M/s Cypress Semiconductor Technology India Private Limited, Bangalore V. ITO, Bangalore

ITA 62/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5230 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: VIVEK MALLYA
• Section: 143(1); 246A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS.62 & 63(BNG)/10 (ASSESSMENT YEARS : 2002-03 & 2003-04) M/S. CYPRESS SEMI CONDUCTOR TECHNOLOGIES INDIA PRIVATE LIMITED, # 65/2, BAGMANE TECH PARK, BLOCK C, BAGMANE LAUREL, C.V. RAMAN NAGAR, BANGALORE-560 093. VS. INCOME TAX OFFICER, WARD 11(1), BANGALORE. APPELLANT. RESPONDENT. APPELLANT BY : SHRI VIVEK MALLYA. RESPONDENT BY : SHRI JASON P. BOAZ. O R D E R PER SMT. P. MADHAVI DEVI, J.M. : BOTH THESE APPEALS ARE FILED BY THE ASSESSEE FOR T HE ASSESSMENT YEARS 2002- 03 & 2003-04. FOR BOTH THE ASSESSMENT YEARS, THE G ROUNDS OF APPEAL ARE COMMON EXCEPT FOR THE QUANTUM. FOR THE SAKE OF CONVENIENC E AND BREVITY, THE GROUNDS OF APPEAL RAISED IN ASSESSMENT YEAR 2002-03 ARE REPROD UCED HEREUNDER : 1. THAT THE ORDER OF THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS IS CONTRARY TO THE PROVISIONS OF LAW AND IS LIABLE TO BE QUASHED. 2. THAT THE HON'BLE CIT(A) ERRED IN HOLDING IN HIS ORDER DATED NOV., 13, 2009 THAT THE CIT(A) HAS NO POWER TO ADJUDICATE UPON THE ISSUE OF A WRONG ASSESSMENT OF INCOME BY THE LEARNED ASSESSING OFFI CER, WHILE GIVING EFFECT TO AN ORDER FROM THE HON'BLE CIT(A). 3. A) THAT THE HON'BLE CIT(A) ERRED IN HOLDING IN THE AFOREMENTIONED ORDER THAT THE ISSUE IN APPEAL WAS NOT DISCUSSED BY THE L EARNED ASSESSING OFFICER IN HIS ORDER AND HENCE CANNOT BE RAISED FOR THE FIR ST TIME IN THE APPEAL. ITA NOS.62 & 63(BNG)/10 - 2 - B) THAT THE HON'BLE CIT(A) FAILED TO APPRECIATE THA T THE APPELLANT HAD NO OPPORTUNITY TO DISCUSS, PRESENT ARGUMENTS BEFORE TH E LEARNED ASSESSING OFFICER, IN THE MATTER RELATING ORDER GIVING EFFECT FOR CIT(A) ORDER. 4. THAT THE HON'BLE CIT(A) ERRED IN NOT ADJUDICA TING ON THE ALLOWABILITY OF DEDUCTION UNDER SECTION 10A OF THE INCOME TAX ACT, 1961 ON THE ENTIRE PROFIT OF THE UNDERTAKINGS REGISTERED WITH THE SOFTWARE TE CHNOLOGY PARK OF INDIA. 5. A) THAT THE HON'BLE CIT(A) ERRED IN NOT ADJUDI CATING ON THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREIN THE LEARNED ASSES SING OFFICER ERRED IN TREATING THE DATA LINK CHARGES OF RS.17,386 AS ATTR IBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA. B) THAT THE HON'BLE CIT(A) ERRED IN NOT ADJUDICATI NG ON THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREIN THE LEARNED ASSES SING OFFICER ERRED IN NOT ADJUSTING THE TOTAL TURN OVER OF THE APPELLANT BY REDUCING THE DATA LINK CHARGES OF RS.17,386. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD TO A ND/OR TO ALTER, AMEND, RESCIND, MODIFY, THE GROUNDS HEREIN ABOVE OR PRODUCE FURTHER DOCUMENTS BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 2. AS REGARDS GROUND NOS.2 & 3, THE FACTS OF THE CA SE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSME NT YEAR ON 30.10.2002 DECLARING A TOTAL INCOME OF RS.NIL. THE SAME WAS PROCESSED UND ER SECTION 143(1) ON 13.6.2003 RESULTING IN A REFUND OF RS.8,17,591. SUBSEQUENTLY THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 148 BY ISSUING A NOTICE UN DER SECTION 148 ON 8.4.2004 ON THE GROUND THAT THE COMMENCEMENT OF PRODUCTION OF STPI UNIT WAS INDICATED TO BE MUCH EARLIER THAN THE DATE OF REGISTRATION WITH THE STPI AUTHORITIES WHICH WOULD AMOUNT TO AN EXISTING BUSINESS BEING TREATED AS A STPI UNIT A ND THUS THE ASSESSEE WOULD NOT BE ELIGIBLE FOR THE BENEFIT OF SECTION 10A OF THE INCO ME TAX ACT, 1961. THE ASSESSING OFFICER, THEREAFTER PROCEEDED TO CONSIDER THE ELIGI BILITY OF DEDUCTION UNDER SECTION 10A OF THE ACT THE ENTIRE INCOME OF UNITS I & III. THE ASSESSING OFFICER ALSO ITA NOS.62 & 63(BNG)/10 - 3 - CONSIDERED THE ASSESSEES CLAIM IN RESPECT OF UNIT II ENTITLED TO DEDUCTION UNDER SECTION 80HHE. THE ASSESSMENT WAS COMPLETED ON 29. 3.2006 DISALLOWING THE DEDUCTION UNDER SECTION 10A IN RESPECT OF BOTH THE UNITS BUT THE INCOME OF UNIT II WAS ALLOWED U/ 80HHE AFTER SETTING OFF OF UNABSORBED DEPRECIATI ON AND BUSINESS LOSS. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE ASSESSEES CONTEN TION AND ALSO VARIOUS JUDICIAL PRONOUNCEMENTS, HE HELD THAT UNIT I IS NOT ENTITLED TO DEDUCTION BEYOND THE ASSESSMENT YEAR 1998-99. 3. AS REGARDS THE DEDUCTION UNDER SECTION 10A WITH REGARD TO STPI UNIT III IS CONCERNED THE CIT(A) HELD THAT THE BUSINESS OF STPI UNIT III WAS NOT SET UP BY SETTING UP OF ANY EXISTING BUSINESS AND DIRECTED TH E ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 10A IN RESPECT OF STPI UNDE RTAKING UNIT III, IF OTHER CONDITIONS ARE SATISFIED. THE ASSESSING OFFICER WH ILE GIVING EFFECT TO THE ORDER OF THE CIT(A), COMPUTED THE DEDUCTION UNDER SECTION 10A OF THE ACT BY REDUCING DATA LINK CHARGES FROM THE EXPORT TURN OVER OF THE UNDERTAKIN G, BUT HE DID NOT DEDUCT THE SAME FROM THE TOTAL TURN OVER OF THE UNDERTAKING. AS A RESULT, THE QUANTUM OF EXPORT TURN OVER STANDS REDUCED IN THE RATIO OF THE EXPORT TURN OVER TO THE TOTAL TURN OVER AND THUS THE DEDUCTION UNDER SECTION 10A WAS ALSO REDUC ED. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A), HOWEVER, REJECTED THE SAME HOLDING THAT THE CIT(A) DOES NOT HAVE POWER TO EXERCISE APPELLAT E POWER AGAINST THE ORDER GIVING ITA NOS.62 & 63(BNG)/10 - 4 - EFFECT TO THE ORDER OF THE CIT(A). HE, THEREFORE, DISMISSED THE ASSESSEES APPEAL WITHOUT ADMITTING THE SAME. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE PROVISIONS OF THE ACT WHICH LIST OUT THE ORD ERS WHICH ARE APPEALABLE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER SECTION 246A OF THE INCOME TAX ACT, 1961 AND SUBMITTED THAT THE ORDER GIVING EFFECT WOU LD BE AN ASSESSMENT ORDER AND THEREFORE IT IS AMENABLE TO THE JURISDICTION OF THE CIT(A). HE SUPPORTED HIS CONTENTION BY PLACING RELIANCE ON THE DECISION OF I TAT A BENCH IN ITA NO.1122/BANG/09 IN THE CASE OF ASIATIC INDUSTRIAL G ASES LTD. VS. ACIT TO WHICH ONE OF US (ACCOUNTANT MEMBER) IS A PARTY AND AFTER REFERRI NG TO VARIOUS DECISIONS OF THE HIGH COURTS, IT HAS BEEN HELD THAT THE ORDER OF THE ASSE SSING OFFICER GIVING EFFECT TO THE DIRECTION GIVEN BY THE ITAT IS MAINTAINABLE BEFORE THE CIT(A). 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY A DMITTED THAT THE CIT(A) HAS THE POWER TO ENTERTAIN AND ADJUDICATE ANY APPEAL FI LED AGAINST THE ORDER GIVING EFFECT TO THE ORDERS OF THE CIT(A). THEREFORE THESE GROUN DS OF APPEAL ARE ALLOWED AND THE MATTER IS REMITTED BACK TO THE FILE OF CIT(A) FOR A DJUDICATION ON MERIT. 6. AS REGARDS GROUND NOS.4 & 5 ARE CONCERNED, WE FI ND THAT THEY ARE ARISING OUT OF THE CONCLUSION OF THE CIT(A) IN THE ORIGINAL PROCEE DINGS AND NOT FROM THE ORDER OF THE CIT(A) REJECTING THE ASSESSEES APPEAL AGAINST THE ORDER GIVING EFFECT TO THE CIT(A) ITA NOS.62 & 63(BNG)/10 - 5 - ORDER. THEREFORE THESE GROUNDS CANNOT BE ENTERTAIN ED BY THE TRIBUNAL IN THIS APPEAL. THEREFORE THESE GROUNDS ARE REJECTED. 7. IN THE RESULT THE ASSESSEES APPEAL FOR A.Y. 200 2-03 IS PARTLY ALLOWED. 8. SINCE THE GROUNDS OF APPEAL ARE SIMILAR FOR A.Y. 2003-04, GROUND NOS.2 & 3 ARE ALLOWED AND GROUND NOS.4 & 5 ARE REJECTED. 9. IN THE RESULT THE ASSESSEES APPEAL FOR A.Y. 200 3-04 IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH MAY, 2010. SD/- SD/- (A. MOHAN ALANKAMONY) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JU DICIAL MEMBER BANGALORE, DT.20-05-2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE, ITAT, BANGALORE. 6. GUARD FILE, ITAT, BANGALORE. 7. GUARD FILE, ITAT, NEW DELHI. * GPR BY OR DER ASSISTANT R EGISTRAR