DCIT, Bangalore V. M/s SPA Computers Pvt. Ltd., Bangalore

ITA 1570/BANG/2014

• Counselvise Citation: 157021114 RSA 2014
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRASHANTH G
• Keywords: Depreciation; Question of law; Unabsorbed depreciation

Judgement Text

ITA.1570/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.1570/BANG/2014 (ASSESSMENT YEAR : 2010-11) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 6(1)(2), BANGALORE ..APPELLANT V. M/S. SPA COMPUTERS PVT LTD, A-4, NGEF ANCILLIARY, INDUSTRIAL ESTATE, MAHADEVAPURA, BANGALORE 560 048 ..RESPONDENT PAN : AACCS5025L ASSESSEE BY : SHRI. PRASHANTH G, CA REVENUE BY : SMT. NANDINI DAS, JCIT HEARD ON : 04.08.2015 PRONOUNCED ON : 07 .08.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY REVENUE, DIRECTED AGAINST THE ORDER OF CIT (A)-III, BENGALURU, DATED.10.09.2014, FOR THE ASSESSMENT YEA R, IT HAS TAKEN ALTOGETHER SEVEN GROUNDS OF WHICH, GROUNDS 1, 6 AND 7 ARE GENE RAL IN NATURE, NEEDING NO ADJUDICATION. ITA.1570/BANG/2014 PAGE - 2 02. VIDE ITS GROUNDS 2 AND 3, GRIEVANCE RAISED BY T HE REVENUE IS THAT DEDUCTION CLAIMED BY ASSESSEE U/S.10A OF THE INCOME -TAX ACT, 1961 (THE ACT IN SHORT), WAS ALLOWED BY CIT (A) WITHOUT SETTING OF LOSSES OF OTHER STPI UNITS. 03. AS PER THE LD. DR, SECTION 10A OF THE ACT WAS A DEDUCTION AND NOT EXEMPTION FROM TOTAL INCOME. PER CONTRA LD. AR SUP PORTED THE ORDER OF THE CIT (A). 04. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT CIT (A) HAD FOLLOWED THE JUDGMENT OF HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT V. YOKOGAWA INDIA LTD [341 ITR 385] . CIT (A) HAD REPRODUCED THE RELEVANT PART OF THE ABOVE JUDGMENT, WHICH READ AS UNDER : AS THE INCOME OF THE SECTION10A UNIT HAS TO BE EXCL UDED AT SOURCE ITSELF BEFORE ARRIVING AT THE GROSS TOTAL INCOME, THE LOSS OF THE NON-SECTION 10A UNIT CANNOT BE SET OFF AGAINST THE INCOME OF TH E SECTION 10A UNIT UNDER SECTION 72. THE LOSS INCURRED BY THE ASSESSEE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' HAS T O BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR P ROFESSION CARRIED ON BY SUCH ASSESSEE. THEREFORE, AS THE PROFITS AND GAINS UNDER SECTION 10A IS NOT BE INCLUDED IN THE INCOME OF THE ASSESSEE AT AL L, THE QUESTION OF SETTING OFF THE LOSS OF THE ASSESSEE OF ANY PROFITS AND GAINS OF BUSINESS AGAINST SUCH PROFITS AND GAINS OF THE UNDERTAKING W OULD NOT ARISE. SIMILARLY, AS PER SECTION 72(2), UNABSORBED BUSINES S LOSS IS TO BE FIRST SET OFF AND THEREAFTER UNABSORBED DEPRECIATION TREA TED AS CURRENT YEAR'S DEPRECIATION UNDER SECTION 32(2) IS TO BE SET OFF. AS DEDUCTION UNDER SECTION 10A HAS TO BE EXCLUDED FROM THE TOTAL INCOM E OF THE ASSESSEE THE QUESTION OF UNABSORBED BUSINESS LOSS BEING SET OFF AGAINST SUCH PROFIT AND GAINS OF THE UNDERTAKING WOULD NOT ARISE. IN TH AT VIEW OF THE MATTER, THE APPROACH OF THE ASSESSING AUTHORITY WAS QUITE C ONTRARY TO THE AFORESAID STATUTORY PROVISIONS AND THE APPELLATE CO MMISSIONER AS WELL AS THE TRIBUNAL WERE FULLY JUSTIFIED IN SETTING ASI DE THE SAID ASSESSMENT ORDER AND GRANTING THE BENEFIT OF SECTION 10A TO TH E ASSESSEE HENCE, THE MAIN SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAV OUR OF THE ASSESSEES AND AGAINST THE REVENUE. ITA.1570/BANG/2014 PAGE - 3 05. JUST BECAUSE A SLP HAS BEEN FILED BY THE REVENU E AGAINST THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT W OULD NOT BE A REASON TO FOLLOW THE SAID JUDGMENT . IN OUR OPINION, LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. GROUNDS 2 AND 3 OF THE REVENUE STANDS DISMISSED. 06. VIDE ITS GROUNDS 4 AND 5, REVENUE IS AGGRIEVED THAT CIT (A) DIRECTED PARITY BETWEEN EXPORT TURNOVER AND TOTAL T URNOVER FOR WORKING OUT DEDUCTION U/S.10A OF THE ACT, RELYING ON THE DECISI ON OF THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V. TATA ELXSI LTD, (349 ITR 98). 07. WE FIND FROM THE GROUNDS RAISED BY THE REVENUE THAT THEY HAVE MOVED THE HONBLE APEX COURT AGAINST THE JUDGMENT O F THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V. TATA ELXSI LTD, (349 ITR 98). CIT (A) HAD ONLY DIRECTED DEDUCTION OF THE EXPENDITURE EXCL UDED FROM EXPORT TURNOVER ALSO FROM THE TOTAL TURNOVER WHILE COMPUTI NG DEDUCTION U/S.10A OF THE ACT, FOLLOWING THE JUDGMENT OF THE HONBLE J URISDICTIONAL HIGH COURT (SUPRA). AS ALREADY MENTIONED BY US, FILING OF SLP BEFORE THE HONBLE APEX COURT WOULD NOT BE A REASON NOT TO FOL LOW THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. WE DO NOT F IND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). GROUNDS 4 AND 5 ARE ALSO DISMISSED. ITA.1570/BANG/2014 PAGE - 4 08. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH DAY OF AU GUST, 2015. SD/- SD/- (N. V. VASUDEVAN) (ABRAHAM P GEO RGE) JUDICIAL MEMBER ACCOUNTANT MEMBER