ACIT, CIR.-2(3)(1), MUMBAI V. MAHINDRA ENGINEERING SERVICES LTD. (MERGED WITH TECH MAHINDRA LTD.), MUMBAI

ITA 6403/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6767 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 31-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: KARTHIK NATARAJAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , HONBLE JUDICIAL MEMBER & SHRI DR. A.L. SAINI , HONBLE ACCOUNTANT MEMBER ITA NO. 6403/ MUM /201 6 (ASST. YEAR : 20 11 - 12 ) ACIT, CIRCLE - 2(3), ROOM NO. 552, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 V S . M/S. MAHINDRA ENGINEERING SERVICES LTD. (MERGED WITH TECH MAHINDRA LTD.), GATEWAY BUILDING, APOLLO BUNDER, MUMBAI PAN NO. AADCM 2907 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KARTHIK NATARAJAN , C A. DEPARTMENT BY : SHRI H.N. SINGH , CIT - DR DATE OF HEARING : 25 / 0 6 /201 8 . DATE OF PRONOUNCEMENT : 27 / 0 6 /201 8 . O R D E R PER DR. A.L. SAINI , ACCOUNTANT MEMBER THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAINING TO ASSESSMENT YEAR 2011 - 12 , IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) - 58, MUMBAI IN APPEAL NO. CIT(A)/ - 58/09/2015 - 16, DATED 29/07/2016 , WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT') , DATED 10/03/2013. 2 ITA NO. 6403 / MUM /2016 ( M/S. MAHINDRA ENGINEERING SERVICES LTD. ) 2. TH E GRIEVANCES RAISED BY THE REVENUE ARE AS FOLLOWS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELET I NG THE DISALLOWANCE OF RS. 18,24,47,025/ - U/S. 10A & DECIDING THE STP UNIT AS NEW VENTURE IGNORING THE FACT THAT ASSESSEE IS DOING THE SAME BUSINESS IN THE STPI UNIT, WHICH IT WAS EARLIER DOING IN THE NON - STPI UNIT AND HENCE INELIGIBLE FOR DEDUCTION U/S.10A OF THE I.T. ACT, 1961 . 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE D ECISION OF LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 3 . AT THE OUTSET ITSELF, WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 2 0/ 0 3 /201 8 PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 & 2008 - 09 IN ITA NO S . 2413 /M UM/2011 & 1844/MUM/2014 , WHEREBY THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE, LD. AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE HAS SUBMITTED THAT THE PRESENT APPEAL IS SQUARELY COVERED BY THE AFORESAID ORDER OF THIS TRIBUNAL, COPY OF WHICH IS PLACED BEFORE THE BENCH. 4. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. 5. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 2 0/03 /201 8 , IN ITA NOS. 3 ITA NO. 6403 / MUM /2016 ( M/S. MAHINDRA ENGINEERING SERVICES LTD. ) 2413/MUM/2011 & 1844/MUM/2014 FOR THE ASSESSME NT YEARS 2007 - 08 & 2008 - 09 (SUPRA). IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS UNDER: - 12. THE LD. CIT(A) HAS POINTED OUT THAT THE AO HAS DENIED THE DEDUCTION MAINLY ON THE GROUND THAT BY SETTING UP THE STPI UNIT, THE APPELLANT HAD NOT START ED A NEW BUSINESS. THE LD. CIT(A) HAS FURTHER OBSERVED THAT FINDINGS OF THE AO ARE BASED ON AN INADEQUATE PREMISE AS THE AO HAS BASED HIS FINDINGS ON THE PURCHASE ORDER DATED 15.10.2004 AND THE NATURE OF SERVICES IN THE PRE EXISTING NON STPI UNIT AND THE C OMPARABLE RATES OF PRE STPI AND STPI JOBS. WE FIND THAT THE OBSERVATIONS OF THE LD. CIT(A) ARE BASED ON THE EVIDENCE ON RECORD. AS OBSERVED BY THE LD. CIT(A) THE PURCHASE ORDER DATED 15.10.2004 WAS IN CONNECTION WITH ONLY A PILOT PROJECT MOUNTED TO TEST TH E ABILITY OF THE APPELLANT COMPANY TO DO BUSINESS ON A MAGNITUDE AND LEVEL COMPATIBLE TO THE EXPECTATIONS OF ITEC. THE WORK GIVEN FOR THE PILOT PROJECT WAS INITIALLY FOR A SUM OF RS. 9.3 CRORES, HOWEVER, AFTER SIGNING THE CONTRACT WITH INTERNATIONAL TRUCK AND ENGINE CORPORATION (ITEC), THE STPI UNIT EARNED REVENUE OF RS. 42.74 CRORE. AS PER PARA 2.3 OF THE AGREEMENT, WITH THE COMMENCEMENT OF JOINT VENTURE, THE PURCHASE ORDER DATED STOOD TERMINATED. HENCE, IN OUR CONSIDERED OPINION, THE FINDINGS OF THE LD. C IT (A) ARE BASED ON THE EVIDENCE ON RECORD AND IN ACCORDANCE WITH THE SETTLED PRINCIPLES OF LAW. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A). ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS BOTH THE GROUNDS OF THE REVENUE'S APPEAL. 6 . AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 2413/MUM/2011 & 1844/MUM/2014 (SUPRA), AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS AND THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE, WE FIND NO 4 ITA NO. 6403 / MUM /2016 ( M/S. MAHINDRA ENGINEERING SERVICES LTD. ) REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 2 7 T H DAY OF JUNE , 201 8 . S D / - S D / - ( SAKTIJIT DEY ) ( A.L. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 7 T H JUNE , 201 8 . VR/ - 1 . THE ASSESSEE - M/S. MAHINDRA ENGINEERING SERVICES LTD. (MERGED WITH TECH MAHINDRA LTD.), GATEWAY BUILDING, APOLLO BUNDER, MUMBAI . 2 . THE REVENUE ACIT, CIRCLE - 2(3), ROOM NO. 552, 5TH FLOOR, AA YAKAR BHAVAN, M.K. ROAD, MUMBAI - 20 3 . THE CIT - 2, MUMBAI. 4 . THE CIT(A) - 58, MUMBAI. 5 . THE D.R . , MUMBAI. 6 . GUARD FILE. BY ORDER DY./ASST. REGISTRAR, ITAT, MUMBAI.