ITO 8(3)(4), MUMBAI V. Y-POINT TECHNOLOGIES (I) P. LTD, MUMBAI

ITA 3440/MUM/2010

• Counselvise Citation: 344019914 RSA 2010
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2001-2002
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Reassessment proceedings
• Section: 10B; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, G BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.3440/ MUM/2010 ASSESSMENT YEAR: 2001-02 INCOME TAX OFFICER 8(3)(4) .. APPELLANT 2 ND FLOOR, AAYAKAR BHAVAN,M.K. ROAD, MUMBAI VS Y-POINT TECHNOLOGIES (I) PVT.LTD. ,. RESPONDEN T WINCHESTER, 4 TH FLOOR, HIGH STREET, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI. PA NO.AAACE 4836 D APPEARANCES: ANURAG PRASAD, FOR THE APPELLANT NONE, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HA S CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 17 TH FEBRUARY, 2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING DEDUCTION U/S.10B AMOUNTING TO ` .96,54,945 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DOES NOT FU LFILL THE VARIOUS CONDITIONS LAID DOWN FOR CLAIMING THE SAID DEDUCTION. I.T.A NO.3440/ MUM/2010 Y-POINT TECHNOLOGIES (I) PVT.LTD 2 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE HAD FILED ITS RETURN OF INCOME DISCLOSING TOTAL INCOME AT ` .1,51,030 AND THE SAME WAS FINALLY ASSESSED AT ` .3,23,325(WHICH INCLUDED BUSINESS INCOME OF ` .1,72,192 AFTER ALLOWING DEDUCTION UNDER SECTION 10B OF THE ACT AMOUNTING TO ` .96,54,945 AND INCOME FROM OTHER SOURCES AMOUNTING TO ` .1,51,133). THIS SCRUTINY ASSESSMENT WAS, HOWEVER, REOPENED BY ISSUANCE OF NOTICE UNDER SECTION 148 ON 19.3.2008. IN THE COURSE OF REASSESSMENT PROCEEDINGS, IT WAS POINTED OUT TO THE ASSESSEE THAT THE CLAIM OF DEDUCTION WAS MADE FOR THE FIRST TIME IN THE ASSESS MENT YEAR 200102 AND IN THE PRECEDING ASSESSMENT YEARS I.E. 1999-2000 AND 2000- 2001, THE ASSESSEE WAS KNOWN AS M/S. E-PARLE SYSTEMS P.LTD. AND THAT DEDUCTION U NDER SECTION 80 HHE WAS ALLOWED TO THE ASSESSEE FOR THESE YEARS AMOUNTING T O ` .1,13,434 & ` .12,03,162, RESPECTIVELY. IT WAS ALSO POINTED OUT TO THE ASSES SEE THAT IN TERMS OF PROVISIONS OF SECTION 10-B, THE UNIT IN RESPECT OF WHICH BENEFIT UNDER SECTION 10-B IS CLAIMED IS A NEW UNIT.. THE AO WAS OF THE VIEW THAT SINCE THE AS SESSEE WAS CLAIMING DEDUCTION UNDER SECTION 10-B IN RESPECT OF AN OLD UNIT IN TH E NAME AND STYLE OF M/S. E-PARLE SYSTEMS P. LTD., WHICH DOES NOT SATISFY THE REQUIRE MENTS OF SECTION 10-B, ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED REQUIRI NG THE ASSESSEE TO EXPLAIN AS TO WHY BENEFIT OF SECTION 10B NOT BE DECLINED. THE SU BMISSION MADE BY THE ASSESSEE DID NOT IMPRESS THE ASSESSING OFFICER AND HE HELD T HAT SINCE DEDUCTION IS BEING CLAIMED IN RESPECT OF UNIT WHICH IS NOT A NEW UNIT AND IN RESPECT OF WHICH DEDUCTION UNDER SECTION 80 HHE IS GRANTED FOR THE ASSESSMENT YEARS 1999-2000 AND 2000- 2001, THE BENEFIT UNDER SECTION 10-B CANNOT BE GRAN TED. IN ADDITION TO THIS, OBJECTIONS WERE ALSO RAISED FOR REOPENING THE ASSES SMENT BUT THE SAME WAS REJECTED BY THE AO AS ALSO BY THE CIT(A). HOWEVER, AT THIS STAGE, WE ARE NOT REQUIRED TO GO DEEP INTO THE ISSUES RELATING TO REASSESSMENT PROCE EDINGS BECAUSE NOW WE ARE DEALING THE APPEAL FILED BY THE ASSESSING OFFICER A GAINST RELIEF GRANTED BY THE CIT(A) IN RESPECT OF QUANTUM DISALLOWANCE. 3. COMING BACK TO SEQUENCE OF EVENTS WITH REGARD TO QUANTUM DISALLOWANCE, THE AOS STAND FOR DECLINING THE BENEFIT UNDER SECTION 10B DID NOT FAVOUR WITH THE CIT(A) WHO REVERSED THE ACTION OF THE AO BY OBSERVI NG AS FOLLOWS: I.T.A NO.3440/ MUM/2010 Y-POINT TECHNOLOGIES (I) PVT.LTD 3 I HAVE CAREFULLY CONSIDERED THE INFORMATION ON REC ORD. THERE IS NO DISPUTE ON THE FACTS THAT THE APPELLANT COMMENCED HIS SOFTW ARE IN THE YEAR 1998-99 AS THE APPELLANT CLAIMED DEDUCTION U/S. 80 HHE FOR THE A.Y. 1999-2000 AND 2000-2001 WHICH WAS ALLOWED. HOWEVER, FOR A.Y. 200 1-02, HE CLAIMED THE DEDUCTION U/S.10B. THE CONDITIONS THAT ARE TO BE SA TISFIED FOR CLAIMING THE DEDUCTION U/S.10B ARE AS UNDER; I) IT MANUFACTURES OR PRODUCES ANY ARTICLES OR THINGS OR COMPUTER SOFTWARE. II) IT IS NOT FORMED BY THE SPLITTING UP OR THE RECONST RUCTION, OF A BUSINESS ALREADY IN EXISTENCE. III) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. THE FACT IS, THE APPELLANT IS SATISFYING THE CONDIT IONS AS LAID DOWN IN BOTH THE SECTIONS I.E. U/S.80HHE AND U/S. 10B. THE AOS OBJ ECTION THAT AS PER SECTION 80HHE(5) ONCE THE CLAIM WAS MADE U/S. 80HHE NO OTHE R DEDUCTION IS PERMISSIBLE UNDER ANY OTHER SECTION, THE LANGUAGE O F THIS SECTION IS QUITE CLEAR IT ONLY MEANS THAT IF PROFITS ARE ALLOWED AS DEDUCTION U/S. 80HHE, THE SAME PROFITS CANNOT BE ALLOWED UNDER ANY OTHER SECT ION FOR ANY ASSESSMENT YEAR. IT ONLY MEANS THAT THERE SHOULD NOT BE DOUBL E DEDUCTION FOR THE SAME AMOUNT. FURTHER, THE AO COMMENTED THAT, THE DEDUCT ION ALLOWABLE U/S. 80HHE IS ONLY 80% AGAINST THE DEDUCTION ALLOWABLE U /S.10B OF 100%. THERE IS NOTHING WRONG IF THE ASSESEE CHOOSES THE BETTER OPTION WHICH GIVES HIM MORE BENEFIT AS A MATTER OF TAX PLANNING. FURTHER, THE APPELLANT RELIED ON THE DECISION OF EFUNDS INTERNATIONAL PVT LTD. VS DCIT(2 008) 25 SOT 306(DEL), WHEREIN, THE HONBLE TRIBUNAL HELD THAT IT IS POSSI BLE FOR THE ASSESSEE TO CLAIM THE DEDUCTION UNDER SECTION 10B EVEN THOUGH THE ASS ESSEE CLAIMED DEDUCTION U/S. 80HHE EARLIER. THE ISSUE IS SQUARELY COVERED B Y THE ABOVE DECISION OF DELHI TRIBUNAL. HENCE, THE DEDUCTION U/S.10B IS AL LOWABLE TO THE APPELLANT. 4. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APP EAL BEFORE US. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDE NT DESPITE SERVICE OF NOTICE OF HEARING. WE, THEREFORE, PROCEED TO DECID E THE APPEAL OF THE REVENUE EXPARTE QUA THE RESPONDENT-ASSESSEE AFTER HEARING T HE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILAB LE ON RECORD. 6. HAVING HEARD THE LD D.R. WE FIND THAT AS EVIDENT FROM ANNEXURE-A TO THE ASSESSMENT ORDER THERE HAS ONLY BEEN CHANGE IN THE NAME OF THE ASSESSEE COMPANY I.T.A NO.3440/ MUM/2010 Y-POINT TECHNOLOGIES (I) PVT.LTD 4 INASMUCH AS THE COMPANY, WHICH WAS KNOWN AS E-PARLE SYSTEMS P.LTD., AND AS SUCH, THERE WAS NEITHER ANY CHANGE IN THE OWNERSHIP NOR I N THE UNIT OR ANY OTHER THINGS RELATING TO THE ASSESSEE COMPANY. IN THESE CIRCUMS TANCES, BY NO STRETCH OF LOGIC, IT CAN BE SAID THAT THE UNIT IN RESPECT OF WHICH BENEF IT UNDER SECTION 10B HAS BEEN CLAIMED, HAS BEEN FORMED BY WAY OF USING MACHINERY OR PLANT, WHICH HAS BEEN USED PREVIOUSLY BY THE SPLITTING UP OR THE RECONSTRUCTIO N OF A BUSINESS ALREADY IN EXISTENCE. WE FIND THAT AS HELD BY A CO-ORDINATE B ENCH OF THIS TRIBUNAL IN THE CASE OF EFUNDS INTERNATIONAL PVT LTD V. DCIT, THE CHOICE IS WITH THE ASSESSEE AS TO WHETHER CLAIM UNDER SECTION 80HHE AND UNDER SECTION 80B IS TO BE MADE AND THAT MERELY BECAUSE THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SE CTION 80HHE IN PAST, BENEFIT OF SECTION 10B CANNOT BE DECLINED. IN THIS VIEW OF TH E MATTER AND BEARING IN MIND THE ENTIRETY OF THE CASE, WE APPROVE AND AFFIRM THE CON CLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE. 7. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARI NG I.E. ON 28.4.2011 SD/- (D.MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 28 TH APRIL, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),18 MUMBAI 4. COMMISSIONER OF INCOME TAX, 8 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI