ACIT 15(2)(2), MUMBAI V. M MODEL GLOBAL SERVICES PVT. LTD., NAVI MUMBAI

ITA 4935/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9203 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: POON AM SHINDE; ABHSHEK TILAK
• Keywords: Set aside
• Section: 10AA; 10B

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAVISH SOOD (JM) I.T.A. NO. 4935 /MUM/ 2017 (ASSESSMENT YEAR 20 11 - 12 ) ACIT 15(2)(2) ROOM NO. 357 3 RD FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. V S . M MODEL GL OBAL SERVICES PVT. LTD. 3 RD FLOOR, BUILDING NO. 3 MINDSPACE, AIROLI, PLOT NO. 3 KALWA TTC INDUSTRIAL ESTATE MIDC, THANE BELAPUR ROAD AIROLI NAVI MUMBAI - 400 708. PAN : AAACC9165F ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI ABHSHEK TILAK & MS. POON AM SHINDE DEPARTMENT BY SHRI D.G. PANSARI DATE OF HEARING 17 .6 . 201 9 DATE OF PRONOUNCEMENT 28 . 6 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 24.4.2017 AND PERTAINS TO A.Y. 2011 - 12. 2. GROUNDS OF APPEAL READ AS UNDER : - 1) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A), MUMBAI WAS JUSTIFIED IN ALLOWING DEDUCTION OF PROFITS OF THE 10A UNIT ON A STAND ALONE BASIS WITHOUT AGGREGATION OF IN COME AND SET OFF OF LOSSES, WITHOUT APPRECIATING THE FACT THAT AFTER THE AMENDMENT OF SECTION 10A BY FINANCE ACT 2000, THE PROFITS OF THE 10A UNIT ARE NO LONGER ELIGIBLE FOR EXEMPTION BUT ELIGIBLE FOR DEDUCTION FROM TOTAL INCOME AND TOTAL INCOME IS LIABLE TO BE COMPUTED AS PER THE PROVISIONS OF SECTION 2(45) R.W.S. OF THE ACT AND THEREFORE BY ALLOWING DEDUCTION OF THE IDA UNIT PROFIT EXCLUSIVELY, THE LD CIT(A) HAS IN EFFECT, TREATED THE PROFIT OF THE 10A UNIT AS EXEMPT, CONTRARY TO AMENDED PROVISIONS OF SEC TION 10A OF THE ACT. 2) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A), MUMBAI WAS JUSTIFIED IN ALLOWING DEDUCTION OF M MODEL GLOBAL SERVICES PVT. LTD. 2 PROFITS OF THE 10A UNIT ON A STAND ALONE BASIS WITHOUT AGGREGATION OF INCOME AND SET OFF OF LOSSE S, AND THEREBY IGNORING THE RATION OF JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT - 10 VS M/S. GALAXY SURFACTANTS LTD RENDERED IN FEBRUARY 2012, WHEREIN THE HO NBLE JURISDICTIONAL HIGH COURT HAS CLEARLY HELD THAT THE PROVISIONS OF SECTION 70,71, 72 WOULD APPLY IN COMPUTING THE PROFITS OF 10A UNDERTAKINGS AS THERE IS NO CLAUSE AKIN TO SECTION 80IA(5) OR 80IA(6) ENACTED IN SECTION.' 3) ' THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 3. BRIEF FACTS OF THE CASE ARE AS UNDER : - D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE - COMPANY HAD CARRIED OUT BUSINESS OPERATIONS FROM VARIOUS UNITS LOCATED ACROSS DIFFERENT CITIES IN INDIA. THE DETAILS OF THESE UNITS AND INCOME/LOSS GENERATED FROM THESE UNITS ALONG WITH DEDUCTION CLAIMED BY IT U/S .10A/10AA WERE AS UNDER: PARTICULARS STP UNITS (AMOUNT IN RS.) OTHER UNITS (I.E. STP, SEZ & DTA UNITS) (AMOUNT IN RS.) TOTAL (AMOUNT IN RS.) PROFITS / (LOSS) OF UNIT S LESS: DEDUCTION U/ S 10A 17,72,26,283 (17,33,22,943) (15,05,83,667) NIL BALANCE PROFITS /(LOSS) 39,03,339 (15,05 , 83,667) BUSINESS PROFITS /(LOSS ) (14,66,80,327) INCOME FROM OTHER SOURCES 59,68,619 BALANCE LOSS CARRIED FORWARD (14,07,11,708 ) GROSS TOTAL INCOME NIL IT WAS SEEN BY THE A.O. THAT THE ASSESSEE - C OMPANY HAD CLAIMED DEDUCTION U/S. 10A/10AA/10B WITHOUT SETTIN G OFF OF LOSSES OF THE ELIGIBLE /INELIGIBLE UNITS. AS PER THE PROVISIONS OF THE SECTION 1 0 A/10AA/1OB OF THE ACT, A DEDUCTION OF THE PROFIT DERIVED FROM THE ELIGIBLE UNDERTAKING WAS TO BE ALLOWED OUT OF THE TOTAL INCOME OF THE ASSESSEE - COMPANY. THE ASSESSEE - COMPANY WAS ASKED TO M MODEL GLOBAL SERVICES PVT. LTD. 3 SHOW CA USE AS TO WHY THE DEDUCTION U/S. 1OA/10AA/1OB SHOULD NOT BE ALLOWED OUT OF THE TOTAL INCOME COM PUTED AFTER GIVING EFFECT OF THE PROVISIONS OF CHAPTER IV OF THE ACT. IN RESPONSE, THE ASSESSEE SUBMITTED ITS REPLY WHICH HAS BEEN BRIEFLY SUMMARIZED BY THE A.O.AT PAGE4 OF THE ASSESSMENT ORDER. THE SUBMISSIONS OF THE ASSESSEE WAS CONSIDERED BY THE A.O. BU T HE DID NOT FIND IT TENABLE DUE TO THE REASONS DISCUSSED IN DETAIL BY THE A.O. AT PAGES 4 TO13 OF THE ASSESSMENT ORDER. THE A.O. DISALLOWED THE CLAIM OF THE ASSESSEE OF ALLOWING DEDUCTION U/S. 10A/ 10AA BEFORE SETTING OFF OF CURRENT AND BROUGHT FORWARD LO SSES AND UNABSORBED DEPRECIATI ON. 4. UPON ASSESSEES APPEAL LEARNED CIT(A) REFERRED TO ITATS ORDER IN ASSESSEES OWN CASE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : - I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS GIVEN BY TH E APPELLANT. I FIND THAT ON SIMILAR FACTS AND CIRCUMSTANCES, THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE APPELLANT'S OWN CASE IN ITA NO.8560/M/2011 FOR A.Y.2007 - 08 VIDE ORDER DATED16.02.2016 HAD DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT BY HOLDING AS UND ER: '3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED JUDGEMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER (SUPRA).ON PERUSAL CIT(A)'S ORDER, WE FIND, THE CIT(A) UNFAI RLY DISTINGUISHED THE SAID JUDGMENT AND RESTRICTED THE DEDUCTION BY PARTLY ALLOWING THE APPEAL OF THE ASSESSES. IN OUR OPINION, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S1OA SO FAR AS THE PROFITS OF THE ELIGIBLE UNIT IS CONCERNED AND THE LOSS OF OTHER UNIT (MUMBAI UNIT) SHOULD BE ALLOWED TO BE CARRIED FORWARD AFTER SET OFF AGAINST INCOME FROM OTHER SOURCES AS REQUIRED BY THE IN ITS CROSS OBJECTION. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ALS O, THE HON'BLE COMMISSIONER OF INCOME - TAX (APPEALS) - 22 ['CIT(A) - 22'] VIDE ORDER DATED 11.07.2016 FOR AY 2010 - 11 HAS DECIDED ; THIS ISSUE IN THE FAVOUR OF THE APPELLANT. THUS, RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE JURISDICTIONAL TRIBUNAL AND T HAT OF THE HON'BLE CIT(A) - 22 IN THE APPELLANT'S OWN CASE, THE APPELLANT'S GROUND OF APPEAL IS ALLOWED . 5. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. AT THE OUTSET LEARNED COUNSEL OF THE M MODEL GLOBAL SERVICES PVT. LTD. 4 ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR A.Y. 2010 - 11 VIDE ORDER DATED 3.12.2018. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE DECISION NOW REFERRED BY THE REV ENUE IN THE GROUNDS OF APPEAL HAS ALREADY BEEN DEALT WITH THE ITAT IN THE AFORESAID ORDER. LEARNED COUNSEL FURTHER SUBMITTED THAT THIS ISSUE IS ALSO NOW COVERED IN FAVOUR OF THE ASSESSEE BY FOLLOWING CASE LAWS : - P RINCIPAL CIT VS. MAKIN O INDIA PVT. LTD. (3 93 ITR 291 (SC) CIT VS. YOKOGAWA INDIA LTD. (391 ITR 274)(SC) 6. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE WOULD NOT DISPUTE THE ABOVE PROPOSITION. 7. UPON CAREFUL CONSIDERATION WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEE S OWN CASE AS UNDER : - 8. WE NOTICE THAT THE LD. CIT (A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE COORDINATE BENCH RENDERED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2007 - 08. SO FA R AS THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX - 10, MUMBAI VS. GALAXY SURFACTANTS LTD., 343 ITR 108 (BOM.), RELIED UPON BY THE REVENUE IS CONCERNED, THE HONBLE HIGH COURT HAS HELD IN THE SAID CASE THAT LOSS OF 100% EXPORT ORIENTED UNIT WHICH IS ENTITLED TO DEDUCTION UNDER SECTION 10B OF THE ACT CAN BE SET OFF AGAINST PROFITS OF OTHER UNITS UNDER THE SAME HEAD. THUS WE SEE THAT THE AFORESAID CASE HAS BEEN DECIDED ON DIFFERENT FACTS. SINCE, THE DECISION OF THE LD. CIT(A) IS IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH RENDERED IN THE ASSESSEES OWN CASE BASED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER TO INTERFERE WITH. WE ACCORDINGLY UPHOLD THE F INDINGS OF THE LD. CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE . 8. THE ORDERS OF HON'BLE APEX COURT REFERRED BY LEARNED COUNSEL OF THE ASSESSEE REFERRED ABOVE ALSO SUPPORT THE PROPOSITION IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE ORDER OF LEARNED CIT(A). 9. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. M MODEL GLOBAL SERVICES PVT. LTD. 5 ORDER HAS BE EN PRONOUNCED IN THE COURT ON 28 . 6 . 201 9 . SD/ - SD/ - (RAVISH SOOD ) (SH A MIM YAHYA ) JUDIC IAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 28 / 6 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. B Y ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI