BLACK & VEATCH CONSULTING P. LTD, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 1524/MUM/2010

• Counselvise Citation: 152419914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 05-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: RAJAN VORA MANOJ ANCHALIA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.1524/M/2010 ASSESSMENT YEAR 2006-07 BLACK & VEATCH CONSULTING PRIVATE LTD. THE ITO 10( 3)(1) OFFICE 101, KENSINGTON A WING AAYAKAR BHAVAN HIRANANDANI BUSINESS PARK, MUMBAI HIRANANDANI GARDENS, POWAI MUMBAI 400 076. PAN : AACCB 0522 D APPELLANT RESPONDENT ASSESSEE BY : S/SHRI RAJAN VORA, MANOJ ANCHALIA REVENUE BY : SHRI SUMEET KUMAR O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 11.12.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-0 7. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING ADJUSTM ENT OF BROUGHT FORWARD LOSSES OF 10A UNIT AGAINST THE INCOME OF 10A UNIT B EFORE ALLOWING DEDUCTION UNDER SECTION 10A. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE WHO WAS ENGAGED IN PROVIDING I.T. ENABLED SERVICES WAS HAVI NG A UNIT AT MUMBAI IN SOFTWARE TECHNOLOGY PARK WHICH WAS ENTITLED FOR DED UCTION UNDER SECTION 10A. IN ADDITION TO THE ABOVE 10A UNIT, THE ASSESSEE WAS ALSO HAVING CERTAIN OTHER 2 UNITS NAMELY NON 10A UNITS WHICH WERE NOT ENTITLED FOR DEDUCTION UNDER SECTION 10A. THE ASSESSEE HAD BROUGHT FORWARD LOSSES IN RES PECT OF NON 10A UNITS. IN RESPECT OF THE 10A UNIT WHICH WAS PROFITABLE, THE A SSESSEE FIRST CLAIMED DEDUCTION UNDER SECTION 10A AND AFTER CLAIMING THE DEDUCTION THE BALANCE INCOME OF THE 10A UNIT WAS SET OFF AGAINST THE BROU GHT FORWARD LOSSES OF NON 10A UNIT. AO HOWEVER DID NOT ACCEPT THE CLAIM OF TH E ASSESSEE. THE AO FIRST SET OFF THE BROUGHT FORWARD LOSSES OF THE NON 10A UNIT AGAINST THE PROFIT OF 10A UNIT AND SINCE THE ENTIRE PROFIT HAD BEEN SET OFF AGAINS T THE BROUGHT FORWARD LOSSES NO DEDUCTION WAS ALLOWED UNDER SECTION 10A. IN APPE AL CIT(A) CONFIRMED THE ORDER OF AO AGGRIEVED BY WHICH THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LEARNED AR FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSE E BY THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN CASE OF SCIENTIFIC ATLANTA VS ACIT (129 TTJ 273). THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING THE ADJUSTMENT OF BROUGHT FORWARD LOSSES OF NON 10A UNITS AGAINST THE PROFIT OF 10A UNIT BEFORE ALLOWING DEDUCTION UNDER SECTION 10A. WE FIND THAT THE SAME ISSUE HAS ALREAD Y BEEN CONSIDERED BY THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF SCIENTIFIC ATLANTA VS ACIT (SUPRA) IN WHICH THE TRIBUNAL HELD THAT THE DEDUCTION UNDER SE CTION 10A WAS NOT AN EXEMPTION BUT ONLY A DEDUCTION UNDER CHAPTER III OF THE INCOME-TAX ACT AND THEREFORE THE PROVISIONS OF SECTION 80AB OF CHAPTER VIA WERE NOT APPLICABLE TO SUCH DEDUCTION UNDER SECTION 10A. THE TRIBUNAL ALSO HELD THAT DEDUCTION UNDER SECTION 10A WAS TO BE ALLOWED IN RESPECT OF THE PRO FIT OF THE ELIGIBLE UNIT AND 3 NOT FROM THE GROSS TOTAL INCOME AS ENVISAGED UNDER CHAPTER VI A. THE TRIBUNAL ALSO HELD THAT THE BUSINESS LOSSES OF NON ELIGIBLE UNITS CANNOT BE SET OFF AGAINST THE PROFITS OF THE UNDERTAKING ELIGIBLE FOR DEDUCTI ON UNDER SECTION 10A FOR THE PURPOSE OF DETERMINING THE DEDUCTION ALLOWABLE UNDE R SECTION 10A. THE TRIBUNAL FURTHER HELD THAT DECISION WILL BE APPLICABLE ONLY IN CASE WHERE THERE WAS ONLY ONE ELIGIBLE UNDERTAKING UNDER SECTION 10A. THE CAS E OF THE ASSESSEE IS IDENTICAL AS IN THIS CASE ALSO THERE IS ONLY ONE UN IT FOR DEDUCTION UNDER SECTION 10A AND THERE ARE NON 10A UNITS WHO HAVE BROUGHT FO RWARD LOSSES. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH (SUPRA) WE HOLD THAT DEDUCTION UNDER SECTION 10A IN RESPECT OF THE 10A U NIT HAS TO BE ALLOWED BEFORE SETTING OFF THE BROUGHT FORWARD LOSSES OF NON 10A U NIT. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND ALLOWED THE CLAIM OF THE AS SESSEE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. 6. ORDER WAS PRONOUNCED IN THE OPEN COURT 20.04.201 1. SD/- SD/- ( D. K. AGARWAL ) (RAJEND RA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR J BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK 4