ASST CIT 10(3), MUMBAI V. CALIBER POINT BUSINESS SOLUTIONS LTD, MUMBAI

ITA 6598/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88703 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: J O MISTRY
• Keywords: Wholly owned subsidiary

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 6598/M/2011 ASSESSMENT YEAR: 2008 - 09 THE ACIT - 10(3), ROOM NO.451, 4 TH FLOOR, AAYAKAR BHAVAN, MAHAR SHI KARVE ROAD, MUMBAI - 400020 VS. M/S. CALIBER POINT BUSINESS SOLUTIONS LTD., 816, NIRMAL CORPORATE CENTRE, LBS MARG, MULUND (WEST), MUMBAI 400 080 PAN: AACCC 3705H (APPELLANT) (RESPONDENT) ASSE SSEE BY : SHRI J.O. MISTRY, A.R. REVENUE BY : SHRI JEETENDRA KUMAR, D.R. DATE OF HEARING : 30.03. 201 5 DATE OF PRONOUNCEMENT : 30.03. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINS T THE ORDER DATED 12.07.2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008 - 09. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S 10A OF RS.5,35,70,775/ - WITHOUT CONSIDERING THE FACT THAT THE COMPANY WAS FORMED BY SPLITTING /RECONSTRUCTION OF THE BUSINESS AND TRANSFER OF ASSETS OF ITS PARENT COMPANY, HEXAWARE TECHN OLOGY LTD.(HTL). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAS GIVEN A COLOUR OF ESTABLISHING A NEW UNDERTAKING WHEN IT IS A SIMPLE REORGANIZATION OF ITA NO.6598/M/2011 M/S. CALIBER POINT BUSINESS SOLUTIONS LTD. 2 EXISTING UNDERTAKING. FURTHE R THE FINANCIAL AND MANAGEMENT CONTROL AND TRANSACTIONS RELATED TO BUSINESS OF THE ASSESSEE ARE UNDER THE DIRECT CONTROL OF ITS PARENT COMPANY. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE BUSINESS OF THE PARENT COMPANY HTL AND THAT OF THE ASSESSSEE ARE DIFFERENT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE COMPANY ACQUIRED SEPARATE ASSETS ON ITS OWN FOR ITS BPO BUSINESS AND NO SUCH ASSETS WERE TAKEN OVER OR BOUGH T FROM HTL, THE PARENT COMPANY. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE A NY OF THE AFORESAID GROUNDS OF APPEAL BEFORE OR AT ANY TIME OR AT THE TIME OF HEARING OF APPEAL. 3. THE DISPUTE IN THIS CASE IS RELATING TO THE CLAIM OF DEDUCTION UNDER SECTION 10A. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) , RELYING UPON HIS OWN FINDINGS RELATING TO EARLIER ASSESSMENT YEAR 2005 - 06 WHICH WAS SUBSEQUENTLY FOLLOWED BY HIM FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08 ALSO , DENIED THE DEDUCTION OF THE ASSESSEE UNDER SECTION 10A OBSERVING THAT NO NEW FACTS HAD BEEN BROUGHT ON RECORD B Y THE ASSESSEE FOR THE CURRENT ASSESSMENT YEAR . AS GATHERED FROM THE FACTS OF THE CASE, IT REVEALS THAT THE AO IN THE EARLIER ASSESSMENT YEARS HAD DENIED THE CLAIM OF DEDUCTION UNDER SECTION 10A OBSERVING THAT THE ASSESSEE COMPANY WAS A 100% SUBSIDIARY OF M/S. HEXAWARE TECHNOLOGY LTD. HE NOTED THAT THE BUSINESS OF THE ASSESSEE AS WELL AS OF THE M/S. HEXAWARE TECHNOLOGY LTD. W AS SAME I.E. SOFTWARE DEVELOPMENT. THE AO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE BUSINESS OF BPO SERVICES , WHICH THE ASSE SSEE WAS DOING, WAS A DISTINCT BUSINESS , AND THAT THE SOFTWARE DEVELOPMENT AND BPO SERVICES WERE TWO SEPARATE ACTIVITIES. THE AO HELD THAT THE ASSESSEE COMPANY HAD BEEN FOUND BY SPLITTING OR RECONSTRUCTION OF EXISTING COMPANY. NO SEPARATE BUSINESS ACTIVI TY WAS CARRIED OUT BY THE ASSESSEE COMPANY. ITA NO.6598/M/2011 M/S. CALIBER POINT BUSINESS SOLUTIONS LTD. 3 4. THE LD. CIT(A) , HOWEVER, ALLOWED THE CLAIM OF THE ASSESSEE RELYING UPON AND FOLLOWING HIS FINDINGS GIVEN IN EARLIER ASSESSMENT YEAR S IN RESPECT OF APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE AO F OR A.YS. 2005 - 06 TO 2007 - 08 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A) , THE REVENUE HAS COME IN APPEAL BEFORE US. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE FINDINGS OF THE LD. CIT(A) GIVEN IN THE EARLIER ASSESSMENT YEAR S 200 5 - 06, 2006 - 07 & 2007 - 08 HAVE BEEN FURTHER UPHELD BY THE TRIBUNAL VIDE ORDER DATED 14.03.12 PASSED IN ITA NO S . 2832 ETC. OF MUM OF 2012 . HE, THEREFORE, HAS STATED THAT THE ISSUE IS SQUARELY COVERED WITH THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE AS SESSEE FOR EARLIER ASSESSMENT YEARS . 6. WE HAVE GONE THROUGH THE SAID DECISION DATED 14.03.12. WE FIND THAT VIDE PARA 10 OF THE SAID DECISION, THE TRIBUNAL HAS CONCLUDED THAT THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE COMPANY HAD NOT BEEN FO RMED BY SPLITTING OF THE APPELLANT COMPANY NOR IT WAS A CASE OF RECONSTRUCTION. THE FACTS FOR THIS YEAR BEING IDENTICAL IN NATURE AND THIS BEING THE SUBSEQUENT YEAR OF CLAIM, WE DO NOT FIND ANY JUSTIFICATION FOR INTERFERING IN THE ORDER OF LD. CIT(A) FOR THIS YEAR ALSO. 7. IN VIEW OF OUR DISCUSSION ABOVE, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03. 201 5 . SD/ - SD/ - ( SAN JAY ARORA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.03.2015 * KISHORE , SR. P.S. ITA NO.6598/M/2011 M/S. CALIBER POINT BUSINESS SOLUTIONS LTD. 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.