ITO 2(3)(4), MUMBAI V. WESTERN OUTDOOR INTERATIVE P. LTD, MUMBAI

ITA 3563/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7694 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R DAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI R.K. PAND A ,(AM) ITA NO.3563/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD 2(3)(4) ROOM NO.552, AAYAKAR BHAVAN MUMBAI. ..( APPELLANT ) VS. M/S. WESTERN OUTDOOR INTERACTIVE PVT. LTD. 7 TH FLOOR, NANAVATI MAHALAYA 18, HOMI MODY STREET, FORT MUMBAI-400001. ..( RESPONDENT ) P.A. NO. (AAACW 0584 A) APPELLANT BY : SHRI K.R. DAS RESPONDENT BY : SHRI SHEKHAR GUPTA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGA INST THE ORDER DATED 6.3.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06 TAKING FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED IN ALLOWING DEDUCTION U/S.10A OF THE INCOME TAX ACT AMOUNTING TO RS.5,53,55,828/- IN RESPECT OF ITS UNIT IN SEEPZ. 2. THE LD. CIT(A) FAILED TO APPRECIATE THE FINDING OF THE ASSESSING OFFICER THAT NEW UNIT/DIVISION AT SEEPZ ITA NO.3563/M/09 A.Y: 05-06 2 HAS COME INTO EXISTENCE BY SPLITTING OF ASSESSEES EXISTING BUSINESS AND AS SUCH THE CONDITIONS LAID D OWN IN SECTION 10A OF THE I.T. ACT HAVE NOT BEEN FULFILLED . 2. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THE IMPUGNED ISSUE IS COVERED AGAINST THE REVENUE AND IN FA VOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITO VS. WESTERN OUTDOOR INTERACTIVE PVT. LTD. IN ITA NOS.314 AND 1711/MUM/2007 AND ITA NO.3920/M/2008 FOR ASSESSMENT YE ARS 2003-04, 2004-05 AND 2002-03 RESPECTIVELY DATED 12.8 .2009. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD THE COPY O F THE SAID ORDER OF THE TRIBUNAL . 3. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF SOFTWARE FOR IN-FLIGHT ENTERTAINMENT FOR AIRCRAFTS. T HE RETURN WAS FILED DECLARING TOTAL INCOME OF RS.1,21,610/- AFTER CLAIMING DEDUCTION U/S.10A RS.5,53,55,828/-. DURING THE COURSE OF ASSESSMENT, THE AO OBSERVED THAT SIMILAR DEDUCTION U/S.10A WAS CLAIMED BY T HE ASSESSEE IN RESPECT OF INCOME FROM ITS SEEPZ UNIT FOR THE ASSESSME NT YEARS 2003-04 AND 2004-05 WHICH HAS BEEN REJECTED BY OBSERVIN G THAT THE NEW UNIT/DIVISION AT SEEPZ HAS COME INTO EXISTENCE ONLY BY SPLITTING OF ASSESSEES EXISTING BUSINESS AND THEREFORE, CONDITIONS LAID DO WN IN ITA NO.3563/M/09 A.Y: 05-06 3 SEC.10A HAVE NOT BEEN FULFILLED BY THE ASSESSEE. THE FA CTS BEING IDENTICAL AND KEEPING IN VIEW THAT THE DEPARTMENTS A PPEALS AGAINST THE ORDER OF THE LD. CIT(A) ARE PENDING BEFORE THE TRIBUNAL, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL THE LD. CIT(A) FOLLOWING THE APPELLATE ORDER FOR THE EARLIER YEARS DIRECTED THE AO TO GRANT RELIEF U/S.10A OF THE ACT. THE TRIBUNAL IN A SSESSEES OWN CASE(SUPRA), HAS HELD VIDE PARA 5.4 AND 5.5. AS UNDER : 5.4 THUS, IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE HUMBLE OPINION THAT THE ASSESSEES NEW UNIT ALSO HA VING SUPPLIED THE SAME PRODUCT TO M/S. MAS LTD ON THE BA SIS OF THE OLD AGREEMENT, DOES NOT IN ANY WAY AFFECT TH E CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.10A OF THE ACT SPECIFICALLY WHEN IT IS NOT THE CASE OF THE REVENUE THAT ANY MACHINERY OF THE OLD UNIT HAS BEEN DIVERTED TO THE NEW UNIT OR THAT THE NEW UNIT WAS THE RESULT OF SPLITTI NG UP OF THE EXISTING NEW UNIT. THE CRITERIA ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS DENIED THE DEDUCTION ARE IRRELEVANT AS THEY ARE NOT THE CONDITION SPECIFIED U/S.10A OF THE ACT. THUS, WE UPHOLD THE ORDER OF THE LEA RNED CIT(A) ON MERITS. 5.5 EVEN OTHERWISE, THE ASSESSING OFFICER, IN THE E ARLIER ASSESSMENT YEARS 2000-01 AND 2001-02 IN SCRUTINY ASSESSMENTS U/S.143(3) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE SEEPZ UNIT ON THE SAME SET OF FACTS . IN OUR CONSIDERED OPINION, IT WAS NOT RIGHT ON THE PAR T OF THE ASSESSING OFFICER TO TAKE A CONTRARY VIEW. 4. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SUPRA, ALLOW THE CLAIM OF THE ASSESSEE AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE ITA NO.3563/M/09 A.Y: 05-06 4 MADE BY THE AO. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE, REJECTED. 5. IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.2.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.2.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.3563/M/09 A.Y: 05-06 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 29.1.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 2.2.10 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 12.2.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 15.2.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER