DCIT, Bangalore V. M/s Nous Infosystems Pvt. Ltd., Bangalore

ITA 1369/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8665 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 12-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR AGARWALA JT
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Reassessment proceedings
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1369/BANG/2015 ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5(1)(1), BANGALORE. VS. M/S. NOUS INFOSYSTEMS PVT. LTD., 1 ST MAIN, 1 ST BLOCK, KORAMANGALA, BANGALORE 560 034. PAN: AAACN 4584B APPELLANT RESPONDENT APPELLANT BY : SHRI SUNIL KUMAR AGARWALA, JT. CIT(DR) RESPONDENT BY : SHRI K.R. VASUDEVAN, ADVOCATE DATE OF HEARING : 01.02.2016 DATE OF PRONOUNCEMENT : 05.02.2016 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 14.08.2015 OF THE CIT(APPEALS)-5, BENGALURU FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE G ROUND:- ITA NO.1369/BANG/2015 PAGE 2 OF 5 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN LAW IN DIRECTING THE ASSESSING OFFICER THA T DEDUCTION U/S. 10A IS TO BE ON THE BASIS OF PROFITS OF THE UNDERTA KING ELIGIBLE U/S. 10A AND THE LOSSES PERTAINING TO NON-10A UNDERTAKIN G SHOULD NOT BE REDUCED FROM SUCH PROFITS PRIOR TO THE COMPUTATI ON OF DEDUCTION U/S. 10A, WHILE AS PER THE PROVISIONS OF SECTION 72 OF THE INCOME-TAX ACT, THE BROUGHT FORWARD LOSSES HAVE TO BE ADJUSTED AGAINST THE GROSS TOTAL INCOME OF THE ASSE SSEE BEFORE ARRIVING AT THE TAXABLE INCOME FOR THE YEAR, THEREA FTER THE DEDUCTION U/S. 10A HAS TO BE ALLOWED. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COMPU TER SOFTWARE AND INFORMATION SYSTEMS. THE ASSESSEE CLAIMED DEDUCTI ON U/S. 10A OF THE INCOME-TAX ACT, 1961 [THE ACT]. THE ASSESSING OF FICER IN THE REASSESSMENT PROCEEDINGS U/S. 147 COMPUTED THE DEDU CTION U/S. 10A AFTER REDUCING THE STPI LOSSES OF THE PRIOR YEARS AND THE REFORE REDUCED THE DEDUCTION U/S. 10A AND COMPUTED THE SAME ON THE NET AMOUNT. 4. AGGRIEVED BY THE ACTION OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). THE CIT(A) HAS ALLOWED TH E CLAIM OF THE ASSESSEE HOLDING THAT DEDUCTION U/.S 10A HAS TO BE EXCLUDED FROM THE TOTAL INCOME OF THE ASSESSEE, WITHOUT SETTING OFF CARRIED FORWARD LOSSES OF EARLIER YEARS. 5. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR A ND CONSIDERED THE RELEVANT MATERIAL ON RECORD. 6. THE LD. DR HAS SUBMITTED THAT THE ISSUE IS COVER ED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT V. HIMATASINGIKE ITA NO.1369/BANG/2015 PAGE 3 OF 5 SEIDE, 286 ITR 255 (KAR) . HE HAS FURTHER SUBMITTED THAT THE SLP FILED BY THE ASSESSEE IN THE CASE OF HIMATASINGIKE SEIDE (SUPRA) HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT, THEREFORE T HE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT HAS ATTAINED FINA LITY. 7. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HA S SUBMITTED THAT THE ISSUE IS COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT JUDGMENT IN CIT V. YOKOGAWA INDIA LTD., 341 ITR 385 (KARN) AS WELL AS THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FOR THE AY 2004- 05 VIDE ORDER DATED 6.4.2015. 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE ISSUE PRIOR TO THE AMEN DED PROVISIONS OF SECTION 10A/10B WAS DECIDED IN FAVOUR OF THE REVENUE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. HIMATASINGIKE SEIDE (SUPRA) . HOWEVER, THERE IS A SUBSTANTIAL CHANGE IN THE PROVISIONS OF SECTION 10A/10B VIDE AMENDMENT BY FINANCE ACT, 2000 W.E.F. 1.4.2001. TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF YOKOGAWA INDIA LTD. (SUPRA) HAS CONSIDERED THE PROVISIONS OF SECTION 10A/10B AS AME NDED BY THE FINANCE ACT, 2000 & 2001 AND AFTER NOTING THE CHANGE IN THE PROVISIONS, THE HONBLE JURISDICTIONAL HIGH COURT HAS DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE. THUS, PRIOR TO THE AMENDMENT, THIS PROVISION WAS CO NSIDERED AS EXEMPTION; WHEREAS POST-AMENDMENT, THIS PROVISION IS ONLY A DE DUCTION. WE FURTHER NOTE THAT FOR THE AY 2004-05, THE HONBLE JURISDICT IONAL HIGH COURT IN ITA NO.1369/BANG/2015 PAGE 4 OF 5 ASSESSEES OWN CASE IN ITA NO.189/2009 VIDE ORDER D ATED 6.4.2015 HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN PAR A 4 AS UNDER:- 4. IN SUCH VIEW OF THE MATTER, WE ARE OF THE VIEW THAT NO SUBSTANTIAL QUESTIONS OF LAW REMAINS TO BE ANSWERED BY THIS COURT. SRI K.V. ARAVIND, LEARNED COUNSEL FOR THE A PPELLANT STATES THAT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS TATA ELXSI LTD (SUPRA) , APPEALS HAVE BEEN FILED BEFORE THE APEX COURT WHICH HAVE BEEN ADMITTED ON THE QUESTION S OF LAW. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN ASSESSEES OWN CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF CIT(APPEALS). 10. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF FEBRUARY, 2016. SD/- SD/- ( INTURI RAMA RAO ) (VIJAY PAL R AO ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 5 TH FEBRUARY, 2016. /D S/ ITA NO.1369/BANG/2015 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.