DCIT 9(3), MUMBAI V. ZYCUS INFOTECH P.LTD, MUMBAI

ITA 5770/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62700 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-07-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 12-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V JHAVERI
• Assessee Lawyers: RAJN EESH K ARVIND
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 5770/M/2011 ASSESSMENT YEAR 2003-04 DCIT, CIRCLE 9(3), 2 ND FLOOR, ROOM NO. 229, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 VS. M/S. ZYCUS INFOTECH PVT. LTD. BLDG. NO.75, 1 ST FLOOR, NIRLON COMPLEX, GOREGAON (E), MUMBAI-400 063 PAN NO: AAACS 3540 Q (APPELLANT) ( RESPONDENT) ASSESSEE BY : SHRI RAJNEESH K. ARVIND REVENUE BY : SHRI B. V. JHAVERI DATE OF HEARING : 10-07-2012 DATE OF PRONOUNCEMENT : 18-07-2012 O R D E R PER RAJENDRA, A.M. THE SOLITARY GROUNDS OF APPEAL WERE FILED BY THE AO AGAINST THE ORDER DATED 19.06.2011 OF CIT (A)- 20, MUMBAI FOR THE ASSESSMENT YEAR 2003 -04 READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.29,84,300 BEING ASSESSED LOSS OF A.Y.2002-03 DESPITE THE FACT THAT THE ASSESSEE IS ENTITLED FOR DEDUCTIO N U/S10A OF THE INCOME TAX ACT, 1961 FOR A.Y.2002-03 AND THE SAID LOSS PERTAINED TO THE SAME UNIT FOR WHICH THE ASSESSEE HAS EARNED PROFITS DURING A.Y .2003-04. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2 I.T.A. NO.5770/MUM/2011 M/S. ZYCUS INFOTECH PVT. LTD. 2. IN THIS CASE, THE ASSESSMENT ORDER WAS PASSED U/ S. 143(3) R.W.S 147 OF THE I.T ACT, 1961 (ACT) BY THE AO ON 30.11.2010. DURING THE RE-ASSES SMENT PROCEEDING, THE AO OBSERVED THAT THE AY UNDER CONSIDERATION WAS THE SECOND YEAR FOR WHIC H APPELLANT COMPANY WAS CLAIMING DEDUCTION U/S.10A OF THE ACT. AS PER THE AO, THE A SSESSEE HAD INCURRED LOSS DURING A.Y. 2002- 03 AND THE LOSS PERTAINED TO SAME UNIT THAT HAD EAR NED PROFIT DURING THE A.Y. 2003-04. AO HELD THAT INCOME FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE WAS EXEMPT U/S. 10A OF THE ACT, THAT LOSSES ARISING FROM THE SAID INDUSTRIAL UNDERTAKING COULD NOT BE CARRIED FORWARD FOR SET OFF. HE HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CARRY FO RWARD THE LOSS INCURRED BY IT DURING 2002-03. AS A RESULT, LOSS AMOUNTING TO RS.1.24 CRORES ALLOW ED WAS WITHDRAWN BY THE AO. HE RELIED UPON THE CASE OF HARPRASAD & CO. LTD. (99 ITR 118). 3. THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST AP PELLATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, FAA HEL D THAT AS PER THE PROVISIONS OF SEC.10A6(II) NO LOSSES COULD BE CARRIED FORWARD OR SET OFF WHERE SUCH LOSS RELATED TO ANY OF THE RELEVANT ASSESSMENT YEAR ENDING BEFORE AY 2000-01 THAT IN TH E CASE UNDER CONSIDERATION LOSS OF AY 2002-03 WAS BEING SET OFF AGAINST THE BUSINESS INCO ME OF AY 2003-04 THAT APPELLANT COMPANY HAD MADE A DECLARATION U/S.10A(8) OF THE ACT FOR NO T CLAIMING THE BENEFIT IN RESPECT OF INCOME ASSESSED U/S.10A FOR THE A.Y. 2002-03, THAT CASE OF HARPRASAD (SUPRA) WAS NOT APPLICABLE TO THE FACTS OF THE CASE. HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 4. BEFORE US, THE DR RELIED UPON THE ORDER OF THE A O. AR SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE APPELLANT COMPANY IN LIGHT OF THE DECISION OF G BENCH OF ITAT, MUMBAI DELIVERED IN THE CASE OF M/S. GEBBS INFOTECH LTD. IN ITA NOS.3370/MUM/2007, 7738/MUM/2008, 7196/MUM/2008, AY 2003-04, 2004-05 A ND 2005-06 VIDE ORDER DATED 13.10.2010. WE HAVE PERUSED THE SAID ORDER. IN TH AT CASE, THE ASSESSEE HAD CLAIMED DEDUCTION U/S.10A OF THE ACT IN THE AY 2001-02 FOR THE FIRST TIME. NO CLAIM U/S.10A WAS MADE FOR THE AY 2002-03 AS THE ASSESSEE COMPANY HAD SUFFERED LOSSES . FOR THE AY 2003-04, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2.112 CRORES AFTER CLAIMING THE DEDUCTION U/S.10B OF THE ACT AMOUNTING TO RS.3.61 CRORES. INCOME FRO M THE 10B UNIT WAS RS.4.02 CRORES. THE ASSESSEE CLAIMED 90% OF IT AS DEDUCTION AND BALANCE I.E. RS.40.2 LAKHS WAS SET OFF AGAINST 3 I.T.A. NO.5770/MUM/2011 M/S. ZYCUS INFOTECH PVT. LTD. BROUGHT FORWARD LOSSES OF AY 2001-02. THE AO DISAL LOWED THE SET OFF OF CARRIED FORWARD LOSSES. AFTER HEARING THE RIVAL CONTENTION, THE TR IBUNAL HELD AS UNDER: 7. WE HAVE HEARD RIVAL CONTENTIONS, SECTION 10A(6) (II) READS AS FOLLOWS : NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE LAST OF THE RELEVANT ASSESSMENT YEARS, OR OF ANY PREVIOUS YEAR, RELEVANT TO ANY SUB SEQUENT YEAR,- (I) .. .. (II) NO LOSS REFEREED TO IN SUB-SECTION (1) OF SECTION72 OR SUB-SECTION (1) OR SUB-SECTION (3) OF SECTION 74, IN SO FAR AS SUCH LO SS RELATES TO THE BUSINESS OF THE UNDERTAKING, SHALL BE CARRIED FORWARD OR SET OFF WHERE SUCH LOSS RELATES TO ANY OF THE RELEVANT ASSESSMENT YEARS [EN DING BEFORE THE 1 ST DAY OF APRIL, 2001]; THE UNDISPUTED FACT IN THIS CASE IS THAT THE ASSESS EE HAS NOT CLAIMED DEDUCTION U/S.10A FOR THE ASSESSMENT YEAR 2002-03. AN ORDER U/S.143(3) WAS PASSED ON 24- 3-2005 FOR THE ASSESSMENT YEAR 2002-03 AND RETURNED LOSS HAS BEEN ACCEPTED. THUS THE ASSESSEE IS ENTITLED FOR CARRY FORWARD AND SET OFF OF THE ASSESSED LOSS PERTAINING TO THE ASSESSMENT YEAR 2002-03. IN ANY EVENT, SECTION 10A(6)(II) HAS BEEN AMENDED BY THE FINANCE ACT 2003 W.R.E.F 01-04- 2001 AND THE FOLLOWING WORDS WERE ADDED : ENDING BEFORE THE FIRST DAY OF APRIL, 2001 THIS AMENDMENT CLEARLY COMES TO THE RESCUE OF THE A SSESSEE. UNDER THESE CIRCUMSTANCES, WE UPHOLD THE FOLLOWING DECISION OF THE LEARNED CIT(APPEALS): SUB-CLAUSE (2) OF CLAUSE (6) TO SECTION 10A CLEAR LY STATES THAT NO LOSS SHALL BE CARRIED FORWARD OR SET-OFF WHERE SUCH LOSS RELATES TO ANY OF THE RELEVANT ASSESSMENT YEARS. THERE IS NOT AMBIGUITY IN THE AC T AND IT IS ALSO AN UNDISPUTED FACT THAT THE APPELLANT WAS ENTITLED TO DEDUCTION U /S.10A WHICH IT HAD BEEN ALLOWED IN THE A.Y. 2001-02 AND WHICH IT ALLEGEDLY DID NOT CLAIM IN THE A.Y. 2002-03. IT IS ALSO NOT IN DISPUTE BY THE A.O. THA T THE APPELLANT HAD NOT MADE A DECLARATION AS REQUIRED U/S.10A(8) OF THE ACT FOR N OT CLAIMING DEDUCTION U/S.10A OF THE ACT. IN THIS REGARD THE LD. COUNSEL FOR THE APPELLANT HAS POINTED OUT TO THE DECLARATION VIDE LETTER DATED 08.10.2002 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE STAND OF THE A.O. NO T ALLOWING THE SET-OFF OF CARRY FORWARD LOSS INCURRED DURING THE A.Y. 2002-03 CANNO T BE SUSTAINED. THIS GROUND IS ALLOWED IN FAVOUR OF THE APPELLANT. IN THE RESULT, GROUND NO.1 OF THE REVENUE IS DISMIS SED. 4 I.T.A. NO.5770/MUM/2011 M/S. ZYCUS INFOTECH PVT. LTD. RESPECTFULLY, FOLLOWING THE ORDER OF THE CO-COORDIN ATING BENCH WE HOLD THAT THE ASSESSEE COMPANY WAS ENTITLED FOR CARRYING FORWARD AND SET O FF OF LOSSES FOR THE A.Y. 2002-03 AGAINST THE PROFIT FOR THE AY 2003-04. GROUND NO. 1 IS DECIDED AGAINST THE AO. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS REJECTED. PRONOUNCED IN THE OPEN COURT ON 18 TH JULY , 2012 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (RAJENDRA) ACCOUNTANT MEMBER MUMBAI, DATED : 18 TH JULY, 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),XIV, MUMBA I 4. COMMISSIONER OF INCOME TAX, 14 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI