Techsignia Solutions Private Limited, Pune V. Income tax Officer, Pune

ITA 455/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9873 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Assessee Lawyers: MITESH CHHEDA; RAVI GOENKA
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 143(3); 10AA; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 45 5 /P U N/20 1 7 / ASSESSMENT YEAR : 20 1 2 - 1 3 TECHSIGNIA SOLUTIONS PVT. LTD., NOW KNOWN AS GFI INFORMATIQUE INDIA PVT. LTD. 201, BLDG. 4A, SP INFOCITY SEZ ZONE, PUNE - SASWAD ROAD, PHURSUNGI, PUNE 412308 . / APPELL ANT PAN: AA FC M3544H VS. THE INCOME TAX OFFICER , WARD 7(5), P UNE . / RESPONDENT ASSESSEE BY : S /S HRI MITESH CHHEDA AND RAVI GOENKA REVENUE BY : SHRI S.B. PRASAD , CIT / DATE OF HEARING : 26 . 0 3 . 201 9 / DATE OF PRONOUNCEMENT: 03 . 0 4 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF ITO , WARD 7(5), PUNE , DATED 26 . 12 .201 6 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 PASSED UNDER SECTION 143(3) R.W.S. 144 C(1) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA NO. 455 /P U N/2 0 1 7 TECHSIGNIA SOLUTIONS PVT. LTD. 2 1. THE ORDER PASSED BY THE LEARNED AO IS ULTRA VIRES, BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT AND FACTS OF THE CASE AND HENCE OUGHT TO BE QUASHED. 2. THE LEARNED AO, BASED ON THE DIRECTIONS OF HONBLE DISPUTE RESOLUTION PANEL, MUMBAI (DRP), ERRED IN COMPUTING INCOME OF THE APPELLANT BY FIRST SETTING OFF UNABSORBED DEPRECIATION FROM BUSINESS INCOME AND THEN ALLOWING DEDUCTION UNDER SECTION 10AA OF THE ACT, THEREBY RESTRICTING THE DEDUCTION UNDER SECTION 10AA OF THE ACT TO RS.1,64,96,849/ - AS AGAINST RS.2,26,71,225/ - CLAIMED BY THE APPELLANT. 3. THE LEARNED AO ERRED IN CONSIDERING INCOME FROM OTHER SOURCES AT RS.506,539/ - AS AG AINST RS.55,244/ - DISCLOSED IN THE RETURN OF INCOME, WITHOUT PROVIDING ANY REASONS WHATSOEVER. 4. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED O UT THAT THE ISSUE RAISED VIDE GROUND OF APPEAL NO.2 IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR ASSESSMENT YEAR 2011 - 12. THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS GENERAL AND HENCE, DO NOT NEED ANY ADJUDICATION. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 5. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.2 RAISED BY ASSESSEE IS AGAINST COMPUTATION OF DEDUCTION CLAIMED UNDER SECTION 10AA OF THE ACT, WHE REIN THE ASSESSEE HAD CLAIMED THE SAME OUT OF ITS BUSINESS INCOME BUT THE ASSESSING OFFICER / DISPUTE RESOLUTION PANEL (DRP) HAD RESTRICTED THE SAME BY FIRST SETTING OFF OF UNABSORBED DEPRECIATION FROM BUSINESS INCOME AND THEN ALLOWING DEDUCTION UNDER SECT ION 10AA OF THE ACT. ITA NO. 455 /P U N/2 0 1 7 TECHSIGNIA SOLUTIONS PVT. LTD. 3 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN DEVELOPMENT OF SOFTWARE AND HAD CLAIMED DEDUCTION UNDER SECTION 10AA OF THE ACT. THE ASSESSEE HAD CERTAIN UNABSORBED DEPRECIATION PERTAINING TO EARLIER YEARS, WHICH WERE NOT SET OFF AGAINST BUSINESS INCOME BEFORE CLAIMING THE DEDUCTION UNDER SECTION 10AA OF THE ACT. HOWEVER, THE ASSESSING OFFICER AND THEREAFTER, DRP AND THE ASSESSING OFFICER IN FINAL ASSESSMENT ORDER WERE OF THE VIEW THAT DEDUCTION UNDER SECTION 10AA OF THE ACT WAS TO BE CURTAILED I.E. BUSINESS INCOME AFTER SETTING OFF OF UNABSORBED DEPRECIATION CARRIED FORWARDED IS ELIGIBLE FOR THE SAID CLAIM OF DEDUCTION UNDER SECTION 10AA OF THE ACT. 7. IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2011 - 12, SUCH POSI TION OF CURTAILMENT OF DEDUCTION UNDER SECTION 10AA OF THE ACT BY FIRST SETTING OFF OF UNABSORBED DEPRECIATION AGAINST BUSINESS INCOME, AROSE IN THE HANDS OF ASSESSEE, CONSEQUENT TO ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. THE TRIBUN AL AFTER CONSIDERING VARIOUS ASPECTS OF THE ISSUE OBSERVED THAT THE ISSUE STANDS COVERED BY THE ORDER OF HON'BLE SUPREME COURT IN CIT & ANR. VS. M/S. YOKOGAWA INDIA LTD. REPORTED IN 341 ITR 385 (SC) HAD HELD THAT DEDUCTION UNDER SECTION 10AA OF THE ACT IS TO BE COMPUTED / ALLOWED BEFORE REDUCING THE TOTAL INCOME TO THE EXTENT OF UNABSORBED DEPRECIATION OF EARLIER YEARS. 8. WE FIND THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 10AA OF THE ACT BEFORE SETTING OFF OF UNABSORBED DEPRECIATION IS SETTLED B Y THE RATIO LAID DOWN BY THE APEX COURT IN THE CASE OF CIT & ANR. VS. M/S. YOKOGAWA INDIA LTD. (SUPRA) AND ALSO BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF BLACK & VEATCH CONSULTING PVT. LTD. REPORTED IN 20 TAXMANN.COM 727 (BOM) . ITA NO. 455 /P U N/2 0 1 7 TECHSIGNIA SOLUTIONS PVT. LTD. 4 9. THE HON'BLE SUPR EME COURT IN THE CASE OF HEMASINGKA SIEDE LTD. VS. CIT IN CIVIL APPEAL NO.1501 OF 2008, JUDGMENT DATED 19.09.2013 HAD HELD OTHERWISE WHILE DECIDING THE APPEAL FOR THE PERIOD PRIOR TO AMENDMENT TO CHAPTER VI - A OR SECTION 10A OF THE ACT. 10. THE TRIBUNAL IN ASSESSMENT YEAR 2011 - 12 (SUPRA) HAD HELD THAT EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT RELYING ON THE DECISION IN THE CASE OF HEMASINGKA SIEDE LTD. VS. CIT (SUPRA), WAS MISPLACED AS THE ISSUE STANDS SETTLED BY THE HON'BLE SUPREME COURT IN CIT & ANR. VS. M/S. YOKOGAWA INDIA LTD. (SUPRA) . APPLYING THE SAID PARITY OF REASONING TO THE FACTS OF PRESENT CASE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 10AA OF THE ACT BEFORE SETTING OFF OF UNABSORBED DEPRECIATION FROM BUSINESS INCOME. HENCE, THE GROUND OF APPEAL NO.2 RAISED BY ASSESSEE IS ALLOWED. 11. NOW, COMING TO THE ISSUE RAISED VIDE GROUND OF APPEAL NO.3, WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF ASSESSING OFFICER IN CONSIDERING THE INCO ME FROM OTHER SOURCE AT 5,06,539/ - AS AGAINST 55,244/ - DISCLOSED IN THE RETURN OF INCOME. OUR ATTENTION WAS DRAWN TO THE STATEMENT OF TOTAL INCOME FILED FOR THE YEAR UNDER CONSIDERATION, WHICH IS PLACED AT PAPER BOOK. THE PERUSAL OF THE SAME CLEARLY REFLECTS THAT INCOME FROM OTHER SOURCES COMPRISED OF INTEREST ON INCOME TAX REFUND OF 55,244/ - , WHICH WAS THEN CLUBBED WITH INCOME FROM BUSINESS AT 4,51,295/ - AND THE GROSS TOTAL INCOME WAS DECLARED AT 5,06,539/ - . THIS IS A MISTAKE AT THE END OF ASS ESSING OFFICER. ACCORDINGLY, WE DIRECT HIM TO ADOPT THE INCOME FROM OTHER SOURCES AT 55,244/ - . THE ITA NO. 455 /P U N/2 0 1 7 TECHSIGNIA SOLUTIONS PVT. LTD. 5 GROUND OF APPEAL NO.3 RAISED BY ASSESSEE IS THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED. 12. IN THE RESULT, THE APPE AL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 3 RD DAY OF APRIL , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 3 RD APRIL , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT ; 2. THE RESPONDENT; 3. THE DRP - 3, MUMBAI ; 4. THE CIT (IT&TP) , PUNE ; 5. T HE DR A , ITAT, PUNE; 6. GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE