M/s Tayana Consult Pvt Ltd , Bangalore V. Deputy Commissioner of Income Tax ircle-7(1)(1), Bangalore

ITA 1193/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0722 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-09-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 10-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS PRISCILLA SINGSIT
• Keywords: Depreciation; Bad and doubtful debts; Difference of opinion; Prejudicial to interest; Tax effect; Revised return; Unabsorbed depreciation; Change of opinion
• Section: 263; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1193 /BANG/201 8 ASSESSMENT YEAR : 20 13 - 14 M/S. TAYANA CONSULT PVT. LTD., NO. 3155/A, 11 TH MAIN, 2 ND STAGE, NEAR ESI HOSPITAL, INDIRANAGAR, BANGALORE 560 038. PAN: AABCG7893D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7 (1) (1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI S. PARTHASARATHI, ADVOCATE REVENUE BY : MRS. PRISCILLA SINGSIT, CIT (DR) DATE OF HEARING : 05 . 09 .2018 DATE OF PRONOUNCEMENT : 29 . 11 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. PR.CIT, BANGALORE-7, BANGALORE DATED 0 5.03.2018 FOR ASSESSMENT YEAR 2013-14 PASSED U/S 263. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER UNDER SECTION 263 DATED OF THE PRINCIP LE COMMISSIONER IS BAD IN LAW AND IS NOT BASED ON FACTS OR LEGAL PO SITION OF LAW AS IT STANDS. 2. NO NEW FACTS OR FINDINGS HAVE BEEN BROUGHT ON RE CORD TO JUSTIFY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. ON THIS GROUND ALONE THE ORDER SHOULD BE SET ASIDE. 3. THE OBSERVATION IN PARA 2.1 THAT 'AO HAS FAILED TO APPRECIATE THAT, AS PER THE ABOVE SUBMISSION NO SPECIFIC REASON, WHA T SO EVER. HAS BEEN FURNISHED FOR GIVING ADVANCE TO M/S TATA TELES ERVICES P LTD' IS NOT BASED ON FACTS OR REALTY. 4. THIS IS MERELY A CHANGE OF OPINION. NO NEW FACTS HAVE BEEN BROUGHT ON RECORD WHICH IS CONTRARY TO THE AVAILABLE AND EX ISTING MATERIAL, INFORMATION TO SUBSTANTIATE THE PROPOSED REVISION. ITA NO.1193/BANG/2018 PAGE 2 OF 8 5. THE LEARNED COMMISSIONER OUGHT TO HAVE DEMONSTRA TED AS TO HOW THE ENTRIES MADE COULD TRANSLATE INTO INCOME IN THE HANDS OF THE APPELLANT AND THUS RESULTING IN AN ORDER BEING PREJ UDICIAL TO THE INTEREST OF REVENUE. 6. THE ADDITION OF EXPLANATION 2 TO SECTION 263 W.E .F 1.6.2015 MAKES IT VERY CLEAR THAT THE PROVISIONS OF SECTION 263 CAN B E INVOKED ONLY WHEN ORDERS WERE PASSED WITHOUT MAKING ENQUIRES AND VERI FICATIONS, WHICH IS REASONABLE AND PRUDENT. THE POWERS VESTED IN NOT UNFETTERED. IN THE CASE OF THE ASSESSE DETAILS WERE SOUGHT AND WERE SU BMITTED AND THE SAME WAS CONSIDERED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. 7. THE PROVISIONS OF THE ENVISAGES A TWIN CONDITION RECOURSE TO SECTION 263 CANNOT BE TAKEN IF THE IMPUGNED ORDER I S ERRONEOUS BUT NOT PREJUDICIAL TO INTEREST OF REVENUE OR IF IT IS PREJUDICIAL TO THE INTEREST OF REVENUE BUT NOT ERRONEOUS. MALABAR INDU STRIAL CO LTD V CIT 243 ITR 83 (SC). EVERY LOSS OF REVENUE AS A CON SEQUENCE OF THE ORDER OF THE AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. HERO BRIGGS & STRATTON AUTO LTD V CIT 161 TAXMAN 127 (DELHI). 8. IN THE ABSENCE OF ANY FINDING THAT THERE IS LOSS OF REVENUE, INTERFERENCE UNDER SECTION 263 IS NOT JUSTIFIED. CI T V G R THANGAMALIGAI 259 ITR 438. IT IS FURTHER HELD THAT WHERE THE TAX EFFECT BECAUSE OF AN ORDER PASSED BY THE AO IS NIL, SUCH O RDER EVEN IF ERRONEOUS BEING PREJUDICIAL TO THE INTEREST OF REVE NUE, IS NOT OPEN TO REVISION UNDER SECTION 263. PUNJAB WOOL SYNDICATE V ITO 17 ITR 439. 9. THE FACT THAT THE APPELLANT HAD SUBMITTED DETAIL S TO THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS VIDE LETTER D ATED 26.11.2015 AND VIDE LETTER DATED 18.12.2015 PROVIDING DETAILS OF TRADE PAYABLES. OTHER LOANS AND ADVANCES WITH SPECIFIC REFERENCE TO TATA TELESERVICES WRITE OFF AND ICD WRITTEN OFF HAS NOT BEEN DISPUTED OR HAS THE FACTS BEEN FOUND TO BE ERRONEOUS OR FALSE. 10. THE FACT THAT THE ASSESSMENT ORDER WAS PASSED A FTER CONSIDERING THE RESPONSE BY THE APPELLANT ON SPECIFIC QUERY RAI SED DURING THE COURSE OF HEARING, DETAILS WITH REGARD TO TATA TELE SERVICES AND ICD HAVE BEEN IGNORED. 11. THE LEARNED COMMISSIONER OUGHT TO HAVE CONSIDER ED THE FACT THAT THE SAME GROUND WAS FURTHER DISCUSSED ON 25.1.2016 AND DETAILS WITH RESPECT TO EARLIER ASSESSMENT SUBMITTED. 12. THE APPELLANT SUBMIT THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND AND CONSIDERED ALL ASPECT OF THE CLAIM BEFORE PASSING THE ORDER AND ALL DETAILS CALLED FOR WERE PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ESPECIALLY THE FACT THAT TH E APPELLANT HAD ACCOUNTED AS PAYABLE TO TATA TELESERVICES AN AMOUNT OF RS ITA NO.1193/BANG/2018 PAGE 3 OF 8 1.1.7.92,967. IT WAS FURTHER BROUGHT TO HIS NOTICE THAT AN AMOUNT OF RS 17,53,418 WAS RECEIVED BACK BY THE ASSESSE DURING 2 009-10. THE AMOUNT REMAINING WAS RS1,00,39,549. THIS AMOUNT THE N WRITTEN OFF DURING THE FINANCIAL YEAR 2012-13. THE REASON WAS A LSO EXPLAINED AS BEING 1. NO CONFIRMATION FROM PARTY, 2 EXPIRY OF TI ME 3. COMMERCIAL PRUDENCE IN CARRYING THIS AMOUNT IN THE BOOKS. 13. THE FACTS OF THE CASE THAT, THE PAYMENTS WERE M ADE AS ADVANCE FOR BUSINESS OF THE ASSESSE. THE ASSESSE WAS NOT ABLE T O EVEN GET A CONFIRMATION OF BALANCE FROM THE CONCERNED COMPANY HAS BEEN COMPLETELY IGNORED. THE APPELLANT HAD BROUGHT TO TH E NOTICE AT THE TIME OF ASSESSMENT THAT TATA TELESERVICES WAS INCUR RING A HUGE LOSS AND ITS NET WORTH WAS COMPLETELY ERODED. FURTHER TH E BUSINESS FOR WHICH THE PAYMENTS WERE MADE WERE BEING DISCONTINUE D AND THAT COMPANY ITSELF WAS PLANNING TO CLOSE OR MERGE WITH ANOTHER MOBILE TELEPHONE COMPANY. 14. THE APPELLANT CRAVES LEAVE TO ADD. TO ALTER, TO AMEND OR TO DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL, AT OR PRIOR TO HEARING OF THE APPEAL AS MAY BE REQUIRED TO ENABLE THE HONORABLE B ENCH COMPLETE THIS APPEAL IN ACCORDANCE WITH LAW. 15. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED, THE APPELLANT PRAYS THAT THE ORDER BE SET ASIDE. 3. BRIEF FACTS ARE THAT IT IS NOTED BY PR.CIT IN PA RA 2 OF THIS IMPUGNED ORDER THAT IT WAS NOTICED THAT THE ASSESSEE HAD DEBITED TO P&L ACCOUNT AN AMOUNT OF RS. 1,00,39,549/- UNDER THE HEAD BAD DEBTS WRITTEN OFF, WHICH WAS ADVANCE PAID TO M/S. TATA TELE SERVICES (P) LTD. AN D FURTHER AN AMOUNT OF RS. 79,75,474/- WAS DEBITED UNDER THE HEAD ADVANCE WRITTEN OFF, WHICH WAS ADVANCE PAID TO M/S. SIVAN & CO. IT IS FURTHER NOTED BY PR.CIT IN SAME PARA THAT IT APPEARS THAT THE ABOVE ADVANCES ARE CA PITAL IN NATURE, AND HENCE ON PRIMA-FACE EVALUATION, COULD NOT BE ALLOWE D TO BE WRITTEN OFF. HE FURTHER NOTED THAT ON PERUSAL OF THE ASSESSEES REP LY SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, IT IS NOTED THAT NO SPECIFI C REASON HAS BEEN FURNISHED FOR GIVING ADVANCES TO M/S. TATA TELESERV ICES PVT. LTD. AND SIMILARLY REGARDING THE ADVANCE WRITTEN OFF -M/S. S IVAN & CO., NO OTHER DETAILS ARE SUBMITTED OTHER THAN THE VAGUE CLAIM TH AT THE ADVANCE WAS GIVEN IN 2003 FOR PURCHASE OF CERTAIN INVESTMENT, B UT THE TRANSACTION COULD NOT BE CONCLUDED DUE TO LEGAL ISSUES OF THE TITLE. THEREAFTER THE PR.CIT ISSUED NOTICE U/S. 263 TO ASSESSEE AND IT WAS SERVE D ON THE ASSESSEE ON 12.02.2018 AND IN RESPONSE TO THIS NOTICE, SHRI M.S . RAM, CA AND AR OF ASSESSEE HAS FILED WRITTEN SUBMISSIONS DATED 12.02. 2018 WHICH WAS RECEIVED ON 26.02.2018 BY LD. PR. CIT. THE PR.CIT HAS CONSIDERED THE ITA NO.1193/BANG/2018 PAGE 4 OF 8 REPLIES OF THE ASSESSEE BUT HE WAS NOT SATISFIED AN D HE HELD THAT THE ASSESSMENT ORDER PASSED BY THE AO U/S. 143(3) DATED 01.03.2016 FOR ASSESSMENT YEAR 2013-14 IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. THE PR. CIT DIRECTED THE AO TO RE-EXAMINE ALL THE RELEVANT FACTS DE NOVO BY MAKING FULL AND COMPLETE ENQUIRY ON FACT S AND LAW AS TO THE AFORESAID TWO ISSUES. NOW THE ASSESSEE IS IN APPEA L AGAINST THIS ORDER PASSED BY LD. PR.CIT U/S. 263 OF IT ACT. 4. IN COURSE OF HEARING BEFORE US, LD. AR OF ASSESS EE WAS ASKED TO FURNISH THE ENQUIRY LETTER ISSUED BY THE AO TO THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS. HE SUBMITTED COPY OF NOTICE ISSUED BY THE AO U/S. 142(1) OF IT ACT. HE ALSO SUBMITTED THAT IN ADDITION TO VARI OUS QUERIES AS PER THE NOTICE U/S 142 (1), VARIOUS OTHER QUERIES WERE RAIS ED BY THE AO ORALLY IN COURSE OF HEARING AND THE SAME WERE REPLIED AS PER LETTER DATED 18.01.2016, PAPER BOOK PAGES 9 TO 12 AND ALSO AS PER LETTER DAT ED 21.11.2016, PAPER BOOK PAGES 1 & 2. RELIANCE WAS PLACED ON TRIBUNAL O RDER RENDERED IN THE CASE OF INFOSYS BPO LTD. VS. CIT AS REPORTED IN 149 TTJ 50(BANGALORE - TRIB.). 5. AS AGAINST THIS, THE LD. DR OF REVENUE SUPPORTED THE ORDER PASSED BY PR.CIT U/S. 263. HE ALSO SUBMITTED THAT NO ENQUIRY WAS MA DE BY THE AO IN THIS REGARD AS CAN BE SEEN IN THE NOTICE ISSUED BY HIM U /S. 142(1) AND THEREFORE, THE ORDER OF PR.CIT U/S. 263 SHOULD BE CONFIRMED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE THE CONTENTS OF THE NOTICE ISSUED BY THE AO U/S. 142(1) IN COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2013-14. THE SAME ARE AS UNDER. IN CONNECTION WITH THE SCRUTINY ASSESSMENT U/S. 143 (3) FOR THE ASSESSMENT YEAR 2013-14, YOU ARE REQUIRED TO FILE T HE FOLLOWING: (B)** PRODUCE OR CAUSE TO BE PRODUCED BEFORE ME AT MY OFFICE AT NRUPATHUNGA ROAD THE ACCOUNTS AND /OR DOCUMENTS SPE CIFIED BELOW: A BRIEF NOTE ON THE NATURE OF BUSINESSACTIVITIES. TAX COMPUTATION SHEET BOTH UNDER REGULAR PROVISIONS AS WELL AS U/S.115JB. IF RETURN HAS BEEN REVISED, REASONS FOR REVISION AN D RECONCILIATION STATEMENT BETWEEN INCOME AS PER ORIG INAL AND REVISED RETURN. ITA NO.1193/BANG/2018 PAGE 5 OF 8 IF BROUGHT FORWARD LOSSES OR MAT CREDIT IS CLAIMED, THE CLAIM MAY BE PRESENTED IN TABULAR FORM GIVING YEAR-WISE D ETAILS. THE SAID CLAIM OF THE ASSESSEE MAY BE JUXTAPOSED AGAINS T THE PERMISSIBLE QUANTUM AS PER THE ASSESSING OFFICER'S ORDERS. P & L A/C AND BALANCE SHEET ALONG WITH NOTES ON ACC OUNTS SR ANNUAL REPORT AUDIT REPORT/3CD REPORT/3CEB REPORT, REPORT U/S 115 JB, FORM NO. 56F, FORM NO L0CCB AS APPLICABLE. DETAILS OF ADDITIONS TO FIXED ASSETS OF MORE THAN R S. 1 LAKH WITH INSTALLATION CERTIFICATE. COPY OF E-FILED RETURN. VAKALATNAMA/AUTHORIZATIONLETTER,IFREPRESENTEDBYREPR ESENTATIVE/ PH.NO. BANK ACCOUNT DETAILS VIZ. BANK ACCOUNT NO, BANK NAM E & BRANCH, COMPLETE POSTAL ADDRESS OF THE BANK, BANK B ALANCE AS ON 31.03.2015. ASSESSMENT ORDER IF ANY PASSED FOR ANY PREVIOUS YEA R. DETAILS OF ASSESSMENTS COMPLETED FOR LAST 3 ASSESSM ENT YEARS IN THE FOLLOWING MANNER. RETURNED INCOME ASSESSED INCOME NATURE OF ADDITIONS RESULT OF APPEAL IF ANY 7. FROM THE ABOVE CONTENTS OF THE NOTICE ISSUED BY THE AO U/S. 142(1) OF IT ACT, THIS IS SEEN THAT LEARNED DR IS CORRECT IN SAY ING THAT THERE IS NO QUERY RAISED BY THE AO WITH REGARD TO BAD DEBTS WRITTEN O FF AND ADVANCES WRITTEN OFF BY ASSESSEE OF RS. 1,00,39,549/- AND RS. 79,75, 474/- RESPECTIVELY. BUT AS PER THESE TWO REPLIES DATED 18.01.2016 AND 21.11 .2016, THE DETAILS ABOUT THESE WRITE OFFS WERE SUBMITTED BY THE ASSESS EE AND THIS IS THE SUBMISSION OF THE LEARNED AR OF THE ASSESSEE THAT T HESE SUBMISSIONS ARE IN REPLY TO ORAL QUERIES OF THE AO. HENCE, IT IS SEEN THAT DETAILS WERE FILED BY THE ASSESSEE BEFORE THE AO IN COURSE OF ASSESSMENT PROCEEDINGS IN REPLIES FILED BEFORE HIM AND THIS IS THE SUBMISSION OF THE LEARNED AR OF THE ASSESSEE THAT THE REPLY ON THIS ACCOUNT OF WRITE OF F IS WITH REFERENCE TO ORAL QUERIES OF THE AO AND WE FIND NO REASON OR BASIS TO DOUBT THIS SUBMISSION. HENCE, IT IS SEEN THAT IN THE FACTS OF THE PRESENT CASE, QUERIES ARE RAISED BY THE AO AND REPLY WAS FILED BY THE ASSESSEE. THIS MA Y BE A CASE OF INADEQUATE ENQUIRY BUT THIS IS NOT A CASE OF NO ENQ UIRY. THIS IS BY NOW A SETTLED POSITION OF LAW THAT FOR INADEQUATE ENQUIRY BY THE AO, THE CIT CANNOT INVOKE SECTION 263 AND ONLY IF NO QUERY IS MADE BY THE AO IN THE COURSE OF ITA NO.1193/BANG/2018 PAGE 6 OF 8 ASSESSMENT PROCEEDINGS AND BECAUSE OF THAT, CERTAIN CLAIM OF THE ASSESSEE FOR DEDUCTION STANDS ALLOWED WITHOUT ENQUIRY THEN S UCH AN ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE IN TEREST OF REVENUE. HENCE, IN VIEW OF THESE FACTS OF THE PRESENT CASE AS PER WHIC H QUERIES WERE MADE BY THE AO AND REPLIES WERE FILED BY THE ASSESSEE BEFOR E THE AO, IN IS NOT A CASE OF NO ENQUIRY BY THE AO AND THEREFORE, LD. PR. CIT IS NOT JUSTIFIED TO INVOKE HIS REVISIONAL POWERS U/S. 263 OF IT ACT. 8. NOW WE EXAMINE THE APPLICABILITY OF TRIBUNAL ORD ER CITED BY LD. AR OF ASSESSEE HAVING BEEN RENDERED IN THE CASE OF INFOSY S BPO LTD. VS. CIT (SUPRA). THE ISSUE IN THAT CASE WAS DECIDED BY TRI BUNAL AS PER PARA NOS. 7 TO 9 OF THAT TRIBUNAL ORDER AND HENCE, WE REPRODUCE THESE PARAS FROM THIS TRIBUNAL ORDER FOR THE SAKE OF READY REFERENCE. TH ESE PARAS ARE AS UNDER. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS, WE FIND THAT THE BASIC GRIEVANCE BEFOR E US IS WITH REGARD TO THE VALIDITY OF THE PROCEEDINGS U/S 263 OF THE I NCOME-TAX ACT. AS HELD BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF INFOSYS TECHNOLOGIES LTD., (CITED SUPRA), WHERE THE ASSESSI NG AUTHORITY HAS CONSIDERED THE ISSUE AT LENGTH AND HAS TAKEN A POSS IBLE VIEW, THEN MERELY BECAUSE THE SAID ORDER DOES NOT MEET THE APP ROVAL OF THE CIT, IT WOULD NOT BECOME AN ERRONEOUS ORDER TO BE REVISE D U/S 263 OF THE INCOME-TAX ACT. IN THE CASE BEFORE US, THE ASSESSIN G AUTHORITY HAS CONSIDERED THE ISSUE AT LENGTH AND AT PAGE 2 AND 3 OF HIS ORDER, HAS HELD AS UNDER : THE ASSESSEE COMPANY HAS COMPUTED THE PROFITS FROM THE BUSINESS AT RS.70,00,353/- AND FROM THIS PROFITS TH E EXEMPTION U/S 10A WAS CLAIMED ATRS.31,89,260/-. THEREMAINING PROF ITS OF RS.38,11,093/- WAS SET OFF AGAINST BROUGHT FORWARD BUSINESS LOSS. THE ASSESSEE COMPANY VIDE LETTER DATED 23RD AUG, 20 07 SUBMITTED THE REASONS FOR CLAIMING BENEFIT U/S 10A BEFORE SET TING OFF THE BROUGHT FORWARD LOSSES. IT IS THE CONTENTION OF THE ASSESSEE THAT SEC. 10A IS AN EXEMPTION SECTION. SECTION 10A IS PLACED IN CHAPTER III OF THE ACT, WH ICH DEALS WITH INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME. SEC TION 10A WAS INITIALLY IN THE NATURE IN EXEMPTION. THE PROVISION WAS SUBSTITUTED W.E.F 1.4.2001 AND THEREAFTER IN AN EXEMPTION SEC. IT WAS CONVERTED INTO A DEDUCTION SECTION. WHILE THE LOSS OF A 10A U NIT WAS NOT ELIGIBLE TO BE CARRIED FORWARD INITIALLY, AFTER THE AMENDMENT BROUGHT ABOUT BY THE FINANCE ACT, 2000 THE LOSS OF A SEC. 10A UNIT IS ELIGIBLE TO BE CARRIED FORWARD AND SET OFF AGAIN ST PROFITS OF SUBSEQUENT YEARS. THIS IS IN TERMS OF SEC. 10A(6) O F THE I.T ACT. THE KARNATAKA HIGH COURT IN THE CASE OF HIMATASINGIKE S EIDE LTD., 286 ITR 255 STATED THAT THE COMPUTATION OF TOTAL INCOME HAS TO BE IN TERMS OF THE IT ACT. THE JUDGMENT OF THE HIGH COURT MAKES IT CLEAR ITA NO.1193/BANG/2018 PAGE 7 OF 8 THAT THE COMPUTATION OF ELIGIBLE PROFITS FOR SEC. 1 0A HAS TO BE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THE P ROFIT OF THE UNDERTAKING CANNOT BE DETERMINED IN ISOLATION OF TH E OTHER PROVISIONS OF THE ACT. IT IS THEREFORE HELD THAT TH E PROVISIONS OF SEC. 70 AND SEC. 72 ARE APPLICABLE IN DETERMINING THE PR OFITS OF THE BUSINESS FOR THE PURPOSES OF SEC. 10A AS FAR AS UNA BSORBED DEPRECIATION IS CONCERNED, CARRY FORWARD AND SET OF F ARE GOVERNED BY SEC. 32(2) AND THE UNABSORBED DEPRECIATION ASSUM ES THE CHARACTER OF CURRENT YEARS DEPRECIATION AND HAS TO BE ALLOWED AS A DEDUCTION FROM CURRENT YEARS INCOME. THEREFORE T HE CLAIM U/S 10A IS ALLOWED FROM TOTAL INCOME OF THE ASSESSEE AF TER SETTING OFF THE BROUGHT FORWARD LOSSES. 8. THE ABOVE ORDER OF THE ASSESSING AUTHORITY CLEAR LY SHOWS THAT HE HAS APPLIED HIS MIND TO THE FACTS OF THE CASE BEFOR E HIM AND AS TO WHETHER THE UNABSORBED BUSINESS LOSS AND DEPRECIATI ON ARE TO BE REDUCED FROM THE TOTAL TURNOVER BEFORE ALLOWING CLA IM OF DEDUCTION U/S 10A OF THE INCOME-TAX ACT. THEREFORE, IN OUR OPINIO N, THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF INFOSYS TECHNOLOGIES LTD CITED (SUPRA) IS CLEARLY APPLICABL E TO THE FACTS OF THE CASE BEFORE US AND, THEREFORE, THE ORDER OF THE CIT (A) U/S 263 HAS TO BE QUASHED. AS WE HAVE ALREADY QUASHED THE PROCEEDI NGS U/S 263 OF THE INCOME-TAX ACT, WE ARE NOT INCLINED TO GO INTO MERITS OF THE DIRECTION OF THE CIT. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. 9. FROM THE ABOVE PARAS REPRODUCED FROM THIS TRIBUN AL ORDER, IT IS SEEN THAT IN THAT CASE, A CATEGORICAL FINDING HAS BEEN GIVEN BY TRIBUNAL THAT FROM THE ORDER OF ASSESSING AUTHORITY, IT IS CLEARLY SEEN TH AT HE HAS APPLIED HIS MIND IN THE FACTS OF THE CASE BEFORE HIM AND AS TO WHETHER THE UNABSORBED BUSINESS LOSS AND DEPRECIATION ARE TO BE REDUCED FROM THE TO TAL TURNOVER BEFORE ALLOWING CLAIM OF DEDUCTION U/S 10A OF THE IT ACT A ND IN THE LIGHT OF THESE FACTS, THE TRIBUNAL CAME TO THE CONCLUSION IN THAT CASE THAT THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. INFOSYS TECHNOLOGIES LTD. AS REPORTED IN 341 ITR 393 IS APP LICABLE AND THE ORDER OF CIT(A) U/S. 263 IN THAT CASE WAS QUASHED BY THE TRI BUNAL. IN THE PRESENT CASE ALSO, WE FIND THAT THERE IS SUBMISSION OF THE ASSESSEE BEFORE THE AO IN COURSE OF ASSESSMENT PROCEEDINGS ABOUT BAD DEBTS WR ITTEN OFF AND ADVANCE WRITTEN OFF AND HENCE, IT HAS TO BE ACCEPTED THAT T HE AO HAS MADE QUERY AND APPLIED HIS MIND TO THESE TWO ITEMS OF EXPENSES DEBITED BY ASSESSEE TO P&L ACCOUNT, BEING AN AMOUNT OF RS. 1,00,39,549/- U NDER THE HEAD BAD DEBTS WRITTEN OFF, WHICH WAS ADVANCE PAID TO M/S. TATA TELESERVICES (P) LTD. AND FURTHER AN AMOUNT OF RS. 79,75,474/- DEBIT ED UNDER THE HEAD ITA NO.1193/BANG/2018 PAGE 8 OF 8 ADVANCE WRITTEN OFF, WHICH WAS ADVANCE PAID TO M/ S. SIVAN & CO. HENCE IN OUR CONSIDERED OPINION, THIS TRIBUNAL ORDER IS A PPLICABLE AND THE ISSUE INVOLVED IN THE PRESENT CASE IS COVERED IN FAVOUR O F THE ASSESSEE BY THIS TRIBUNAL ORDER. HENCE, WE RESPECTFULLY FOLLOW THIS TRIBUNAL ORDER AND QUASH THE IMPUGNED ORDER PASSED BY PCIT U/S 263. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GAROD IA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 29.11.2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALO RE.