D.C.I.T. 9(2), MUMBAI V. M/S MWH INDIA LTD, MUMBAI

ITA 2539/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0790 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2010
• Court: TRIBUNAL
• Assessee Lawyers: ARJO GARODIA
• Keywords: Opportunity of being heard; Additional evidence
• Section: 115JB; 10B

Judgement Text

' IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER ITA NO. 2539 /MUM/201 0 : (A.Y : 200 6 - 0 7 ) DCIT 9 (2) R.NO. 218 AAYAKAR BHAVAN M.K.ROAD MUMBAI 400 020 VS. M/S MWH INDIA LTD. 168, UDYOG BHAVAN SONAWALA ROAD GOREGAON (E) MUM BAI 400 0 6 3 PAN : AA A C A4613L CO NO. 205 /MUM/201 0 : (A.Y : 200 6 - 0 7 ) ARISING OUT OF ITA NO. 2539 /MUM/201 0 M/S MWH INDIA LTD. 168, UDYOG BHAVAN SONAWALA ROAD GOREGAON (E) MUMBAI 400 063 PAN : AA A C A4613L ( / APPELLANT) DCIT 9 (2) R.NO. 218 AAYAKAR BHAVAN M.K.ROAD MUMBAI 400 020 ( / RESPONDENT) / A SSESSEE BY : S MT ARJO GARODIA / RE VENUE BY : SHRI NIRAJ SHETH / DATE OF HEARING : 1 7.5. 2017 / DATE OF PRONOUNCEMENT : 19 .5. 2017 2 ITA NO . 2 5 3 9/MUM/201 0 AND CO NO. 205 /MUM/201 0 , A.Y.2006 - 07 M/S MWH INDIA LTD. / O R D E R P ER C.N.PRASAD (JM) THIS APPEAL IS FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT (APPEALS) - 20, MUMBAI DATED 18.1.2010 FOR THE ASSESSMENT YEAR 2006 - 07. 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APPEAL IS THAT THE LD.CIT(APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION U/S 10B(4) WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO FURNISH SEPARATE BALANCE SHEET FOR EACH UNIT. 3 . BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DISALLOWED THE CLAIM FOR DEDUCTION U/S 10B ON THE PROFITS FROM PUNE UNIT ON THE GROUND THAT THE ASSESSEES MUMBAI UNIT SUFFERED LOSS AND PUNE UNIT HAS SHOWN SUBSTANTIAL PROFITS . ASSESSING OFFICER OBSERVED THAT F OR CLAIMING DEDUCTION U/S 10B THE ASSESSEE DIVERTED PROFITS FROM MUMBAI UNIT TO PUNE UNIT. HE ALSO OBSERVED THAT ASSESSEE IS SIPHONING OF PROFITS OF MUMBAI UNIT AND ALSO MANAGING TRANSACTION S IN A MANNER TO MANIPULATE PROFITS AND THEREFORE CONCLUDED THAT THE DEDUCTION U/S 10B CLAIMED BY THE ASSESSEE DOES NOT APPE A R TO BE GENUINE. HOWEVER, HE ESTIMATED THE ELIGIBLE PROFITS OF THE UNIT AND ALLOWED DEDUCTION U/S 10B OF THE ACT. ON APPEAL BY THE ASSESSEE THE LD.CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE 3 ITA NO . 2 5 3 9/MUM/201 0 AND CO NO. 205 /MUM/201 0 , A.Y.2006 - 07 M/S MWH INDIA LTD. ASSESSEE IN TERMS OF SECTION 10B(4) OF THE ACT. THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DR BEFORE US VEHEMENTLY SUBMITS THAT THE LD.CIT (APPEALS) GRANTED RELIEF TO THE ASSESSEE WITHOUT APPRECIATING THE FACTS AND AVERMENTS NOTED BY THE ASSESSING OFFICER AND THE LD.CIT(APPEALS) PASSED A VERY CRYPTIC ORDER WITHOUT ANY DIS CUSSION AND FINDINGS AND REASONING AND THEREFORE IT WAS SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE LD.CIT(APPEALS) FOR FRESH ADJUDICATION . 5. THE LD. COUNSEL FOR THE ASSESSEE THOUGH TRIED TO DEFEND THE ORDER OF THE LD.CIT(APPEALS), HE SUBMITTED THAT THE ORDER OF THE LD.CIT (APPEALS) IS CRYPTIC AND HE HAS NO SERIOUS OBJECTION IN SENDING BACK THE ISSUE TO THE FILE OF THE LD.CIT(APPEALS) FOR FRESH CONSIDERATION. 6. ON HEARING BOTH THE PARTIES, WE ARE OF THE CONS IDERED VIEW THAT THIS MATTER HAS TO BE RESTORED TO THE FILE OF THE LD.CIT(APPEALS) FOR PASSING A SPEAKING AND REASONED ORDER ON THE ISSUE OF DEDUCTION UNDER SECTION 10B OF THE ACT. THUS, WE RESTORE THIS ISSUE TO THE FILE OF THE LD.CIT(APPEALS) WHO SHALL DE CIDE IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7 . COMING TO THE CROSS OBJECTION FILED BY THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE FILED ADDITIONAL EVIDENCES IN RESPECT OF 4 ITA NO . 2 5 3 9/MUM/201 0 AND CO NO. 205 /MUM/201 0 , A.Y.2006 - 07 M/S MWH INDIA LTD. GROUND NOS.1 TO 4 OF THE CROSS OBJECTIONS I.E. DISALL OWANCE IN RESPECT OF PROVISION F OR PROFESSIONAL FEE, DISALLOWANCE IN RESPECT OF PROVISION FOR CONTRACTUAL PAYMENTS AND ADDITION IN RESPECT OF WRITE OFF OF EXCESS PROVISION FOR SOLE/NON MOVING CONTRACTS. 8 . TH E LD. DR SUBMITS THAT THESE GROUNDS MAY ALSO BE RESTORED TO T H E LD. CIT (APPEALS) AS THE ASSESSEE FILED ADDITIONAL EVIDENCES . 9. CONSIDERING THE SUBMISSION OF THE PARTIES WE RESTORE THESE GROUNDS OF CROSS OBJECTION OF THE ASSESSEE TO THE FILE OF THE LD.CIT(APPEALS) WHO SHALL CONSIDER THEM AND DECIDE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCES FILED BEFORE US , ESPECIALLY PAGES 55, 56, 73, 79, 45 AND 80 OF THE PAPER BOOK . THUS, WE RESTORE THESE GROUNDS TO THE LD.CIT(APPEALS) WHO SHALL DECIDE IN ACC ORDANCE WITH LAW. 10 . COMING TO GROUND NO.5 OF CROSS OBJECTION I.E. DISALLOWANCE U/S 40 ( A ) (IA) FOR SHORT DEDUCTION OF TDS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE IS SQUARELY COVERED IN ASSESSEES FAVOUR BY THE COORDINATE BENCH OF THE TRI BUNAL, WHEREIN, IT WAS HELD THAT PROVISIONS OF SECTION 40 (A) (IA) HAVE NO APPLICATION FOR SHORT DEDUCTION OF TDS. HE PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCHES IN THE CASES OF ACIT VS. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD IN ITA NO.746/MUM/ 2014 DATED 19.2.2016 AND ACIT VS. LAMHAS SATELLITE SERVICES LTD. IN ITA NO.5966/MUM/2013 DATED 16.3.2016. 5 ITA NO . 2 5 3 9/MUM/201 0 AND CO NO. 205 /MUM/201 0 , A.Y.2006 - 07 M/S MWH INDIA LTD. 11 . WE HAVE PERUSED THE ORDERS OF THE TRIBUNAL PLACED BEFORE US AND FIND THAT IN THESE TWO DECISIONS, IT WAS HELD THAT PROVISIONS OF SECTION 40 ( A ) (IA) CANNOT BE INVOKED WHERE THE ASSESSEE DEDUCTS TAX AT LOWER RATES. THE TRIBUNAL FOLLOWED THE DECISIONS OF THE HONBLE CALCUTTA AND MADRAS HIGH COURTS. THEREFORE, RESPECTFULLY FOLLOWING THE SAID DECISIONS, WE ALLOW THIS GROUND OF THE CROSS OBJECTION OF THE ASSESSEE. 1 2 . GROUND NO.6 IS RELATING TO COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT BY ADDING BACK PROVISION FOR GRATUITY AND PROVISION FOR VARIOUS EXPENSES. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN SO FAR AS GRATUITY IS CONCERNED, THIS IS DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE AND IN RESPECT OF PROVISION FOR VARIOUS EXPENSES, HE SUBMITS THAT THE ASSESSING OFFICER MAY BE DIRECT ED FOR DELETING THE ADJUSTMENTS MADE TO BOOK PROFITS. 1 3 . ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS GROUND SHOULD GO BACK TO THE LD.CIT (APPEALS) FOR FRESH CONSIDERATION WHO SHALL EXAMINE AND DECIDE IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD. 14 . IN THE RESULT APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE . 6 ITA NO . 2 5 3 9/MUM/201 0 AND CO NO. 205 /MUM/201 0 , A.Y.2006 - 07 M/S MWH INDIA LTD. ORDER PRONOUNCED IN THE OPEN COURT ON THE 19 TH DAY OF MAY 2017 . SD/ - SD/ - ( RAJENDRA ) ( C.N.PRASAD ) / / ACCOUNTANT MEMBER JUDICIAL MEMBER / MUMBAI; / DATED 19 .0 5 . 2017 LR, SPS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, (ASSTT. REGISTRAR) , / ITAT, MUM 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. // TRUE COPY / /