ITO 10(2)(4), MUMBAI V. TRICOM INFOTECH SOLUTIONS LTD, MUMBAI

ITA 3710/MUM/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1101 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Depreciation; Corroborative evidences; Unabsorbed depreciation
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3710/M/2014 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER- 10(2)(4), 431, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI - 400020 VS. M/S. TRICOM INFOTECH SOLUTIONS LTD., TRICOM HOUSE, GANDHI ESTATE, SAFED POOL, ANDHERI KURLA, SAKINAKA, ANDHERI (EAST) MUMBAI 400 072 PAN: AABCG 8618E (APPELLANT) (RE SPONDENT) CO NO.188/M/2015 (ARISING OUT OF ITA NO.3710/M/2014) ASSESSMENT YEAR: 2009-10 M/S. TRICOM INFOTECH SOLUTIONS LTD., TRICOM HOUSE, GANDHI ESTATE, SAFED POOL, ANDHERI KURLA, SAKINAKA, ANDHERI MUMBAI 400 072 PAN: AABCG 8618E VS. INCOME TAX OFFICER- 10(2)(4), 430-A, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 17.09.2018 DATE OF PRONOUNCEMENT : 30.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL BY THE REVENUE AND THE CROSS OB JECTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORD ER DATED ITA NO.3710/M/2014 CO NO.188/M/2015 M/S. TRICOM INFOTECH SOLUTIONS LTD. 2 03.03.2014 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. AT THE OUTSET, WE WOULD LIKE TO MENTION THAT NE ITHER ASSESSEE NOR THE AUTHORISED REPRESENTATIVE WERE PRE SENT S AT THE TIME WHEN THE CASE WAS CALLED UP FOR HEARING. WE A RE THEREFORE PROCEEDING TO DISPOSE OF THE APPEAL ALONG WITH CO O F THE ASSESSEE AFTER HEARING THE LD. D.R. AND CONSIDERING THE MERITS OF THE CASE. 3. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE A.O TO ALLOW THE CLAIM OF DE DUCTION UNDER 10A AT THE INITIAL STAGE OF PROFIT WITHOUT SET OFF OF THE CARRIED FORW ARD BUSINESS LOSSES AND DEPRECIATION AGAINST THE GROSS TOTAL INCOME. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VERY OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUND OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) O N THE ABOVE GROUND BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 4. THE ISSUE RAISED IN FIRST GROUND OF APPEAL IS AG AINST THE DIRECTION OF LD. CIT(A) TO AO TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT IN RESPECT OF PROFIT WITHOUT SETTING OFF THE BROUGHT FORWARD BUSINESS LOSSES AND DEPRE CIATION AGAINST THE GROSS TOTAL INCOME. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF ENABLING INFORMATION TECHNOLOGY, BACK O FFICE SUPPORT FUNCTIONS, INVESTMENTS IN ENTERPRISES AND OTHER CON NECTED SERVICES. DURING THE YEAR THE ASSESSEE FILED NIL R ETURN OF INCOME BY CLAIMING DEDUCTION UNDER SECTION 10A AT RS.2,21, 70,299/- ITA NO.3710/M/2014 CO NO.188/M/2015 M/S. TRICOM INFOTECH SOLUTIONS LTD. 3 AND AFTER SETTING OFF THE BUSINESS LOSSES TO THE EXTENT OF RS.56,09,038/-. THE ASSESSEE CARRIED FORWARD THE U NABSORBED DEPRECIATION AT RS.2,59,63,139/- AND BUSINESS LOSS OF RS.67,93,175/- IN ADDITION TO LONG TERM CAPITAL LOS S OF RS.15,99,68,929/- TO ASSESSMENT YEAR 2010-11. THE BOOK PROFIT OF THE ASSESSEE UNDER SECTION 115JB WAS COMPUTED AT RS.1,04,29,227/-. THE A.O. RESTRICTED THE DEDUCTIO N UNDER SECTION 10A AT RS.26,45,869/- BY ALLOWING THE SET O FF OF BROUGHT FORWARD LOSSES AND DEPRECIATION TO THE EXTENT OF RS.3,26,62,434/- BEFORE ALLOWING DEDUCTION U/S 10A OF THE ACT. 6. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) ALL OWED THE APPEAL BY FOLLOWING THE DECISION OF HONBLE KARNATA KA HIGH COURT IN THE CASE OF CIT VS. YOKOGAVA INDIA LTD. 34 1 ITR 385 (KAR.) AND THUS DIRECTED THE AO TO ALLOW THE DEDUCT ION UNDER SECTION 10A OF THE ACT BEFORE SETTING OFF THE BROU GHT FORWARD UNABSORBED DEPRECIATION AND UNABSORBED LOSSES. 7. AFTER HEARING THE LD. D.R. AND PERUSING THE RELE VANT RECORDS PLACED BEFORE US INCLUDING THE DECISION ON THE SUBJECT OF VARIOUS HIGH COURTS INCLUDING THE JURISDICTIONAL HI GH COURT AND THE ONE RELIED UPON BY THE LD. CIT(A), WE FIND THAT THE ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE HOLDING THAT THE DEDUCTION UNDER SECTION 10A HAS TO BE ALLOWED BEFORE ALLOWING THE SET OFF OF BROUGHT FORWARD UNAB SORBED DEPRECIATION AND UNABSORBED LOSSES. EVEN THE DECIS ION OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN AFFIRMED BY T HE HONBLE SUPREME COURT VIDE ORDER DATED 16.12.2016. IN VIEW OF THE SAID ITA NO.3710/M/2014 CO NO.188/M/2015 M/S. TRICOM INFOTECH SOLUTIONS LTD. 4 DECISION OF THE HONBLE SUPREME COURT, WE DISMISS T HE APPEAL OF THE REVENUE AND ACCORDINGLY THE ORDER OF THE LD. CI T(A) IS UPHELD ON THIS ISSUE. 8. BY WAY OF FILING THE CROSS OBJECTION, THE ASSESS EE CHALLENGED THE CONFIRMATION OF ADDITION BY LD. CIT(A) TO THE T UNE OF RS.50 LAKHS. 9. AFTER OBSERVING THE RECORDS BEFORE US AND AFTER HEARING THE LD. D.R. WE FIND THAT THE ASSESSEE HAS NOT FILED NE CESSARY SUPPORTING EVIDENCES FOR VERIFICATION OF EXPENSES C LAIMED DURING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE SEVERA L OPPORTUNITIES WERE GIVEN TO THE ASSESSEE AND SO MUC H SO THAT EVEN IN THE APPELLATE STAGE THE ASSESSEE COULD NOT FILE THE NECESSARY EVIDENCES BEFORE LD. CIT(A). THE LD. CIT( A) AFFIRMED THE ADDITION AS MADE BY THE AO BY OBSERVING AND HO LDING AS UNDER: 2.4 I HAVE CAREFULLY CONSIDERED THE IMPUGNED ASSES SMENT ORDER AND THE AOCE SUBMISSION OF THE APPELLANT. I DO NOT FIND ANY MERI T IN THE CONTENTION OF THE APPELLANT THAT IN SPITE OF MR.SANGHAVI HAVING APPEA RED FROM TIME TO TIME, STILL THE ASSESSMENT HAS BEEN COMPLETED U/S.144. AS DISCUSSED ABOVE, IN SPITE OF SEVERAL OPPORTUNITIES GIVEN, THE APPELLANT WAS NOT IN A POS ITION TO FILE THE REQUIRED DETAILS CALLED FOR BY THE AO. PARA 3.4 AND 3.6 OF THE ASSES SMENT ORDER INDICATES THAT THE AO HAD CALLED FOR VARIOUS DETAILS WHICH WERE NOT PRODU CED BY THE APPELLANT WITH SUPPORTING DOCUMENTS AND EVIDENCES. MERELY FILING O F COMPUTERIZED PRINTOUT WOULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED. EVEN DURING THE COURSE OF APPELLATE PROCEEDING, NO SUPPORTING DOCUMENTS LIKE BILLS, VOUCHERS, ETC. WERE FILED BEFORE ME. EVEN TWO YEARS AFTER COMPLETION OF THE A SSESSMENT, THE APPELLANT WAS NOT IN A POSITION TO CLARIFY ANY OF THE ISSUES RAIS ED IN THE APPEAL WITH DOCUMENTARY PROOF. IN THE ABSENCE OF EVIDENCE, THE AO HAD NO OP TION BUT TO RESORT TO PASSING ORDER U/S.144 OF L.T.ACT. HENCE, I UPHOLD THE ACTION OF THE AO AND THE ADHOC ADDITION MADE RS.50,00,000/- MADE IS HEREBY SUSTAINED. THIS GROUND OF APPEAL IS DISMISSED. 10. WE OBSERVE THAT THE ASSESSEE IS NOT CO-OPERATIV E IN FILING THE DETAILS BEFORE THE AUTHORITIES BELOW AND ALSO W HEN THE CASE ITA NO.3710/M/2014 CO NO.188/M/2015 M/S. TRICOM INFOTECH SOLUTIONS LTD. 5 WAS CALLED UP FOR HEARING BEFORE US NEITHER ASSESSE E NOR HIS AUTHORISED REPRESENTATIVE WAS PRESENT BEFORE THE BE NCH TO ATTEND THE HEARING. AFTER PERUSING THE RECORDS BEF ORE US INCLUDING THE IMPUGNED ORDER, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF LD. CIT(A) WHICH WILL PROMPT US TO TAK E A DECISION IN VARIANCE TO THE FINDING OF THE LD. CIT(A). ACCORDI NGLY, WE UPHOLD THE ORDER OF LD. CIT(A) AND THE CO FILED BY THE ASS ESSEE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2018. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30.11.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.