Msource(India)Pvt Ltd, Bangalore V. Deputy Commissioner of Income tax, Bangalore

ITA 1178/BANG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9330 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 12-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P C KHINCHA
• Keywords: Depreciation; Unabsorbed depreciation; Revenue expenditure
• Section: 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI S.K.YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.1178 (BANG) 2014 (ASSESSMENT YEAR : 2004 05) M/S MSOURCE (INDIA) PRIVATE LIMITED, BAGMANE WORLD TECHNOLOGY CENTRE, MARATHANHALLI, OUTER RING ROAD, DODDANAKHUNDI VILLAGE, MAHADEVAPURA, BANGALORE 560048 PAN: AAACM2097G APPELLANT VS DCIT, CIRCLE 12(1), BANGALORE RESPONDENT ASSESSEE BY : SHRI P. C. KHINCHA, C. A. REVENUE BY : MISS NEERA MALHOTRA, CIT(DR) DATE OF HEARING : 24-08-2016 DATE OF PRONOUNCEMENT: 18 -10-2016 O R D E R PER A. K. GARODIA, A. M.: THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF CIT (A) MYSORE DATED 17.10.2013 FOR A. Y. 2004 05. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - THE FOLLOWING GROUNDS OF APPEAL ARE INDEPENDENT OF , AND WITHOUT PREJUDICE, TO ONE ANOTHER. 1. THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) - MYSORE ('CIT(A)'), BANGALORE IS BAD IN FACTS AND IN LAW. ITA NO.1178/B/2014 2 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE DEPUTY COMMISSIONER OF INCOME- TAX,8 (2) MUMBAI ('D CIT') AND THEREBY CONFIRMING IN DENIAL OF THE EXPENDITURE INCURRED ON ACCOUNT OF LEASEHOLD IMPROVEMENT OF RS. 6,509,157/- AS REVENUE. THE APPELLANT PRAYS THAT TH E EXPENDITURE ON NORMAL REPAIRS AND MAINTENANCE CLASS IFIED AS LEASEDHOLD IMPROVEMENT BE ALLOWED AS REVENUE EXPENDITURE. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF DCIT, IGNORING THE PROVISION OF SECTION 72(2) R.W.S. 32(2 ) OF THE ACT AND DENYING THE SET OFF OF UN ABSORBED DEPRECIATION OF A.Y. 2001- 02 AMOUNTING TO RS. 1,985,585/-. THE APPELLAN T PRAYS THAT THE DEPARTMENT BE DIRECTED TO ALLOW SET OFF UNABSORBED DEPRECIATION OF A. Y. 2001-02 BEFORE SET TING OFF UNABSORBED DEPRECIATION OF A.Y. 2002-03 AS PER SECT ION 72(2) R.W. SECTION 32(2) OF THE ACT. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF DCIT, IN DENYING THE APPLICATION FOR REVISION OF CLAIM OF DE DUCTION UNDER SECTION 10A. THE APPELLANT PRAYS THAT THE DEPARTMENT BE DIRECTED TO CONSIDER THE REVISION OF THE CLAIM. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF DCIT, IN RE-COMPUTING THE INCOME U/S. 115JB OF THE ACT. THE APPELLANT PRAYS THAT THE DEPARTMENT BE DIRECTED NOT TO RE- COMPUTE THE INCOME U/S. 115JB OF THE ACT. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVYING OF INTEREST U/S. 234C IGNORING THE FACT THAT THE TAXES PAYABLE ON RETRUN INCOME HAVE BEEN PAID ON TIME. THE APPELL ANT PRAYS THAT THE LEVY OF INTEREST U/S. 234C BE DELETE D. THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER, BY D ELETION, SUBSTITUTION OR OTHERWISE, ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR DURING THE HEARING OF THE APPEAL. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT GROUND NO. 1 IS GENERAL AND GROUND NOS. 2 TO 4 ARE OF ACADEMIC INTEREST BEC AUSE DEDUCTION WAS ITA NO.1178/B/2014 3 ALLOWED U/S 10A IN RESPECT OF ENHANCED INCOME. HENC E, WE ARE REQUIRED TO DECIDE ONLY GROUND NO. 5. 4. REGARDING GROUND NO. 5, HE SUBMITTED THAT IT IS NOTED BY CIT (A) ON PAGE 21 OF HIS ORDER THAT THE A.O. HAS REDUCED FROM BOOK PROFIT AN AMOUNT OF RS. 20,07,33,204/- BEING PROPORTIONATE INCOME RE LATABLE TO SECTION 10A BY TAKING PROPORTION OF EXPORT TURNOVER/ TOTAL TURN OVER. THEREAFTER, HE DRAWN OUR ATTENTION TO PAGE 38 OF THE PAPER BOOK AN D IT WAS POINTED OUT THAT THE EXPORT IS RS. 152,17,02,392/- AND THE EXPE NSES INCURRED FOR THESE EXPORTS IS RS. 126,90,11,567/- AND THERE THE PROFIT ON EXPORT IS RS. 25,26,90,825/- AND THIS AMOUNT SHOULD BE DEDUCTED F ROM BOOK PROFIT BEING ACTUAL PROFIT FROM EXPORTS AND NOT THE PROPORTIONAT E AMOUNT AS HAS BEEN DONE BY THE A.O. LEARNED DR OF THE REVENUE SUPPORTE D THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THE A.O. HAS ALSO REDUCED AN AMOUNT OF RS. 2007.33 LACS FROM BOO K PROFIT AS DEDUCTION U/S 10A.THIS IS THE SAME AMOUNT WHICH IS ALLOWED BY HIM AS DEDUCTION U/S 10A IN NORMAL COMPUTATION. HE HAS ALSO NOTED THESE TWO AMOUNTS OF RS. 15217.02 LACS AND RS. 12690.11 LACS BECAUSE HE HAS ADDED BACK THE FIRST AMOUNT AND REDUCED THE SECOND AMOUNT TO NULLIFY THE ADJUSTMENTS MADE BY THE ASSESSEE IN COMPUTATION OF BOOK PROFIT. AS PER THE PROVISIONS OF SECTION 115 JB OF I. T. ACT, WHAT IS REQUIRED TO BE REDUCED FROM NET PROFIT AS PER P/L ACCOUNT TO COMPUTE BOOK PROFIT IS THE AMOUNT OF INC OME TO WHICH ANY OF THE PROVISIONS OF SECTION 10, 11 OR 12 ETC. APPLY AND N OT THE AMOUNT ALLOWED AS ITA NO.1178/B/2014 4 DEDUCTION U/S ANY OF THESE SECTIONS. IN THIS VIEW O F THE MATTER, WE FIND FORCE IN THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSE E THAT INSTEAD OF REDUCING THE AMOUNT OF DEDUCTION ALLOWED U/S 10A, T HE REDUCTION FROM BOOK PROFIT SHOULD BE OF THE AMOUNT OF INCOME TO WHICH ANY OF THE PROVISIONS OF SECTION 10, 11 OR 12 ETC. APPLY. BUT ON FACTUAL ASP ECT, HE HAS TO EXAMINE THE CLAIM OF THE ASSESSEE AS TO WHAT IS CORRECT AMOUNT OF INCOME, WHICH IS REQUIRED TO BE REDUCED FROM BOOK PROFIT. HENCE, WE SET ASIDE THE ORDER OF CIT (A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO TH E A.O. FOR A FRESH DECISION WITH THE DIRECTION THAT THE ASSESSEE SHOULD PRODUCE FULL DETAIL AND EVIDENCES IN SUPPORT OF ITS CLAIM ABOUT INCOME ELIGIBLE FOR D EDUCTION U/S 10A AND THE A.O. SHOULD REDUCE SUCH INCOME ELIGIBLE FOR DEDUCTI ON U/S 10A AND IS LYING CREDITED IN P & L ACCOUNT FROM NET PROFIT AS PER P & L ACCOUNT INSTEAD OF REDUCING THE AMOUNT OF ACTUAL DEDUCTION ALLOWED U/S 10A. NEEDLESS TO SAY, HE SHOULD ALLOW REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. GROUND NO. 5 IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED ON THE CAPTION PAGE. SD/- (SUNIL KUMAR YADAV) SD/- (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE: D A T E D : 18.10.2016 AM / AKG/ DS ITA NO.1178/B/2014 5 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE