Deputy Commissioner of Income-tax, V. Great Software Laboratory Pvt. Ltd., Pune

ITA 1546/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5838 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-11-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 15-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY DHOKE

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO.1546/PUN/2016 / ASSESSMENT YEAR : 2011-12 DY.COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), PUNE. . / APPELLANT V/S GREAT SOFTWARE LABORATORY PVT. LTD., 6 TH FLOOR, AMAR ARMA GENESIS, BANER ROAD, BANER, PUNE 411 045. PAN : AABCG9652J. . / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR. REVENUE BY : SHRI AJAY DHOKE. / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) PUNE 1 DT.28.04.20 16 FOR ASSESSMENT YEAR 2011-12. 2. THE APPEAL HAS BEEN FILED WITH THE DELAY OF 3 DAYS. TH E LD.D.R. MADE ORAL REQUEST FOR CONDONING THE DELAY. THE DELAY OF 3 DAYS IN FILING THE APPEAL IS CONDONED AND THE APPEAL IS TAKEN UP FOR HEARING ON MERITS. / DATE OF HEARING : 06.11.2018 / DATE OF PRONOUNCEMENT: 30.01.2019. 2 ITA NO.1546/PUN/2016 3. THE REVENUE IN APPEAL HAS ASSAILED THE ORDER OF CIT(A) ON FOLLOWING GROUNDS : 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (AP PEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) GRO SSLY ERRED IN DELETING THE ADDITION MODE BY THE ASSESSING OFFICER U/S 10A OF THE I.T. ACT OF RS.2,69,76,031/- INSTEAD OF CONFIRMING THE SAID ADDITION AS THE SAME IS NOT ALLOWABLE TO THE ASSESSEE. 3. THE LD. CIT(A) ERRED IN ALLOWING THE GROUND IN FAVOUR OF ASSESSEE IGNORING THE CBDT'S CIRCULAR NO. 07/DV/2013 ISSUED ON 16/07/2013, WHEN THE SAME IS APPLICABLE IN THE CASE OF ASSESSEE AND BINDING ON THE REVENUE AUTHORITIES. 4. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOM E-TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICE BE RESTORED. 5. THE APPELLANT CRAVES TO ADD, AMEND, ALTER OR DELETE ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PR OCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 4. SHRI C.H. NANIWADEKAR APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED AT THE OUTSET THAT THE SOLITARY ISSUE RAISED IN THE APPEAL BY THE DEPARTMENT IS AGAINST DELETING THE ADDITION MADE U/S 10A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE A CT). THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUS INESS OF SOFTWARE DEVELOPMENT SERVICES. THE ASSESSEE HAS TWO UN DERTAKINGS. ONE UNDERTAKING IS 100% EXPORT ORIENTED UNIT AND IS REG ISTERED WITH SOFTWARE TECHNOLOGY PARKS OF INDIA. IN RESPECT OF ELIGIBLE UNDERTAKING, THE ASSESSEE CLAIMED DEDUCTION OF RS.2,69,76,031 /- U/S 10A OF THE ACT. THE ASSESSEE HAD CLAIMED DEDUCTION BEFO RE SETTING OFF BROUGHT FORWARD LOSSES OF ELIGIBLE UNDERTAKING, AS PER THE LA W LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. BLACK & VEATH CONSULTING (P) LTD., REPORTED AS 348 ITR 72. THE AO REJECTED 3 ITA NO.1546/PUN/2016 ASSESSEES CLAIM OF DEDUCTION. IN FIRST APPELLATE PROCEEDI NGS, THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE BY FOLLOWING THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE AFORESAID CASE. THE LD.A. R. FURTHER SUBMITTED THAT THE ISSUE IS NOW SQUARELY COVERED BY T HE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD., REPORTED AS 391 ITR 274. 5. ON THE OTHER HAND, SHRI AJAY DHOKE REPRESENTING TH E DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. THE LD.D.R. IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE CBDT C IRCULAR NO.07 DT.16.07.2013. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND PERUSED THE ORDERS OF AUTHORITIES BELOW. T HE ONLY ISSUE ARISING IN THE APPEAL BY THE REVENUE IS AGAINST ALLOW ING OF DEDUCTION U/S 10A OF THE ACT BEFORE SETTING OFF OF BROUG HT FORWARD LOSSES OF ELIGIBLE UNIT. IT IS NOT IN DISPUTE THAT THE BROUG HT FORWARD LOSSES SET OFF BY THE ASSESSEE ARE OF ELIGIBLE UNIT. IT IS N O MORE RES INTEGRA THAT THE ASSESSEE CAN CLAIM DEDUCTION U/S 10A O F THE ACT BEFORE CLAIMING SETTING OFF OF BROUGHT FORWARD LOSSES. THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF BLACK & VEATH CONSULTIN G PVT. LTD., (SUPRA) AND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD., REPORTED AS 341 ITR 385 HAS HELD THAT THE DEDUCTION U/S 10A OF THE ACT CAN BE CLAIMED BEFORE SETTIN G OFF OF BROUGHT FORWARD LOSSES OF NON-ELIGIBLE UNITS. THE HONBLE AP EX COURT IN THE CASE OF CIT & ANOTHER VS. YOKOGAWA INDIA LTD., (SU PRA) HAS UPHELD THE DECISION OF HONBLE KARNATAKA HIGH COURT. THE HONBLE 4 ITA NO.1546/PUN/2016 SUPREME COURT OF INDIA WHILE RENDERING THE DECISION HAS CO NSIDERED VARIOUS CBDT CIRCULARS INCLUDING CIRCULAR NO.7 DATED 16.07.201 3 AND HAS HELD AS UNDER : 16. FROM A READING OF THE RELEVANT PROVISIONS OF SECTIO N 10A IT IS MORE THAN CLEAR TO US THAT THE DEDUCTIONS CONTEMPLATED T HEREIN I S QUA THE E L IGIBLE UNDERTAKING OF AN ASSESSEE STANDING ON I TS OWN AND WITHOUT REFERENCE TO THE OTHER ELIGIBLE OR NON-ELIGIBLE UNI TS OR UNDERTAK I NGS OF THE ASSESSEE. THE BENEFIT OF DEDUCTION IS GIVEN BY THE ACT T O THE INDIVIDUAL UNDERTAKING AND RESULTANTLY FLOWS TO THE ASSESSEE. THIS IS ALSO MORE THAN CLEAR FROM THE CONTEMPORANEOUS CIRCU LAR NO . 794 DAT E D 9.8 . 2000 WHICH STATES IN PARAGRAPH 15.6 THAT, 'THE EXPORT TURNOVER AND THE TOTAL TURNOVER FOR THE PURPOSES OF SECTIONS 10A AND 10A SHALL BE OF THE UNDERTAKING LOCATED I N SPECIFIED ZONES OR 100% EXPORT ORIENTED UNDERTAKING S, AS THE CASE MAY BE, AND THIS SHALL NOT HAVE ANY MATERIAL R ELATIONSHIP WITH THE OTHER BUSINESS OF THE ASSESSEE OUTSIDE THE SE ZONES OR UNITS FOR THE PURPOSES OF THIS PROVISION. ' 17. IF THE SPECIFIC PROVISIONS OF THE ACT PROVIDE [F I RST PROVISO TO SECTIONS 10A(1); 10A (1A) AND 10A (4)] THAT THE UNIT THAT IS CONTEMPLATED FOR GRANT OF BENEFIT OF DEDUCT I ON I S THE EL I GI B LE UNDERTAKING AND THAT IS ALSO HOW THE CONTEMPORANEOU S C I RCULAR OF TH E DEPARTMENT (NO . 794 DATED 09 . 08.2000) UNDERSTOOD THE SITUATION , I T I S ONLY LOGICAL AND NATURAL THAT THE STAGE OF DEDUCTIO N OF THE PROFITS AND GAINS OF THE BUSINESS OF AN ELIGIBLE UNDERTAKING HA S TO BE MADE INDEPENDENTLY AND, THEREFORE, IMMEDIATELY AFTER THE STAGE OF DETERMINATION OF ITS PROFITS AND GAINS. AT THAT STA GE THE AGGREGATE OF THE I NCOMES UNDER OTHER HEADS AND THE PROVISIONS FOR SET OFF AND CARRY FORWARD CONTAINED IN SECTIONS 70, 72 AND 74 OF THE ACT WOULD BE PREMATURE FOR APPLICATION . THE DEDUCTIONS UNDER SECTION 10A THEREFORE WOULD BE PR I OR TO THE COMMENCEMENT OF THE EXERCISE TO BE UNDERT AK E N UNDER CHAPTER VI OF THE ACT FOR ARRIVING AT THE TOT AL I NCOME OF TH E ASSESSEE FROM THE GROSS TOTAL INCOME. THE SOMEWHAT DISCORDANT U SE OF THE EXPRESSION 'TOTAL INCOME OF THE ASSESSEE' IN SE CTION 10A HAS A L READY BEEN DEALT WITH EARLIER AND IN THE OVERALL SC ENARIO UNFOLDED BY THE PROVISIONS OF SECTION 10A THE AFORESAID DISCORD CAN BE RECONCILED BY UNDERSTANDING THE EXPRESSION TOTAL INCOME OF TH E ASSESSEE IN SECTION 10A AS TOTAL INCOME OF THE UNDERTAKING. THUS, IN VIEW OF SETTLED POSITION, WE FIND NO INFIRMITY IN THE ORD ER OF CIT(A) IN ALLOWING THE BENEFIT OF DEDUCTION U/S 10A OF THE ACT TO THE 5 ITA NO.1546/PUN/2016 ASSESSEE. THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 30 TH DAY OF JANUARY, 2019. SD/- SD/- (R.S. SYAL) (VIKAS A WASTHY ) VICE PRESIDENT JUDICIAL MEMB ER PUNE; DATED : 30 TH JANUARY, 2019. YAMINI !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, PUNE. PR. CIT-1, PUNE. '#$ %%&',)&', / DR, ITAT, PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // Y // /01%2&3 / SR. PRIVATE SECRETARY )&', / ITAT, PUNE.