Asst.C.I.T., Bangalore V. M/s Subex Ltd., Bangalore

ITA 1165/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0479 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR CITIIIDR
• Assessee Lawyers: CHYTHANYA K K
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1165/BANG/2015 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(1)(2), BANGALORE. VS. M/S. SUBEX LTD., ADARSH TECH PARK, DEVARABISANAHALLI, OUTER RING ROAD, BANGALORE 560 037. PAN: AABCS 9255R APPELLANT RESPONDENT APPELLANT BY : SHRI SANJAY KUMAR, CIT-III(DR) RESPONDENT BY : SHRI CHYTHANYA K.K., ADVOCATE DATE OF HEARING : 30.03.2016 DATE OF PRONOUNCEMENT : 01.04.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER DATED 14.05.2015 OF CIT(APPEALS)-6, BANGALORE FOR THE ASS ESSMENT YEAR 2008-09 INTER ALIA ON THE FOLLOWING GROUNDS. ITA NO.1165/BANG/2015 PAGE 2 OF 4 1. THE ORDER OF THE CIT (APPEALS) IS OPPOSED TO LAW A ND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-COMP UTE THE BENEFIT ALLOWABLE U/S 10A ON ACCOUNT OF CHANGE IN P ROFIT WITHOUT APPRECIATING THAT THE GAIN ARISING FROM RES TATEMENT OF FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS) DOES NOT HAVE DIRECT NEXUS WITH PROFITS DERIVED FROM THE EXPORT A CTIVITY OF THE ASSESSEE. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AME ND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 2. DURING THE COURSE OF HEARING, THE DEFECTS IN TH E REVENUES APPEAL IS POINTED OUT THAT THE REVENUE HAS NOT FILED COPY OF GROUNDS OF APPEAL BEFORE THE CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS A LSO INVITED OUR ATTENTION THAT THIS APPEAL OF THE DEPARTMENT IS NOT MAINTAINA BLE IN LIGHT OF THE FACT THAT THIS APPEAL HAS EMANATED AGAINST THE ORDER OF THE ASSESSING OFFICER PASSED CONSEQUENT TO THE ORDER OF CIT PASSED U/S. 2 63 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. 3. THE ISSUE IN THIS APPEAL ON ALTERNATIVE CLAIM OF ALLOWABILITY OF 10A DEDUCTION ON THE INCOME ENHANCED DUE TO CERTAIN DIS ALLOWANCES MADE TO THE INCOME BY THE AO IN HIS ORDER GIVING EFFECT TO THE DIRECTIONS OF THE CIT U/S. 263 OF THE ACT. THE ORDER OF THE CIT U/S. 263 OF THE ACT HOLDING FOREIGN ITA NO.1165/BANG/2015 PAGE 3 OF 4 EXCHANGE GAIN ARISING FROM RESTATEMENT OF FCCBS IS TO BE TREATED AS INCOME. THE ASSESSEE WAS AGGRIEVED BY THE SAID ORD ER OF THE CIT AND FILED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNA L VIDE ITS ORDER DATED 19.6.2015 HELD THAT FCCBS ARE INSTRUMENT ISSUED TO INVESTORS FOR RECEIVING FUNDS WHICH IS REPAYABLE AFTER CERTAIN PERIOD. THE REFORE, GAIN OR LOSS WOULD BE ON CAPITAL ACCOUNT AND NOT TAXABLE. THE TRIBUNA L ACCORDINGLY SET ASIDE THE VIEW TAKEN BY THE CIT. THEREFORE, THE GAIN ARI SING ON ACCOUNT OF STATEMENT OF FCCBS CANNOT BE TREATED AS INCOME IN T HE HANDS OF THE ASSESSEE. THE ORDER OF THE LD. AO DATED 5.1.2015 G IVING EFFECT TO THE DIRECTIONS OF THE CIT BECAME INVALID, INSOFAR AS TH E AFORESAID GROUND IS CONCERNED, BECAUSE THE SUBSEQUENT APPEAL OF THE ASS ESSEE AND THE APPELLATE ORDER OF CIT(APPEALS) INSOFAR AS THE SAME IS RELATED TO THE AFORESAID ISSUE HAVE BECOME NON EST . IN LIGHT OF THESE FACTS, THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A PPEALS) IS INFRUCTUOUS AND LIABLE TO BE DISMISSED. THE LD. DR DID NOT DIS PUTE THESE FACTUAL ASPECTS. 4. HAVING GIVEN A CAREFUL CONSIDERATION TO THE RIVA L SUBMISSIONS, WE FIND THAT ONCE THE ORDER PASSED U/S. 263 OF THE ACT HAS BEEN SET ASIDE BY THE TRIBUNAL, THE ASSESSMENT ORDER PASSED BY THE AO CONSEQUENT TO THE ORDER OF CIT U/S. 263 OF THE ACT BECAME NON EST AND ANY APPEAL ARISING OUT OF IT IS NOT SUSTAINABLE IN THE EYE OF LAW. WE THE REFORE DISMISS THE APPEAL OF THE REVENUE AS THE SAME IS NOT MAINTAINABLE. ITA NO.1165/BANG/2015 PAGE 4 OF 4 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 1 ST DAY OF APRIL, 2016. SD/- SD/- ( A.K. GARODIA ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 1 ST APRIL, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.