ACIT 8(1), MUMBAI V. BHUKHANVALA TOOLS P. LTD, MUMBAI

ITA 5377/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8794 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Keywords: Opportunity of being heard; Additional evidence
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5377/MUM/2010 (ASSESSMENT YEAR: 2006-07) D C I T - 8(1) M/S. BHUKHANVALA TOOLS P. LTD. ROOM NO. 210, 2ND FLOOR PLOT B-28, VEERA INDUL. EST ATE AAYAKAR BHAVAN, M.K. ROAD VS. VEERA DESAI ROAD EXTN. MUMBAI 400020 ANDHERI (W), MUMBAI 400053 PAN - AABCB 0098 B APPELLANT RESPONDENT APPELLANT BY: SHRI PRITAM SINGH RESPONDENT BY: MS. AARTI VISSANJI & MS. SHALIN S. DIVATIA DATE OF HEARING: 17.09.2012 DATE OF PRONOUNCEMENT: 26.09.2012 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENUE AND IT PERTAINS TO A.Y. 2006-07. 2. THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO SET OFF LOSS OF RS.5,77,44,936/- FROM 10B UNITS AGAINST NON-10B UNI TS, WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE PROVISIONS OF SECTION 10B(4) AS WELL AS THE INCOME FROM 10B UNITS DOES NO FORM P ART OF THE TOTAL INCOME, WITHOUT APPRECIATING THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN LAW. 3. THE CASE OF THE ASSESSEE, IN SHORT, WAS THAT THE LO SS ARISING FROM TWO UNITS CAN BE ADJUSTED AGAINST THE PROFIT DERIVED FR OM OTHER UNITS SINCE THE SET OFF IS PERMISSIBLE UNDER THE ACT. THE REVENUE, ON THE OTHER HAND, WAS OF THE OPINION THAT SECTION 10B PROVIDES FOR EXEMPTION OF TAXABLE INCOME AND ITA NO.5377/MUM/2010 M/S. BHUKHANVALA TOOLS P. LTD. 2 HENCE EVEN THE LOSS FROM THE EXEMPT UNITS COULD NOT BE ALLOWED TO BE SET OFF AGAINST OTHER INCOME. 4. BEFORE THE LEARNED CIT(A) THE ASSESSEE CONTENDED TH AT SECTION 10B WAS AMENDED W.E.F. 01.04.2001 WHEREBY IT PROVIDES F OR BENEFIT OF DEDUCTION AND IT DOES NOT SPEAK OF EXEMPTION IN WHICH EVENT T HE LOSS ARISING FROM A UNIT WHOSE SOURCES OF WHICH IS ALLOWABLE AS DEDUCTI ON CAN BE ALLOWED TO BE SET OFF AGAINST THE INCOME OF OTHER UNITS. IN THE I NSTANT CASE THE LOSS IS ELIGIBLE FOR SET OFF UNDER THE SAME HEAD, I.E. PRO FITS AND GAINS FROM BUSINESS AND PROFESSION. IT IS ALSO SUBMITTED THAT THE ASSE SSEE HAS TWO UNITS OUT OF WHICH UNIT NO. 4 WAS ENTITLED TO THE BENEFIT UNDER SECTION 10B UPTO A.Y. 2004-05 WHEREAS THE YEAR UNDER CONSIDERATION IS A.Y . 2006-07. THEREFORE THE ASSESSEE WAS NOT ENTITLED TO ANY BENEFIT UNDER SECTION 10B IN RESPECT OF PROFIT/LOSS ARISING OUT OF UNIT NO. 4 IN WHICH EVEN T THE LOSS CAN BE SET OFF AGAINST OTHER INCOME. WITH REGARD TO UNIT NO. 7 IT WAS CONTENDED THAT SECTION 10B CONTEMPLATES DEDUCTION ONLY AND HENCE LOSS ARISING FROM ONE UNIT CAN BE SET OFF AGAINST OTHER UNITS. THE LEARNE D CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE ON BOTH THE POINTS AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 5. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. THE LEARN ED D.R. SUBMITTED THAT WITH REGARD TO UNIT NO. 4 THE ASSESSEE NEVER R AISED THE PLEA BEFORE THE AO THAT IT WAS NOT ELIGIBLE FOR DEDUCTION UNDER SEC TION 10B BEYOND A.Y. 2004-05 AND A NEW PLEA HAVING BEEN RAISED BEFORE TH E CIT(A), IT IS INCUMBENT ON THE PART OF THE CIT(A) TO CALL FOR A R EMAND REPORT FROM THE AO. IN THE ABSENCE OF IT SUCH ADDITIONAL PLEA SHOULD NO T HAVE BEEN ACCEPTED. WITH REGARD TO THE PLEA OF THE AO THAT SECTION 10B CONTEMPLATES FOR EXEMPTION, THE LEARNED D.R. RELIED UPON THE LATEST DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. TEI TECHNOL OGIES PVT. LTD. IN ITA NOS. 347/2011 AND 2067/2010 WHEREIN THEIR LORDSHIPS OBSE RVED, WITH REGARD TO THE PROVISIONS OF SECTION 10A, THAT PRIOR TO THE AM ENDMENT AS WELL AS AFTER THE AMENDMENT SECTION 10B REFERS TO INCOMES WHICH DO NOT FORM PART OF THE TOTAL INCOME WHICH IMPLIES THAT IT PROVIDES FOR EX EMPTION AND NOT DEDUCTION. ITA NO.5377/MUM/2010 M/S. BHUKHANVALA TOOLS P. LTD. 3 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE STRONGLY RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GALAXY SURFACTANTS LTD. [2012] 343 ITR 108 TO SUBMIT THAT IN THE LIGHT OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT SECTION 10B CONTEMPLATES THE BENEFIT OF DEDUCTION AND AT ANY RA TE SECTIONS 70 TO 72 INDEPENDENTLY OPERATE WHERE LOSS FROM ONE UNIT CAN BE SET OFF AGAINST THE PROFIT FROM OTHER UNITS. SHE ALSO RELIED UPON THE U NREPORTED DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PATNI COMP UTERS AS WELL AS THE DECISION IN THE CASE OF HINDUSTAN UNILEVER LTD. VS. DCIT [2010] 325 ITR 102. IT WAS FURTHER CONTENDED THAT THOUGH THE LEARNED D. R. SOUGHT TO RELY UPON THE HON'BLE DELHI HIGH COURT JUDGEMENT AS WELL AS O THER HIGH COURT JUDGEMENTS, THE FACT REMAINS THAT THE HON'BLE JURIS DICTIONAL HIGH COURT HAS CONSIDERED IDENTICAL ISSUE IN FAVOUR OF THE ASSESSE E AND HENCE THE SAID DECISION HAS TO BE PREFERRED BY THE MUMBAI BENCH OF THE ITAT. 7. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN THE L IGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT (SUPRA) WE HOLD TH AT THE LEARNED CIT(A)S ORDER DOES NOT CALL FOR ANY INTERFERENCE. IT IS NEC ESSARY TO POINT OUT THAT WITH REGARD TO UNIT NO. 4 THE REVENUE HAS NOT RAISED THE ISSUE THAT THE ADDITIONAL EVIDENCE WITH REGARD TO FACTUM OF NON-AVAILABILITY OF EXEMPTION/DEDUCTION BEYOND A.Y. 2004-05 IS ADMITTED WITHOUT GIVING THE AO AN OPPORTUNITY OF BEING HEARD AND, AT ANY RATE, NO SUCH PLEA WAS SPEC IFICALLY RAISED BEFORE US. BE THAT AS IT MAY, IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT, DEDUCTION IS OTHERWISE ADMISSIBLE. UNDER THE CIRCUMSTANCES WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPE AL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER 2012. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 26 TH SEPTEMBER 2012 ITA NO.5377/MUM/2010 M/S. BHUKHANVALA TOOLS P. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 16, MUMBAI 4. THE CIT VIII, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.