Techsignia Solutions Private Ltd., Pune V. Pr. Commissioner of Income-tax : 4,

ITA 1122/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0848 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-11-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 26-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Assessee Lawyers: RAVI GOYANKA
• Keywords: Business income; Depreciation; Transfer pricing; International transaction; Retrospective amendment; Initiation of penalty proceedings; Unabsorbed depreciation
• Section: 10AA; 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , . ! , ' , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM $ / ITA NO.1122/PUN/2016 % & & / ASSESSMENT YEAR : 2011-12 TECHSIGNIA SOLUTIONS PRIVATE LIMITED. 201, BLDG. 4A, SP INFOCITY SEZ ZONE, PUNE- SASWAD ROAD, PHURSUNGI, PUNE-412 308 PAN : AAFCM3544H .... / APPELLANT '% / V/S. THE PR. COMMISSIONER OF INCOME TAX-4, PUNE. / RESPONDENT ASSESSEE BY : SHRI RAVI GOYANKA REVENUE BY : MS. DIVYA BAJPAI, CIT / DATE OF HEARING : 28.11.2018 / DATE OF PRONOUNCEMENT : 30.11.2018 ( / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST THE ORDE R OF PRINCIPAL COMMISSIONER OF INCOME TAX, PUNE-4, PUNE DATED 30.03.2016 PASSED U/S.263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN APPEAL: 2 ITA NO. 1122/PUN/2016 A.Y.2011-12 1. THE ORDER PASSED BY THE LEARNED PR. CIT IS ULTRA VIRES, BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT AND FACTS OF THE CASE AND HENCE, OUGHT TO BE QUASHED. 2. THE LEARNED PR. CIT ERRED IN INVOKING THE PROVIS IONS OF SECTION 263 OF THE ACT, THEREBY SETTING ASIDE THE ORDER DATED 14 TH FEBRUARY, 2014 OF THE LEARNED ASSESSING OFFICER, TREATING IT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THE LEARNED PR. CIT ERRED IN HOLDING THAT THE AC TION OF THE ASSESSING OFFICER IN ALLOWING DEDUCTION UNDER SECTION 10AA OF THE ACT BEFORE SETTING OFF UNABSORBED DEPRECIATION IS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. 4. THE LEARNED PR. CIT ERRED IN DIRECTING THE LEARN ED ASSESSING OFFICER TO SET OFF UNABSORBED DEPRECIATION OF EARLIER YEARS BE FORE ALLOWING DEDUCTION UNDER SECTION 10AA OF THE ACT FOR AY 2011-12. 5. EACH OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT P REJUDICE TO THE OTHER. 6. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF SOFTWARE AND FILED RETURN OF INCOM E DECLARING TOTAL INCOME AT NIL AFTER CLAIMING OF DEDUCTION U/S.10AA OF THE A CT. ASSESSMENT WAS COMPLETED ON 14.02.2014 ACCEPTING INCOME RETURNED BY THE ASSE SSEE. SUBSEQUENTLY, THE PR. COMMISSIONER OF INCOME TAX REVISED THE SAID ORDER OF THE ASSESSING OFFICER U/S.263 OF THE ACT. THE PR. C OMMISSIONER OF INCOME TAX NOTED THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.1,05,27,646/- U/S.10AA OF THE ACT AND THE AMOUNT OF DEDUCTION WAS COM PUTED BY THE ASSESSEE BEFORE REDUCING THE BROUGHT FORWARD UNABSORBE D DEPRECIATION. THE ASSESSING OFFICER FAILED TO GRANT SET OFF OF SUM OF RS.70,24,01 8/- AS PER PROVISIONS OF SECTION 70 & 71 OF THE ACT. ASSESSING OFFICER S HOULD HAVE CONSIDERED THE ABOVE SETTING OFF UNABSORBED DEPRECIATION OUT OF THE GROSS TOTAL INCOME BEFORE ALLOWING DEDUCTION U/S.10AA OF THE ACT. THUS, G RANTING OF DEDUCTION BEFORE OR AFTER THE SETTING OF ADJUSTMENT OF LOS SES/UNABSORBED DEPRECIATION FOR THE PURPOSE OF COMPUTING THE ALLOWABLE DE DUCTION U/S.10AA OF THE ACT, WAS THE CORE ISSUE BEFORE THE PR. COMMISSIONER OF INCOME TAX IN 3 ITA NO. 1122/PUN/2016 A.Y.2011-12 HIS REVISIONAL ORDER. FAILURE TO MAKE REFERENCE TO THE TRAN SFER PRICING OFFICER (TPO) FOR BENCHMARKING THE INTERNATIONAL TRANSACTION, WAS ALSO NOTED BY THE PR. COMMISSIONER OF INCOME TAX IN THE REVISIONAL ORDER. HOW EVER, THE SAME WAS DROPPED EVENTUALLY. ACCORDINGLY, PR. COMMISSIONER OF IN COME TAX IS OF THE VIEW THAT THE ORDER OF ASSESSING OFFICER PASSED U/S.143(3 ) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE QUA THE ISSUE OF SET OFF OF THE BROUGHT FORWARD UNABSORBED DEPRECIATION OF EARLIE R YEARS. THEREFORE, HE ISSUED SHOW CAUSE NOTICE AS WELL AS OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE BEFORE INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. THE PR. COMMISSIONER OF INCOME TAX DISCUSSED THE ISSUE IN PARA 2 AND 3 OF HIS ORDER AND THE SAME ARE EXTRACTED AS UNDER: 2. WHILE COMPUTING THE TOTAL INCOME FOR THE YEAR EN DED 31.03.2011, DEDUCTION U/S. 10AA HAS BEEN CLAIMED AMOUNTING TO R S.1,05,27,646/-. (THIS AMOUNT PERTAINS TO STANDALONE ELIGIBLE UNIT A ND NO INTRA-HEAD SET OFF OF LOSSES U/S. 70 & 71 IN RESPECT TO OTHER UNITS ARC TAKEN CARE OF). IT IS NOTED THAT THE ASSESSEE HAD UNABSORBED DEPRECIATION PERTAINING TO AY 2009-10 OF RS.70,24,018/- WHICH SHOULD HAVE BEEN CONSIDERED TO ARRIVE AT GROSS TOTAL INCOME BEFORE ALLOWING DEDUCTION U/S.10AA. IN TERMS OF CBDT CIRCULAR DATED 16.07.201 3, DEDUCTION U/S.10AA IS TO BE MADE ONLY AFTER GIVING EFFECT TO THE PROV ISIONS OF SECTIONS 70 AND 71. HENCE, THE DEDUCTION U/S.10A NE EDED TO BE RESTRICTED UPTO AVAILABLE INCOME AT RS.42,30,362/-. THIS HAS R ESULTED IN EXCESS ALLOWANCE OF DEDUCTION TO THE EXTENT OF RS.62,97,28 4/- U/S 10AA. 3. IT IS ALSO OBSERVED FROM (SCHEDULE K ) I.E. RELATED PARTY DISCLOSURE DETAILS THAT THE ASSESSEE HAD ENTERED INTO INTERNAT IONAL TRANSACTIONS WORTH RS.18,52,68,681/- WITH ITS ASSOCIATED ENTERPR ISES. HOWEVER, NO 3CEB REPORT WAS SOUGHT BY THE ASSESSING OFFICER NOR SUBMITTED BY THE ASSESSEE AND NO REFERENCE WAS MADE TO THE TPO TO DE TERMINE ARM'S LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION S. THUS, VIOLATION OF THE PROVISIONS OF CHAPTER X OF THE ACT RESULTED IN NON- DETERMINATION OF ALP OF THE INTERNATIONAL TRANSACTION AS WELL AS INITIATING PENALTY PROCEEDINGS U/S 271BA AND 271G. AT THE END OF THE REVISIONARY PROCEEDINGS, PR. COMMISSION ER OF INCOME TAX DROPPED THE ISSUE RAISED IN PARA 3 OF HIS ORDER. ACC ORDINGLY, ASSESSING OFFICER MADE FRESH ASSESSMENT ALLOWING THE SAID DEDUCTION AFT ER SET OFF OF THE 4 ITA NO. 1122/PUN/2016 A.Y.2011-12 UNABSORBED DEPRECIATION OF EARLIER YEARS. HOWEVER, THE CIT (A) GRANTED RELIEF TO THE ASSESSEE RELYING ON THE FAVOURABLE JUDGMENTS. 3.1 DURING FIRST APPELLATE PROCEEDINGS CONNECTED TO THE S AID FRESH ASSESSMENT ORDER, THE ASSESSEE RAISED THE ISSUE OF GRA NTING DEDUCTION U/S.10AA OF THE ACT QUA LOSSES/UNABSORBED DEPRECIATION. T HE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON VARIOUS DECISIONS WHILE AD VANCING HIS ARGUMENT BEFORE THE PR. COMMISSIONER OF INCOME TAX. ASSE SSEE JUSTIFIED HIS CLAIM IN THE RETURN OF INCOME. HOWEVER, PR. COMMISSIONER OF I NCOME TAX REJECTED THE SAME AND KEPT HIS RELIANCE IN THE JUDGMENT OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF HEMASINGKA SIEDE LTD. VS. CI T, CIVIL APPEAL NO. 1501 OF 2008 DATED 19.09.2013. THUS, PR. COMMISSIONER OF IN COME TAX HELD THAT ALLOWING DEDUCTION U/S.10AA OF THE ACT BEFORE SETTING OFF UNABSORBED DEPRECIATION CONSTITUTES AN ERRONEOUS ORDER OF ASSESSING OFFICER AND PREJUDICIAL TO THE INTEREST OF REVENUE. AT THE END, ASSES SING OFFICER WAS DIRECTED TO SET OFF UNABSORBED DEPRECIATION OF EARLIER YEA RS BEFORE COMPUTING THE ELIGIBLE DEDUCTION AND ALLOWING THE SAME U/S.10AA OF THE ACT. 3.2 ON THE ISSUE OF REFERENCE TO TPO REGARDING BENCHMARK ING THE INTERNATIONAL TRANSACTION, THE PR. COMMISSIONER OF INCOME TA X CONSIDERED THE ARGUMENTS OF LD. COUNSEL FOR THE ASSESSEE AND HELD THAT AS THE VALUE OF SUCH TRANSACTION WAS ONLY RS.10,17,49,646/-, SUCH REFERENCE TO TPO WAS NOT MANDATORY AND THE ASSESSING OFFICER CHOSE NOT TO DO SO. THE PR. COMMISSIONER OF INCOME TAX ALSO HELD THAT THERE IS NO CAS E FOR INITIATION OF PENALTY PROCEEDINGS U/S.271G OF THE ACT. THEREFORE, THE ISSUE OF COMPUTING/ALLOWING DEDUCTION U/S.10A A OF THE ACT BEFORE SETTING OFF OF UNABSORBED DEPRECIATION OF EARLIER YEARS, IS THE SOLITARY 5 ITA NO. 1122/PUN/2016 A.Y.2011-12 ISSUE FOR THE PR. COMMISSIONER OF INCOME TAX FOR ASSUMING JURISDICTION U/S.263 OF THE ACT. THE PR. COMMISSIONER OF INCOME TAX RE LIED HEAVILY ON THE JUDGMENT OF HON'BLE SUPREME COURT OF INDIA IN THE CASE O F HEMASINGKA SIEDE LTD. VS. CIT (SUPRA.) 4. AGGRIEVED BY THE ORDER OF PR. COMMISSIONER OF INCOME T AX, ASSESSEE RAISED THE ABOVE GROUNDS AS EXTRACTED ABOVE. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF ALLOWING DEDUCTION U/S.10AA OF THE ACT BEFORE SETTING OFF OF U NABSORBED DEPRECIATION IS SETTLED LEGAL ISSUE AT THE LEVEL OF HON'BLE SU PREME COURT. REFERRING TO THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT & ANR. VS. M/S. YOKOGAWA INDIA LTD., CIVIL APPEAL NO.8498 OF 2013, CO PY OF WHICH IS PLACED AT PAGE NO. 90 OF THE PAPER BOOK, LD. COUNSEL SUBM ITTED THAT THIS QUESTION OF COMPUTING/ALLOWING DEDUCTION U/S.10AA OF THE AC T BEFORE REDUCING THE TOTAL INCOME TO THE EXTENT OF UNABSORBED DEPRECIATION OF EARLIER YEARS IS A SETTLED ISSUE. FURTHER, REFERRING TO THE PUNE B ENCH DECISION ON THIS MATTER, LD. COUNSEL SUBMITTED THAT IT IS NOW A SETTLED IS SUE IN FAVOUR OF THE ASSESSEE AS THE CLAIM U/S.10AA OF THE ACT CONSTITUTES THE DEDUCT ION PROVISIONS AND NOT AN EXEMPT ON PROVISION. FILING THE COPY OF THE FRE SH ASSESSMENT ORDER OF DEPUTY COMMISSIONER OF INCOME TAX PASSED U/S.143(3) R.W .S.263 OF THE ACT AND THE ORDER OF FIRST APPELLATE AUTHORITY, LD. COUNSEL S UBMITTED THAT THE SAME MATTER WAS DECIDED IN FAVOUR OF THE ASSESSEE RELY ING ON THE HON'BLE APEX COURT JUDGMENT IN THE CASE OF CIT & ANR. VS. M/S. YOK OGAWA INDIA LTD. REPORTED AS 341 ITR 385 AND ALSO ON THE DECISION OF HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BLACK & VEATCH CONSULTING PVT. L TD. REPORTED AS 20 TAXMANN.COM 727. THE DEPUTY COMMISSIONER OF INCOME TAX REFERRED MANY DECISIONS OF THE TRIBUNAL TAKING SIMILAR VIEW IN THE MATTER. T HE LD. COUNSEL 6 ITA NO. 1122/PUN/2016 A.Y.2011-12 ALSO MENTIONED THAT THE SAID JUDGMENT OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF HEMASINGKA SIEDE LTD. VS. CIT (SUPRA.) RELATES TO THE PERIOD PRIOR TO AMENDMENT OF THE CHAPTER VI-A OR SECTION 10A OF THE ACT. THEREFORE, THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE A S PER AMENDED PROVISIONS OF SECTION 10AA OF THE ACT. THEREFORE, LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF ASSESSING OFFICER DOES NOT SU FFER FROM ANY INFIRMITY SO FAR AS LOSSES ARE CONCERNED. ACCORDINGLY TO TH E LD. COUNSEL, THE ORDER OF ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJU DICIAL TO THE INTEREST OF THE REVENUE. 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAV ILY ON THE ORDER OF THE PR. COMMISSIONER OF INCOME TAX. 7. WE HAVE HEARD BOTH THE PARTIES ON THE LIMITED LEGAL IS SUE OF ASSUMPTION OF JURISDICTION OF PR. COMMISSIONER OF INCOME TAX. IT IS A C ASE WHERE THE ISSUE OF I.E. COMPUTING/ALLOWING DEDUCTION U/S.10AA OF THE ACT BEFOR E SETTING OFF OF UNABSORBED DEPRECIATION OF THE EARLIER YEARS, IS COVERED BY THE DECISION OF HON'BLE APEX COURT JUDGMENT / JURISDICTIONAL HIGH COURT J UDGMENTS. IN THIS REGARD, WE ALSO PERUSED THE CITED HON'BLE APEX COURT JU DGMENTS AND FOUND THAT THE SAME ARE DISCUSSED BY THE COMMISSIONER OF INC OME TAX WHILE GIVING RELIEF TO THE ASSESSEE. FOR THE SAKE OF COMPLETENESS, THE RELEVANT PARA IS EXTRACTED AS UNDER: 4.3 THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMI SSION OF THE ASSESSEE OPINING THAT, AS PER CIRCULAR NO.279/MISC./M-116/20 12-ITJ DATED 16.07.2013 SECTION 10A AND 10B PROVIDE FOR DEDUCTION OF THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS BEGINNI NG WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLE OR TH ING OR COMPUTER SOFTWARE. DEFINING THE TERM 'TOTAL INCOME' AND STAT ING THAT INCOME IS COMPUTED IN ACCORDANCE WITH THE VARIOUS PROVISIONS OF CHAPTER IV OF THE ACT. THE ASSESSING OFFICER HELD THAT INCOME/LOSS FR OM VARIOUS SOURCES I.E. ELIGIBLE AND INELIGIBLE UNITS UNDER THE SAME HEAD W ERE TO BE AGGREGATED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 70 OF THE ACT. HE, THEREFORE, 7 ITA NO. 1122/PUN/2016 A.Y.2011-12 OPINED THAT, IF AFTER GIVING EFFECT TO THE PROVISIO NS OF SECTION 70 AND 71 OF THE ACT, IF THERE IS ANY INCOME, THE SAME WAS ELIGI BLE FOR DEDUCTION IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER VIA OR SE CTION 10A & 10B OF THE ACT. HE RELIED ON THE HON'BLE SUPREME COURT IN HERN ASINGKA SIEDA LTD. VS. (IT CIVIL APPEAL NO.1501 OF 2008 DATED 19.09.2013 W HERE THE HON'BLE APEX COURT HAD DISMISSED THE ASSESSEE'S CASE ON A S IMILAR ISSUE. HE, THEREFORE, REJECTED THE CONTENTION OF THE ASSESSEE AND RECOMPUTED THE INCOME BY FIRST SETTING OFF OF UNABSORBED DEPRECIAT ION OF BUSINESS INCOME AND THEN ALLOWING EXEMPTION U/S.10AA OF THE ACT. 4.4. IN THE WRITTEN SUBMISSION DATED 03.01.2018 FIL ED DURING THE COURSE OF APPELLATE PROCEEDINGS, IN THIS CONNECTION THE APPEL LANT INTER ALIA STATED AS UNDER : 'THESE SUBMISSIONS ARE IN ADDITION TO THE SUBMISSIO NS MADE BY THE APPELLANT BY A SEPARATE LETTER DATED 3RD JANUAR Y 2018. 1. AT THE TIME OF HEARING OF THE CASE' THE LEARNED DCIT INTER ALIA I WAS INFORMED ABOUT THE JUDGMENT OF HONORABLE KARNAT AKA HC IN CASE OF YOKOGAWA INDIA LTD (34 ITR 385). EXTRACTS F ROM THESE JUDGMENTS WERE REPRODUCED IN SUPPORT OF OUR SUBMISS IONS THAT THE NATURE OF RELIEF CONTINUES TO BE EXEMPTION EVEN THO UGH PARLIAMENT HAS AMENDED TO TERM IT AS DEDUCTION. 2. THE DEPARTMENT HAD FILED CIVIL APPEAL NO 8498 OF 2013 BEFORE HONORABLE SUPREME COURT OF INDIA AGAINST THE ORDER OF HONORABLE KARNATAKA HC IN THE CASE OF YOKOGAWA INDIA LTD. 3. WE ARE PLEASED TO NOW SUBMIT THE AFORESAID APPEA L ALONG WITH MANY OTHER APPEALS ON THE SAME OR SIMILAR ISSUE HAV E BEEN DISPOSED OF BY THE HON. SUPREME COURT OF INDIA BY O RDER DATED 16.12.2016. A COPY OF SUPREME COURT ORDER IS ATTACH ED AS ANNEXURE 1. 4. RELEVANT EXTRACT RELATING TO THE CONCLUSION DRAW N BY THE HON. SUPREME COURT OF INDIA ARE REPRODUCED BELOW QUOTING PARAGRAPH NO OF THE SAID ORDER OF THE HON. SUPREME COURT. 'QUOTE 12. WE HAVE CONSIDERED THE SUBMISSIONS ADVANCED AND THE PROVISIONS OF SECTION 10A AS IT STOOD PRIOR TO THE AMENDMENT MADE BY FINANCE ACT 2000 WITH EFFECT FROM 1.4.2001; THE AMENDED SECTION 10A THEREAFTER AND ALSO THE AMENDMENT MADE BY FINANCE ACT, 2003 WITH RETROSPECTIVE EFFECT FROM 1.4.2001. 8. FURTHER, WE ALSO EXAMINED THE WRITTEN SUBMISSION DATED 14.06.2018 FILED BY ASSESSEE BEFORE US AND THE SAME IS EXTRACTED AS FOLLOWS: 1. THE SUBJECT APPEAL HAS BEEN FILED BY US AGAINST THE ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX (PCIT) PASSED U/S. 263 OF THE INCOME TAX ACT, 1961. THE ORDER WAS PASSED ON 30 TH MARCH, 2016 AND APPEAL BEFORE YOUR WAS FILED ON 26.05.2016. 2. THE ISSUE INVOLVED. WE ARE AN UNDERTAKING OPERAT ING FROM SEZ PUNE AND ARE ENTITLED TO EXEMPTION U/S.10AA TO THE EXTEN T OF 100% OF OUR INCOME FROM THE UNDERTAKING. WHILE COMPUTING THE AF ORESAID AMOUNT THE 8 ITA NO. 1122/PUN/2016 A.Y.2011-12 ASSESSING OFFICER ALLOWED OUR CLAIM AS PER COMPUTAT ION WHICH WAS BEFORE DEDUCTION OF BROUGHT FORWARD DEPRECIATION OF RS.70, 24,018. THE LEARNED PCIT CONSIDERED THE ORDER AS PREJUDICIAL TO THE REV ENUE AND AFTER GIVING AN OPPORTUNITY TO US DIRECTED THE ASSESSING OFFICER AS UNDER: ' .... HENCE, THE ACTION OF THE ASSESSING OFFICER I N ALLOWING DEDUCTION U/S. 10AA BEFORE SETTING OF UNABSORBED DE PRECIATION IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE ASSESSING OFFICER IS DIRECTED TO SET OFF UNABSORBED DEPRECIAT ION OF EARLIER YEARS BEFORE ALLOWING DEDUCTION U/S.10AA. (PARA 8 ON PAGE 4 OF THE ORDER U/S.263). 3. OUR APPEAL BEFORE YOU IS AGAINST THE ABOVE ORDER . 4. FOLLOWING THE DIRECTIONS OF THE LEARNED PCIT, TH E ASSESSING OFFICER AFTER GIVING AN OPPORTUNITY TO US, PASSED AN ASSESSMENT O RDER U/S.143(3) R.W.S. SECTION 263 ON 16 TH DECEMBER, 2016, REVISING COMPUTATION FOR THE PURPOSE OF SECTION 10AA. 5. AGGRIEVED BY THE AFORESAID ORDER, WE FILED APPEA L BEFORE THE CIT-A APPEALS PUNE-5, ON 20 TH JANUARY, 2017. 6. BEFORE, THE LEARNED CIT -APPEALS, PUNE-5, WE HAD FILED AN ORDER OF THE HON'BLE SUPREME COURT OF INDIA PASSED ON 16.12.2016 IN CASE OF CIT & ANR V/S.YOKOGAWA LTD A COPY OF WHICH IS INCLUDED AN D ATTACHED IN THE PAPER BOOK ON PAGE 68 TO 90 . 7. THE LEARNED CIT (APPEALS), PUNE-5 HAS FOLLOWED T HE APEX COURT RULING WHILE ALLOWING THE APPEAL (PARA 4.7 ON PAGE 21 OF C IT (APPEALS) PUNE -5. THUS, OUR CLAIM OF CALCULATING AMOUNT U/S. 10AA BEFORE SETTING OFF UNABSORBED DEPRECIATION HAS BEEN ACCEPTED IN THE AP PEAL. 8. WE REQUEST YOUR HONOUR TO TAKE THE PAPER BOOK (T HREE COPIES) ON RECORD FOR THE DISPOSAL OF THE APPEAL NO ITA 1122/PUN/2016 . FROM THE ABOVE, IT IS EVIDENT THAT THE ORDER OF ASSESS ING OFFICER DATED 14.02.2014 DOES NOT SUFFER FROM ANY ERROR SO FAR AS INTERE ST OF REVENUE IS CONCERNED. THEREFORE, THE ORDER OF PR. COMMISSIONER OF INCO ME TAX ERRED IN VALIDLY ASSUMING JURISDICTION U/S.263 OF THE ACT. ACCORDINGLY , WITHOUT GOING INTO THE MERITS OF THE ISSUE RAISED BY THE ASSESSEE, LEGAL ARGUMENTS RAISED IN GROUND NO. 1 AND 2 ARE ALLOWED . 9. GROUND NOS. 3 AND 4 RELATES TO THE MERITS OF THE ISSU E AND THE SAME STANDS DISMISSED AS ACADEMIC IN VIEW OF THE RELIEF IN ALLOWING G ROUND NOS.1 AND 2 OF THE APPEAL. ACCORDINGLY, GROUND NOS. 3 AND 4 ARE DISMISSED . 9 ITA NO. 1122/PUN/2016 A.Y.2011-12 10. GROUND NOS. 5 AND 6 ARE GENERAL IN NATURE AND HEN CE, REQUIRES NO ADJUDICATION. ACCORDINGLY, GROUND NOS. 5 AND 6 ARE DISMISSED . 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF NOVEMBER, 2018. SD/- SD/- ( / SUSHMA CHOWLA ) ( . ! / D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; !' / DATED : 30 TH NOVEMBER, 2018. SB ()*+,-.-+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE PR. CIT, PUNE-4, PUNE. 4 . $%& '( , ) '( , *+, , / DR, ITAT, A BENCH, PUNE. 5. &-. /0 / GUARD FILE. // TRUE COPY // ) 1 / BY ORDER, 2 ', /PRIVATE SECRETARY ) '( , / ITAT, PUNE.