ACIT (OSD), CORP RANGE-1, CHENNAI V. DOTCOM INFOWAY LTD, CHENNAI

ITA 3483/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8851 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 23-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DRS BHARATH
• Keywords: Set aside
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , ! , ' # BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R ! ./ ITA NOS.3483 & 3484/CHNY/2018 $ /ASSESSMENT YEARS: 2007-08 & 2009-10 ASST. COMMISSIONER OF INCOME TAX, CORPORATE RANGE-1, CHENNAI. VS. M/S. DOCTOM INFOWAY LTD., GNG HOUSE, 17 TH STREET, K BLOCK, 48, ANNA NAGAR EAST, CHENNAI 600 102. [PAN: AABCD 3233G] ( % /APPELLANT) ( &'% /RESPONDENT) % ( ) / APPELLANT BY : SHRI DRS BHARATH, CIT &'% ( ) /RESPONDENT BY : NONE * ( +' /DATE OF HEARING : 13.06.2019 ,-$ ( +' / DATE OF PRONOUNCEMENT : 17.06.2019 . / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE REVENUE FILED BOTH THE APPEALS AGAINST THE COMM ON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, CHENNAI , IN ITA NO.108/2009-10/A-1 & ITA NO.251/201314/A-1 DATED 28 .09.2018 FOR THE ASSESSMENT YEARS (AYS) 2007-08 & 2010-11, RESPECTIV ELY. 2. M/S. DOCTOM INFOWAY LTD., THE ASSESSEE, IS ENGAG ED IN SOFTWARE DEVELOPMENT (EXPORTS AND SALES). WHILE MAKING THE ASSESSMENT FOR AY ITA NOS.3483 & 3484/CHNY/2018 :- 2 -: 2007-08, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 10B FROM EXPORT UNIT AND A LOSS FROM THE LOCAL UNIT. THE AO FOUND THAT EXPORT DIVISION IS IN ANNA SALAI, CHENNAI, AND THE LOCAL DIVISION IS AT ANNA NAGAR EAST, CHENNAI B ESIDES ANOTHER UNIT AT MADURAI. THEREFORE, HE APPORTIONED CERTAIN EXPENSE S AT THE RATIO OF EXPORT TURNOVER AND LOCAL TURNOVER AND THEN ARRIVED THE ADJUSTED PROFIT OF EXPORT DIVISION AND THE ADJUSTED LOSS OF THE LOCAL DIVISION. AGAINST THE ADJUSTED EXPORT PROFIT, THE AO DEDUCTED THE ADJUSTE D LOCAL DIVISION LOSS AND THEN ARRIVED THE ADJUSTED PROFIT FOR THE PURP OSES OF S. 10B, BASED ON WHICH HE COMPUTED THE DEDUCTION U/S. 10B. FOR AY 2 010-11, AS IN AY 2007-08, THE ASSESSEE CLAIMED DEDUCTION U/S. 10B FR OM THE EXPORT DIVISION AND LOSS FROM THE LOCAL DIVISION. WHILE CO MPLETING THE ASSESSMENT, THE AO, AS MADE IN AY 2007-08, ARRIVED THE ADJUSTED PROFIT OF EXPORT DIVISION AND THE ADJUSTED LOSS OF LOCAL D IVISION. AGAINST THE ADJUSTED EXPORT PROFIT, THE AO DEDUCTED THE ADJUSTE D LOCAL DIVISION LOSS AND THEREAFTER DEDUCTED THE BROUGHT FORWARD LOSS AN D THEN FOUND THAT THERE WAS NO INCOME ON WHICH THE ASSESSEES CLAIM OF DEDUCTION U/S. 10B COULD BE ALLOWED. THUS, THE AO QUANTIFIED NIL DEDUCTION U/S 10B FOR THIS ASSESSMENT YEAR. 3. AGGRIEVED AGAINST THOSE ORDERS, THE ASSESSEE FIL ED APPEALS BEFORE CIT(A). THE LD. CIT(A) FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE ITA NOS.3483 & 3484/CHNY/2018 :- 3 -: OF LIASON INDIA PVT. LTD. VS. ITO [2008] 301 ITR (AT) 0306 (ITAT- CHENNAI) AND IN THE CASE OF SCIENTIFIC ATLANTA INDI A PVT. LTD. VS. ACIT [2010] 129 TTJ 273 (ITAT-CHENNAI SPECIAL BENCH) DIRECTED THE AO TO ALLOW DEDUCTION U/S. 10B AS CLAIMED BY THE ASSESSEE AND ALLOW THE LOSSES OF LOCAL DIVISION TO CARRY FORWARD FOR BOTH THE ASSESSMENT YEARS. AGGRIEVED AGAINST THOSE ORDERS, THE REVENUE FILED T HESE APPEALS WITH THE FOLLOWING COMMON GROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A) ERRED IN GIVING RELIEF TO THE ASSE SSEE BY HOLDING THAT DEDUCTION UNDER SECTION 10B IS ELIGIBLE WITHOUT SET TING OFF LOSSES OF THE CURRENT YEAR OF NON-ELIGIBLE UNITS AGAINST THE INCOMES OF THE ELIGIBLE UNITS. 3. THE LD. CIT(A) ERRED IN NOT APPLYING THE RATIONA LE OF THE APEX COURT DECISION IN M/S HIMATSINGIKE SEIDA CASE [2014 ] 48 TAXMANN.COM 357 (SC) , WHERE IT WAS HELD THAT THE E LIGIBLE DEDUCTION U/S.1OB WOULD BE PROFITS OF THE ELIGIBLE UNIT AFTER SET OFF OF LOSSES OF THE CURRENT YEAR, WHICH WAS NEITHER OVER-RULED NOR DISCUSSED IT IN THE YOKOGAWA INDIA LTD CASE (2017) 77 TAXMAN.COM 41 (SC ). 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE AO RESTORED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE PRESENTED TH E CASES ON THE LINES OF GROUNDS OF APPEAL, SUPRA, AND PLEADED THAT THE ORDERS OF LD. CIT (A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. N ONE WAS PRESENT ON BEHALF THE ASSESSEE ALTHOUGH THE HEARING NOTICE WAS SERVED ON THE ASSESSEE ON 06.02.2019 AND PLACED ON RECORD. ITA NOS.3483 & 3484/CHNY/2018 :- 4 -: 5. WE HEARD THE SUBMISSIONS MADE BY THE LD DR AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE HON'BLE SUPREM E COURT IN THE CASE OF CIT V. YOKOGAWA INDIA LTD , [ 2017] 77 TAXMANN.COM 41 SC/391 ITR 274 (SC) HELD THAT THOUGH S. 10A OF THE ACT, AS AMENDED, IS A PROVISION FOR DEDUCTION, THE STAGE OF DEDUCTION WOULD BE WHI LE COMPUTING THE GROSS TOTAL INCOME OF THE ELIGIBLE UNDERTAKING UNDE R CHAPTER-IV OF THE ACT AND NOT AT THE STAGE OF COMPUTATION OF TOTAL INCOME UNDER CHAPTER-VI. SINCE THE PROVISIONS OF SECTION 10A ARE PARI-MATERI A WITH THE PROVISIONS OF SECTION 10B, THEREFORE, WE DIRECT THE AO TO RE-C OMPUTE THE DEDUCTION U/S. 10B OF THE ACT IN ACCORDANCE WITH THE HON'BLE APEX COURTS DECISION, SUPRA AND RE-DETERMINE THE INCOME, AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, BOTH THE REVENUES APPEALS ARE TREAT ED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 17 TH JUNE, 2019 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, /! /DATED: 17 TH JUNE, 2019 . EDN, SR. P.S . ( &+01 21$+ /COPY TO: 1. % /APPELLANT 2. &'% /RESPONDENT 3. * 3+ ( )/CIT(A) 4. * 3+ /CIT 5. 1 45 &+ /DR 6. 56 7 /GF ITA NOS.3483 & 3484/CHNY/2018 :- 5 -: