GILTEDGE INFOTECH SERVICES P. LTD, MUMBAI V. ACIT CIR 8(1), MUMBAI

ITA 2560/MUM/2011

• Counselvise Citation: 256019914 RSA 2011
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 16-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P PATHAK
• Keywords: Business income
• Section: 10B

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI .. , !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM !./ I.T.A. NO. 2560 /MUM/2011 ( )( , $-, )( , $-, )( , $-, )( , $-, / / / / ASSESSMENT YEAR : 2007-08) M/S GILTEDGE INFOTECH SERVICES PVT. LTD., 501 TO 504, 5 TH FLOOR, SAI ARPAN, P.G. VORA ROAD, NEXT TO P.G. VORA SCHOOL, MIRA ROAD (E), THANE 401 107. ( ( ( ( / VS. THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 8(1), ROOM NO. 210/262, AAYAKAR BHAVAN, MAHARSHI KARVE MARG, MUMBAI - 20. #. !./ PAN : AAACG4096M ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) ./ 2 3 ! / APPELLANT BY : SHRI VIPUL JOSHI & SHRI NISHIT GANDHI 01./ 2 3 ! / RESPONDENT BY : SHRI C.P. PATHAK !($ 2 / // / DATE OF HEARING : 16-09-13 45- 2 / DATE OF PRONOUNCEMENT : 27-09-13 '6 / O R D E R PER P.M. JAGTAP, A.M. : .. , !'# THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) - 16, MUMBAI DATED 12-01-2011 WHEREBY HE CON FIRMED THE ACTION OF THE A.O. HOLDING THAT THE BUSINESS LOSS OF RS. 26,8 8,512/- OF ASSESSEES ELIGIBLE UNIT AT HYDERABAD U/S 10A OF THE INCOME TA X ACT, 1961 (THE ACT) ITA 2560/M/11 2 CANNOT BE SET OFF AGAINST BUSINESS INCOME OF ASSESS EES ANOTHER UNIT IN MUMBAI WHICH WAS NOT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF PROVIDING DATA PROCESSING, IT ENABLED S ERVICES AS WELL AS SOFTWARE. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 24-10-2007 DECLARING LOSS OF RS. 4,61,011/- A FTER CLAIMING DEDUCTION OF RS. 42,64,758/- U/S 10A OF THE ACT. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE AS SESSEE HAS TWO UNITS WHICH ARE ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT WHILE IT ALSO HAS OTHER UNITS WHICH ARE NOT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. IT WAS ALSO NOTICED BY THE A.O. THAT THE STP UNIT AT HYDERABAD ELIGIBLE FO R DEDUCTION U/S 10A HAS INCURRED A LOSS OF RS. 26,88,512/- AND THE SAID LOS S WAS ADJUSTED BY THE ASSESSEE AGAINST THE PROFIT DERIVED FROM OTHER UNIT S WHICH ARE NOT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. ACCORDING TO HIM, TH E LOSS INCURRED BY THE ASSESSEE FROM A SOURCE OF INCOME WHICH IS EXEMPT, C OULD NOT BE SET OFF AGAINST THE INCOME FROM OTHER SOURCE. ACCORDINGLY, THE CLAIM OF THE ASSESSEE FOR SET OFF OF LOSS FROM STP UNIT AT HYDERABAD WAS DISALLOWED BY HIM AND ADDITION OF RS. 26,88,512/- WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) UPHELD THE ACT ION OF THE A.O. ON THIS ISSUE RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT CH ENNAI IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD., 129 TTJ 273 (CHENNAI)[SB] WHEREIN IT WAS HELD THAT DEDUCTION U/S 10A IS UNDER TAKINGS SPECIFIC AND THEREFORE LOSS FROM NON-ELIGIBLE UNIT CANNOT BE SET OFF AGAINST THE PROFIT OF THE ELIGIBLE UNIT WHILE DETERMINING DEDUCTION U/S 10A O F THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFE RRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSER VED THAT A SIMILAR ISSUE AROSE IN THE CASE OF HINDUSTAN UNILEVER LTD. V. DEPUTY CO MMISSIONER OF INCOME-TAX ITA 2560/M/11 3 (2010) 325 ITR 102 (BOM.) BEFORE THE HONBLE BOMBAY HIGH COURT CITED BY THE LD. COUNSEL FOR THE ASSESSEE WHEREIN OUT OF FOUR UN ITS OF THE ASSESSEE WHICH WERE ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT , TH REE UNITS HAD RETURNED A PROFIT FOR THE RELEVANT YEAR WHILE THE FOURTH HAD R ETURNED A LOSS AND THE ASSESSEE IN THESE FACTS AND CIRCUMSTANCES OF THE CA SE WAS HELD TO BE ENTITLED FOR DEDUCTION U/S 10B OF THE ACT IN RESPECT OF THE PROFITS OF THE THREE ELIGIBLE UNITS WHILE THE LOSS SUSTAINED BY THE FOURTH UNIT W ERE ALLOWED TO BE SET OFF AGAINST THE NORMAL BUSINESS INCOME. SINCE THE PROV ISIONS OF SECTION 10A ARE ANALOGUES TO PROVISIONS OF SECTION 10B, WE RESPECTF ULLY FOLLOW THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUS TAN UNILEVER LTD. (SUPRA) AND DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSES SEE FOR SET OFF OF BUSINESS LOSS OF HYDERABAD UNIT ELIGIBLE FOR DEDUCTION U/S 1 0A OF THE ACT AGAINST BUSINESS INCOME OF MUMBAI UNIT WHICH IS NOT COVERED U/S 10A OF THE ACT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . )( ,7 2 #$ 8 2 9: ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2013 . '6 2 45- ;'(< 27-09-13 5 2 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; ;'( DATED 27-09-13 $.)(.!./ RK , SR. PS ITA 2560/M/11 4 '6 2 0)=> ?>- '6 2 0)=> ?>- '6 2 0)=> ?>- '6 2 0)=> ?>-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. @ () / THE CIT(A)- 16, MUMBAI 4. @ / CIT 8, MUMBAI 5. >$C 0))( , , / DR, ITAT, MUMBAI G BENCH 6. %, D / GUARD FILE. '6(! '6(! '6(! '6(! / BY ORDER, !1> 0) //TRUE COPY// E E E E/ // /!9 !9 !9 !9 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI