ITO, Pune V. Nihilent Technology P. Ltd., Pune

ITA 2489/PUN/2012

• Counselvise Citation: 248924514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 17-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2489/PN/2012 (ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER, WARD 2(3), PUNE. . APPELLANT VS. NIHILENT TECHNOLOGY PVT. LTD., D BLOCK, 4 TH FLOOR, 403/404, WEIKFIELD IT CITI INFOPARK, NAGAR ROAD, CAMP, PUNE 411 014. PAN : AABCN0867G . RESPONDENT DEPARTMENT BY : SHRI P. L. PATHADE ASSESSEE BY : SHRI NIKHIL PATHAK DATE OF HEARING : 21-01-2014 DATE OF PRONOUNCEMENT : 27-01-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 31.08.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 23.12.2009 PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN ALLOWING SET OFF OF BROUGHT FORWARD LOSSES AND DEPR ECIATION. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THAT AS THE ASSESSEE HAS BEEN CLAI MING DEDUCTION U/S 10A, THE LOSS OF THE UNDERTAKING WHICH RELATES TO AN A.Y . ENDING BEFORE 1 ST DAY OF APRIL, 2011, CANNOT BE ALLOWED TO BE SET OFF. ITA NO.2489/PN/2012 A.Y. 2006-07 3. IN ORDER TO APPRECIATE THE CONTROVERSY RAISED IN THE PRESENT APPEAL, THE BRIEF FACTS ARE SUMMARIZED AS FOLLOWS. ASSESSEE IS A COMPANY ENGAGED IN SOFTWARE DEVELOPMENT BUSINESS AND IT FILED A RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 DECLARING TOTAL INCOME AT RS.1,20,03,8 85/- WHEREIN IT HAD CLAIMED DEDUCTION U/S 10A OF THE ACT IN RESPECT OF PROFITS ARISING FROM THE STP UNIT. THE ASSESSING OFFICER COMPLETED THE ASSESSME NT U/S 143(3) OF THE ACT ON 23.12.2009 DETERMINING THE TOTAL INCOME OF RS.1, 62,78,218/- WHICH WAS CARRIED IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) VIDE HIS ORDER DATED 09.09.2010 DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER. IN CONSEQUENCE TO THE ORDER PASSED BY THE CIT(A), THE ASSESSING OFFICER PASSED AN ORDER U/S 154 OF THE ACT GIVING EFFECT TO THE OR DER OF THE CIT(A) WHEREIN THE REVISED TOTAL INCOME WAS DETERMINED AT RS.1,20,03,8 84/-. THE SAID ORDER OF THE ASSESSING OFFICER IS THE SUBJECT-MATTER OF CONT ROVERSY IN THE PRESENT APPEAL. AGAINST THE SAID ORDER OF THE ASSESSING OF FICER, ASSESSEE WENT IN AN APPEAL BEFORE THE CIT(A) CONTENDING THAT THE UNABSO RBED LOSSES AND DEPRECIATION PERTAINING TO THE ASSESSMENT YEARS 200 1-02 AND 2002-03 OUGHT TO HAVE BEEN SET-OFF BY THE ASSESSING OFFICER WHILE ARRIVING AT THE TOTAL INCOME AFTER GIVING EFFECT TO THE ORDER OF THE CIT(A) DATE D 09.09.2010. THE CIT(A) BY WAY OF AN IMPUGNED ORDER CONSIDERED THE PLEA OF THE ASSESSEE AS JUSTIFIED AND ACCORDINGLY DIRECTED AS FOLLOWS :- 3.5 . THE APPELLANT IN THE GROUND OF APPEAL RAISED B EFORE HAD SOUGHT THE CLAIM OF SET OFF OF CARRIED FORWARD LOSS ES AND DEPRECIATION RELATING TO A.Y. 2001-02 AND A.Y. 2002-03 AMOUNTING TO RS. 6 ,43,35,153/- AGAINST THE INCOME ARISING DURING AFTER GIVING EFFECT TO THE OR DER OF THE CIT (APPEALS) DATED 09.09.2010. IT HAS ALREADY BEEN SEEN THAT, TH E A.O. HAS ALREADY GIVEN THE SET OFF OF THE BROUGHT FORWARD LOSSES AND DEPRE CIATION WHILE GIVING EFFECT TO THE APPELLATE ORDER FOR A.Y. 2005-06, HOWEVER, THE SAME HAS REMAINED TO BE CONSIDERED WHILE GIVING APPEAL EFFECT FOR A.Y. 2006 -07. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO VERIFY THE CORRECTNESS O F THE FIGURES OF LOSSES AND DEPRECIATION BROUGHT FORWARD FROM THE EARLIER YEAR IN THE BALANCE-SHEET AND CONSIDER THE SAME TO BE SET OFF AGAINST THE INCOME DETERMINED AFTER GIVING EFFECT TO THE ORDER OF THE CIT (APPEALS). 3.6 IN VIEW OF THE ABOVE, GROUNDS OF APPEAL NO. 1 AND 2 RAISED BY THE APPELLANT ARE TREATED AS ALLOWED SUBJECT TO THE ABOVE REMARKS AND VERIFICATION OF BROUGHT FORWARD LOSSES AND DEPRECIA TION SOUGHT TO BE SET OFF. ITA NO.2489/PN/2012 A.Y. 2006-07 4. AGAINST THE AFORESAID DIRECTION OF THE CIT(A), R EVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARIN G FOR THE REVENUE HAS MERELY REFERRED TO THE GROUNDS OF APPEAL FILED WITHOUT POINTING OUT ANY SPECIFIC ERROR IN THE AFORESAID DIRECTIONS OF THE C IT(A). 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE R ESPONDENT-ASSESSEE POINTED OUT THAT THERE WAS NO ERROR IN THE APPROACH OF THE CIT(A) INASMUCH AS ASSESSEE IS ENTITLED TO SET-OFF BROUGHT FORWARD LOS SES/DEPRECIATION WHICH PERTAIN TO ASSESSMENT YEAR ENDING AFTER 01.04.2001, A POSITION WHICH HAS BEEN UPHELD BY THE PUNE BENCH OF THE TRIBUNAL IN TH E CASE OF OPUS SOFTWARE SOLUTIONS (P.) LTD. VS. ACIT, (2012) 139 ITD 427 (P UNE). APART THEREFROM THE LEARNED COUNSEL POINTED OUT THAT THE GROUND OF APPE AL NO. 2 PREFERRED BY THE REVENUE IS MISCONCEIVED BECAUSE THE LOSSES/DEPRECIA TION SOUGHT TO BE SET-OFF DO NOT RELATE TO AN ASSESSMENT YEAR STARTING BEFORE 01.04.2004 AS IS EVIDENT FROM THE DETAILS CONTAINED IN THE ORDER OF THE CIT( A). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. AT THE OUTSET, WE MAY SAY THAT THE GROUND OF APPEAL NO.2 PREFERRED BY THE REVENUE CLAIMING THE LOSSES OF AN UNDERTAKING PERTAINING TO AN ASSES SMENT ENDING BEFORE 01.02.2001 CANNOT BE ALLOWED TO SET-OFF IN TERMS OF SECTION 10A OF THE ACT, CANNOT BE FAULTED. SO HOWEVER, IN THE PRESENT CASE LOSSES/DEPRECIATION SOUGHT TO BE SET-OFF RELATE TO ASSESSMENT YEARS 200 1-02 AND 2002-03 AS DETAILED IN PARA 3.3 OF THE ORDER OF THE CIT(A). T HE AFORESAID POSITION HAS ALSO BEEN APPRECIATED BY THE CIT(A) AS A PART OF HIS OPE RATIVE ORDER GIVING DIRECTIONS TO THE ASSESSING OFFICER TO VERIFY THE C ORRECTNESS OF LOSSES/DEPRECIATION BROUGHT FORWARD AND ALLOW THE S AME. THERE IS NO MATERIAL TO DISTRACT FROM THE FINDING OF THE CIT(A) AND THER EFORE, IN OUR VIEW, THE LEARNED COUNSEL FOR THE ASSESSEE IS CORRECT IN ASSERTING TH AT THE GROUND OF APPEAL NO.2 PREFERRED BY THE REVENUE IS MISCONCEIVED AS IT IS FACTUALLY ITA NO.2489/PN/2012 A.Y. 2006-07 UNSUSTAINABLE. IN SO FAR AS THE DIRECTIONS OF THE CIT(A) TO ALLOW THE BROUGHT FORWARD LOSSES/DEPRECIATION AS PER THE RECORD, IN O UR VIEW, DOES NOT REQUIRE ANY INTERFERENCE AS NO INFIRMITY IN THE SAME HAS BE EN POINTED OUT. ACCORDINGLY, THE ORDER OF THE CIT(A) IS HEREBY AFFI RMED AND REVENUE FAILS ON THIS ASPECT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 27 TH JANUARY, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE