A.C.I.T. 8(3), MUMBAI V. RENAISSANCE JEWELLERY LTD., MUMBAI

ITA 5662/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5811 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANAJY R PARIKH
• Keywords: Reopening of assessment; Business income
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 5662/MUM/2012 (ASSESSMENT YEAR: 2006-07) A C I T - 8(3) M/S. RENAISSANCE JEWELERY LTD. ROOM NO. 217, AAYAKAR BHAVAN PLOT NO. 36A & 37, MID C MAROL M.K. ROAD, MUMBAI 400020 VS. SEEPZ, ANDHERI, MUMBAI - 096 PAN - AACCR2148B APPELLANT RESPONDENT APPELLANT BY: SHRI SANJEEV JAIN RESPONDENT BY: SHRI SANAJY R. PARIKH DATE OF HEARING: 11.02.2014 DATE OF PRONOUNCEMENT: 11.02.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 14.06.2012 PASSED BY THE CIT(A)-18, MUMBAI AND IT P ERTAINS TO A.Y. 2006-07. 2. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW SET-OFF O F LOSS SUSTAINED BY THE 10-B UNIT AGAINST THE NORMAL BUSINESS INCOME WITHOU T APPRECIATING THE FACT THAT THE SAME IS NOT IN ACCORDANCE WITH SUB-SE CTION (6) OF SEC.10B OF THE INCOME TAX ACT ACCORDING TO WHICH THE LOSS O F THE 10B UNIT SHOULD HAVE BEEN CARRIED FORWARD AND SET-OFF AGAINS T THE INCOME OF THE 10B UNIT IN THE SUBSEQUENT YEAR/YEARS. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY DECLA RED TOTAL LOSS OF ` 1,16,88,727/-. ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3) OF THE ACT BY DETERMINING THE TOTAL LOSS AT ` 1.03 CRORES WHEREIN THE ASSESSEE HAS BEEN ALLOWED TO SET OFF THE BUSINESS LOSS OF ASSESSEES EOU (INCOME OF WHICH IS EXEMPT UNDER SECTION 10A) AGAINST THE INCOME OF UNI T II (INCOME OF WHICH IS TAXABLE). IN THE OPINION OF THE AO THE LOSS FROM ON E UNIT CANNOT BE ADJUSTED ITA NO. 5662/MUM/2012 M/S. RENAISSANCE JEWELERY LTD. 2 AGAINST THE PROFIT OF ANOTHER UNIT AND, THEREFORE, REOPENED THE ASSESSMENT WHEREIN THE SET OFF OF THE LOSS OF UNIT-I IS NOT PE RMITTED. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER LTD. VS. DCIT 325 ITR 10 2 AND HENCE THE ASSESSEE IS ENTITLED TO SET OFF THE LOSS FROM UNIT- I AGAINST THE INCOME OF UNIT- II. IT WAS FURTHER CONTENDED THAT REOPENING OF ASSE SSMENT IS ALSO BAD IN LAW SINCE THE AO HAS WRONGLY UNDERSTOOD THE PROVISIONS, I.E. SECTION 10B(6) OF THE ACT, WHICH WAS IN OPERATION PRIOR TO 1 ST APRIL, 2001. THE LEARNED CIT(A) FOLLOWED THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT AND DIRECTED THE AO TO SET OFF THE LOSS SUSTAINED BY UNIT-I AGAI NST THE NORMAL BUSINESS INCOME EARNED BY THE ASSESSEE FROM UNIT-II. SINCE T HE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE ON MERITS, THE CIT(A) WAS OF THE OPINION THAT THE LEGAL ISSUE CONCERNING VALIDITY OF REOPENING OF ASSESSMEN T BECOMES ACADEMIC AND, THEREFORE, DID NOT TO DECIDE THE SAME. 5. REVENUE IS IN APPEAL BEFORE US AGAINST THE DIRECTIO N OF THE LEARNED CIT(A) TO ALLOW SET OFF OF LOSS FROM UNIT-I AGAINST THE NORMAL BUSINESS INCOME. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE STANDS COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT (SUPRA) AND THUS THE CIT(A) IS JUSTIFIED IN GRANTING RELIEF. HE ALSO SUBMITTED THAT REOPENING OF ASSESSMENT ITSELF WAS BAD IN LAW AND THE LEARNED CI T(A) CHOSE NOT TO GO INTO THE ISSUE MERELY ON THE BASIS THAT IT IS ACADEMIC; OTHERWISE THE ASSESSEE HAS A STRONG CASE EVEN ON THE ISSUE OF REOPENING OF ASS ESSMENT. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED D.R. AND THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS NOT DIS PUTED BY THE REVENUE THAT THE ISSUE, AS OF NOW, STANDS COVERED BY THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT. UNDER THESE CIRCUMSTANCES IT IS NOT NEC ESSARY FOR US TO GO INTO THE OTHER ASPECTS. SUFFICE TO SAY THAT THE ORDER PA SSED BY THE CIT(A) IS IN ACCORDANCE WITH LAW AND, THEREFORE, THE APPEAL FILE D BY THE REVENUE DESERVES TO BE DISMISSED. WE HOLD ACCORDINGLY. ITA NO. 5662/MUM/2012 M/S. RENAISSANCE JEWELERY LTD. 3 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2014. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 11 TH FEBRUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 18, MUMBAI 4. THE CIT 8, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.