Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 7586 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-10-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2007-2008
Appeal Filed On
22-02-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.429 & 430/BANG/2017 (ASST. YEAR 2007-08 & 2010-11) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)(1), BENGALURU. . APPELLANT VS. M/S CROSSDOMAIN SOLUTIONS PVT. LTD., CENEX, 94, 2 ND MAIN, INDUSTRIAL SUBURB II STAGE, YESHWANTHPUR, BENGALURU. . RESPONDENT PAN AACCC1271G APPELLANT BY : SHRI L.V BHASKAR REDDY, ADDL. CIT RESPONDENT BY : SHRI ASHWIN RAO, C.A DATE OF HEARING : 5-10-2017 DATE OF PRONOUNCEMENT : 6-10-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST T HE COMMON ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) -2, B ANGALORE DATED 24/7/2015 FOR ASST. YEARS 2007-08 AND 2010-11. SIN CE COMMON ISSUES ITA NOS.429-430/ B/17 2 ARE INVOLVED THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. ORDER ON CONDONATION OF DELAY IN FILING THE APPEALS FOR ASST. YEARS 2007-08 TO 2010-11 2.1 THE IMPUGNED ORDER OF THE CIT(A)-2, BANGALORE D ATED 24/7/2015 WAS ADMITTEDLY SERVED ON REVENUE ON 19/8/ 2015, BUT THESE APPEALS FOR ASST. YEARS 2007-08 AND 2010-11 WERE FI LED ONLY ON 22/2/2017, THEREBY LEADING TO A DELAY OF 494 DAYS I N FILING THESE APPEALS. 2.2 ACCORDING TO THE LD DR FOR REVENUE, THE DELAY I N FILING THE APPEALS WAS ON ACCOUNT OF, INTER ALIA, CHANGE IN JU RISDICTION IN THE DEPARTMENT OF THE AOS. THE AOS WHO PASSED THE OR DERS OF ASSESSMENT WERE ITO, WARD 11(1) BANGALORE FOR ASS T. YEAR 2007-08 AND DCIT, CIRCLE-11(2) BANGALORE FOR ASST. YEAR 201 0-11 RESPECTIVELY. HOWEVER, DURING APPELLATE PROCEEDINGS BEFORE CIT(A) , THERE WAS A RE- ORGANIZATION OF THE DEPARTMENT WHEREBY THE PRESENT AO HAVING JURISDICTION IN DCIT, CIRCLE - 2(1)(1), BANGALORE. THIS HAS LED TO SOME CONFUSION IN LINKING UP THE IMPUGNED ORDERS OF THE LD CIT(A) WITH THE RECORDS OF ASSESSMENT WITH THE NEW AO I.E DCIT, CIRCLE- 2(1)(1), BANGALORE HAVING JURISDICTION OF THE CASE; THEREBY LEADING TO THE AFORESAID DELAY IN FILING THE APPEALS FOR BOTH ASST. YEARS 2007-08 AND 2010-11. IT IS SUBMITTED THAT THE DELAY IN FIL ING THESE APPEALS WAS NEITHER DELIBERATE NOR WITH MALAFIDE INTENTIONAL AN D THERE WAS ITA NOS.429-430/ B/17 3 REASONABLE CAUSE FOR FILING THE APPEAL BELATEDLY. IT WAS PRAYED THAT A LENIENT VIEW BE TAKEN IN THE MATTER AND THESE APPEA LS BE ADMITTED FOR HEARING AND ADJUDICATIONS IN ACCORDANCE WITH THE DE CISION OF THE HONBLE APEX COURT IN THE CASE OF MST KATIJI & OTHE RS (1987) 167 ITR 471 (SC). 2.3 THE LD AR FOR THE ASSESSEE WAS HEARD IN THE MAT TER AND DID NOT OBJECT TO THE DELAY IN FILING THE APPEALS FOR ASST. YEARS 2007-08 & 2010-11 BEING CONDONED BY THE BENCH AND FOR HEARING WITH THE APPEALS ON MERITS. 2.4 WE HAVE PERUSED AND CAREFULLY CONSIDERED THE MA TERIAL ON RECORD AND TAKEN INTO ACCOUNT THE ORAL SUBMISSIONS OF THE LD DR FOR REVENUE SEEKING CONDONATION OF THE DELAY OF 494 DAY S IN FILING THE APPEALS FOR BOTH ASST. YEARS 2007-08 AND 2010-11 AN D THE FACT THAT THE LD AR FOR THE ASSESSEE STATING THAT THERE WAS NO OB JECTION FROM THE ASSESSEES SIDE FOR THE BENCH TO CONDONE THE DELAY IN FILING THESE APPEALS, SO THAT THESE APPEALS CAN BE ADMITTED FOR HEARING AND ADJUDICATION OF ISSUES ON MERITS OF THE GROUNDS RAI SED. TAKING INTO ACCOUNT THE ABOVE SUBMISSIONS OF BOTH PARTIES AND R ESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE A PEX COURT IN THE CASE OF MST KATIJI & OTHERS (SUPRA) FOR DEALING WIT H MATTERS OF CONDONATION OF DELAY I.E THAT SUBSTANTIAL JUSTICE S HOULD PREVAIL OVER TECHNICAL CONSIDERATIONS; WE ARE OF THE VIEW THAT R EVENUES DEFAULT IN FILING THESE APPEALS BELATEDLY WAS NEITHER DELIBE RATE NOR INTENTIONAL AND ACCORDINGLY IN THE INTEREST OF SUBSTANTIAL JUST ICE SEE THIS IS A FIT CASE FOR CONDONATION OF DELAY AND CONDONE THE DELA Y OF 494 DAYS IN ITA NOS.429-430/ B/17 4 FILING THE APPEALS FOR ASST. YEAR 2007-08 AND 2010- 11 BEFORE THE TRIBUNAL. CONSEQUENTLY, THE APPEALS FOR ASST. YEAR S 2007-08 AND 2010-11 ARE ADMITTED FOR HEARING AND ADJUDICATION. O R D E R 3. BRIEFLY STATED, THE FACTS OF THE CASE RELEVANT F OR THESE APPEALS ARE AS UNDER:- 3.1 THE ASSESSEE, A COMPANY RENDERING ITE ENABLED S ERVICES, FILED ITS RETURN OF INCOME FOR ASST. YEARS 2007-08 ON 30/ 10/2007 AND 2010- 11 ON 8/10/2010 DECLARING NIL INCOME AND LOSS OF RS .76,43,561/- RESPECTIVELY AFTER CLAIMING DEDUCTION U/S 10B OF TH E INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE RETURNS WERE PROCES SED U/S 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT FOR THESE YEARS WERE COMPLETED U/S 143(3 ) OF THE ACT VIDE ORDER DATED 24/12/2009 FOR ASST. YEAR 2007-08 AND O RDER DATED 22/2/2013 FOR ASST. YEAR 2010-11, DENYING THE ASSES SEES CLAIMS FOR DEDUCTION U/S 10B OF THE ACT. ON APPEAL, THE CIT(A )-2, BANGALORE ALLOWED THE ASSESSEES APPEALS, INTER ALIA, IN RESP ECT OF ITS CLAIM FOR DEDUCTION U/S 10B OF THE ACT FOLLOWING THE JUDICIA L PRONOUNCEMENTS RENDERED ON THIS ISSUE BY THE HONBLE KARNATAKA HIG H COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD., (341 ITR 385) AND TATA ELXSI LTD., (349 ITR 98). 4.1 AGGRIEVED BY THE COMBINED ORDERS OF THE CIT-2, BANGALORE DATED 24/7/2015 FOR BOTH ASST. YEARS 2007-08 AND 20 10-11, REVENUE HAS FILED THESE APPEALS RAISING THE FOLLOWING IDENT ICAL GROUNDS FOR BOTH ASST. YEARS:- ITA NOS.429-430/ B/17 5 1) THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE NOT SUSTAINABLE. 2) THE CIT(A) HAS ERRED IN RELYING ON THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN CIT V. YOKOGAWA INDIA LTD. [341 FIR 385] AND THE DECISION OF THE HON'BLE FIAT, BANGALORE 'B' BENCH IN ITA NO.1074/BANG/2011 VIDE ORDER DATED 29.6.2012 FOR TH E A.Y.2006-07 IN THE ASSESSEE'S OWN CASE, BY DIRECTIN G THE AO TO CALCULATE DEDUCTION U/S.10B OF THE ACT BE FORE SETTING OFF THE BROUGHT-FORWARD LOSSES/DEPRECIATED FOR THE ASSESSMENT YEARS IN QUESTION AS THE DEPARTMENT HAS FLIED APPEAL U/S.260A BEFORE THE HON'BLE HIGH COURT . 3) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT HE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY B E RESTORED. 4) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANT OF THE GROUNDS MENTIONED ABOVE. ITA NOS.429-430/ B/17 6 4.2 THE LD DR FOR REVENUE WAS HEARD IN SUPPORT OF T HE GROUNDS RAISED (SUPRA) AND PLACED STRONG RELIANCE ON THE FI NDING IN THE ORDERS OF THE AO ON THIS ISSUE. 4.3 PER CONTRA, THE LD AR FOR THE ASSESSEE SUBMITTE D THAT THE ASSESSEES CLAIM FOR BEING ALLOWED THE DEDUCTION CL AIMED U/S 10B OF THE ACT IS SQUARELY COVERED IN ITS FAVOUR BY THE DE CISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGOWA INDIA LTD. (341 ITR 385). IT IS SUBMITTED THAT THE LD CIT(A), FOLLOWING THE AFORESAID DECISION, HAS RIGHTLY DIREC TED THE AO TO COMPUTE THE DEDUCTION U/S 10B OF THE ACT BEFORE SET TING OFF THE BROUGHT FORWARD BUSINESS LOSSES AND DEPRECIATION FO R THE ASST. YEARS IN QUESTION. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. FROM A PERUSAL OF THE DETAILS ON RECORD IT IS SEEN THAT THE AO WAS OF THE VIEW THAT DEDUCTION U/S 10B OF THE ACT WAS TO BE ALLOWED ONLY ON THE INCOME COMPUT ED AFTER SETTING OFF THE BROUGHT FORWARD LOSSES AND DEPRECIATION. A CCORDINGLY, THE ASSESSEES INCOME FOR BOTH ASST. YEARS WAS DETERMIN ED AT NIL BY THE AO BY FIRST SETTING OFF THE BROUGHT FORWARD LOSSES/ DEPRECIATION FROM THE BUSINESS INCOME FOR CALCULATING THE DEDUCTION U /S 10B OF THE ACT. 4.4.2 WE FIND THAT THE ISSUE IN DISPUTE BEFORE US I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HO NBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LT D. (2012) 341 ITA NOS.429-430/ B/17 7 ITR 385 (KAR). IN ITS DECISION THE HONBLE HIGH CO URT HAD HELD THAT AS THE INCOME OF SEC. 10A UNIT HAS TO BE EXCLUDED A T SOURCE ITSELF BEFORE ARRIVING AT THE GROSS TOTAL INCOME/LOSS. AS THE DEDUCTION U/S 10A OF THE ACT HAS TO BE INCLUDED FROM THE TOTAL IN COME OF THE ASSESSEE, AND THE BROUGHT FORWARD BUSINESS LOSS AND DEPRECIATION BEING SET OFF AGAINST SUCH PROFIT AND GAINS OF THE UNDERTAKING AND A WHOLE COULD NOT ARISE. SECTION 10A OF THE ACT BEIN G ANALOGOUS WITH SEC. 10B OF THE ACT, THE AFORESAID DECISION OF THE HONBLE HIGH COURT WOULD EQUALLY APPLY TO THE CASE ON HAND. IN THIS VI EW OF THE MATTER AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN YOKOGAWA INDIA LTD. (341 ITR 385). W E UPHOLD THE IMPUGNED ORDERS OF THE LD CIT(A) IN DIRECTING THE A O TO COMPUTE THE DEDUCTION U/S 10B OF THE ACT IN THE CASE ON HAND WI THOUT SETTING OFF THE BROUGHT FORWARD BUSINESS LOSSES AND DEPRECIATIO N FROM THE ASSESSEES INCOME. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, THE GROUNDS RAISED BY REVENUE ARE DISMISSED. 4. IN THE RESULT, THE REVENUES APPEAL FOR THE ASST . YEARS 2007-08 AND 2010-11 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH OCTOBER, 2017 . SD/- SD/- (N.V VASUDEVAN) (JASO N P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : 6/10/2017 VMS ITA NOS.429-430/ B/17 8 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVAT E SECRETARY, ITAT, BANGALORE
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