D.C.I.T. CIRCLE 2(2), MUMBAI V. MOBIAPPS INDIA PVT. LTD., MUMBAI

ITA 4473/MUM/2012

• Counselvise Citation: 447319914 RSA 2012
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4473/MUM/2012 ASSESSMENT YEAR: 2007-08 ACIT, CIRCLE-2(2), ROOM NO.545, 5 TH FLOOR, AYAKAR BHAWAN, M.K. ROAD, MUMBAI-400020 / VS. M/S MOBIAPPS INDIA PVT. LTD. 7/10, BOTAWALA BUILDING, HORNIMAN CIRCLE, FORT MUMBAI-400001 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO. AAACCM3613L / REVENUE BY SHRI RADHA K. NARANG !' # / ASSESSEE BY NONE $ % & # ' / DATE OF HEARING : 17/06/2015 & # ' / DATE OF ORDER: 24/07/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 19/04/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME T AX M/S MOBIAPPS INDIA PVT. LTD. ITA NO.4473/MUM/2012 2 (APPEALS) ERRED IN GIVING FINDING THAT THE BUSINESS LOSSES OF UNITS WHICH ARE NOT ELIGIBLE FOR DEDUCTION U/S 10A ARE NOT TO BE SET OFF AGAINST THE PROFIT OF AN UNDERTAKINGS WHICH ARE ELIGIBLE FOR DEDUCTION U/S 10A AND FURTHER THE DEDU CTION IS NOT TO BE RESTRICTED TO THE TOTAL INCOME OF THE ASS ESSEE. 2. DURING HEARING OF THIS APPEAL, THE LD. DR, MS. R ADHA K. NARANG, ADVANCED HER ARGUMENTS WHICH ARE IDENTIC AL TO THE GROUND RAISED. NOBODY ATTENDED ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF REGISTERED AD NOTIC E. IT SEEMS THAT THE ASSESSEE HAS NOTHING TO SAY, THEREFORE, WE TEND TO PROCEED EX-PARTY, QUA THE ASSESSEE, AND DISPOSE OFF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD . 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF DEVELOPING MOBILE AND WIRELESS APPLICATIONS ALONG WITH EMBEDDED SOLUTIONS DECLARED INCOME OF RS.43,310/- IN ITS RETURN FILED ON 30/10/ 2007. DURING THE YEAR, UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION OF RS.2,30,48,615/- U/S 10A OF THE ACT AN D CLAIMED TOTAL LOSS FROM THE BUSINESS. THE ASSESSIN G OFFICER ASKED THE ASSESSEE AS TO WHY THE CLAIMED EXEMPTION U/S 10A MAY NOT BE RESTRICTED TO THE TOTAL INCOME. THE ASSESSEE PLACE RELIANCE UPON THE DECISION OF THE SPECIAL BEN CH IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LT D. (129 TTJ 273)(CHENNAI). HOWEVER, THE ASSESSING OFFICER PLAC E RELIANCE UPON THE DECISION IN GODREJ UNILEVER VS AC IT 191 M/S MOBIAPPS INDIA PVT. LTD. ITA NO.4473/MUM/2012 3 TAXMAN 119 BY HOLDING THAT DEDUCTION CAN ONLY BE GR ANTED FROM THE TOTAL INCOME WHICH REFERS TO POSITIVE INCO ME BY PLACING RELIANCE UPON THE DECISION IN IPCA LABORATO RY VS DCIT (2004) 266 ITR 521 & ITO VS INDUFLEX PRODUCTS PVT. LTD. (2006) 280 ITR 1. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE AGAIN PLACE RELIANCE UPON THE SPECIAL BENCH DECISION IN T HE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD.(SU PRA) AND ANOTHER DECISION FROM HONBLE KARNATAKA HIGH COURT IN CIT VS YOKOGAWA INDIA LTD. THE LD. FIRST APPELLATE AUTH ORITY GRANTED RELIEF TO THE ASSESSEE AGAINST WHICH THE RE VENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE SPECIA L CHENNAI BENCH OF THE TRIBUNAL IN SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD (129 TTJ 273) HELD AS UNDER:- A. SECTION 10A FALLS UNDER CHAPTER III (TITLE INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME) OF THE ACT AND NOT UNDER CHAPTER IV (COMPUTATION OF INCOME) SO T HAT SECTION 80AB OF CHAPTER VIA WHICH CONCERNS DEDUCTIONS FROM THE GROSS TOTAL INCOME (GTI) ARRIVE D AT AFTER AGGREGATION INCLUDING SET OFF, OF INCOMES FORMING PART OF THE TOTAL INCOME (AS PER CHAPTER VI ) WOULD HAVE NO APPLICATION. M/S MOBIAPPS INDIA PVT. LTD. ITA NO.4473/MUM/2012 4 B. ACCORDINGLY UNDER THE SCHEME OF THE ACT, THE DEDUCTION U/S 10A OF THE ACT HAS TO BE MADE WHILE COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND NOT FROM THE GROSS TOTAL INCOME OF THE TAXPAYER. C. WHEREVER THE LEGISLATURE INTENDED TO RESTRICT THE DEDUCTION TO THE TOTAL INCOME COMPUTED UNDER THE AC T, IT HAD SPECIFICALLY PROVIDED FOR THE SAME. IN THE CONTEXT OF SECTION 10A OF THE ACT, THE STATUTE DOES NOT PROVIDE SUCH RESTRICTION. D. THE DEDUCTION U/S 10A OF THE ACT IS WITH REFERENCE TO THE INCOME FROM A SPECIFIC UNDERTAKING AND CANNOT B E EQUATED TO THAT TOTAL INCOME OF THE TAXPAYER. E. THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF IPCA LABORATORY LTD. (SUPRA) STANDS ALSO CONSIDERED BY THE TRIBUNAL AND REFERRED TO AT PARAS 49,62 AND 63 OF ITS ORDER. F. ACCORDINGLY THE SPECIAL BENCH ITAT RULED THAT THE LOSSES FROM OTHER BUSINESS CANNOT BE REDUCED FROM THE PROFITS OF THE STPI UNIT IN DETERMINING THE DEDUCTION U/S 10A OF THE ACT. 2.3. IN VIEW OF THE ABOVE DECISION OF THE SPECIAL BENCH OF THE CHENNAI TRIBUNAL, ORDER FROM HONBLE KARNATAKA HIGH COURT IN CIT VS YOKOGAWA INDIA LTD., CHANCEPOND TECHNOLOGIES PVT. LTD. VS ACIT (2008) 22 SOT 220 (ITAT CHENNAI) IT CAN BE SAID THAT PROVISION CO NTAINED IN SECTION 10A OF THE ACT ALONG WITH SUB-SECTION 6, IT IS DISTINCT AND SEPARATE DEEMING PROVISION WHICH PRESC RIBES SPECIAL MANNER OF COMPUTATION OF PROFIT & GAINS, EN TITLES THE M/S MOBIAPPS INDIA PVT. LTD. ITA NO.4473/MUM/2012 5 ASSESSEE FOR DEDUCTION U/S 10A OF THE ACT, CONSEQUE NTLY, WHILE DEDUCTION U/S 10A OF THE ACT, THE PROFIT & GA INS OF THAT UNDERTAKING, FOR THE PURPOSE OF DETERMINING TH E QUANTUM OF DEDUCTION, IS TO BE COMPUTED IF SUCH ELI GIBLE ACTIVITY OF THE SAID UNDERTAKING IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE AND AS SUCH BEFORE COMPUTING THE DE DUCTION U/S 10A OF THE ACT, THE INCOME, PROFIT & LOSS PERTA INING TO OTHER ACTIVITY OF THE ASSESSEE CANNOT BE TAKEN INTO CONSIDERATION. EVEN OTHERWISE, AFTER THE AMENDMENT WITH EFFECT FROM 01/04/2001 ONWARDS, THE BROUGHT FORWARD LOSS PERTAINING TO SPECIFIC UNDERTAKING ELIGIBLE FOR DED UCTION U/S 10A OF THE ACT ARE ALLOWED TO BE CARRY FORWARD AND SET OFF AGAINST THE INCOME OF SUCH UNDERTAKING IN FUTURE ASSESSMENT YEAR BUT WITHIN THE BLOCK PERIOD ITSELF. THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRM ED. FINALLY, WE FIND NO MERIT IN THE APPEAL OF THE REV ENUE, CONSEQUENTLY, DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON17/06/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 24/07/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. M/S MOBIAPPS INDIA PVT. LTD. ITA NO.4473/MUM/2012 6 3. 0 0 $ 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 $ 1# / CIT(A)- , MUMBAI 5. 34 .# , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI