Altruist Technologies Pvt. Ltd., Shimla V. DCIT, Circle , Parwanoo

ITA 331/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2080 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 13-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , . .., , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NOS. 427 & 428/CHD/2018 / ASSESSMENT YEARS : 2013-14 & 2014-15 M/S ALTRUIST TECHNOLOGIES PRIVATE LTD., 4 TH FLOOR, BEHIND HOTEL FIRHILL, NEAR TUNNEL NO.103, SHIMLA THE DCIT, CIRCLE, PARWANOO ! ./PAN NO: AAFCA3725N / APPELLANT /RESPONDENT (APPEAL AGAINST THE ORDER OF CIT(A),SHIMLA DATED 2 1/03/2018) ./ ITA NOS. 330 TO 332/CHD/2018 / ASSESSMENT YEARS : 2010-11 TO 2012-13 M/S ALTRUIST TECHNOLOGIES PRIVATE LTD., 4 TH FLOOR, BEHIND HOTEL FIRHILL, NEAR TUNNEL NO.103, SHIMLA THE DCIT, CIRCLE, PARWANOO ! ./PAN NO: AAFCA3725N (APPEAL AGAINST THE ORDER OF CIT(A) ,SHIMLA DATED 30.01.2018) '# $ % /ASSESSEE BY : SH. ROHIT GOEL, CA $ % / REVENUE BY : DR GULSHAN RAJ, CIT DR & $ # ' /DATE OF HEARING : 08.08.2018 ()* $ # ' /DATE OF PRONOUNCEMENT : 02.11. 2018 ! / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( A), SHIMLA [HEREINAFTER REFERRED TO AS CIT(A)] ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 2 2. SINCE IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEALS, HENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER. 3. THE APPEAL IN ITA NO. 330/CHD/2018 FOR ASSESSMENT YEAR 2010-11 IS TAKEN AS A LEAD CASE, WHEREIN, THE GROUNDS RAISE D BY THE ASSESSEE ARE AS UNDER:- 1. THAT LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER BY HOLDING THAT UNIT-3 IS RECONSTRUCTION OF EXISTING BUSINESS ACTIVITY OF THE COMPANY AND THEREBY HOLDIN G BOTH UNITS AS A SINGLE UNIT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN RESTRICTING THE DEDUCTION U/S 80IC IN RESPECT OF UNIT-3 ACCORDING TO THE ELIGIBILITY OF PERCENTAGE DEDUCTION U/S 80IC FOR UNIT-2 3. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN HOL DING INITIAL ASSESSMENT YEAR OF UNIT-3 SAME AS OF UNIT-2 . 3. SINCE ALL THE THREE GROUNDS ARE INTERLINKED, HEN CE, THEY ARE TAKEN TOGETHER FOR ADJUDICATION. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INFORMATION AND COMMUNICATION TECHNOLOGY SINCE ASSESSMENT YEAR 2006 -07. THE ASSESSEE CLAIMED DEDUCTION U/S 80IC OF THE INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT') IN RESPECT OF ITS TWO UNITS NAMELY UNITII AND UNIT- III. FOR THE UNIT-2, THE ASSESSEE TOOK THE INITIAL ASSESSMENT YEAR AS 2006-07 AND FOR UNIT-3, THE INITIAL ASSESSMENT YEAR FOR CLAIMING EXEMPTION U/S 80IC OF THE ACT WAS TAKEN AS ASSESSME NT YEAR 2010-11. THE ASSESSING OFFICER, HOWEVER, OBSERVED THAT THE B USINESS OPERATION ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 3 OF THE ASSESSEE COMPANY AT BOTH THE BUSINESS PREMIS ES (UNIT II & UNIT III) WAS IDENTICAL AND FURTHER THAT UNIT III W AS CARRYING OUT ITS OPERATION AT THE REGISTERED OFFICE OF THE COMPANY W HICH WAS OF UNIT NO. II ALSO, HENCE, IT AMOUNTED SPITTING / RECONSTR UCTION OF AN EXISTING BUSINESS. HE, THEREFORE, HELD THAT UNIT-II I WAS NOT A NEW UNIT WITHIN THE MEANING OF SECTION 80IC OF THE ACT AND ITS INITIAL ASSESSMENT YEAR WOULD BE THE SAME AS OF THE UNIT-I I. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE APPEAL BEFORE THE CIT( A). 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE FINDINGS OF THE LOWER AUTHORITIES THAT BOTH THE UNITS WERE BEING RUN BY THE ASSESSEE FROM THE SAME PREMISES WAS WRON G. THAT THE UNITII WAS BEING OPERATED FROM STPI BUILDING, SHIM LA W.E.F. 30.3.2007. THE LD. COUNSEL FOR THE ASSESSEE IN THIS RESPECT HAS PLACED RELIANCE UPON THE DIC (DISTRICT INDUSTRIES CENTRE), REGISTRATION LETTER DATED 30.3.2017, WHEREIN, THE ADDRESS OF THE ASSESS EE UNITII HAS BEEN MENTIONED AS STPI BUILDING, BLACK 24, SDA COM PLEX SHIMLA. IT HAS BEEN CLAIMED THAT, WHEREAS, UNIT-III OF THE ASSESSEE WAS BEING RUN FROM 4 TH FLOOR, ALTRUIST TECHNOLOGIES PRIVATE LIMITED, BEHI ND HOTEL FIRHILL, NEAR TUNNEL NO. 103, SHIMLA. THE LD. COUNSEL IN THIS RESPECT HAS RELIED UPON THE COPY OF THE LETTER OF T HE DIC REGISTRATION OF UNIT-III PLACED AT PAPER BOOK PAGE NO. 42. HE HA S FURTHER SUBMITTED THAT WITH A VIEW TO ESTABLISH A NEW UNIT (UNIT-III), THE ASSESSEE COMPANY ON 21.1.2008 HAD PURCHASED A BUILD ING AT THE AFORESAID ADDRESS OF UNIT-III. THE PREMISES AT THAT TIME WAS ON RENT TO SOME OUTSIDE PARTIES. THEREAFTER, THE PREMISES W AS VACATED AND THE ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 4 REGISTERED OFFICE OF THE ASSESSEE COMPANY WAS SHIFT ED TO SAID PREMISES IN ASSESSMENT YEAR 2009-10. THE NECESSARY REGISTRATION AND APPROVAL WERE OBTAINED AND NEW UNIT-III WAS STARTED AT THE SAID PREMISES, THE OPERATION OF WHICH HAD COMMENCED IN A SSESSMENT YEAR 2010-11 WITH NEW EMPLOYEES AND NEW PLANT & MACHINER Y. THE LD. COUNSEL FOR THE ASSESSEE HAS DEMONSTRATED THAT UNIT II AND UNIT-III WERE BEING OPERATED FROM SEPARATE BUILDINGS WITH S EPARATE EMPLOYEES, SEPARATE CLIENTAGE AND SEPARATE SALE TAX REGISTRATION NUMBERS AND SEPARATE REGISTRATION WITH DISTRICT IND USTRIES CENTRE, AS GIVEN IN THE FOLLOWING CHARTS:- PARTICULARS UNIT-II UNIT-III NAME AND ADDRESS OF THE UNIT ALTRUIST TECHNOLOGIES PVT LTD, UNIT-II, BLOCK 24, SDA COMMERCIAL COMPLEX, STPI BUILDING KASUMPTI, SHIMLA ALTRUIST TECHNOLOGIES PVT LTD. UNIT- III, 4THFLOOR,ALTRUIST MOUNT, BEHIND FIRHILL, SHIMLA DISTANCE BETWEEN THE TWO UNITS 7 KMS. SERVICE TAX REGISTRATION NO. AAFCA3725NST001 SALES TAX REGISTRATION NO. 9658 14158 REGISTRATION WITH DISTRICT INDUSTRIES CENTRE, SHIMLA NO. 02/011/21/00038 DATED 30.3.2007 NO. 02/11/21/00256 EFFECTIVE FROM 31.12.2009 DATE OF COMMENCEMENT OF PRODUCTION 21.09.2005 31.12.2009 INITIAL A.Y. U/S 80-IC A.Y. 2006-07 A.Y. 2010-11 ACCOUNTS BOOKS SEPARATELY MAINTAINED AND DULY AUDITED SEPARATELY MAINTAINED AND DULY AUDITED INVESTMENT IN 45,16,158/- 76,15,962/- ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 5 COMPUTERS (BEING PRIMARY PLANT & MACHINERY) IN A.Y.2010-11 (100% NEW PURCHASES WITH NO TRANSFERS FORM UNIT-II) ATTRIBUTABLE PROFITS 20,85,23,896/- 1,06,90,722/- NO. OF EMPLOYEES AS OF DATE OF FORMATION OF UNIT-3. 175 EMPLOYEES 27 EMPLOYEES UNIT-II CLIENTS UNIT II INVOICED AMOUNTS (RS.) BHARTI AIRTEL 173825288 BHARTI AIRTEL SIMLA 1108148 BHARTI AIRTEL-MOHALI 5820103 BHARTI AIRTEL KOLKATA 125176 BHARTI AIRTEL-DELHI 1428765 IDEA CELLULAR LTD 11223942 MTNL-DELHI 3865460 RCIL-MUMBAI 121567046 TATA TELESERVICES LTD., MUMBAI 25859599 TOTAL 34,38,23,527 UNIT-III CLIENTS UNIT-III INVOICED AMOUNTS (RS.) AIRCEL LAD 1061050 HUNGAMA DEBTOR 4002574 MTNL-MUMBAI 258361 SHOTFORMATS DIGITAL PRODUCTIONS PVT. LTD 1469686 AMA INDIA CONSULTANTS INCOME 610786 FEDERATION OF ALL INDIA ALUMINUM UTENSILS MANUFAC 18000 THE TRIBUNE TRUST 200000 TOTAL 17,169,557 ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 6 5. IT HAS BEEN FURTHER EXPLAINED THAT THE CLIENTAGE AND PROJECT BEING SERVICED FROM UNITIII WERE FRESH, THE COMPAN Y EARLIER WAS GIVING SERVICES IN RELATION TO THE ONE PRODUCT I.E. VOICE CHAT TO ITS CLINES LIKE AIRTEL, RELIANCE, IDEA AND TATA. HOWEVE R, SINCE THE BUSINESS OF THE COMPANY HAD GROWN UP AND NEED WAS F ELT TO START A NEW UNIT ALSO SO AS TO EXPAND ITS AREA OF SERVICE, HENCE, A SEPARATE UNIT WAS STARTED WHEREFROM THE SERVICES INTO OTHER PRODUCTS TO OTHER NON-TELCO COMPANIES / CLIENTS IN THE FIELD OF INFO RMATION TECHNOLOGY AND SOFTWARE SERVICES WERE PROVIDED. THA T THE UNIT-III OF THE ASSESSEE COMPANY HAS BEEN RUNNING IN THE COMPAN Y OWNED PREMISES SPREAD OVER FOUR FLOORS AND HAS TREMENDOUS CAPACITY TO GROW AND MAKE BIG MARK IN MOBILE VALUE ADDED SERVICES AN D INFORMATION TECHNOLOGY INDUSTRIES AND THAT THE BUSINESS OF THE COMPANY HAS SEEN A TREMENDOUS GROWTH. IT HAS BEEN FURTHER EXPLAINED TH AT THOUGH, THE BUILDING USED OF UNIT III WAS EARLIER REGISTERED O FFICE OF THE COMPANY, HOWEVER, THE SAID BUILDING NOW HAS BEEN U SED FOR THE OPERATION OF UNIT-III, WHEREAS, THE UNIT-II HAS BEE N SEPARATELY RUNNING FROM ANOTHER BUILDING SITUATED AT A DISTAN CE OF 7 KMS. 6. WE FIND THAT THE ABOVE CONTENTIONS OF THE ASSESS EE HAVE NOT BEEN REBUTTED BY THE LOWER AUTHORITIES. THE ONLY OB JECTION PUT BY THE ASSESSING OFFICER WAS THAT THE BUILDING / ADDRESS O F UNIT-III WAS EARLIER THE REGISTERED OFFICE OF THE COMPANY, HOWEV ER, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT UNIT-II WAS ALSO RUN FROM THIS BUILDING. IN OUR VIEW, MERELY BECAUSE THE ASSESSEE COMPANY HAD STARTED CONDUCTING ITS OPERATION OF UNITIII, FROM ITS REGISTERED OFFICE, THAT DOES NOT MEAN THAT THE ASSESSEE COMPAN Y HAS BEEN SPLIT ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 7 OUT OR RECONSTRUCTED OUT OF UNIT-II. THERE IS NO AL LEGATION THAT THE PLANT AND MACHINERY OF UNITII HAS BEEN USED FOR UN IT-III. MOREOVER, THE ASSESSEE COMPANY HAS ALSO NOT ONLY SHOWN TREMEN DOUS GROWTH IN BUSINESS BUT HAS ALSO DEMONSTRATED THAT IT HAS BEE N DEALING WITH AND ATTRACTING NEW CLIENTS AND SERVICING IN NEW PRODUCT S. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN DENYING THE CLAIM OF THE ASSESSEE BY ASSUMING THAT UNIT-III WAS NOT A NEW UNIT OR THAT IT WAS STARTED BY WAY OF SPITTING OR RECONSTRUCTION OF AN EXISTING UNIT. THE ORDERS OF THE LOWER AUTHORITI ES ARE THEREFORE, SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO GIVE RELIEF TO THE ASSESSEE AS PER THE PROVISIONS OF SECTION 80IC OF T HE ACT TREATING THE UNIT-III AS A SEPARATE AND DISTINCT UNIT. THE APPEA L OF THE ASSESSEE IS HEREBY ALLOWED. 7. SINCE THE ISSUE INVOLVED IN ALL THE APPEALS FILE D BY THE ASSESSEE IS IDENTICAL, OUR FINDING ARRIVED AT IN ITA NO. 330 /CHD/2018 WILL APPLY MUTATIS-MUTANDIS TO APPEALS FILED BY THE ASSE SSEE FOR OTHER ASSESSMENT YEARS I.E. IN ASSESSMENT YEAR 2011-12 ( ITA NOS. 331/CHD/2018) AND ASSESSMENT YEAR 2012-13 (ITA NO. 332/CHD/2018) . ACCORDINGLY, THESE, APPEALS OF THE ASSESSEE ARE ALL OWED. ITA NO. 428/CHD/2018 (A.Y.2014-15) 8. IN THIS APPEAL, BESIDES THE IDENTICAL GROUNDS RAISED I N ITA NO. 330/CHD/2018, WHICH WE HAVE ADJUDICATED ABOVE, THE ASSESSEE HAS ITA NOS. 427 & 428, 330 TO 332/CHD/2018-- M/S ALTRUIST TECHNOLOGIES PRIVATE LTD,SHIMLA 8 TAKEN ANOTHER GROUND AGITATING THE ACTION OF THE CI T(A) IN CONFIRMATION THE DISALLOWANCE OF RS. 7,02,090/-. 9. NO ARGUMENT HAVE BEEN ADDRESSED BY THE LD. COUNS EL FOR THE ASSESSEE ON THIS ISSUE, HENCE, THIS GROUND OF APPEA L IS DISMISSED AS NOT PRESSED. THIS APPEAL OF THE ASSESSEE, THEREFO RE, STANDS PARTLY ALLOWED. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA N OS. 330 TO 332/CHD/2018 AND 427/CHD/2018 STANDS ALLOWED WHEREA S ITA NO. 428/CHD/2018 STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.11.2018 SD/- SD/- ( ' . . , $ % / B.R.R. KUMAR) & '/ ACCOUNTANT MEMBER ( ( ) / SANJAY GARG ) * ' / JUDICIAL MEMBER +, /DATE: 02.11. 2018 .. + $ , #-./ 01. #/ COPY OF THE ORDER FORWARDED TO : 1. 0/ !3/ THE APPELLANT 2. ,4!3/ THE RESPONDENT 3. 5#/ CIT 4. 5# (0/)/ THE CIT(A) 5. .8 , # 9, 0/' 9, :; / / ASSISTANT REGISTRAR