DCIT, Corporate Circle 1(2), Chennai V. Comstar Automotive Technologies Pvt Ltd, Chengalpattu

ITA 209/CHNY/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 4697 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 16-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV RAGHAV MENON
• Keywords: Depreciation; Unabsorbed depreciation; Set aside
• Section: 10B; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , , $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 209/CHNY/2018 / ASSESSMENT YEAR : 2003-04 DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(2), CHENNAI 600 034. VS. M/S. COMSTAR AUTOMOTIVE TECHNOLOGIES PVT. LTD., KEELAKARANI VILLAGE, MALROSAPURAM PO, MARAIMALAI NAGAR, CHENGALPATTU 600 204. [PAN: AAACM 2284P] ( / APPELLANT) ( %&' /RESPONDENT ) REVENUE BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT ASSESSEE BY : SHRI RAJIV RAGHAV MENON, ADVOCATE . /DATE OF HEARING : 25.10.2018 . /DATE OF PRONOUNCEMENT : 25.10.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE REVENUE FILED THIS APPEAL AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-9, CHENNAI IN ITA NO. 330/CIT(A)-11/2013-14 DATED 29.09.2017 FOR ASSESSME NT YEAR 2003-04. :-2-: ITA NO. 209/CHNY/2018 2. THE QUESTION IN THIS APPEAL IS AT WHAT STAGE THE EXEMPTION CLAIMED U/S. 10B SHOULD BE COMPUTED? I.E. WHETHER AT THE ST AGE PRIOR TO ARRIVING AT THE GROSS TOTAL INCOME I.E., BEFORE ALLOWING SET OFF FOR CARRY FORWARD OF LOSSES OR THE CARRY FORWARD LOSSES MUST BE SET OFF AGAINST THE GROSS TOTAL INCOME & THEN EXEMPTION U/S. 10B SHOULD BE ALLOWED . FOLLOWING THE HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE O F CIT VS HIMATASINGIKE SEIDE LTD., 286 ITR 255, THE AO ADJUS TED THE UNABSORBED DEPRECIATION FROM THE PROFITS EARNED BY THE 100% EX PORT ORIENTED UNDERTAKING AND THEN COMPUTED THE DEDUCTION U/S. 10 B. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) FOLLOWING THE LATEST JUDGEMENT OF THE SUPREME COURT IN THE CASE OF YOHOGAWA INDIA LTD, (2017) 77 TAXMANN.COM 41 (SC), ALLOWED THE ASSESSEES APPEAL. 3. AGGRIEVED, THE REVENUE FILED THIS APPEAL WITH TH E FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE 2. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE CLA IM U/S.10B OF RS.2.54 CRORES IN ITS ENTIRETY 2.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E AMOUNT OF CLAIM UFS.1OB WAS ARRIVED AT BY THE ASSESSEE WITHOUT SETT ING OFF THE UNABSORBED DEPRECIATION LOSS OF EARLIER YEAR. 2.2 THE LEARNED CIT(A) ERRED IN NOT PLACING RELIANC E ON THE DECISION OF THE APEX COURT IN THE CASE OF HIMATSINGIKE SEIDA LTD VS . CIT DATED 14.10.2013 WHICH IS SQUARELY APPLICABLE TO THE FACT S OF THE INSTANT CASE. :-3-: ITA NO. 209/CHNY/2018 2.3 THE LEARNED CIT(A ) FAILED TO APPRECIATE THAT T HE APEX COURT IN THE CASE OF CIT V YOKOGAWA (2017) 77 TAXMANN.COM 41 (SC ) HAS NOT OVER- RULED ITS EARLIER DECISION ON THE ISSUE IN THE CASE OF HIMATASINGIKE SEIDE LTD V CIT (2014) 48 TAXMANN.COM 357 (SC). 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT UNA BSORBED DEPRECIATION LOSS OF EARLIER YEARS IS TO BE TREATED AS CURRENT D EPRECIATION AS PER SEC.32(2) AND THE PROFITS ELIGIBLE FOR DEDUCTION U/ S.108 ARE TO BE COMPUTED AFTER DEDUCTION OF SUCH DEPRECIATION LOSSE S. 3.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E APEX COURT EVEN IN THE CASE OF CIT V YOKOGAWA CITED SUPRA HAD HELD THA T PROFITS ELIGIBLE FOR DEDUCTION UNDER SEC.10B WOULD HAVE TO BE COMPUTED A FTER ALLOWING DEDUCTIONS FALLING UNDER CHAPTER IV OF THE ACT AND SINCE THE PROVISIONS SEC.32(2) RELATING TO UNABSORBED DEPRECIATION LOSS FALLS UNDER CHAPTER IV, THE ELIGIBLE PROFITS FOR DEDUCTION U/S.10B WOULD AL SO THEREFORE, REQUIRED TO BE COMPUTED AFTER SETTING OFF THE UNABSORBED DEPREC IATION LOSS OF EARLIER YEARS OF THE ELIGIBLE UNIT. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE A.O. RESTORED. THE LD. DR PRESENTED THE CASE ON THE LINES OF THE G ROUNDS OF THE APPEAL, SUPRA. 4. THE LD. AR RELIED ON THIS ITAT DECISION IN THE A SSESSEES OWN CASE IN ITA NO. 827, 828, 829 & 830/CHNY/2017 FOR ASSESS MENT YEARS 2005- 06, 2007-08, 2008-09 DATED 13.02.2018, WHEREIN APPL YING THE RATIO OF THE APEX COURT IN THE CASE OF CIT VS YOKOGAWA, SUPR A, THIS TRIBUNAL ALLOWED THE ASSESSEES APPEAL. :-4-: ITA NO. 209/CHNY/2018 5. WE HEARD THE RIVAL SUBMISSIONS. SINCE, IT IS A RECURRENT ISSUE AND THE ISSUE HAS BEEN ALLOWED IN THE ASSESSEES OWN CA SE, RELYING ON THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS YOKAGAWA INDIA LTD(2007) 391 ITR 247, VIDE THE ORDER UNDER R EFERENCE, SUPRA, THE REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2018 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 25 TH OCTOBER, 2018 JPV .%5676 /COPY TO: 1. ' / APPELLANT 2. %&' /RESPONDENT 3. 9 ) ( /CIT(A) 4. 9 /CIT 5. 6% /DR 6. /GF