DCIT, CHENNAI V. Changepond Technologies P. Ltd., CHENNAI

ITA 1901/CHNY/2015

• Counselvise Citation: 190121714 RSA 2015
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 26-08-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: H P ADAMCHAND KINCHA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1901/MDS/2015 / ASSESSMENT YEAR : 2010-11 THE DY. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE I(2) CHENNAI VS. M/S CHANGEPOND TECHNOLOGIES P. LTD PLOT H-2, 2 ND MAIN ROAD SIPCOT IT PARK, OMR SIRUSERI CHENNAI 603 103 [PAN AABCC 3252 G ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI A.V SREEKANTH, JCIT /RESPONDENT BY : SHRI H. P ADAMCHAND KINCHA, CA / DATE OF HEARING : 29 - 10 - 2015 ! / DATE OF PRONOUNCEMENT : 13 - 11 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, CHENNA I, DATED 28.5.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REG ARD TO DEDUCTION CLAIMED BY THE ASSESSEE U/S 10A OF THE ACT IN RESPECT OF UNIT AT SIRUSERI. ITA NO. 1901/15 :- 2 -: 3. WE HEARD SHRI A.V. SREEKANTH, LD. DEPARTMENTAL REPRESENTATIVE AND SHRI H. PADAMCHAND KINCHA, LD. R EPRESENTATIVE FOR THE ASSESSEE. 4. IT IS BROUGHT TO THE NOTICE OF THE BENCH BY THE LD. DR AND THE LD. REPRESENTATIVE THAT AN IDENTICAL ISSUE IN RESPE CT OF THE SAME UNIT AT SIRUSERI WAS CONSIDERED BY THIS TRIBUNAL IN ASSESS EES OWN CASE FOR ASSESSMENT YEAR 2009-10 IN I.T.A.NO.1408/MDS/2013 D ATED 20.11.2013. THIS TRIBUNAL FOUND THAT THE UNIT AT S IRUSERI IS ENTITLED FOR DEDUCTION U/S 10A OF THE ACT. IT IS ALSO CLARIFIE D BY THE LD. DR AND THE LD. REPRESENTATIVE FOR ASSESSEE THAT THE FACTS ARE IDENTICAL AND SIMILAR TO THAT OF ASSESSMENT YEAR 2009-10. WE HAVE ALSO C AREFULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL IN ASSESSEES O WN CASE FOR ASSESSMENT YEAR 2009-10 IN I.T.A.NO. 1408/MDS/2013. IN FACT, THIS TRIBUNAL HAS OBSERVED AS FOLLOWS: 16. REGARDING THE OBJECTION OF THE ASSESSING OFFI CER ON TRANSFERRING CONTRACTS AND CLIENTELE FROM ADYAR UNI T TO SIRUSERI UNIT, WE AGREE WITH THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE-COMPANY IS RUNNING BOTH TH E UNITS, NAMELY, ADYAR UNIT AND SIRUSERI UNIT. SO ALSO THE ASSESSEE -COMPANY WAS CONTEMPLATING THE CLOSING DOWN OF ADYAR UNIT. THER EFORE, NATURALLY, THE ASSESSEE-COMPANY, FOR THE PURPOSE OF RETAINING THE CONTRACTS AND CLIENTELE, WAS ASSIGNING THEM TO ITS OTHER WORK ING UNIT. THIS IS NOTHING BUT A PRUDENT BUSINESS DECISION. THIS BUSI NESS DECISION DOES NOT DETRIMENT THE INDEPENDENT STATUS OF SIRUSE RI UNIT. 17. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE F IND THAT THE SIRUSERI UNIT SET UP BY THE ASSESSEE IS AN INDE PENDENT STPI UNIT ELIGIBLE FOR CLAIMING DEDUCTION AVAILABLE UNDE R SECTION 10A OF ITA NO. 1901/15 :- 3 -: THE INCOME-TAX ACT, 1961. THEREFORE, THE ASSESSING OF FICER WAS NOT JUSTIFIED IN DENYING THE EXEMPTION UNDER SECTION 10A IN RESPECT OF THE INCOME GENERATED FROM SIRUSERI UNIT. WE UPH OLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSU E. THE RELEVANT GROUNDS ARE ACCORDINGLY DISMISSED. 18. FROM ANOTHER POINT OF VIEW, THE WHOLE CONTROVERS Y BUILT UP BY THE REVENUE IS JUST TECHNICAL. IT SHOULD BE SEE N THAT ASSESSEE IS HAVING ONLY TWO STPI UNITS ONE AT ADYAR AND THE O THER AT SIRUSERI. BOTH THE UNITS ARE INDEPENDENTLY REGISTERED AS A SEP ARATE STPI UNIT. BOTH THE UNITS ARE CARRYING ON SOFTWARE ACTIV ITIES AND GENERATING INCOME FROM EXPORTS. THE ASSESSEE IS NOT HAVING ANY OTHER UNIT, WHICH IS NOT ENTITLED FOR THE BENEFITS CONFERRED TO THE STPI UNITS. IF SIRUSERI UNIT IS NOT TREATED AS AN INDEPENDENT, NEW UNIT, THE SAID UNIT SHOULD BE TREATED AS AN EXTENSIO N OR PART OF ADYAR UNIT. SIRUSERI UNIT HAS WORKED DURING THE PR EVIOUS YEAR AND MADE EXPORTS OF SOFTWARE. THEREFORE, WE CANNOT IGNO RE THOSE OPERATIONS CARRIED AT SIRUSERI UNIT. IF THE SIRUSE RI UNIT IS NOT TREATED AS INDEPENDENT, ACCORDING TO THE ARGUMENT O F THE ASSESSING OFFICER ITSELF, SIRUSERI UNIT BECOMES PAR T OF ADYAR UNIT. IF SO, THE ENTIRE TURNOVER OF EXPORT GENERATED BY TH E ASSESSEE SHOULD BE ACCOUNTED IN THE HANDS OF ADYAR UNIT. TH E ENTIRE INCOME ARISING OUT OF SUCH EXPORTS IS ELIGIBLE FOR DEDUCTIO N UNDER SECTION 10A IN THE HANDS OF ADYAR UNIT ITSELF FOR THE REASON THAT ADYAR UNIT AS WELL AS SIRUSERI UNIT ARE REGISTERED AS STP I UNITS. THEREFORE, EVEN IF WE IGNORE THE SEPARATE IDENTITY OF SIRUSERI UNIT, WE HAVE TO SAY THAT THE ADYAR UNIT OF THE ASSESSEE REMAINS INTACT. THE ENTIRE TURNOVER AND INCOME OF THE ASSESSEE FROM SOFTWARE EXPORT HAVE TO BE ATTRIBUTED IN THE HANDS OF THE ADY AR UNIT. THE INCOME IS STILL ENTITLED FOR DEDUCTION UNDER SECTIO N 10A. THEREFORE, THESE CONTROVERSIES ARE JUST ACADEMIC. 5. IN VIEW OF THE ABOVE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDER OF THE CIT(A). BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 AND FOR THE REASONS STA TED THEREIN, THE ORDER OF THE CIT(A) IS CONFIRMED. ITA NO. 1901/15 :- 4 -: 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 13 TH NOVEMBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF