Elitecore Technologies Private Limited, Ahmedabad V. The Pr. CIT.-2, Ahmedabad

ITA 1356/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8606 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Depreciation; Question of law
• Section: 80C; 143(3); 142(1); 115JB; 10B; 143(2); 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.1356/AHD/2016 (ASSESSMENT YEAR : 2009-10) ELITECORE TECHNOLOGIES PVT. LTD., 904 SILICON TOWER, BH PARISEEMA BUILDING, OFF CG ROAD, NAVRANGPURA, AHMEDABAD 380 009. VS. PR. CIT-2, AHMEDABAD. [ PAN NO. AAACE 6815 G ] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S. N. SOPARKAR & PARIN SHAH, A.R. RESPONDENT BY : SHRI ALOK SINGH, CIT-D.R. DATE OF HEARING 12.06.2019 DATE OF PRONOUNCEMENT 04.09.2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 30.03.2016 PASSED BY THE PR. COMMISSIONER OF INCOME TAX 2, AHMEDABAD UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) ARISING OUT OF THE ORDER DATED 27.05.2013 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, AHMEDABAD FOR AS SESSMENT YEAR 2009- 10. 2. THE ASSESSEE HAS CHALLENGED THE INITIATION OF RE VISION PROCEEDING U/S 263 OF THE ACT AND HAS ALSO CLAIMED THE DEDUCTION U /S 10A OF THE ACT BEFORE SETTING OFF BROUGHT FORWARD LOSSES. THE LEARNED COU NSEL APPEARED FOR THE ASSESSEE BASICALLY ARGUED ON THE POINT OF MERIT OF THE MATTER REGARDING THE ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 2 - CLAIM OF DEDUCTION U/S 10A OF THE ACT BEFORE SETTIN G OFF BROUGHT FORWARD LOSSES. THE BRIEF FACT LEADING TO THIS CASE IS THIS THAT TH E ASSESSEE-COMPANY HAS FILED ITS RETUNE OF INCOME ON 27.09.2009, WHICH WAS FINALIZED BY AND UNDER AN ORDER DATED 27.05.2013 U/S 143(3) ALLOWING THE CLAI M OF DEDUCTION U/S 10A OF THE ACT UPON ALLOWING SETTING OFF OF BROUGHT FORWAR D LOSSES. FURTHER, THE BOOK PROFIT WAS COMPUTED UNDER MAT ON THE INCOME OF RS.4 ,77,79,483/- AND THE TAX WAS PAID U/S 115JB OF THE ACT. THE QUESTION BEFORE US IS AS TO WHETHER THE CLAIM OF DEDUCTION U/S 10A OF THE ACT BEFORE SETTIN G OFF BROUGHT FORWARD LOSSES IRREGULAR EXCESS ALLOWANCE OF CARRIED FORWARD BUS INESS LOSSES TO THE EXTENT OF RS.3,96,60,132/- FOR SET OFF IN SUBSEQUENT YEARS IS PERMISSIBLE OR NOT. THE CASE OF THE ASSESSEE IS THIS THAT THE DEDUCTION U/S 10A OF THE ACT IS TO BE ALLOWED BEFORE SET OFF OF BROUGHT FORWARD LOSSES / LOSS FRO M INELIGIBLE UNITS. THE FACTS OF THE CASE IS THIS THAT THE ASSESSEE DECLARED HIS INCOME AS NIL AFTER CLAIMING DEDUCTION OF RS.3,96,60,132/- U/S 10A AND THEREAFTE R SET OFF OF BUSINESS LOSSES OF RS.2,91,07,555/- PERTAINING TO ASSESSMENT YEAR 2 008-09 AGAINST THE INCOME OF CURRENT YEAR. FURTHER THAT, THE CLAIM OF CARRY F ORWARD OF BUSINESS LOSSES TO THE TUNE OF RS.3,70,52,213/- (BROUGHT FORWARD BUSIN ESS LOSS RS.6,61,59,798/- LESS SET OFF CLAIMED RS.2,91,07,555/-) PERTAINING T O THE ASSESSMENT YEAR 2008- 09 FOR SET OFF IN SUBSEQUENT YEARS. THE ASSESSMENT HAS BEEN FINALIZED AS PER SUCH CLAIM AND THE ASSESSEE ALSO PAID TAX UNDER MAT ON THE INCOME OF RS.4,77,79,483/- U/S 115JB OF THE ACT. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED SR. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE CIRCULAR BEING NO.7 OF CBDT DATED 16.07.2013 WHICH WAS RELIED UPON BY THE LEARNED PCIT CLARIFIED THAT LOSS OF INELIGIBLE UNITS, IF ANY, SHOULD BE SE T OFF AGAINST THE PROFIT OF ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 3 - ELIGIBLE UNITS BEFORE ALLOWING DEDUCTION UNDER ABOV E SECTION OF THE ACT HAVING NO MANNER OF APPLICATION TO THE INSTANT CASE BECAUS E OF THE PARTICULAR REASON THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME FO R A.Y. 2009-10 ON 27.09.2009 AND THE ASSESSMENT WAS FINALIZED ON 27.05.2013. FUR THER THAT, THE ASSESSEE- COMPANY HAS CLAIMED DEDUCTION U/S 10A OF THE ACT BA SED ON RELEVANT LAW THAT PREVAILED AT THAT MATERIAL POINT OF TIME WHERE IT W AS SETTLED THAT DEDUCTION U/S 10A OF THE ACT IS TO BE ALLOWED BEFORE SET OFF OF B ROUGHT FORWARD LOSSES / LOSS FROM INELIGIBLE UNIT. ON THIS ASPECT, LEARNED AR RE LIED UPON THE ORDER PASSED BY THE JURISDICTIONAL HIGH COURT IN THE MATTER OF C IT-VS-INDUSA INFOTECH SERVICES (P.) LTD. ON THE OTHER HAND, LEARNED DR RE LIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 4. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE JURISDICTI ONAL HIGH COURT. ON THIS PARTICULAR ISSUE, THE RELEVANT PORTION WHEREOF IS A S FOLLOWS: 3.1 THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME F OR THE AY 2005-06 DECLARING TOTAL INCOME OF RS. NIL. THE SAID RETURN WAS PROCESSED AND ACCEPTED BY THE ASSESSING OFFICER. HOWEVER, AFTER R ECORDING THE REASONS, THE CASE WAS RE-OPENED AND A NOTICE UNDER SECTION 148 O F THE INCOME-TAX ACT, 1961 ('ACT' FOR SHORT) WAS ISSUED ON 9TH JANUARY 20 09. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED RETURN ON 12TH FEBRUARY 2009 DECLARING THE SAME INCOME. A FURTHER NOTICE UNDER SECTION 143(2) OF TH E ACT WAS ISSUED BY THE ASSESSING OFFICER ON 14TH JULY 2009, FOLLOWED BY YE T ANOTHER NOTICE UNDER SECTION 142(1) OF THE ACT. 3.2 IT APPEARS THAT DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE CLAIMED EXCESS EXPENDITUR E IN MUMBAI UNIT AND DIVERSED ITS EXPENDITURE THERE TO CLAIM HIGHER EXEM PT INCOME FROM THE AHMEDABAD UNIT. ACCORDINGLY, A SHOW CAUSE NOTICE DA TED 16TH DECEMBER 2009 WAS ISSUED TO THE ASSESSEE. IN THE SAID SHOW C AUSE NOTICE, IT WAS POINTED OUT THAT THERE IS NO BUSINESS ACTIVITY FROM MUMBAI UNIT OF THE COMPANY SINCE FINANCIAL YEAR 2001-02, THEREFORE, CLAIM OF EXPENDI TURE IN RESPECT OF MUMBAI UNIT IS ONLY ADJUSTMENT ENTRY AND DIVERSION OF EXPE NDITURE OF THE COMPANY TO ENHANCE THE PROFIT OF STPI UNIT AT AHMEDABAD TO CLA IM MORE DEDUCTION UNDER SECTION 10A OF THE ACT, AND THEREFORE, THE ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY THE AMOUNT OF BROUGHT-FORWARD LOSSES MAY NOT AGAINST THE INCOME ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 4 - BEFORE GRANTING DEDUCTION UNDER SECTION 10A OF THE ACT. THE ASSESSEE WAS THEREFORE REQUESTED TO JUSTIFY ITS CLAIM UNDER SECT ION 10A OF THE ACT. 3.3 IN RESPONSE TO THE ABOVE, THE ASSESSEE SUBMITTED ITS EXPLANATION ON 19TH DECEMBER 2009, AND THAT THEREAFTER, THE ASSESS ING OFFICER PASSED AN ORDER OF ASSESSMENT ON 24TH DECEMBER 2009 DISALLOWI NG THE SET-OFF OF THE BUSINESS LOSS OF A.Y 2001-02 AND ADDED IT BACK TO T HE TOTAL INCOME OF THE ASSESSEE-COMPANY. 4. FEELING AGGRIEVED AND DISSATISFIED WITH THE ORDER OF ASSESSMENT DATED 24TH DECEMBER 2009, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A) AND BY ORDER DATED 19TH NOVEMBER 2010, THE CIT(A) HAD D ISMISSED THE SAID APPEAL BY HOLDING THAT THE BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED BUSINESS LOSS OF THE MUMBAI UNIT HAS TO BE ADJUSTED AGAINST THE INCOME FOR COMPUTATION OF DEDUCTIONS UNDER SECTION 10A OF THE ACT, AND THUS, THE ASSESSING OFFICER WAS JUSTIFIED IN SETTING OFF THE UNABSORBED LOSSES AND DEPRECIATION OF MUMBAI UNIT, WHILE COMPUTING THE DE DUCTION UNDER SECTION 10A OF THE ACT. 5. FEELING AGGRIEVED AND DISSATISFIED WITH THE ORDER PASSED BY THE CIT(A), THE ASSESSEE PREFERRED APPEAL BEFORE THE TR IBUNAL, RELYING ON THE DECISION OF THE BOMBAY HIGH COURT IN CASE OF CIT V. BLACK & VEATCH CONSULTING (P.) LTD. [2012] 348 ITR 72/208 TAXMAN 1 44/20 TAXMANN.COM 727 AS WELL AS SUBSEQUENT DECISION OF THE BOMBAY HIGH COURT IN CASE OF CIT V. SCHMETZ INDIA (P.) LTD. [2012] 211 TAXMAN 59/26 TAXMANN.COM 336 , THE TRIBUNAL BY IMPUGNED JUDGMENT HAS ALLOWED THE A PPEAL PREFERRED BY THE ASSESSEE AND QUASHED THE ORDER PASSED BY CIT (A) AS WELL AS THAT OF THE ASSESSING OFFICER. 6. FEELING AGGRIEVED AND DISSATISFIED WITH THE IMPUG NED COMMON ORDER DATED 8TH MARCH 2024 PASSED BY THE TRIBUNAL IN ITA NOS. 3404; 2405 & 3406/AHD/2010 WITH RESPECT TO A.YS 2005-06; 2006-07 & 2007-08, THE REVENUE HAS PREFERRED THE PRESENT TAX APPEALS, RAIS ING AFOREMENTIONED QUESTION OF LAW. 7. MS. MAUNA BHATT, LEARNED ADVOCATE APPEARING FOR T HE APPELLANT- REVENUE HAS NOT DISPUTED THE POSITION THAT THE ISSU E/QUESTION INVOLVED IN THE PRESENT TAX APPEALS IS COVERED BY THE DECISION OF T HE BOMBAY HIGH COURT IN CASE OF BLACK & VEATCH CONSULTING (P.) LTD. (SUPRA) AND SCHMETZ INDIA (P.) LTD. (SUPRA). SHE ALSO IS ALSO NOT IN A POSITION TO DISPUTE THAT THE ISSUE/QUESTION RAISED IN THE PRESENT TAX APPEALS IS ALSO COVERED BY THE DECISION OF THIS COURT IN CASE OF CIT V. ACE SOFTWA RE EXPORTS LTD. [TAX APPEAL NO. 687/2012] WHEREIN THE DIVISION BENCH OF THIS COURT, RELYING ON THE AFORESAID TWO DECISIONS OF THE BOMBAY HIGH COUR T, HAS HELD THE QUESTION AGAINST THE REVENUE. ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 5 - 8. HOWEVER, SHE HAS SUBMITTED THAT IN VIEW OF THE DE CISIONS OF MADRAS HIGH COURT IN CASE OF CIT V. CHEMPLAST SANMAR LTD. [2009] 314 ITR 231/180 TAXMAN 335 ; OF KARNATAKA HIGH COURT IN CASE OF CIT V. HIMATASINGIKE SEIDE LTD. [2006] 286 ITR 2 55/156 TAXMAN 151 AND DEFINITION OF 'TOTAL INCOME' AS PER SECTION 2(45) O F THE INCOME-TAX ACT, 1961 AND THE CIRCULAR NO. 7/DV/2013 DATED 16/07/2013 ISS UED BY THE CBDT, THE ISSUE/QUESTION RAISED IN THE PRESENT TAX APPEALS MA Y BE ADMITTED. IT IS SUBMITTED THAT WHILE ISSUING THE CIRCULAR, THE BOAR D HAS CLARIFIED WHAT CAN BE SAID TO BE THE 'TOTAL INCOME' AS PER SECTION 2(45) OF THE ACT. IT IS FURTHER SUBMITTED THAT BY THE AFORESAID CIRCULAR, THE BOARD HAS TRIED TO CLARIFY THE AMENDMENT AND/OR PROVISION OF SECTIONS 10A & 10B OF THE INCOME-TAX ACT. 9. HEARD MS. MAUNA BHATT, LEARNED ADVOCATE APPEARING FOR THE REVENUE AND PERUSED THE IMPUGNED COMMON JUDGMENT AND ORDER PASSED BY THE TRIBUNAL. AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT THE ONLY ISSUE/QUESTION BEFORE THE TRIBUNAL WAS, 'WHETHER DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 10A OF THE INCOME-TAX ACT, 1961 SHOULD BE A LLOWED WITHOUT ADJUSTMENT OF LOSSES OF OTHER UNITS AND WITHOUT ADJ USTMENT OF BROUGHT FORWARD LOSSES AND/OR ITS DEPRECIATION OF EARLIER YEARS.' C ONSIDERING THE DECISION OF THE BOMBAY HIGH COURT IN CASE OF BLACK & VEATCH CON SULTING (P.) LTD. (SUPRA), WHICH SUBSEQUENTLY AGAIN CAME TO BE C ONSIDERED BY THE BOMBAY HIGH COURT IN CASE OF SCHMETZ INDIA (P.) LTD. (SUPR A), THE TRIBUNAL HAS HELD THE AFOREMENTIONED ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. ON PERUSAL OF THE DECISION OF THE BOMBAY HIGH COU RT IN CASE OF BLACK & VEATCH CONSULTING (P.) LTD. (SUPRA), IT APPEARS T HAT IN THE SAID DECISION, THE DIVISION BENCH OF THE BOMBAY HIGH COURT HAS CONSIDE RED ITS EARLIER DECISION RENDERED IN CASE OF HINDUSTAN UNILEVER LTD. V. DY. CIT [2010] 325 ITR 102/191 TAXMAN 119 AT PARAGRAPH 29. 10.1 ON PERUSAL OF THE DECISION OF DIVISION BENCH OF T HE BOMBAY HIGH COURT IN CASE OF HINDUSTAN UNILEVER LTD. (SUPRA), I N PARAGRAPH 24, IT IS OBSERVED AND HELD AS UNDER : 'THERE IS MERIT IN THE SUBMISSION WHICH HAS BEEN UR GED ON BEHALF OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS WHILE REOPE NING THE ASSESSMENT EX FACIE PROCEEDED ON THE ERRONEOUS PREMISE THAT SECTI ON 10B IS A PROVISION IN THE NATURE OF AN EXCEPTION. PLAINLY, SECTION 10B AS IT STANDS IS NOT A PROVISION IN THE NATURE OF AN EXCEPTION BUT PROVIDE S FOR A DEDUCTION. SECTION 10B WAS SUBSTITUTED BY THE FINANCE ACT OF 2 000 WITH EFFECT FROM APRIL 1, 2001. PRIOR TO THE SUBSTITUTION OF THE PRO VISION, THE EARLIER PROVISION STIPULATED THAT ANY PROFITS AND GAINS DER IVED BY AN ASSESSEE FROM A 100 PER CENT EXPORT ORIENTED UNDERTAKING, TO WHICH THE SECTION APPLICATION 'SHALL NOT BE INCLUDED IN THE TOTAL INC OME OF THE ASSESSEE'. THE PROVISION, THEREFORE, AS IT EARLIER STOOD WAS I N THE NATURE OF AN EXEMPTION. AFTER THE SUBSTITUTION OF SECTION 10B BY THE FINANCE ACT OF ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 6 - 2000, THE PROVISION AS IT NOW STANDS PROVIDES FOR A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A 100 PER CENT EXPORT ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS O R COMPUTER SOFTWARE FOR TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAK ING BEGINS TO MANUFACTURE OR PRODUCE. CONSEQUENTLY, IT IS EVIDENT THAT THE BASIS ON WHICH THE ASSESSMENT HAS SOUGHT TO BE REOPENED IS B ELIED BY A PLAIN READING OF THE PROVISION. THE ASSESSING OFFICER WAS PLAINLY IN ERROR IN PROCEEDING ON THE BASIS THAT BECAUSE THE INCOME IS EXEMPTED, THE LOSS WAS NOT ALLOWABLE. ALL THE FOUR UNITS OF THE ASSESS EE WERE ELIGIBLE UNDER SECTION 10B. THREE UNITS HAD RETURNED A PROFIT DURI NG THE COURSE OF THE ASSESSMENT YEAR, WHILE THE CRAB STICK UNIT HAD RETU RNED A LOSS. THE ASSESSEE WAS ENTITLED TO A DEDUCTION IN RESPECT OF THE PROFITS OF THE THREE ELIGIBLE UNITS WHILE THE LOSS SUSTAINED BY THE FOUR TH UNIT COULD BE SET OFF AGAINST THE NORMAL BUSINESS INCOME. IN THESE CIRCUM STANCES, THE BASIS ON WHICH THE ASSESSMENT IS SOUGHT TO BE REOPENED IS CO NTRARY TO THE PLAIN LANGUAGE OF SECTION 10B.' 10.2 FOLLOWING THE AFORESAID DECISION IN THE CASE OF H INDUSTAN UNILEVER LIMITED (SUPRA), IN THE CASE OF BLACK & VEATCH CONS ULTING (P.) LTD. (SUPRA), IN PARAGRAPH 4, IT IS OBSERVED AND HELD AS UNDER : 'SECTION 10A IS A PROVISION WHICH IS IN THE NATURE OF A DEDUCTION AND NOT AN EXEMPTION. THIS WAS EMPHASIZED IN A JUDGMENT OF A DIVISION BENCH OF THIS COURT, WHILE CONSTRUING THE PROVISIONS OF SECT ION 10B, IN CASE OF HINDUSTAN UNILEVER LTD. V. DY. CIT [2010] 325 IT R 102/191 TAXMAN 119 (BOM.) AT PARAGRAPH 24. THE SUBMISSION OF THE REVENUE PLACED ITS RELIANCE ON THE LITERAL READING OF SECTION 10A UNDER WHICH A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS O R COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS IS TO BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. THE DEDUCTION UNDER S ECTION 10A, IN OUR VIEW, HAS TO BE GIVEN EFFECT TO AT THE STAGE OF COM PUTING THE PROFITS AND GAINS OF BUSINESS. THIS IS ANTERIOR TO THE APPLICAT ION OF THE PROVISIONS OF SECTION 72 WHICH DEALS WITH THE CARRY FORWARD AND S ET OFF OF BUSINESS LOSSES. A DISTINCTION HAS BEEN MADE BY THE LEGISLAT URE WHILE INCORPORATING THE PROVISIONS OF CHAPTER VI-A. SECTI ON 80A(1) STIPULATES THAT IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, THERE SHALL ALLOWED FROM HIS GROSS TOTAL INCOME, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE CHAPTER, THE DEDUCTIONS SPECIFIED IN SECTIONS 80C TO 80U. SECTION 80B(5) DEFINES FOR THE PURPOSES OF CHA PTER VI-A 'GROSS TOTAL INCOME' TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, BEFORE MAKING ANY DEDUCTION UNDER THE CHAPTER. WHAT THE REVENUE IN ESSENCE SEEKS TO ATTAIN IS TO T ELESCOPE THE PROVISIONS OF CHAPTER VI-A IN THE CONTEXT OF THE DEDUCTION WHI CH IS ALLOWABLE UNDER ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 7 - SECTION 10A, WHICH WOULD NOT BE PERMISSIBLE UNLESS A SPECIFIC STATUTORY PROVISION TO THAT EFFECT WERE TO BE MADE. IN THE AB SENCE THEREOF, SUCH AN APPROACH CANNOT BE ACCEPTED. IN THE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL WOULD HAVE TO BE AFFIRMED SINCE IT IS PLAI N AND EVIDENT THAT THE DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE FIRST INS TANCE. SO CONSTRUED, THE APPEAL BY THE REVENUE WOULD NOT GIVE RISE TO AN Y SUBSTANTIAL QUESTION OF LAW AND SHALL ACCORDINGLY STAND DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS.' 10.3 IT IS REPORTED THAT THE DECISION OF DIVISION BENC H OF THE BOMBAY HIGH COURT IN CASE OF BLACK & VEATCH CONSULTING (P.) LTD . (SUPRA) HAS BEEN SUBSEQUENTLY FOLLOWED BY THE BOMBAY HIGH COURT IN C ASE OF SCHMETZ INDIA (P.) LTD. (SUPRA). IT IS ALSO REPORTED THAT IN TAX APPEAL NO. 687 OF 2012, THE DIVISION BENCH OF THIS COURT HAD AN OCCASION TO CON SIDER IDENTICAL ISSUE/QUESTION, AND RELYING ON THE AFORESAID TWO DE CISIONS OF THE BOMBAY HIGH COURT IN CASE OF BLACK & VEATCH CONSULTING (P.) LTD . (SUPRA) AND SCHMETZ INDIA (P.) LTD. (SUPRA) AND CONCURRING WITH THE VIE W TAKEN BY THE BOMBAY HIGH COURT IN THE AFORESAID TWO DECISION, THE DIVIS ION BENCH HAS DISMISSED THE TAX APPEAL AND HELD THE AFORESAID ISSUED AGAINS T THE REVENUE. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND THE BINDING DECISION OF THIS COURT IN TAX APPEAL NO. 786 OF 2012 AND AS THE ISSUE/QUESTION PROPOSED IS DIRECTLY COVERED BY THE DECISIONS OF TH E BOMBAY HIGH COURT IN CASE OF BLACK & VEATCH CONSULTING (P.) LTD. (SUPRA) AND SCHMETZ INDIA (P.) LTD. (SUPRA), AND EVEN BY THIS COURT IN CASE OF ACE SOFTWARE EXPORTS LTD. (SUPRA), WE SEE NO REASON TO ADMIT THE PRESENT TAX APPEAL AS NO SUBSTANTIAL QUESTION OF LAW ARISES. 12. NOW, SO FAR AS RELIANCE PLACED UPON THE DECISION OF MADRAS HIGH COURT IN CASE OF CHEMPLAST SANMAR LTD. (SUPRA) AND THE KARNATAKA HIGH COURT IN CASE OF HIMATASINGIKE SEIDE LTD. (SUPRA) A RE CONCERNED, IT IS REQUIRED TO BE NOTED THAT AS SUCH THERE IS A BINDIN G DECISION OF THIS COURT IN CASE OF ACE SOFTWARE EXPORTS LTD. (SUPRA). 13. IN VIEW OF THE ABOVE, AND FOR THE REASONS STATED ABOVE, ALL THESE TAX APPEALS FAIL AND ARE ACCORDINGLY DISMISSED. NO COST S. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JURIS DICTIONAL HIGH COURT THAT THE DEDUCTION U/S 10A HAS TO BE ALLOWED BEFORE SET OFF OF UNABSORBED LOSS AND DEPRECIATION OF NON-ELIGIBLE BUSINESS UNIT OF A SSESSEE. WE FIND NO JUSTIFICATION IN SUCH ORDER PASSED BY THE LEARNED P CIT WHO HAS NOT TAKEN INTO ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 8 - CONSIDERATION THIS PARTICULAR ASPECT OF THE MATTER THOUGH THE SAME WAS BROUGHT TO HIS NOTICE BY THE ASSESSEE BY AND UNDER REPLY DA TED 21.03.2016 HENCE RELYING UPON THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE, WE FIND NO JUSTIFICATION IN THE ORDER IMPUGNED BEFO RE US WHICH HAS RE-OPENED THE ISSUE U/S 263 OF THE ACT WHEREAS, WE FIND THAT THE ORDER PASSED BY THE LEARNED AO IS JUST AND PROPER AND IN TERMS OF THE R ATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT. THERE IS NOTHING ERRONEO US FOUND IN THE ORDER OF THE LEARNED AO, NEITHER IT IS PREJUDICIAL TO THE INSTAN T OF THE REVENUE. NONE OF THE CONDITIONS IS BEING FULFILLED BY THE ORDER PASSED B Y THE LEARNED PCIT IN ORDER TO INVOKE THE PROVISION OF SECTION 263 OF THE ACT I N ORDER TO REOPEN THE ASSESSMENT OF THE APPELLANT COMPANY. HENCE, THE ORD ER IMPUGNED IS BEING DEVOID OF ANY MERIT AND THUS QUASHED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 04 / 0 9 /201 9 SD/- SD/- ( PRAMOD KUMAR ) ( M S. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 04/09/2019 PRITI YADAV, SR.PS ITA NO.1356/AHD/2016 ELITECORE TECHNOLOGIES PVT. LTD. VS. PCIT ASSESSMENT YEAR 2009-10 - 9 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE PCIT-2, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. !' #$ / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , !' / ITAT, AHMEDABAD 1. DATE OF DICTATION 04.09.2019 (DICTATION PAGES 4) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.09.2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER