Omega Healthcare Management Services Private Limited, Bangalore V. DCIT, Bangalore

ITA 1502/BANG/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8593 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMALADHAR HEARD ON P
• Assessee Lawyers: K P SRINIVAS
• Section: 10

Judgement Text

ITA.1502/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALURU BENCH 'A', BANGALURU BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.1502/BANG/2015 (ASSESSMENT YEAR : 2007-08) OMEGA HEALTHCARE MANAGEMENT SERVICES P. LTD, NO.33, NAL, WIND TUNNEL ROAD, MURUGESHPALYA, BENGALURU 560 017 .. APPELLANT PAN : AADCM7259F V. DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE -12(2), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. K. P. SRINIVAS, CA REVENUE BY : SHRI. KAMALADHAR, STANDING COUNSEL HEARD ON : 15.11.2016 PRONOUNCED ON : 06.02.2017 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT (A) 5, BENGALURU, DT.06.10.2015, FOR THE ASSESSMENT YEA R 2007-08. 02. THE FACTS IN BRIEF RELEVANT TO THIS APPEAL ARE TH AT OMEGA HEALTHCARE MANAGEMENT SERVICES P. LTD , THE ASSESSE E, IS ENGAGED IN THE BUSINESS OF RENDERING IT ENABLED SERVICES TO THE HE ALTHCARE INDUSTRY FROM THE SOFTWARE TECHNOLOGY PARK UNITS SET UP IN B ENGALURU AND ITA.1502/BANG/2015 PAGE - 2 CHENNAI AS SEPARATE UNDERTAKINGS ON DIFFERENT DATES . IT FILED ITS RETURN FOR THIS ASSESSMENT YEAR ON 2.11.2007 DECLARING A TOTAL LOSS OF RS. 43,32,990/- AND BOOK PROFITS UNDER SECTION 1I5JB ( MAT) AT RS. 28,786/-.THE A O FOUND THAT THE ASSESSEE EARNED AN INCOME OF RS.4,80,82,639/- FROM BENGALURU UNIT, A LOSS OF RS. 53,81,511/- IN CHENNAI UNIT AND CLAIMED DEDUCTIONS U/S 10 A ON BOT H UNITS . THE ASSESSEE HAS NOT SET OFF THE LOSS PERTAINING TO CHE NNAI UNIT FROM THE PROFIT OF BENGALURU UNIT ON THE PLEA THAT EACH OF ITS UNIT IS SEPARATE, INDEPENDENTLY REGISTERED UNDER STPI UNITS AND THERE FORE THE COMPANY HAS NOT ADJUSTED THE INTER-UNIT LOSSES. THE AO DID NOT ACCEPT SUCH PLEA, HELD THAT ITS INCOME HAS TO BE ASSESSED AS A SEPARATE ENTITY IRRESPECTIVE NUMBER OF UNITS, ACCORDINGLY ADJUSTED THE LOSS OF CHENNAI UNIT AGAINST THE PROFIT OF BENGALURU UNIT AND RESTR ICTED THE DEDUCTION UNDER SECTION 10A . CONSEQUENTLY, THE AO HAS DENIED THE CARRY FORWARD OF LOSS OF RS 43,32,990/- RELATING TO CHENN AI STP UNDERTAKING. 03. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) 5, BENGALURU. THE CIT (A), AFTER CONSIDERING THE RULING OF THE HONBLE SUPREME COURT IN THE CASE OF HIMATASINGIKE SEIDE V CIT (286 ITR 255), THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF YOKOGAVA INDIA LTD 341 ITR 385 ETC, DISTINGUISHED , INTER ALIA THAT THE ITA.1502/BANG/2015 PAGE - 3 PURPOSE, THE ENACTMENT, THE INTERPRETATION, THE APP LICABILITY AND CONSTITUTIONAL VALIDITY OF ANY PROVISIONS OF THE IN COME TAX ACT HAS TO BE EXAMINED AND LOOKED INTO. THE PRINCIPLE LAID DOWN I N THE DECISION IN 341 ITR 385 IS THAT THE LOSSES OF THE NON STPI UNIT SHOUL D NOT BE SET OFF AGAINST THE PROFITS OF THE STPI UNIT AND VICE VERSA . WHEREAS IN THE APPELLANT'S CASE SINCE BOTH THE UNITS ARE STPI AND ARE ELIGIBLE FOR DEDUCTION U/S 10A . THE LOSSES OF ONE ELIGIBLE UNIT CAN BE SET OFF AGAINST THE PROFITS OF THE OTHER ELIGIBLE UNIT TO ARRIVE AT THE GROSS TOTAL INCOME S INCE BOTH UNITS ARE STANDING ON THE SAME FOOTING UNDER THE ONE INDUSTRI AL UNDERTAKING. FURTHER DURING THE APPELLATE PROCEEDINGS THE APPELLANT COUL D NOT DEMONSTRATE THAT SEPARATE BOOKS OF ACCOUNT AND SEPARATE PROFIT AND L OSS ACCOUNTS WERE PREPARED FOR BOTH THE UNITS INDEPENDENTLY. AND THER EFORE ONE CAN DRAW THE INFERENCE THAT BOTH THE UNITS ARE ONE AND THE SAME UNDER THE ONE INDUSTRIAL UNDERTAKING AND THE LOSSES OF ONE UNIT C AN BE SET OFF AGAINST THE PROFITS OF THE OTHER UNIT BEFORE ARRIVING THE E LIGIBLE PROFITS FOR DEDUCTION U/S 10A .EVEN THOUGH, THE A O HAS NOT DISTINGUISHED ON THE FACTS OF THIS CASE WITH THAT OF THE YOKOGAWA INDIA LTD , THE CIT (A) CONFIRMED THE VIEW TAKEN BY THE A O. THUS, THE CIT (A) HAS DISMISSED T HIS ISSUE. 04. AGGRIEVED BY THE CIT (A) ORDER, THE ASSESSEE FI LED THIS APPEAL WITH FOLLOWING GROUNDS: ITA.1502/BANG/2015 PAGE - 4 05. THE AR SUBMITTED THE SAME PLEA TAKEN BEFORE THE CIT(A) AND THE CASE LAWS. WE HEARD THE RIVAL SUBMISSIONS. WHIL E THERE IS NO DISPUTE ON THE LEGAL SETTINGS, SINCE THE CIT (A) HA S RECORDED A FINDING THAT DURING THE APPELLATE PROCEEDINGS THE APPELLA NT COULD NOT DEMONSTRATE THAT SEPARATE BOOKS OF ACCOUNT AND SEPARATE PROFIT AND LOSS ACCOUNTS WERE PREPARED FOR BOTH THE UNITS INDEPENDENTLY. DEDUCTION U/S 10A. IN OUR CONSIDERED VIEW, THIS ASPECT REQUI RES EXAMINATION AND VERIFICATION AND HENCE THIS ISSUE IS REMITTED BACK TO THE AO FOR RE- EXAMINATION AND RE-ADJUDICATION. THE AO SHALL FURNI SH DUE OPPORTUNITY TO THE ASSESSEE AND DECIDE THE MATTER IN ACCORDANCE WI TH LAW. THE APPEAL GROUNDS ARE TREATED AS ALLOWED FOR STATISTICAL PURP OSES. ITA.1502/BANG/2015 PAGE - 5 06. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DAY OF FEBRUARY, 2017. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (S. JA YARAMAN) JUDICIAL MEMBER ACCOU NTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR