY// !3$ / BY ORDER, E / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI