ITO 8(3)3, MUMBAI V. TWINKLE DIAMOND JEWELLERY INDIA P.LTD, MUMBAI

ITA 5851/MUM/2013

• Counselvise Citation: 585119914 RSA 2013
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 5851/MUM/2013 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER - 8(3)3 TWINKLE DIAMOND JEWELLER Y INDIA P. LTD. ROOM NO. 22, AAYAKAR BHAVAN 503, BLDG. NO. 2, SEEPZ M.K. ROAD, MUMBAI 400020 VS. JOGESHWARI VIKHROLI ROAD ANDHERI (W), MUMBAI 400096 PAN - AABCT8924G APPELLANT RESPONDENT APPELLANT BY: MS. SONIA KUMAR RESPONDENT BY: NONE DATE OF HEARING: 29.01.2014 DATE OF PRONOUNCEMENT: 29.01.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 05.07.2013 PASSED BY THE CIT(A)-18, MUMBAI AND IT P ERTAINS TO A.Y. 2010-11. 2. THOUGH NUMBER OF GROUNDS WERE URGED BEFORE THE TRIB UNAL THE SUM AND SUBSTANCE OF THE GROUNDS ARE THAT THE CIT(A) ER RED IN HOLDING THAT THE BROUGHT FORWARD UNABSORBED DEPRECIATION OF THE ASSE SSEES 10B UNIT WAS NOT ELIGIBLE FOR SET OFF AGAINST CURRENT YEARS PROFIT OF THE SAME 10B UNIT AND THE LEARNED CIT(A) ERRED IN RELYING UPON THE DECISION O F THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BLACK & VEATCH CONSULTING PVT. LTD. (ITA NO. 1237 OF 2011) WHICH IN TURN WAS REFERRED TO IN THE DECIS ION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER LTD. 3 25 ITR 102 AND FURTHER ERRED IN RELYING UPON THE DECISION OF THE HON'BLE K ARNATAKA HIGH COURT IN THE CASE OF YOKOGAWA INDIA LTD. 341 ITR 385, OVERLO OKING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE ABOVE DECISION AND AN SLP HAS BEEN FILED. 3. ON BEHALF OF THE ASSESSEE SHRI B.V. JHAVERI, ADVOCA TE FILED HIS POWER OF ATTORNEY BUT REQUESTED FOR SHORT ADJOURNMENT. HO WEVER, HAVING REGARD TO ITA NO. 5851/MUM/2013 TWINKLE DIAMOND JEWELLERY INDIA P. LTD. 2 THE FACTUAL MATRIX OF THE CASE THE REQUEST FOR ADJO URNMENT WAS REJECTED AND THE APPEAL WAS HEARD. THE FACTS IN SHORT ARE THAT T HE ASSESSEE IS A MANUFACTURER AND EXPORTER OF JEWELLERY. FOR THE YEA R UNDER CONSIDERATION IT DECLARED NIL INCOME WHEREAS DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SHOWN INCOME U NDER THE HEAD BUSINESS FROM THE ACTIVITY OF MANUFACTURE AND EXP ORT OF JEWELLERY AND CLAIMED EXEMPTION UNDER SECTION 10B OF THE ACT. HE FURTHER NOTICED THAT THOUGH THE ASSESSEE HAS CLAIMED DEDUCTION OF ` 81,66,963/- UNDER SECTION 10B OF THE ACT THE ASSESSEE COMPANY COMPLETELY IGNO RED THE BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION AVAILABLE FOR SET OFF. IN THE OPINION OF THE AO THE BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION HAS TO BE ADJUSTED BEFORE CLAIMING DED UCTION AND ACCORDINGLY THE ASSESSMENT WAS COMPLETED. 4. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT( A) OBSERVED THAT THE AO HAS RESTRICTED THE DEDUCTION UNDER SECTION 1 0B BY RELYING ON THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF JEWE LLERY SOLUTIONS PVT. LTD. 28 SOT 405 BUT IDENTICAL ISSUE WAS CONSIDERED BY TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF BLACK AND VEATCH CONSULTING PV T. LTD. AS WELL AS BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF YOKOGAW A INDIA LTD. WHEREIN THE RESPECTIVE COURTS HELD THAT DEDUCTION UNDER SEC TION 10A AND 10B WILL BE ALLOWED BEFORE SETTING OFF THE BROUGHT FORWARD BUSI NESS LOSSES AND UNABSORBED DEPRECIATION. IN THE LIGHT OF THE DECISI ONS OF THE HON'BLE BOMBAY HIGH COURT AND HON'BLE KARNATAKA HIGH COURT AND ALS O IN THE LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS LTD. 88 ITR 192 THE LEARNED CIT(A) DIRECTED THE AO TO ALLOW THE DED UCTION UNDER SECTION 10B BEFORE ADJUSTING THE UNABSORBED DEPRECIATION AND BR OUGHT FORWARD LOSSES. EVEN AT THIS STAGE NO CONTRARY DECISION WAS PLACED BEFORE THIS BENCH TO SHOW THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS NOT IN ACCORDANCE WITH LAW. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE I HOLD THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ITA NO. 5851/MUM/2013 TWINKLE DIAMOND JEWELLERY INDIA P. LTD. 3 5. IN THE RESULT, AS DECLARED IN THE OPEN COURT, THE A PPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH JANUARY, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 29 TH JANUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 18, MUMBAI 4. THE CIT 8, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.