ACIT, CHENNAI V. M/s. Chettinad Quartz Products Ltd., CHENNAI

ITA 51/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90433 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A. NO.51/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI 600 034. ( %& /APPELLANT) VS M/S. CHETTINAD QUARTZ PRODUCTS LIMITED (NOW MERGED WITH M/S.CHETTINAD MORIMURA SEMI CONDUCTOR MATERIAL P. LTD) NO.37, OLD MAHABALIPURAM ROAD, KHAZHIPATTUR VILLAGE, PADUR POST, KANCHEEPURAM (DIST) 603 103. [PAN: AAACC 2461Q] ( '(%& /RESPONDENT) / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. / RESPONDENT BY : NONE /DATE OF HEARING : 19.05.2015 /DATE OF PRONOUNCEMENT : 29.05.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CHENNAI, DA TED 25.10.2013 FOR THE ASSESSMENT YEAR 2009-2010. I.T.A.NO.51/MDS/2014. :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 2.1 THE CIT(A) ERRED IN HOLDING THAT UNABSORBED DE PRECIATION MUST NOT BE SET OFF AGAINST INCOME OF THE UNDERTAKI NG BEFORE GIVING DEDUCTION U/S.10B. 2.2 THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED T HE RECENT DECISION OF THE HONBLE APEX COURT IN THE CASE OF HIMATASINKA SEIDE LTD VS. CIT DATED 19.09.2013 REPO RTED IN 2013-TIOL-53-SUPREME COURT-IT-LB WHEREIN IT HAS HELD THAT UNABSORBED DEPRECIATION CARRIED FORWARD F ROM EARLIER YEARS IS TO BE SET OFF BEFORE ALLOWING DEDU CTION U/S.10A/10B. 2.3 THE LEARNED CIT(A) FAILED TO NOTE THAT IN THE FOLLOWING DECISIONS, IT WAS HELD THAT BROUGHT FORWARD BUSINES S LOSSES AND UNABSORBED DEPRECIATION SHOULD BE SET OFF AGAI NST THE INCOME OF THE 10B UNIT BEFORE COMPUTING DEDUCTION U/S.10B. (I) CIT VS. PATSPIN INDIA LTD (KER) 62 DTR 364. (II) SIEMENS INFORMATION SYSTEMS LTD VS. DCIT (ITAT, MUM) 135 ITD 196. (III) ACIT VS. JEWELLERY SOLUTIONS INTERNATIONAL PV T. LTD. (ITAT., MUM) 28 SOT 405. 3. NONE APPEARED FOR ASSESSEE. WE PROCEED TO DISPOSE OFF THIS APPEAL AFTER HEARING THE LD. DEPARTMENTAL REPRESEN TATIVE. IN OUR OPINION, IDENTICAL ISSUE WAS CONSIDERED BY THIS TRI BUNAL IN ASSESSEES OWN CASE IN ITA NO.430/MDS/2014 FOR THE ASSESSMENT YEAR 2008-09, VIDE ORDER DATED 16.10.2014, WHEREIN IT WAS OBSERVE D AS UNDER:- 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHO RITIES AND THE DECISIONS RELIED ON. WE FIND THAT THE ISSUE IN APPEAL HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF S.R.A.SYSTEMS LTD.(SUP RA) FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN I.T.A.NO.51/MDS/2014. :- 3 -: THE CASE OF M/S. HIMATSINGKA SEIDE LTD. (SUPRA) . T HE CO- ORDINATE BENCH WHILE DECIDING THE ISSUE HELD THAT UNABSORBED DEPRECIATION HAS TO BE SET OFF BEFORE COMPUTING EXEMPTION ALLOWABLE UNDER SECTION 10A OF THE ACT OBSERVING AS UNDER : 7. THE THIRD ISSUE IN APPEAL RELATES TO THE METHOD OF COMPUTATION OF DEDUCTION U/S.10A OF THE ACT. THE ASSESSEE HAS CLAIMED DEDUCTION U/S.10A BEFORE SETTING OFF OF UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES. THE LD.AR OF THE ASSESSEE IN ORDER TO FORTIFY THE STAND OF ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN ASSESSEES APPEAL FOR THE AY.2005-06 AND AY.2007-08 (SUPRA). THE LD.AR HAS ALSO DRAWN SUPPORT FROM THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD.(SUPRA). ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE LATEST DECISION OF THE HONBLE APEX COURT IN THE CASE OF M/S.HIMATSINGKA SEIDE LTD., VS.CIT (SUPRA). THE HONBLE SUPREME COURT OF INDIA DISMISSED THE APPEAL OF THE ASSESSEE AND HAS UPHELD THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT. THE HONBLE HIGH COURT HAS HELD THAT THE BROUGHT FORWARD DEPRECIATION HAS TO BE ADJUSTED AGAINST THE PROFITS OF THE EOU BEFORE COMPUTING THE EXEMPTION ALLOWABLE U/S.10B. THE PROVISIONS OF SECTION 10A ARE PARI MATERIA WITH THE PROVISIONS OF SECTION 10B OF THE ACT.WE FIND THAT AS FAR AS UNABSORBED DEPRECIATION IS CONCERNED, THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF M/S.HIMATSINGKA SEIDE LTD., VS. CIT (SUPRA), HAS UP-HELD THE FINDINGS OF THE HONBLE KARNATAKA HIGH COURT AND AS SUCH, UN-ABSORBED DEPRECIATION HAS TO BE SET-OFF BEFORE COMPUTING THE EXEMPTION ALLOWABLE U/S.10A. IN RESPECT OF SETTING-OFF OF THE BROUGHT FORWARD LOSSES, THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. YOKOGAWA INDIA LTD.(SUPRA) STILL HOLDS GOOD. ACCORDINGLY, THE ASSESSEE CAN CLAIM DEDUCTION U/S.10A BEFORE I.T.A.NO.51/MDS/2014. :- 4 -: SETTING OFF OF BROUGHT FORWARD LOSSES. IN VIEW OF THE ABOVE, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 4. IN VIEW OF THE ABOVE, WE ARE INCLINED TO ALLOW THE APPEAL OF THE REVENUE IN SIMILAR LINE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 51/MDS/2014 IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF MAY, 2015, AT CHENNAI. SD/- SD/- ( . ! ) V. DURGA RAO ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' /CHENNAI. #$ /DATED:29.05.2015. KV $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF.