IBI CHEMATUR ( ENGINEERING & CONSULTANCY ) LTD, MUMBAI V. DCIT (OSD) 2(2), MUMBAI

ITA 501/MUM/2012

• Counselvise Citation: 50119914 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 06-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: V MOHAN
• Section: 10B

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI .. , !'# $ $ $ $ ! %, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M !./ I.T.A. NO. 501 /MUM/2012 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2008-09) IBI CHEMATUR (ENGINEERING & CONSULTANCY) LTD., VICTORIA BUILDING, IST FLOOR, S.A. BRELVI ROAD, FORT, MUMBAI 400 001. ) ) ) ) / VS. DY. COMMISSIONER OF INCOME-TAX- (OSD) -2(2), ROOM NO. 545, 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020. #+ !./ PAN : AAACI 3317D ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) +, / 0 ! / APPELLANT BY : SHRI V. MOHAN -.+, / 0 ! / RESPONDENT BY : SHRI O.P. SINGH !)$ / / // / DATE OF HEARING : 06-09-2013 12* / / DATE OF PRONOUNCEMENT : 18-09-2013 '3 / O R D E R PER P.M. JAGTAP, A.M . : .. , !'# THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) - 5, MUMBAI DATED 11-8-2011 WHEREBY HE UPHEL D THE ACTION OF THE A.O. IN SETTING OFF THE LOSS INCURRED BY THE ASSESSEE IN RESPECT OF BUSINESS CARRIED ON IN DOMESTIC TARIFF AREA AGAINST THE PROFIT DERIV ED BY 100% EOU ELIGIBLE FOR BENEFIT OF DEDUCTION U/S 10B OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 10B OF THE A CT. ITA 501/MUM/2012 2 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF PROVIDING TECHNICAL CONSULTANCY AND IT ENABLED SERVICES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY DERIVED A PROFIT OF RS. 1,51,17,018/- FROM ITS 100% EOU WHICH WAS ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. ITS DOMESTIC UNITS, HOWEVER, SUFFERED A LOSS OF RS. 1,03,54,617/- FROM THE BUSINESS MADE IN THE DOMESTIC TARIFF AREA. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSE E CLAIMED DEDUCTION OF RS. 1,36,05,407/- U/S 10B OF THE ACT BEING 90% OF THE E XPORT PROFIT OF ITS 100% EOU AND AFTER ADJUSTING THE BALANCE PROFIT OF RS. 1 5,11,611/- OF THE SAID UNIT AGAINST THE LOSS OF RS. 1,03,54,617/- SUFFERED BY T HE DOMESTIC UNIT, THE RESULTANT LOSS WAS CLAIMED TO BE CARRIED FORWARD. A CCORDING TO THE A.O., THE DEDUCTION U/S 10B OF THE ACT WAS ALLOWABLE TO THE A SSESSEE FROM ITS TOTAL INCOME AND SINCE THE TOTAL INCOME OF THE ASSESSEE F OR THE YEAR UNDER CONSIDERATION, ACCORDING TO HIM, WAS ONLY RS. 54,41 ,171/- AFTER ADJUSTING THE LOSS OF DOMESTIC UNIT AGAINST THE PROFIT OF EXPORT ORIENTED UNIT, HE RESTRICTED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 10B OF TH E ACT TO THAT EXTENT. ACCORDINGLY, THE CLAIM OF THE ASSESSEE FOR CARRY FO RWARD OF LOSS WAS DISALLOWED BY HIM. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF TH E A.O. ON THIS ISSUE HOLDING THAT THE CLAIM OF THE ASSESSEE AMOUNTED TO CARRY FORWARD OF THE EXEMPTION U/S 10B OF THE ACT IN THE FORM OF DEPRECI ATION AND BUSINESS LOSS WHICH WAS NOT PERMISSIBLE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A),THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBU NAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED B Y THE LD. REPRESENTATIVES OF BOTH THE SIDES, THE ISSUE INVOLVED IN THIS APPEAL I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY (P.) LTD. VS. A CIT (2010) 38 SOT 252 (CHENNAI) (SB] WHEREIN THE ISSUE INVOLVED WAS WHETH ER THE BUSINESS LOSSES OF ITA 501/MUM/2012 3 A NON-ELIGIBLE UNIT, WHOSE INCOME WAS NOT ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT, HAD TO BE SET OFF AGAINST THE PROFITS OF T HE UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 10A FOR THE PURPOSE OF DETERMINING TH E ALLOWABLE DEDUCTION U/S 10A OF THE ACT AND THE SAME WAS DECIDED BY THE SPECIAL BENCH IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE BUSINESS LOSSES OF A NON-ELIGIBLE UNIT, WHOSE INCOME WAS NOT ELIGIBLE FOR DEDUCTION U/A 10A OF THE ACT, COULD NOT BE SET OFF AGAINST THE PROFITS OF THE UNDERTAKING ELIG IBLE FOR DEDUCTION U/S 10A FOR THE PURPOSE OF DETERMINING THE ALLOWABLE DEDUCTION U/S 10A OF THE ACT. IT WAS HELD THAT THE DEDUCTION U/S 10A IS NOT AN EXEMP TION BUT ONLY A DEDUCTION UNDER CHAPTER III OF THE INCOME TAX ACT A ND THE PROVISIONS OF SECTION 80AB OF CHAPTER VI-A COULD NOT BE APPLIED T O SUCH DEDUCTION U/S 10A. IT WAS ALSO HELD THAT THE DEDUCTION UNDER SEC TION 10A IS UNDERTAKING SPECIFIC AND HENCE THE LOSSES OF A NON-ELIGIBLE UNI T CANNOT BE SET OFF AGAINST THE PROFITS OF THE ELIGIBLE UNIT FOR DETERMINING DE DUCTION U/S 10A. AS THE PROVISIONS OF SECTION 10B ARE ANALOGOUS TO THE PROV ISIONS OF SECTION 10A, WE RESPECTFULLY FOLLOW THE DECISION OF THE SPECIAL BEN CH OF THIS TRIBUNAL IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY (P.) LT D. (SUPRA) AND DIRECT THE A.O. TO ALLOW THE DEDUCTION U/S 10B OF THE ACT AS CLAIME D BY THE ASSESSEE BEING 90% OF THE EXPORT PROFIT OF EOU WITHOUT SETTING OFF OF LOSS INCURRED IN RESPECT OF BUSINESS CARRIED ON IN DOMESTIC TARIFF AREA. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 4 5 &) %4 / #$ 6 / 78 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2013. . '3 / 12* 9')5 18-09-2013 2 / SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER ITA 501/MUM/2012 4 MUMBAI ; 9') DATED 18-09-2013 $.&).!./ RK , SR. PS '3 / -&:; <;* '3 / -&:; <;* '3 / -&:; <;* '3 / -&:; <;*/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. = () / THE CIT(A)- 5, MUMBAI 4. = / CIT 2 MUMBAI 5. ;$@ -&&) , , / DR, ITAT, MUMBAI I BENCH 6. A% B / GUARD FILE. '3)! '3)! '3)! '3)! / BY ORDER, !.; -& //TRUE COPY// C C C C/ // /!7 !7 !7 !7 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI