Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 1019 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 2 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-07-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Next Hearing Date
20-07-2010
Assessment Year
2002-2003
Appeal Filed On
09-05-2006
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PRAMOD KUMAR (AM) AND SMT. ASHA VIJAY ARAGHAVAN (JM) ITA NO. 2904/MUM/2006 ASSESSMENT YEAR-2002-03 M/S. ORBITECH SOLUTIONS LTD., UNIT-133, SDF-5, SEEPZ, ANDHERI-E, MUMBAI-400 096 PAN-AAACP4341E VS. THE ACIT, CIR. 8(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PORUS KAKA RESPONDENT BY: SHRI A.P. SINGH O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT. 8.3.2006 PASSED BY THE LD. CIT(A)-VIII, MUMBAI FOR THE ASSESSMENT YEAR 2002-03. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND EXPORT OF SOFTWA RE AND WAS ASSESSED TO TAX UNDER PAN NO. AAACO4461G. THE COMPANY WAS M ERGED WITH POLARIS SOFTWARE LAB LTD VIDE ORDER OF HIGH COURT O F MADRAS DT. 26.2.2003 EFFECTIVE FROM 1 ST NOVEMBER, 2002. FOR THE A.Y. 2002-03, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 31 ST OCT., 2002 ADMITTING A TOTAL INCOME OF RS. 29,68,10,211/-. THE COMPANY FILED ITS REVISED RETURN OF INCOME ON 25.6.2003 ADMITTING A TOTAL INC OME OF RS. 34,82,11,520/-. ITA NO.2904 /M/06 2 3. THE ASSESSEE HAS CLAIMED THE BENEFIT OF EXEMPTIO N U/S. 10A OF THE I.T. ACT AMOUNTING TO RS. 25,33,55,292/- IN RESPEC T OF THE PROFITS DERIVED FROM EXPORTS BY THE UNITS SITUATED IN SOFTWARE TECH NOLOGY PARKS OF INDIA (STPI) AT HYDERABAD AND CHENNAI (SPENCERS TOWERS & STEEPLE REACH). THE ASSESSEE HAS CLAIMED THE BENEFIT OF DEDUCTION U /S. 80HHE AMOUNTING TO RS. 29,96,23,465/- IN RESPECT OF THE P ROFITS DERIVED FROM EXPORTS BY THE UNITS SITUATED AT MUMBAI AND CHENNAI (SAKTHI TOWERS.) 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) VIDE ORDER D T. 8.3.2006 HAS WHILE AGREEING WITH THE SUBMISSION OF THE APPELLANT THAT DISALLOWANCE U/S. 10A(2)(III) IS NOT APPLICABLE AND HAS HELD THAT THE APPELLANT IS INELIGIBLE FOR DEDUCTION U/S. 10A DUE TO THE OPERATION OF SUB- SECTION 10A(9). 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) ASSESSE E PREFERRED AND APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: THE LD. CIT(A) HAS ERRED IN HOLDING THAT WHERE EIT HER OF THE TWO CONDITIONS, NAMELY THE OWNERSHIP OR BENEFICIAL INTEREST, THE PROVISION OF SUB-SECTION (9) OF SEC. 10A WILL APPLY . HE HAS FAILED TO APPRECIATE THAT BOTH THE CONDITION NEEDS TO BE SATI SFIED FOR A DISALLOWANCE U/S. 10A(9). THE CIT(A) SHOULD HAVE ALLOWED THE BENEFIT OF THE D OUBLE TAXATION RELIEF U/S. 90 AS PER THE PROVISIONS OF TH E I.T. ACT. 6. LD. COUNSEL FOR THE ASSESSEE SHRI PORUS KAKA POI NTED OUT THAT THIS ISSUE IS COVERED BY THE DECISION OF MUMBAI ITAT H BENCH VIDE ORDER DT. 9.2.2010 IN ASSESSEES OWN CASE IN ITA NOS. 3209 & 6645/M/05 IN WHICH IT HAS BEEN HELD AS UNDER: THE LD. COUNSEL FOR THE ASSESSEE WHILE REIT ERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, SUBM ITTED THAT SEC.10A BEING A BENEFICIAL PROVISION, SHOULD B E INTERPRETED LIBERALLY. HE SUBMITTED THAT SUB-SEC.[9] OF SEC .10A HAS BEEN SUBSEQUENTLY OMITTED FROM THE STATUTE BOOK BY THE FINANCE ACT, ITA NO.2904 /M/06 3 2003 WITHOUT ANY SAVING CLAUSE AND, THEREFORE, IT HAS TO BE CONSTRUED TO HAVE NEVER BEEN IN EXISTENCE. AS THE CASE IS BEING HEARD IN 2009, WHEN THE SAID PROVISION 6 IS NOT I N THE STATUTE BOOK ANY LONGER, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT IT CANNOT BE MADE APPLICABLE AT THIS STAGE. FOR THIS PROPOSITION HE PLACED RELIANCE UPON THE DECISION OF B BENCH OF THE TRIBUNAL AT BANGALORE IN THE CASE OF M/S GE THERM OMETRICS INDIA PVT. LTD. IN I.T.A.NOS.257 & 258/BANG/08 FOR A.YS . 03-04 AND 04- 05 DATED 30TH MAY, 2008 IN SUPPORT OF HIS CONTENTIO NS. FURTHER ON MERITS ALSO, HE SUBMITTED THAT THE ASSESSEE IS A 100% SUBSIDIARY OF COIC WHICH IN TURN IS 100% SUB SIDIARY OF CITI GROUP. THE TRANSFER OF OWNERSHIP OF SHARES OF ASSESSEE COMPANY IS FROM THE PARENT COMPANY TO ANOTHE R 100% SUBSIDIARY OF CITI GROUP AND, THEREFORE, ACCORDING TO HIM THERE IS NO TRANSFER OF LEGAL OWNERSHIP AS FAR AS THE UNDERTAKI NG IS CONCERNED, THE TRANSFER IS ONLY IN THE OWNERSHIP OF THE ASSESS EE COMPANY AND ALSO THERE IS NO TRANSFER OF BENEFICIAL INTEREST AS CONTEMPLATED U/S.10A[9] OF THE ACT. THUS, ACCORDING TO HIM, TH E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.10A OF THE ACT. 6. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT D URING THE RELEVANT PERIOD THE PROVISION OF SUB-SEC.[9] OF SEC.10A WAS VERY MUCH IN FORCE AND, THEREFORE, IS APPLICABLE TO THE CASE OF THE ASSESSEE. 7.HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDER ED THEIR RIVAL CONTENTIONS, WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE BANG ALORE ITAT IN THE CASE OF M/S GE THEROMETRICS INDIA PVT. LTD. VS. DY. CIT IN I.T.A.NOS.257 & 258/BANG/2008, DATED 30TH MAY, 200 8 WHEREIN WHILE DEALING WITH THE PROVISIONS OF SUB SEC .(9) OF SEC.10B OF THE INCOME TAX ACT, THE CO-ORDINATE BENCH RELI ED UPON THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE S OF KOLHAPUR CANESUGAR WORKS LTD. VS. UOI (2 SCC 536) AND RAYAL A CORPORATION P. LTD. VS. DIRECTOR OF ENFORCEMENT (2 SCC 412) AND ALSO IN THE CASE OF GENERAL FINANCE CO. VS. ACIT 257 ITR 328 FOR COM ING TO THE FOLLOWING CONCLUSION: 11. THEREFORE, EVEN THOUGH THE FINANCE ACT, 2003 MENTIONS THAT THE AFORESAID SUB-SECTION (9) IS OMITTED WITH EFFECT FROM 1-4-2004, IN VIEW OF THE FACT THA T THE SAID OMISSION IS DIFFERENT FROM REPEAL, THE SAVING CLAUSE PROVIDED IN SECTION 6 OF THE GENERAL CLAUSES ACT IS NOT APPLICABLE. THEREFORE, THE LEARNED CIT[A] IS NOT JUSTIFIED ITA NO.2904 /M/06 4 IN NOT APPRECIATING THE FACT THAT SECTION 10B SHOULD BE READ AS THOUGH IT NEVER HAD THE SAID SUB-SECT ION (9) IN IT IN ALL PROCEEDINGS UNDER THE ACT. AS THE APPELLATE PROCEEDINGS ARE CONTINUATION OF THE ASSESSMENT PROCEEDINGS, A S HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD., (187 ITR 686), EVEN FOR ASSE SSMENT YEAR 2003-04 THE AFORESAID SECTION 10B HAS TO BE READ WITHOUT THE IMPUGNED SUB-SECTION (9). THEREFORE, W E FIND MUCH FORCE IN THE STAND TAKEN BY THE ASSESSEE IN VIEW OF THE DECISION OF THE SUPREME COURT. EVEN ON THIS ISS UE, THE ASSESSEE IS BOUND TO SUCCEED. IT IS ORDERED ACCORDINGLY. 8 . AS THE LD. DR HAS NOT BROUGHT TO OUR NOTICE ANY DECISION TO THE CONTRARY, WE ARE INCLINED TO FOLLOW THE DECI SION OF THE CO- ORDINATE BENCH OF THE ITAT BANGALORE. IN THE CA SE BEFORE US THE ISSUE IS WITH REGARD TO THE APPLICABILITY OF THE O MITTED SUB-SEC.(9) OF SEC.10A OF THE ACT WHICH IS SIMILARLY WORDED AS SU B-SEC.(9) OF SEC.10B AND THE SAME DECISION IS APPLICABLE TO THE ISSUE BEFORE US ALSO. IN VIEW OF THE SAME, WE ARE CONSTRAINED TO FOLLOW THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL AT BANGAL ORE AND HOLD THAT SUB-SEC.(9) OF SEC.10A CANNOT BE APPLIED TO THE CAS E OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR ALSO. ACCORDINGLY, GROUND OF APPEAL NO.1 IS ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE IN ASSESSEES OWN CASE, WE ALLOW THE ASSESSEES APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF JULY, 2010 SD/- SD/- (PRAMOD KUMAR ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 23 RD JULY, 2010 RJ ITA NO.2904 /M/06 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO.2904 /M/06 6 DATE INITIALS 1 DRAFT DICTATED ON: 21.7.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 21. 7 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/ PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______
