DCIT 9(3), MUMBAI V. TECHNIMONT ICB P LTD, MUMBAI

ITA 2363/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56343 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 20-12-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 13-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10B; 10

Judgement Text

1 TECHNIMONT ICB P LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI T R SOOD, AM & SHRI VIJAY PAL RAO, JM ITA NO. 2363/MUM/2009 (ASST YEAR 2000-01) THE DY COMMR OF INCOME TAX 9(3), MUMBAI VS TECHNIMONT ICB P LTD TECHNIMONT ICB HOUSE CHINCHOLI BUNDER 504, LINK ROAD, - MALAD(W) MUMBAI 64 (APPELLANT) (RESPONDENT) PAN NO. AAACI2628B ASSESSEE BY SH NITESH JOSHI REVENUE BY SH O A MAO DT.OF HEARING 20 TH DEC 2011 DT OF PRONOUNCEMENT 30 TH , DEC 2011 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 5.1.2009 OF THE CIT(A) FOR THE AY 2000-01. 2 THE ONLY GROUND RAISED BY THE REVENUE IN THIS APP EAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION AT ` 3,15,87,614/- AS CLAIMED BY THE ASSESSEE INSTE AD OF ` 2,50,03,884/- IN RESPECT OF PROFIT OF EXPORT ORIENT ED UNIT U/S 10B OF THE I T ACT, 1961. 3 THE ASSESSEE HAS CLAIMED DEDUCTION U/S 10B OF ` 3 ,15,87,614/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE IN ITS COMPUTATION OF INCOME CLAIMED DEDUCTION ON PROFIT OF EXPORT ORIENTED UNITS (EOU) BEFORE COMPUTING THE TOTAL INCOME WHEREAS THE ASSESSING OFFICER WAS OF THE VIE W THAT THE DEDUCTION IN RESPECT OF EXPORT ORIENTED UNITS IS TO BE ALLOWED A FTER COMPUTING THE TOTAL INCOME 2 TECHNIMONT ICB P LTD OF THE ASSESSEE. THUS, THE ASSESSING OFFICER COMPUT ED THE ASSESSEES TOTAL INCOME BY AGGREGATING THE INCOME FROM DIFFERENT BUS INESS UNITS THEREAFTER THE PROFITS OF EOU WAS REDUCED. 3.1 ON APPEAL, THE CIT(A) FOUND THAT FOR THE AY UN DER CONSIDERATION THE PROVISIONS OF SEC. 10B WERE IN THE NATURE OF EXEMPT ION AND THEREFORE, WHILE COMPUTING THE TOTAL INCOME OF THE PROFITS DERIVED FROM THE EOU HAS TO BE DEDUCTED FIRST AND THEREAFTER THE TOTAL INCOME OF T HE ASSESSEE IS TO BE COMPUTED. ACCORDINGLY, THE CIT(A) ALLOWED THE CLAIM OF THE AS SESSEE. 4 BEFORE US, THE LD DR HAS SUBMITTED THAT THE DEDUC TION U/S 10B CANNOT BE ALLOWED MORE THAN THE TOTAL INCOME OF THE ASSESSEE; THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY RESTRICTED THE DEDUCTION U/S 10 B OF THE TOTAL INCOME OF THE ASSESSEE. 4.1 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HA S SUBMITTED THAT THE PROVISIONS OF SEC. 10B, AS STOOD AT THE RELEVANT PO INT OF TIME, TO ALLOW THE PROFITS AND GAINS OF THE EXPORT ORIENTED UNITS, NOT TO BE INCLUDED WHILE COMPUTING THE TOTAL INCOME. HE HAS SUBMITTED THAT THE SAID PROVIS IONS OF SEC. 10B HAS BEEN SUBSTITUTED BY FINANCE ACT 2000 W.E.F 1.4.2001 AND PRIOR TO ITS SUBSTITUTION, SECTION 10B PROVIDES THAT THE PROFITS AND GAINS DER IVED BY THE ASSESSEE FROM 100% EOU SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE WHEREAS AFTER THE SUBSTITUTION/AMENDMENT OF THE PROVISIONS W.E.F 1.4.2001 SECTION 10B(1) PROVIDES A DEDUCTION OF SUCH PROFITS AND GAINS SHAL L BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. THUS, THE LD AR HAS SUBMITT ED THAT PRIOR TO THE AMENDMENT, SECTION 10B WAS IN THE NATURE OF EXEMPT ION AND PROFITS AND GAIN OF 100% EOU SHALL NOT FORM PART OF THE TOTAL INCOME; W HEREAS AFTER THE AMENDMENT W.E.F 1.4.2001, SECTION 10B PROVIDES ONLY A DEDUCTI ON FROM THE TOTAL INCOME. THE LD AR THUS SUBMITTED THAT THE PROFITS AND GAINS FRO M 100% EOU SHALL NOT BE 3 TECHNIMONT ICB P LTD INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE AND TH EREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. HE HAS RELIED UP ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIEMENS INFORMATION SYSTEM LTD. V. ACIT REPORTED IN 293 ITR 548. 5 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. THE SHORT POINT IN THIS APPEAL IS ONLY THE METHOD OF COMPUTATION OF TOTAL INCOME AND THEREBY ALLOWING DE DUCTION U/S 10B. THE ASSESSEE HAS EXCLUDED THE PROFIT AND GAIN OF 100% E OU WHILE COMPUTING THE TOTAL INCOME WHEREAS THE ASSESSING OFFICER FIRSTLY COMPUTED THE TOTAL INCOME BY INCLUDING THE PROFIT AND GAINS OF THE BUSINESS ACTI VITY OF THE ASSESSEE AND THEN ALLOWED THE DEDUCTION U/S 10B, RESTRICTING TO THE T OTAL INCOME OF THE ASSESSEE. 5.1 SINCE THE ASSESSMENT YEAR UNDER CONSIDERATION I S 2000-01 AND THE PROVISIONS OF SEC. 10B AS STOOD PRIOR TO THE AMENDM ENT VIDE FINANCE ACT 2000 W.E.F 1.4.2001 ARE APPLICABLE. SECTION 10B STOOD AT THE RELEVANT POINT OF TIME IS AS UNDER: SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING (1) SUBJECT TO THE PROV ISIONS OF THIS SECTION, ANY PROFITS AND GAINS DERIVED BY AN ASSESS EE FROM A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING (HEREINAFTER I N THIS SECTION REFERRED TO AS THE UNDERTAKING) TO WHICH THIS SECTI ON APPLIES SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. 5.2 IT IS CLEAR THAT THE TERMS SHALL NOT BE INCLUDE D IN THE TOTAL INCOME OF THE ASSESSEE HAS BEEN USED IN THE PRE-AMENDED SEC. 10B WHEREAS AFTER THE AMENDMENT W.E.F 1.4.2001, SUB SEC. (1) OF SEC 10 B READS AS UNDER: 10B(1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFIT AND GAINS AS ARE DERIVED BY A HUNDRED PERCE NT EXPORT ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS O R COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMEN T YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICL ES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE SHALL BE ALLO WED FROM THE TOTAL INCOME OF THE ASSESSEE. 4 TECHNIMONT ICB P LTD 5.2 IN THE AMENDED PROVISIONS OF SEC. 10B, THE TERM S USED AS A DEDUCTION OF SUCH PROFIT AND GAINS SHALL BE ALLOWED FROM THE TOT AL INCOME OF THE ASSESSEE. THUS, THERE IS A MATERIAL CHANGE IN THE LANGUAGE OF SECTION AFTER THE AMENDMENT AND THE NATURE THEREAFTER HAS BEEN CHANGED FROM EXE MPTION TO DEDUCTION. 5.3 THE HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF SIEMENS INFORMATION SYSTEM LTD. (SUPRA) IN PARAS 13 & 14 HAS HELD AS UNDER: 13 SO FAR AS THE SECOND CONTENTION IS CONCERNED, L EARNED COUNSEL HAS DRAWN OUR ATTENTION, FIRSTLY, TO THE PROVISION S OF SECTION 4 OF THE ACT WHICH SETS OUT THAT ANYWHERE ACT ENACTED THAT INCOME-TAX SHALL BE CHARGED FOR ANY ASSESSMENT YEAR AT ANY RATE OR R ATES, INCOME- TAX AT THAT RATE OR THOSE RATES SHALL BE CHARGED F OR THAT YEAR IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS, INC LUDING THE PROVISIONS FOR THE LEVY OF ADDITIONAL INCOME-TAX IN RESPECT OF THE TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON. OUR ATTENTION IS INVITED TO SECTION 2(45). TOTAL INCOME MEANS THE TOTAL AMOUNT OF INCOME REFERRED TO IN SECTION 5, COMPUTED IN THE M ANNER LAID DOWN IN THIS ACT. NEXT, OUR ATTENTION IS INVITED TO WHA T IS GROSS TOTAL INCOME UNDER SECTION 80B(5). THE GROSS TOTAL INCOME HAS BEEN DESCRIBED TO BE THE TOTAL INCOME COMPUTED IN ACCOR DANCE WITH THE PROVISIONS OF THE ACT BEFORE MAKING ANY DEDUCTION UNDER THE RELEVANT CHAPTER. A PERUSAL OF SECTION 10A(1), AS I T STOOD AT THE RELEVANT TIME, CLEARLY SETS OUT THAT SUBJECT TO THE PROVISIONS OF THIS SECTION, ANY PROFITS AND GAINS DERIVED BY AN ASSESS EE FROM AN INDUSTRIAL UNDERTAKING TO WHICH THE SECTION APPLIE S SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. IN O THER WORDS, IT IS CLEAR THAT THE INCOME DERIVED FROM AN INDUSTRIAL U NDERTAKING BY THE ASSESSEE TO WHICH SECTION 10A APPLIES COULD NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. ONCE THAT IS THE CAS E, THE PETITIONER WAS RIGHT IN FILING THE INCOME BY EXCLUDING THE IN COME OF INCOME IN TERMS OF SECTION 10A. 14 LEARNED COUNSEL FOR THE RESPONDENTS HAS DRAWN OU R ATTENTION TO THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF HIMATASINGIKE SEIDE LTD. [2006] 286 ITR 255 WHICH WAS CONSIDERING THE PROVISIONS OF SECTION 10B. AFTER PERUSING THE FACTS IN ISSUE IN THIS CASE AND THE FACTS BEFORE THE KARNATAKA HIGH C OURT, IN OUR OPINION, THE SAID CASE IS NOT APPLICABLE TO THE FA CTS OF THIS CASE. 6 ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANC ES OF THE CASE AS WELL AS THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF SIEMENS 5 TECHNIMONT ICB P LTD INFORMATION SYSTEM LTD. (SUPRA), WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A), ACCORDINGLY THE SAME IS UPHELD. 7 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON THE 30 TH ,DAY OF DEC 2011. SD/ SD/ ( T R SOOD ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH , DEC 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI