The ITO, Ward-1(3), JAMNAGAR V. M/s Shree Krishna Enterprise, JAMNAGAR

ITA 39/RJT/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6625 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 29-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Keywords: Business income
• Section: 10B

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI K. NAR A SIMHA CHARRY , JUDICIAL MEMBER ./ ITA NO . 39 /R JT /2015 / ASSESSMENT YEAR : 200 6 - 0 7 THE IT O , WARD - 1 (3 ) , JAMNAGAR VS M/S. SHREE KRISHNA ENTERP R ISE, PLOT 478/479, GIDC, PHASE - II DARED, JAMNAGAR PAN : AANFS9512J / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI AVINASH KUMAR , D.R A SSESSEE BY : SHRI M. J. RANPURA , C . A / DATE OF HEARING : 21 / 03/2017 / DATE OF PRONOUNCEMENT: 24 /03/2017 / O R D E R PER SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER : THE DEPARTMENT HAS FILED THE ABOVE APP EAL AGAINST THE ORDER OF LD.CIT(A) - I , JAMNAGAR DATED 03 / 02 / 201 4 F OR ASSESSMENT YEAR 200 6 - 20 07 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED CIT(A) - I HAS ERRED IN LAW AND ON FACTS DIRECTING AO NOT TO DEDUCT BUSINESS LOSS B EFORE COMPUTING EXEMPTED INCOME U/S 10B . 2. THAT ON FACS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER 3. ANY OTHER GROUND THAT THE REVENUE MAY RISE BEFORE OR DURING HEARING PROCEEDINGS BEFORE THE HON BLE ITAT. 4.IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT(A), JAMNAGAR MAY KINDLY BE SET - ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ITA NO.39/RJT/2015 A.Y.2006 - 07 - 2 - 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE S ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, WAS FIN ALIZED DETE RMINING THE TOTAL INCOME AT RS.18,40,714/ - AFTER ALLOWING SET OFF OF CARRY FORWARD LOSS OF RS.62,05,026/ - . ASSESSMENT WAS RE - O PENED U/S.147 AND NOTICE U/S.148 WAS ISSUED CALLING FOR THE NECESSARY DETAILS FROM THE ASSESSEE AND TO SHOW CAUSE AS TO WHY , AS PER PROVISIONS OF SECTION 10B OF THE INCOME - TAX ACT, 1961 , BROUGHT FORWARD LOSSES OF EARLIER YEARS SHOULD NOT HAVE BEEN SET OFF FIRST AGAINST THE PROFIT BEFORE ALLOWING DEDUCTION U/S.10B OF THE INCOME TAX ACT. 4. AFTER CONSIDERING THE ASSESSEE S SUBMISSIONS , TOTAL INCOME WAS DETERMINED AS UNDER PARTICULARS AMOUNT RS. AMOUNT RS. NET PROFIT AS PER PROFIT AND LOSS ACCOUNT RS.42,23,670/ - ADD: DISALLOWABLE/ADDITIONS: 1.INTEREST PAYMENT OF PRIOR PERIOD. 2.TOTAL DISALLOWANCE AS PER ORDER U/S.143(3) D ATED 12.06.2008 92,100/ - 12,05,074/ - RS.12,97,174/ - TOTAL INCOME RS.55,20,844/ - LESS: BUSINESS LOSS CARRIED OF EARLIER YEARS RS.62,05,026/ - BUSINESS LOSS TO BE CARRIED FORWARD RS.6,84,182/ - 5. LD. CIT(A), FOLLOWING THE DECISION OF HON'BLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS YOKOGAWA INDIA LTD., 341 ITR 385 (KAR) HAS ALLOWED THE ASSESSEE S CLAIM OBSERVING AS UNDER: 6.2 SO FAS AS GROUND OF APPEAL AGAINST ASSESSING THE TOTAL INCOEMOF RS.55,20,844/ - BEFORE GIVING EFFECT OF EARLIER YEARS C/F. LOSSES AT ITA NO.39/RJT/2015 A.Y.2006 - 07 - 3 - RS.62,05,026/ - IS CONCERNED, THE JUDGEMENT OF KARNATAKA HIGH COURT 341 ITR 385 RELIED UPON BY THE APPELLANT SQUARELY COVERS THE ISSUE IN QUESTION AS SECTION 10B IS AT PAR WITH SEC.10A SO FAR AS ALLOWANCE OF BUSINESS LOSS IS CONCERNED. AS THI S INCOME IS EXEMPT FROM TAXATION AS PER PROVISIONS OF SEC.10B, THIS DOES NOT COME INTO PICTURE WHILE COMPUTING GROSS TOTAL INCOME. THE DECISION IS VERY CLEAR THAT AFTER EXCLUSION OF EXEMPTED INCOME, THE LOSS HAS TO BE ADJUSTED AGAINST BUSINESS INCOME LEFT THERE ANY. HENCE THE AO IS DIRECTED NOT TO DEDUCT BUSINESS LOSS BEFORE COMPUTING EXEMPTED INCOME U/S.10B. THIS GROUND OF APPEAL IS ALLOWED. 6. WE HAVE CONSIDERED THE SUBMIS SIONS OF BOTH THE PARTIES AND FIND THAT HON'BLE KARNATAKA HIGH COURT IN THE CASE OF YOKOGAWA INDIA LTD. (SUPRA) HAS HELD THAT INCOME OF SECTION 10A UNIT HAS TO BE EXCLUDED BEFORE ARRIVING AT GROSS TOTAL INCOME OF THE ASSESSEE. INCOME OF SECTION 10A UNIT HAS TO BE DEDUCTED AT SOURCE ITSELF AND NOT AFTER COMPUTING THE GROSS TOTAL INCOME . THE TOTAL INCOME USED IN THE PROVISIONS OF SECTION 10A IN THIS CONTEXT MEANS GLOBAL INCOME OF THE ASSESSEE AND NOT THE TOTAL INCOME AS DEFINED IN SECTION 2(45). HENCE INCOME ELIGIBLE FOR EXEMPTION UNDER SECTION 10A COULD NOT ENTER INTO COMPUTATION AS THE SAME HAS TO BE DEDUCTED AT SOURCE LEVEL. LD.CIT(A) HAS RIGHTLY OBSERVED THAT PROVISIONS OF SECTION 10A AND 10B ARE AT PAR. THEREFORE, THE SAME PRINCIPLE WILL APPLY WHILE DETERMINING TOTAL INCOME. 7. IN VIEW OF THE DECISION OF THE HON'BLE KARNATAKA HIGH C OURT IN THE CASE OF YOKOGAWA INDIA LTD. (SUPRA) WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). 8. IN THE RESULT APPE AL OF THE REVENUE IS DISMISSED . ITA NO.39/RJT/2015 A.Y.2006 - 07 - 4 - ORDER PRONOUNCED IN THE COURT ON 24 TH MARCH, 2017. SD/ - SD/ - ( K. NAR ASIMHA CHA RY ) JUDICIAL MEMBER ( S.V. MEHROTRA ) ACCOUNTANT MEMBER TRUE COPY RAJKOT , DATED 2 4 / 03 /20 17 * MANISH / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - 2 . / RESPONDENT - 3 . / CONCERNED CIT /DIT 4 . - / CIT (A) - IV, RAJKOT 5 . , , / DR, I TAT, RAJKOT 6 . / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) / ITAT, RAJKOT