ITO,Ward-2(3), Kolkata, Kolkata V. M/s. Last Peak Data(P)Ltd, Kolkata

ITA 1057/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75055 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B PRAMANICK
• Assessee Lawyers: DR SHARAD SUBRAMANYAN
• Section: 6; 11; 10AA; 115JB; 10B

Judgement Text

I.T.A. NO.: 1057/KOL./20 12 ASSESSMENT YEAR : 2008-200 9 PAGE 1 TO 5 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO.: 1057/KOL./ 2012 ASSESSMENT YEAR : 2008-2009 INCOME TAX OFFICER,................................ ...............APPELLANT WARD-2(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 7 TH FLOOR, KOLKATA-700 069 -VS.- M/S. LAST PEAK DATA PVT. LTD., D2, RAWDON CHAMBER, 11A, RAWDON STREET, KOLKATA-700 017 [PAN : AABCL 0380 Q] APPEARANCES BY: SHRI P.B. PRAMANICK, JCIT, SR. D.R, FOR THE DEPARTM ENT DR. SHARAD SUBRAMANYAN, FCA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : FEBRUARY 12, 2014 DATE OF PRONOUNCING THE ORDER : FEBRUARY 19, 2014 O R D E R PER ABRAHAM P. GEROGE : 1. IN THIS APPEAL FILED BY THE REVENUE, DIRECTED AG AINST AN ORDER DATED 26.04.2012 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-I, KOLKATA, ITS GRIEVANCE IS THAT LD. CIT(APPEALS) HELD THE ASSESSE E TO BE A SPECIAL ECONOMIC ZONE (IN SHORT SEZ) UNIT AND ENTITLED FO R THE BENEFIT OF SUB- SECTION 6 OF SECTION 115JB OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT). 2. FACTS APROPOS ARE THAT ASSESSEE INVOLVED IN THE BUSINESS OF DATA PROCESSING, SOFTWARE DEVELOPMENT, HAD FILED ITS RET URN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF RS.1,90,750/-. ASSESSEE WAS ALLOWED EXEMPTION UNDER SECTION 10B OF THE ACT AND IMMUNITY FROM PAYING I.T.A. NO.: 1057/KOL./20 12 ASSESSMENT YEAR : 2008-200 9 PAGE 1 TO 5 2 MINIMUM ALTERNATIVE TAX UNDER SECTION 115JB OF THE ACT UPTO AND INCLUSIVE OF ASSESSMENT YEAR 2007-08. ON ACCOUNT OF THE AMENDMENTS MADE TO THE SAID SECTION WITH EFFECT FROM ASSESSMEN T YEAR 2008-09, ASSESSING OFFICER PUT THE ASSESSEE ON NOTICE AS TO WHY IT SHOULD NOT BE TAXED UNDER SECTION 115JB OF THE ACT. REPLY OF THE ASSESSEE WAS THAT IT CAME WITHIN THE PURVIEW OF SUB-SECTION 6 OF SECTION 115JB OF THE ACT AND, THEREFORE, WAS NOT LIABLE TO MINIMUM ALTERNATIVE TA X. AS PER ASSESSEE, SUB-SECTION 6 OF SECTION 115JB WAS INSERTED BY SPEC IAL ECONOMIC ZONE ACT, 2005 W.E.F. 10 TH FEBRUARY, 2006. ASSESSEE ALSO RELIED ON DEFINITION OF A UNIT UNDER SEZ ACT, 2005. AS PER THE ASSESSEE, SE CTION 2 (ZC) OF THE SAID ACT CLEARLY IMPLIED THAT EVEN AN EXISTING UNIT ESTA BLISHED PRIOR TO THE COMMENCEMENT OF THE SAID ACT WOULD ALSO BE ELIGIBLE FOR CLAIMING EXEMPTION PROVIDED UNDER SUB-SECTION 6 OF SECTION 1 15JB OF THE ACT. AS PER ASSESSEE, UNIT MEANT AN EXISTING UNIT. FURTHER AS PER THE ASSESSEE RULES GOVERNING SEZ WAS APPLICABLE FOR FALTA EXPORT PROCESSING ZONE, WHEREIN IT WAS SITUATED. AGAIN AS PER ASSESSEE, CON TROL OF FALTA EXPORT PROCESSING ZONE WAS EXERCISED BY THE DEVELOPMENT CO MMISSIONER APPOINTED UNDER SEZ ACT, 2005. 3. HOWEVER, THE ASSESSING OFFICER WAS NOT IMPRESSED BY THE ABOVE SUBMISSIONS. ACCORDING TO HIM, ASSESSEE WAS FUNCTIO NING FROM A SOFTWARE TECHNOLOGY PARK (IN SHORT STP) AND WAS A 100% EXP ORT ORIENTED UNIT. AS PER THE LD. ASSESSING OFFICER, FALTA EXPORT PROCESS ING ZONE SITUATED IN SDF BUILDING, SALT LAKE, KOLKATA, WAS NOT NOTIFIED AS S EZ. JUST BECAUSE STP UNIT WAS ALSO COMING WITHIN THE POWERS OF AN AUTHOR ITY MENTIONED IN SEZ ACT WOULD NOT PER SE MAKE IT A UNIT FUNCTIONING FRO M A SEZ. HE, THEREFORE, HELD THAT ASSESSEE COULD NOT BE CONSIDERED AS A UNI T FUNCTIONING FROM A NOTIFIED SPECIAL ECONOMIC ZONE. HENCE, AS PER ASSES SING OFFICER SUB- SECTION 6 OF SECTION 115JB HAD NO APPLICABILITY. HE HELD THAT ASSESSEE WAS LIABLE TO PAY MINIMUM ALTERNATIVE TAX UNDER SECTION 115JB OF THE ACT AND COMPUTED THE TAX ACCORDINGLY. I.T.A. NO.: 1057/KOL./20 12 ASSESSMENT YEAR : 2008-200 9 PAGE 1 TO 5 3 4. IN ITS APPEAL BEFORE THE LD. CIT(APPEALS), ARGUM ENT OF ASSESSEE WAS THAT THE UNIT WAS SET UP IN A SOFTWARE TECHNOLOGY P ARK FOR THE PURPOSE OF RENDERING IT ENABLED SERVICES. AS PER ASSESSEE, GOV ERNMENT OF INDIA HAD PLACED EXPORT PROCESSING ZONE (IN SHORT EPZ), SOF TWARE TECHNOLOGY PARK (IN SHORT STP) AND SPECIAL ECONOMIC ZONE (IN SHOR T SCZ) ON A SIMILAR FOOTING, GIVING SIMILAR SUPPORT TO EACH OF THEM. AS PER ASSESSEE, ALL THE UNITS WHICH WERE ENJOYING EXPORT BENEFITS INCLUDING THOSE IN STP WERE COVERED BY SUB-SECTION 6 OF SECTION 115JB OF THE AC T. SECTION 10AA OF THE ACT WHICH WAS FOR UNITS IN SEZ, AS PER ASSESSEE, AP PLIED ONLY TO THE REMAINING SPAN OF YEARS LEFT OVER FOR RELIEF UNDER SECTION 10A OF THE ACT. AS PER THE ASSESSEE, IT WAS NOT NECESSARY THAT A UN IT SHOULD BE PHYSICALLY PLACED IN AN SEZ FOR CLAIMING THE EXCLUSIONARY BENE FIT OF SUB-SECTION 6 OF SECTION 115JB OF THE ACT. 5. LD. CIT(APPEALS) WAS APPRECIATIVE OF THE ABOVE C ONTENTIONS. ACCORDING TO HIM, ASSESSEE WAS FUNCTIONING FROM FAL TA EXPORT PROCESSING ZONE AND CONTROL THEREOF WAS EXERCISED BY THE DEVEL OPMENT COMMISSIONER UNDER SEZ ACT, 2005. THE UNIT, AS PER LD. CIT(APPEALS), STOOD COVERED BY SECTION 2(ZC) OF SEZ ACT, 2005. HE , THEREFORE, HELD THAT EXCLUSION PROVIDED UNDER SUB-SECTION 6 OF SECTION 1 15JB OF THE ACT WAS AVAILABLE TO THE ASSESSEE. HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE ORD ER OF LD. CIT(APPEALS) SUBMITTED THAT ASSESSEE WAS NOT A UNIT ESTABLISHED IN A SPECIAL ECONOMIC ZONE. HENCE, ACCORDING TO HIM BENE FIT OF SUB-SECTION 6 OF SECTION 115JB WILL NOT BE AVAILABLE TO IT. ACCOR DING TO HIM, LD. CIT(APPEALS) FELL IN ERROR IN CONSIDERING FALTA EXP ORT PROCESSING ZONE AS AN SEZ. IT WAS ONLY A SOFTWARE TECHNOLOGY PARK. SUB -SECTION 6 OF SECTION 115JB OF THE ACT DID NOT INCLUDE UNITS FUNCTIONING FROM SOFTWARE TECHNOLOGY PARK. THEREFORE, ACCORDING TO HIM, ASSES SEE WAS NOT ELIGIBLE FOR ANY EXEMPTION FROM MINIMUM ALTERNATIVE TAX. I.T.A. NO.: 1057/KOL./20 12 ASSESSMENT YEAR : 2008-200 9 PAGE 1 TO 5 4 7. PER CONTRA, LD. AR SUPPORTED THE ORDER OF LD. CI T(APPEALS). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SHORT QUESTION BEFORE US I S WHETHER ASSESSEE, FUNCTIONING FROM FALTA EXPORT PROCESSING ZONE, ADMI TTEDLY A SOFTWARE TECHNOLOGY PARK, WAS ELIGIBLE FOR CLAIMING THE BENE FIT OF SUB-SECTION 6 OF SECTION 115JB OF THE ACT. SUB-SECTION 6 OF SECTION 115JB IS REPRODUCED HEREUNDER :- (6). THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y TO THE INCOME ACCRUED OR ARISING ON OR AFTER THE 1 ST DAY OF APRIL, 2005 FROM ANY BUSINESS CARRIED ON, OR SERVICES REND ERED BY AN ENTREPRENEUR OR A DEVELOPER, IN A UNIT OR SPECIA L ECONOMIC ZONES, AS THE CASE MAY BE. A READING OF THE ABOVE SUB-SECTION WOULD CLEARLY S HOW THAT SECTION 115JB WILL NOT APPLY TO A BUSINESS CARRIED ON BY AN ENTREPRENEUR OR A DEVELOPER IN A UNIT OR SPECIAL ECONOMIC ZONE. THE S UB-SECTION DOES NOT SAY THAT THE UNIT HAS TO BE FUNCTIONING FROM A SPEC IAL ECONOMIC ZONE. THE WORD UNIT HAS NOT BEEN DEFINED UNDER THE INCOME T AX ACT. DISJUNCTIVE EXPRESSION OR HAS BEEN USED BY THE LEGISLATURE BE TWEEN THE WORDS UNIT AND SPECIAL ECONOMIC ZONE. IMPLICATION CAN ONLY BE THAT THERE IS NO CONDITION THAT A UNIT HAS TO FUNCTION IN AN SEZ FOR CLAIMING THE BENEFIT OF SUB-SECTION (6). SINCE SUB-SECTION 6 OF SECTION 115 JB OF THE ACT WAS INSERTED BY SPECIAL ECONOMIC ZONE, 2005, THE MEANIN G OF THE TERM UNIT GIVEN IN THE SAID ACT WILL, IN OUR OPINION, BE RELE VANT SINCE SUCH WORD IS NOT DEFINED IN THE INCOME TAX ACT. SECTION 2(ZC) OF SPECIAL ECONOMIC ZONE ACT 2005 DEFINES A UNIT AS UNDER :- UNIT MEANS A UNIT SET UP BY ENTREPRENEUR IN A SPEC IAL ECONOMIC ZONE AND INCLUDES AN EXISTING UNIT, AN OFF SHORE BANKING UNIT AND A UNIT IN AN INTERNATIONAL FINANCI AL SERVICES CENTRE WHETHER ESTABLISHED BEFORE OR ESTAB LISHED AFTER THE COMMENCEMENT OF THE ACT. THE ABOVE DEFINITION CLEARLY MENTIONS THAT A UNIT I NCLUDES AN EXISTING UNIT. SECTION 2(L) OF THE SPECIAL ECONOMIC ZONE ACT 2005 DEFINES AN EXISTING UNIT AS EVERY UNIT WHICH HAS BEEN SET UP O N OR COMMENCEMENT OF I.T.A. NO.: 1057/KOL./20 12 ASSESSMENT YEAR : 2008-200 9 PAGE 1 TO 5 5 THE SPECIAL ECONOMIC ZONE ACT, 2005. THUS, IN OUR O PINION, THE NECESSITY TO HAVE A PHYSICAL LOCATION INSIDE AN SEZ IS NOT ES SENTIAL FOR APPLYING THE EXCLUSIONARY CLAUSE OF SUB-SECTION 6 OF SECTION 115 JB OF THE ACT. ONE OF THE GROUNDS TAKEN BY REVENUE SAYS THAT ASSESSEE HAS NOT CLAIMED ANY EXEMPTION UNDER SECTION 10AA OF THE ACT FOR APPLYIN G SECTION 6 OF SECTION 115JB OF THE ACT. WE DO NOT FIND ANY SUCH REQUIREME NT IN SUB-SECTION 6 OF SECTION 115JB OF THE ACT. ASSESSEE WAS ALSO GOVERNE D BY THE SAME RULES AS APPLICABLE TO THE SPECIAL ECONOMIC ZONE AND REPORTE D TO THE SAME AUTHORITY MENTIONED UNDER THE SPECIAL ECONOMIC ZONE . THEREFORE, LD. CIT(APPEALS), IN OUR VIEW, WAS RIGHT IN HOLDING THA T ASSESSEE WAS ELIGIBLE TO CLAIM THE BENEFIT OF SUB-SECTION 6 OF SECTION 11 5JB OF THE ACT. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE ORDER OF LD. CIT(APPEALS). 9. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF FEBRUARY, 2014. SD/- SD/- GEORGE MATHAN ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 19 TH DAY OF FEBRUARY, 2014 COPIES TO : (1) INCOME TAX OFFICER, WARD-2(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 7 TH FLOOR, KOLKATA-700 069 (2) M/S. LAST PEAK DATA PVT. LTD., D2, RAWDON CHAMBER, 11A, RAWDON STREET, KOLKATA-700 017 (3) CIT(APPEALS) (4) CIT (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.