Canam International Pvt. Ltd., New Delhi V. ACIT (OSD), New Delhi

ITA 2034/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82028 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER KAUR
• Keywords: Business income; Depreciation; Question of law; Difference of opinion; Capital receipt; Unabsorbed depreciation
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO.1885/DEL /2010 ASSESSMENT YEAR : 200 5 - 200 6 CANAM INTERNATIONAL PVT. LTD. 23, PRAKASH APARTMENT, 5, ANSARI ROAD, DARYA G ANJ NEW DELHI. (PAN AABCC 5336 K) VS. ACIT, CIRCLE 3(1), NEW DELHI. ITA NO.2034/DEL /2012 ASSESSMENT YEAR : 2007 - 2008 CANAM INTERNATIONAL PVT. LTD. VS. ACIT (OSD) 23, PRAKASH APARTMENT, CIT - 1 5, ANSARI ROAD, DARYAGANJ NEW DELHI NEW DELHI. (PAN AABCC 5336 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANDEEP SAPRA, ADVOCATE RESPONDENT BY: SMT. PARMINDER KAUR, SR. D.R. ORDER PER SHRI GEORGE GEORGE K, JM : 1. THESE ARE APPEALS BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT (A) DATED 19.02.2010 AND 30.03.2012 RESPECTIVELY. THE RELEVANT ASSESSMENT YEARS ARE 2005 - 06 AND 2007 - 08. 2. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS AND THEY PERTAIN TO TH E SAME ASSESSEE, THESE WERE HEARD AND DISPOSED OFF IN THIS CONSOLIDATED ORDER. 3. IN ITA NO.1885/10 FOR THE AY 2005 - 06 , THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS: WHETHER THE CIT (A) WAS JUSTIFIED IN CONFIRMING THE AO S ORDER WHEREBY 2 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 DEDUCTI ON U/S 10A OF THE ACT WAS REDUCED ON ACCOUNT OF ADJUSTMENT OF UNABSORBED BUSINESS LOSS AND DEPRECIATION? 4. THE BRIEF FACT IN RELATION TO THIS ISSUE IS AS FOLLOWS: THE ASSESSEE FOR THE AY UNDER DISPUTE CLAIMED DEDUCTION U/S 10A OF THE ACT AMOUNTING T O RS.93,38,312/ - . IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT, THE CLAIM OF DEDUCTION WAS REDUCED TO RS.81,55,777/ - . THE CLAIM OF DEDUCTION U/S 10A OF THE ACT WAS REDUCED ON ACCOUNT OF ADJUSTMENT OF UNABSORBED BUSINESS LOSS AND DEPRECIATION OF RS.16 ,49,809/ - [A.Y. 2004 - 05]. 5. ON FURTHER APPEAL, THE CIT (A) DECIDED THE ISSUE AGAINST THE ASSESSEE FOLLOWING THE FINDINGS OFTHE DELHI TRIBUNAL IN THE CASE OF GLOBAL VANTEDGEPVT. LTD V. DCIT (2010) 1 TAXMANN. COM 12 [(2010) 001 ITR (TRIB) 326 (DELHI)] . 6. THE ASSESSEE, BEING AGGRIEVED, IS IN APPEAL BEFORE US. THE LEARNED AR SUBMITTED THAT THE ISSUE IN QUESTION IS COVERED BY THE JUDICIAL PRONOUNCEMENTS AS LISTED OUT BELOW: (I) CIT V. TEI TECHNOLOGIES PVT. LTD. 361 ITR 36 (DEL); (II) CIT V. BLACK AND VEATCH CONSULTING PVT. LTD 348 ITR 72 (BOM); (III)CIT V. YOKOGAWA INDIA LTD 341 ITR 385 (KAR); (IV) CIT V. TATA ELXSI LTD 349 ITR 98 (KAR); (V) CIT V. ACE SOFTWARE EXPORTS LTD. IN TAX APPEAL NO.831 OF 2012 DT.1.3.2013; (VI) VALUEPROCESS TECHNOLOGIES (I) (P) LTD V. ITO 141 ITD 447 (MUM); (VII) ENERCON WIND FARMS (KRISHNA) LTD V. ACIT 21 SOT 29 (MUM); & (VIII)KPIT CUMMINS INSOSYSTEMS (BANGALORE) (P) LTD V. ACIT 120 TTJ (BANG) 956 7. THE LEARNED DR WAS UNABLE TO CONTROVERT THE SUBMISSIONS OF THE ASSESSEE S COUNSEL .. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RELEVANT MATERIALS ON RECORD. WE HAVE, WITH DUE REGARDS, PERUSED VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE WHICH ARE AS UNDER: 3 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 (I) THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TEI TECHNOLOGIES PVT . LTD. (SUPRA) HAD HELD AS UNDER: WE HAVE ALREADY SEEN THAT SECTION 10A, AS IT PRESENTLY STANDS, THOUGH WORDED AS DEDUCTION PROVISION , IS ESSENTIALLY AND IN SUBSTANCE AN EXEMPTION PROVISION. WE HAVE ALSO HELD THAT THE IMPLICATION OF AN EXEMPTION PROVISION IS THAT THE PARTICULAR INCOME WHICH IS EXEMPT FROM TAX DOES NOT ENTER THE FIELD OF TAXATION AND IS NOT SUBJECT TO ANY COMPUTATION. THE COMPUTATION PROVISIONS OF THE ACT DO NOT GET ATTRACTED AT ALL TO THE EXEMPTED INCOME. THESE JUDGMENTS, THEREFORE, ARE NOT APPOSITE TO THE CONTROVERSY BEFORE US. (II) THE HON BLE BOMBAY HIGH COURT, IN THE CASE OF CIT V. BLACK AND VEATCH CONSULTING PVT. LTD. (SUPRA) ON AN IDENTICAL ISSUE, HAD RUL ED AS UNDER: WHAT THE REVENUE IN ESSENCE SEEKS TO ATTAIN IS TO TELESCOPE THE PROVISIONS OF CHAPTER VI - A IN THE CONTEXT OF THE DEDUCTION WHICH IS ALLOWABLE UNDER SECTION 10A, WHICH WOULD NOT BE PERMISSIBLE UNLESS A SPECIFIC STATUTORY PROVISION TO THAT EFF ECT WERE TO BE MADE. IN THE ABSENCE THEREOF, SUCH AN APPROACH CANNOT BE ACCEPTED. IN THE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL WOULD HAVE TO BE AFFIRMED SINCE IT IS PLAIN AND EVIDENT THAT DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WH EN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. SO CONSTRUED, THE APPEAL BY THE REVENUE WOULD NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND SHALL ACCORDINGLY STAND DISMISSED. (III) FURTHER, IN AN ID ENTICAL ISSUE, THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. YOKOGAWA INDIA LTD (SUPRA) HAS RULED AS UNDER: AS THE INCOME OF SECTION 10A UNIT HAS TO BE EXCLUDED AT SOURCE ITSELF BEFORE ARRIVING AT THE GROSS TOTAL INCOME, THE LOSS OF THE NON - SE CTION 10A UNIT CANNOT BE SET OFF AGAINST THE INCOME OF THE SECTION 10A UNIT UNDER SECTION 72. THE LOSS INCURRED BY THE ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION HAS TO BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BU SINESS OR PROFESSION 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 ALL, THE QUESTION OF SETTING OFF THE LOSS OF THE ASSESSEE OF ANY PROFITS AND GAINS OF BUSINESS AGAI NST SUCH PROFITS AND GAINS OF THE UNDER - TAKING WOULD NOT ARISE. SIMILARLY, AS PER SECTION 72(2), UNABSORBED BUSINESS LOSS IS TO BE FIRST SET OFF AND THEREFORE UNABSORBED DEPRECIATION TREATED 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 INCOME OF THE ASSESSEE THE QUESTION OF UNABSORBED BUSINESS LOSS BEING SET OFF AGAINST SUCH PROFIT AND GAINS OF THE UNDER - TAKING WOULD NOT ARISE. IN THAT VIEW OF THE 4 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 MATTER, THE APPROAC H OF THE ASSESSING AUTHORITY WAS QUITE CONTRARY TO THE AFORESAID STATUTORY PROVISIONS AND THE APPELLATE COMMISSIONER AS WELL AS THE TRIBUNAL WERE DULY JUSTIFIED IN SETTING ASIDE THE SAID ASSESSMENT ORDER AND GRANTING THE BENEFIT OF SECTION 10A TO THE ASSE SSEE .. (IV) ON A SIMILAR ISSUE, THE HON BLE KARNATAKA HIGH COURT, IN THE CASE OF CIT V. TATA ELXSI LTD (SUPRA), IN CONSONANCE WITH ITS EARLIER RULING [341 ITR 385] DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE . 9 . FURTHER, WE WOULD LIKE TO CLARIFY THAT T HE CIT (A) DISMISSED THE APPEAL FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF DY CIT V. GLOBAL VANTEDGEPVT. LTD. (SUPRA). THE ORDER OF THE TRIBUNAL IN CASE OF DY. CIT V. GLOBAL VANTEDGEPVT. LTD. RELIED ON THE F OLLOWING JUDGMENTS: (I) ACIT V. YOKOGAWA INDIA LTD. [111 TTJ 548 ( ITAT , BANGALORE ; (II) CHANGEPOND TECHNOLOGIES PVT. LTD. V. ACIT [22 SOT 220 (ITAT, CHENNAI], (III) CIT V. HIMATASINGIKESEIDE LTD (286 ITR 255 10. THE ABOVE JUDGMENTS ARE DISTINGUISHABLE A S UNDER: (I) AS REGARDS ITAT, BANGALORE JUDGMENT [111 TTJ 548] IN THE CASE OF YOKOGAWA INDIA LTD, THE KARNATAKA HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AS MENTIONED IN 341 ITR 385; (II) AS REGARDS ITAT, CHENNAI BENCH JUDGMENT (22 SOT 220) IN THE CASE OF CHANGEPOND TECHNOLOGIES PVT. LTD., THE SAID COMPANY WAS AN INTERVENER IN THE ITAT, CHENNAI SPECIAL BENCH JUDGMENT IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY (P) LTD V. ACIT REPORT ED IN 129 TTJ 273 WHICH HAS BEEN DECIDED IN ASSESSEE S FAVOUR. (III) AS REGARDS KARNATAKA HIGH COURT S JUDGMENT IN 286 ITR 255 IN CIT V. HIMATASIGIKESEIDE LTD THE SAME HAS BEEN DISTINGHISHED IN KPIT CUMMINS (BANGALORE) P. LTD V. ACIT 120 TTJ (BANG) . 11. THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF M/S. MOTILAL PESTICIDES (I) PVT. LTD. V. CIT [243 ITR 26 (SC)] AS RELIED ON BY THE AO, WE FIND THAT THERE IS NO APPLICATION TO THE FACTS OF THE ASSESSEE S CASE SINCE THE RULING OF THE HON BLE APEX COURT WAS WITH REFERENCE TO SECTIONS 80AA AND 80AB OF THE ACT. FURTHER, IF THERE 5 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 IS A DIFFERENCE OF OPINION OR TWO VIEWS ARE POSSIBLE ON AN ISSUE, AS LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF UNION OF INDIA V. ONKAR S KUN WAR AND OTHERS REPORTED IN 258 ITR 761 (SC), THE VIEW WHICH IS IN FAVOUR OF THE ASSESSEE MUST BE ADOPTED. 12 . IN THE LIGHT OF THE ABOVE JUDICIAL VIEWS AND OUR REASONING, WE HOLD THAT DEDUCTION U/S 10A OF THE ACT IS TO BE CALCULATED BEFORE REDUCING THE U NABSORBED LOSS AND DEPRECIATION FROM THE PROFITS OF THE UNDERTAKING. IT IS ORDERED ACCORDINGLY. 13 . IN THE RESULT, THE ASSESSEE S APPEAL [IN ITA NO.1885] FOR THE A.Y. 2005 - 06 IS ALLOWED. ITA NO.2034/10 [AY 2007 - 08]: 1 4 . THE TWO GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: (1) THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN EXCLUDING EXCHANGE VARIATION OF RS.7,85,820/ - ON SHARE APPLICATION MONEY RECEIVED FROM ABROAD FROM PROFITS AND GAINS OF BUSINESS; & (2) THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 10A OF THE ACT WITHOUT ADJUSTING UNABSORBED BUSINESS LOSS/DEPRECIATION. 1 5 . BRIEFLY STATED, THE FACTS OF THE ISSUE ARE AS UNDER: THE ASSESSEE HAD SHOWN RECEIPT FROM EXCHANGE VALUATION AMOUNTING TO RS.22,49,963/ - , OUT OF WHICH, RS.7,85,820/ - WAS ON SHARE APPLICATION MONEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO HOW THE INCOME FROM EXCHANGE GAIN ON SHARE APPLICATION MONEY HAS BEEN SHOWN AND AS TO WHY DEDUCTION U/S 10A OF THE ACT SHOULD BE GIVEN ON THIS MONEY. AFTER DUE CONSIDERATION OF THE ASSESSEE S CONTENTION S , THE AO TOOK A STAND THAT THE INCOME FROM EXCHANGE VARIATIONS OF SHARE APPLICATION MONEY HAD NO RELEVANCE WITH THE NATURE OF BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S 10 A OF THE ACT AN D, ACCORDINGLY, INCLUDED TO THE INCOME FROM OTHER SOURCE . 6 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 1 6 . AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE, AMONG OTHERS, BEFORE THE CIT (A). DURING THE COURSE OF HEARING, THE ASSESSEE SUBMITTED BEFORE THE CIT (A) THAT IT HAD SHOWN THE FOREI GN EXCHANGE GAIN ON SHARE APPLICATION MONEY AS OTHER INCOME INCLUDED IN THE NET EXCHANGE VARIATION ON IMPORT AND EXPORT OF GOODS AND HAD CLAIMED DEDUCTION U/S 10A ON SUCH EXCHANGE VARIATIONS. AT THE TIME OF FILING OF RETURN THE APPELLANT WAS NOT AWARE OF THE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT V. JAGATJIT INDUSTRIES LTD REPORTED AS 191 TAXMAN 54 WHERE SUCH EXCHANGE VARIATION HAS BEEN HELD AS CAPITAL RECEIPT. HOWEVER AT THE TIME OF REGULAR ASSESSMENT U/S 143(3) THE APPELLANT HAD BROUGHT THIS JUDGM ENT TO THE NOTICE OF THE AO AND HAD REQUESTED THAT THE INCOME OF RS.785820/ - SHOULD BE EXCLUDED FROM TAXABLE INCOME AND CONSEQUENTLY THE DEDUCTION U/S 10A AS CLAIMED BY THE APPELLANT SHOULD BE WITHDRAWN ON THIS AMOUNT. BUT THE AO DID NOT DISCUSS THIS POI NT IN HIS ORDER. IT IS, THEREFORE, BEEN SUBMITTED THAT THE EXCHANGE VARIATION OF RS.785820/ - SHOULD BE EXCLUDED FROM APPELLANT S INCOME EVEN THOUGH BY MISTAKE THE SAME WAS INCLUDED BY THE APPELLANT S IN THE TAXABLE INCOME WHILE FILING THE RETURN [SOURCE: PAGES 2 & 3 OF CIT (A) S ORDER ]. HOWEVER, AFTER DUE CONSIDERATION OF THE ASSESSEE S CONTENTIONS , THE FINDINGS OF THE AO AND ALSO EXTENSIVELY QUOTING THE FINDINGS OF THE EARLIER BENCH OF THIS TRIBUNAL IN THE CASE OF CONVERGYS INDIA SERV ICES PVT LTD. V. DCIT 2011 TIOL - 352 - ITAT - DEL,THE CIT (A) DISMISSED THIS GROUND WITH THE REASONING THAT ..THE GAIN ON EXCHANGE FLUCTUATION IN RESPECT OF SHARE APPLICATION MONEY WILL NOT BE ELIGIBLE FOR DEDUCTION U/S 10A . [REFER: PAGE 7 OF CIT(A) S OR DER]. 1 7 . BEFORE US, IT WAS SUBMITTED THAT ON THE LEGAL ISSUE I.E., INCOME OF RS.7,85,820/ - ON ACCOUNT OF GAIN DUE TO FOREIGN EXCHANGE VARIATION IN RESPECT OF SHARE APPLICATION MONEY RECEIVED FROM ABROAD, THOUGH THE LD. CIT (A) HAD REPRODUCED T HE 7 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 GROUND OF APPEAL AND SUBMISSION OF THE ASSESSEE IN HIS APPELLATE ORDER, THE SAME HAS NOT BEEN ADJUDICATED/ DISPOSED OFF BY THE CIT (A) AND, THEREFORE, PLEADED THAT THE SAME DESERVES TO BE SET ASIDE TO THE FILE OF THE CIT (A) OR AO FOR CONSIDERATION. IN THE ALTERNATIVE, IT WAS SUBMITTED THAT THE ASSESSEE HAD SHOWN THE FOREIGN EXCHANGE GAIN ON SHARE APPLICATION MONEY AS OTHER INCOME INCLUDED IN THE NET EXCHANGE VARIATION ON I MPORT AND EXPORT OF GOODS AND H AD CLAIMED DEDUCTION U/S 10A ON SUCH EXCHANGE VA RIATIONS. AT THE TIME OF FILING OF RETURN, IT WAS SUBMITTED, THE ASSESSEE WAS NOT AWARE OF THE DELHI HIGH JUDGMENT IN THE CASE OF CIT V. JAGATJIT INDUST RIES LTD REPORTED IN 191 TAXMAN 54 WHEREIN IT HAS BEEN HELD THAT SUCH EXCHANGE VARIATION AS CAPITAL REC EIPT. IT WAS, FURTHER, SUBMITTED THAT AT THE TIME OF REGULAR ASSESSMENT, THE AO S ATTENTION W AS DRAWN TO THE JUDGMENT OF THE HON BLE JURISDICTIONAL COURT AND PLEADED WITH HIM THAT THE INCOME OF RS.7,85,820/ - SHOULD BE EXCLUDED FROM TAXABLE INCOME AND CONS EQUENTLY DEDUCTION U/S 10A AS CLAIMED BY THE ASSESSEE SHOULD BE WITHDRAWN ON THIS AMOUNT. ACCORDING TO THE ASSESSEE, THE AO, HOWEVER, DID NOT DISCUSS THIS POINT IN HIS ORDER. IT WAS, THEREFORE, PLEADED THAT THE EXCHANGE VARIATION OF RS.7,85,820/ - SHOULD BE EXCLUDED FROM THE ASSESSEE S INCOME EVEN THOUGH BY MISTAKE THE SAME WAS INCLUDED BY THE ASSES SE E IN THE TAXABLE INCOME WHILE FILING ITS RETURN. THE LEARNED DR PRESENT WAS HEARD. 1 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSE D THE FINDINGS OF THE CIT (A) ON THE ISSUE. IT IS A FACT THAT THE ASSESSEE HAD RAISED THIS ISSUE BEFORE CIT (A) [ GROUND NO.1] AND ALSO PLEADED THAT THE EXCHANGE VARIATION OF RS.785820/ - SHOULD BE EXCLUDED FROM APPELLANT S INCOME EVEN THOUGH BY MISTAKE T HE SAME WAS INCLUDED BY THE APPELLANT S IN THE TAXABLE INCOME WHILE FILING THE RETURN. HOWEVER, WHILE CONSIDERING THIS GROUND, IT WAS OBSERVED, THE CIT (A) HAD NEITHER 8 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 ADJUDICATED NOR DISPOSED OFF THE ISSUE AS TO WHETHER THE EXCHANGE VARIATION OF RS.7,85,820/ - SHOULD BE EXCLUDED FROM TH E ASSESSEE S INCOME OR NOT?. T HE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. JAGATJIT INDUSTRIES REPO RTED IN 191 TAXMAN 54 HAS HELD AS UNDER: WHETHER SINCE ENTIRE MONEY RAISED THROUGH ISSUE OF EQUITY SHA RES IS TO BE TREATED AS CAPITAL RECEIPT, GAINS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATIONS, IN EVEN SUCH SHARE CAPITAL HAS BEEN COLLECTED IN FOREIGN EXCHANGE, WOULD BE CAPITAL RECEIPT IRRESPECTIVE OF END USE OF SHARE CAPITAL? HELD YES . AGAINST THE RULING OF THE HON BLE COURT, THE SLP FILED BY THE REVENUE WAS DISMISSED BY THE HON BLE SUPREME COURT VIDE ITS ORDER DATED 18.02.2011 IN CC 86/2011. 1 9 . SINCE THIS ISSUE WAS CONSIDERED NEITHER BY THE AO NOR BY THE CIT (A), WE DEEM IT APPROPRIATE TO RESTORE T HIS MATTER TO THE AO FOR DENOVO CONSIDERATION. WHILE DECIDING THE ISSUE, THE AO SHALL GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND ALSO KEEP IN MIND THE DICTUM LAID BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE REFERRED ABOVE. T HEREFORE, T HE ALTERNATIVE CONTENTION OF THE ASSESSEE WHICH IS INTER - LINKED TO THE FIRST GROUND IS ALSO RESTORED ON THE FILE OF THE AO FOR SUITABLE ACTION AT HIS END. 2 0 . THE OTHER GROUND OF THE ASSESSEE IS THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 10A OF THE ACT WITHOUT ADJUSTING UNABSORBED BUSINESS LOSS/DEPRECIATION. IN THIS CONNECTION, WE WOULD LIKE TO POINT OUT THAT SIMILAR ISSUE TO THA T OF THE PRESENT WAS CONSIDERED IN THE AY 2005 - 06 IN THE ASSESSEE S OWN CASE WHEREIN WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE [REFER: PARA 8 TO 13 (SUPRA)] . AS THE ISSUE IS IDENTICAL TO THAT OF THE ISSUE RAISED FOR THE AY 2005 - 06, OUR FINDINGS RECORDED FOR THE AY 2005 - 06 (SUPRA) HOLD GOOD FOR THIS AY ALSO. IT IS ORDERED ACCORDINGLY. 9 ITA NO.1885/DEL/2010 ITA NO.2034/DEL/2012 A.Y.2005 - 06 & 2007 - 08 2 1. IN THE RESULT , THE ASSESSEE S APPEAL FOR THE AY 2005 - 06 IS ALLOWED AND THE APPEAL FOR THE AY 2007 - 08 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE . SD/ - SD/ - (J.S. REDDY) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST NOVEMBER, 2014. AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI