Appeal details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 84340 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-11-2014
Appeal Filed By
Department
Bench Allotted
H
Assessment Year
2009-2010
Appeal Filed On
14-06-2013
Judgement Text
IN THE INCO ME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 4686/M/2013 ( AY: 2009 - 2010 ) DCIT 8(2), R.NO.209, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. HURIX SYSTEMS P LTD., 2 ND FLOOR, SUMER PLAZA MAROL, MAROSHI ROAD, ANDHERI (E), MUMBAI - 59. ./ PAN : AAACH8633D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SACHCHIDANANDA DUBE, SR. AR / RESPONDENT BY : SHRI DEEPAK TRALSHAWALA / DATE OF HEARING : 12.11.2014 / DATE OF PRONOUNCEMENT : 26 .11.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 14.6.2013 IS AGAINST THE ORDER OF THE CIT (A) - 17, MUMBAI DATED 14.11.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING TO ALLOW DEDUCTION U/S 10A OF RS. 3,25,76,440/ - BEFORE SETTING OFF OF BUSINESS LOSSES OF E ARLIER Y EARS WITHOUT APPRECIATING THAT IN V IEW OF THE AMENDMENT W.E . F . 01 . 04.2001, S . 1 0A/10B PRO V IDES FOR 'DEDUCTION' AND NOT 'EXEMPTION' . 2 . ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD . CIT(A) ERRED IN ALLO W ING DEDUCTION U / S 10A W ITH O UT SETTIN G OFF THE BROUGHT FOR W ARD BUSINESS LOSS ES AND UNABSORBED DEPRECIATION W ITH O UT CONSIDERING THE RATIO OF THE DECISION IN THE CASE OF GALA XY SURFACTANTS LIMITED 343 ITR 0108 (2012) , WHEREIN THE HON ' BL E JURISDICTIONAL HIGH COURT HAS HELD THAT , A .. . SECTION 10 A A S AT PRES E NT ST A NDS ' . CAM E TO B E SUBSTITUTED B Y THE FINANCE AC T , 2000 W ITH E F F ECT FR O M 1 A PRIL 2001. TH E S E CTI O N AS IT STANDS NOW , IS NOT A PRO V ISION FOR EXEMPTION , BUT A 2 PROVISION WHICH ENABL E S AN ASSESSEE TO C LAIM A DEDUCTION ' B . ' .. . TH E DEDUCTION HAS T O B E ALLO W ED FROM THE TOTAL INCOME O F TH E ASS E SSE E . ... ' C . ' .. . S E CTION 7 2 W HICH PRO V ID ES F O R A C ARR Y F O R WA RD OF A BUSIN E SS L O SS COM ES INTO O P E R A TI O N O NL Y W H E N TH E PR OV I S I O N S O F SEC TI O NS 7 0 AND 7 1 , AS TH E C A SE MA Y B E, A RE EX HAUST E D. T H E R E I S N O P ROV ISI O N IN S ECTI O N 10 B B Y W HI C H A PROHIBITI O N HAS B EE N INTR O DU CE D B Y TH E LEGIS LATUR E IN S ETTIN G O F F A L O S S W HICH IS SUSTAINED FR O M ON E SOURCE F A LLIN G UND E R TH E H EA D O F PR O FIT S A ND GA INS O F TH E BU S IN E SS A G AINST INCOM E FROM A N Y OTH E R SO UR CE UND E R TH E S AM E H EA D ... . ' 3. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT(A) ERRED IN ALLO W ING DEDUCTION U/ S 10A AT RS. 3, 25 , 76 , 440/ - BEFORE SETTING OFF O F BUSINESS LOSSES OF EARLIER Y EARS B Y PLACING RELIANCE UPON THE DECISION OF KARNATAKA HIGH COUR T IN THE CASE OF CIT VS YAKOGA W A INDIA P LTD (KAR) 341 ITR 385 IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE RATIO LAID DO W N IN TH E SAID CASE AND PR E FERRED A SLP AG AIN S T TH E S AID D E CI S ION .' 4. ' ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD . CIT(A) ERRED IN ALLO W IN G DEDUCTION U / S 10A AT RS. 3 , 25,76 , 440 / - BEFORE SETTING OFF OF BUSIN E SS LOSSES OF EARLI E R Y EARS B Y PLACING R E LIANCE UPON TH E DECISION OF BOMBA Y HIGH COURT IN THE CASE OF CIT VS BLACK & V E ATCH CONSULTING . P LTD 20 TAXMANN . COM 727 (BORN) IGNORIN G TH E FACT THAT THE DEP A RTM E NT HAS NOT ACC E PT E D THE RA T IO L A ID D OW N IN THE SAID CASE , THOUGH NO SLP HAS BEEN PREFERRED DUE TO LOW TAX E FF E CT . ' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION OF RS . 1 , 06, 3 9 ,7 92 / - U/ S 115JB A S ALLO W ED B Y THE ASSE S SING OFFIC E R AS AGAINST RS.1 , 47 , 38 , 408 / - CLAIM E D B Y TH E ASS E SSEE, SINC E RS.1 , 06, 3 9 ,7 92/ - WAS THE LEAST OF BUSINESS LOSS AND UNABSORBED DEPRECIATION AS EVIDENT FROM THE CHART FURNISHED BY THE ASSESSEE . 3. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT IN THIS APPEAL, REVENUE RAISED COUPLE OF ISSUES AND THEY ARE (I) THE MANNER OF ALLOWING OF DEDUCTION U/S 10A QUA THE BROUGHT FORWARD BUSINESS LOSSES OF OTHER UNITS AND (II) WHILE QUANTIFYING THE BOOK PROFITS, WHETHER THE UNABSORBED DEPRECIATION SHOULD BE CONSIDERED QUA THE UNABSORBED DEPRECIATION OF THE IMMEDIATE PRECED ING ASSESSMENT YEAR OR CUMULATIVE QUANTITY OF THE UNABSORBED DEPRECIATION OF THE EARLIER ASSESSMENT YEARS. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BLACK & VE ATCH CONSULTING P LTD 20 TAXMANN.COM 727 (BOM) AND MENTIONED THAT THE SAME WAS CONSIDERED BY THE CIT (A) WHILE GRANTING RELIEF TO THE ASSESSEE. HE FURTHER FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2010 - 2011 AND MENTIO NED THAT SIMILAR ISSUE CAME UP FOR 3 ADJUDICATION AND THE TRIBUNAL DECIDED THE SAME IN FAVOUR OF THE ASSESSEE RELYING ON THE SAID BINDING JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BLACK & VEATCH CONSULTING (SUPRA). IN THIS REGARD, LD COUNSEL READ OUT THE CONTENTS OF PARA 9 OF THE SAID ORDER OF THE TRIBUNAL DATED 28.5.2014 (SUPRA) FOR THE PROPOSITION THAT THE DEDUCTION U/S 10A IS ALLOWABLE BEFORE SETTING OFF OF THE BROUGHT FORWARD BUSINESS LOSSES / UNABSORBED DEPRECIATION. ON THE SECOND ISSU E RELATING TO THE MANNER AND QUANTITY OF THE UNABSORBED DEPRECIATION ELIGIBLE FOR SETTING OFF, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE CIT (A) HAS RIGHTLY RELIED ON THE ORDER OF THE COORDINATE BENCH DECISION IN THE CASE OF AMLINE TEXTILES P LTD VS. ITO (2009) 27 SOT 155 (MUM). IN THIS REGARD, LD COUNSEL MENTIONED THAT THE BROUGHT FORWARD DEPRECIATION OF ALL THE YEARS HAS TO BE CONSIDERED WHILE SETTING OFF OF THE SAME AGAINST THE PROFITS OF THE UNIT. CONTENTS OF PARA 6.2 OF THE IMPUGNED ORDER ARE RE LEVANT IN THIS REGARD. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL AND THE JUDGMENTS OF THE HIG HER JUDICIARY. AFTER HEARING BOTH THE PARTIES, WE HAVE PERUSED THE SAID PARA 9 OF THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR THE AY 2010 - 2011 VIDE ITA NO.6484/M/2013, DATED 28.5.2014 AND FIND THE SAME IS RELEVANT WITH REGARD TO THE FIRST ISSUE OF THE MANNER OF ALLOWING OF DEDUCTION U/S 10A QUA THE BROUGHT FORWARD BUSINESS LOSSES OF OTHER UNITS. THEREFORE, FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTION OF THE SAID PARA 9 OF THE TRIBUNALS ORDER (SUPRA) IS EXTRACTED WHICH READ AS UNDE R: 9..THAT DEDUCTION U/S 10A IS ALLOWABLE BEFORE SETTING OFF OF BROUGHT FORWARD BUSINESS LOSSES / UNABSORBED DEPRECIATION, I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD CIT (A). UNDER THESE CIRCUMSTANCES, I UPHOLD THE ORDER PASSED BY LD CIT (A) AND DISMISS THE APPEAL FILED BY THE REVENUE. PRONOUNCED ACCORDINGLY. 6. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE IN THE ASSESSEES OWN CASE, WE FIND THE CLAIM OF THE ASSESSEE IS PROPER AND THEREFORE, THE CONCLUSIONS DRAWN BY THE CIT (A) IN P ARAS 5.2 TO 5.5 OF THE IMPUGNED ORDER DO NOT CALL FOR ANY INTERFERENCE. IT IS ALSO RELEVANT TO MENTION HERE THAT THE JUDGMENT OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF CIT VS. GALAXY SURFACTANTS LTD[2012] 343 ITR 108 (BOM) IS DISTINGUISHABLE ON FACT S. IN THIS CASE, THE UNITS DO NOT HAVE POSITIVE PROFITS 4 THEREFORE, THE CLAIM OF DEDUCTION U/S 10A DID NOT ARIS E. THIS MAKES DISTINGUISHABLE FROM THE PRESENT CASE WHERE THE ASSESSEE HAS REGISTERED POSITIVE PROFITS AND CLAIM OF DEDUCTION U/S 10A WAS ALLOWA BLE. ACCORDINGLY, GROUND NOS. 1 TO 4 RAISED BY THE REVENUE ARE DISMISSED. 7. REGARDING THE SECOND ISSUE, WE FIND THE CONTENTS OF PARA 6.2 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD. CONSIDERING THE IMPORTANCE OF THE SAID PARA 6.3, THE SAME IS EXT RACTED WHICH READS AS UNDER: 6.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE ASSESSING OFFICER. THE CBDT CIRCULAR NO.495 DATED 22.9.1987 IS VERY CLEAR ON THIS SUBJECT. FURTHER, RELIANCE IS ALSO PLACED ON THE DECISION OF THE HONBLE ITAT MUMBAI IN THE CASE OF AMLINE TEXTILES P LTD VS. ITO [2009] 27 SOT 155 (MUM). IN VIEW OF THE ABOVE, THE BOOK PROFIT AS WORKED OUT BY THE ASSESSING OFFICER IS HELD TO BE NOT CORRECT AND BOOK PROFIT AS WORKED OUT BY THE APPELLANT IS TO BE CONFIR MED. THEREFORE, THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 8. FROM THE ABOVE, WE FIND THE CIT (A) WHILE GRANTING THE RELIEF TO THE ASSESSEE, DIRECTED THE ASSESSING OFFICER TO ALLOW THE CUMULATIVE FIGURES OF UNABSORBED DEPRECIATION OF THE ASSESSME NT YEARS. CIT (A) RELIED ON THE DECISION OF THE COORDINATE BENCH AND THE SAME STANDS UN APPEALED EVEN TODAY. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE CONCLUSIONS DRAWN BY THE CIT (A) IN THIS REGARD. ACCORDINGLY, GROUND NO.5 RAISED BY THE REVENU E IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 6 T H NOVEMBER, 2014. S D / - S D / - ( JOGINDER SINGH ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 2 6 /11/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
