ACIT 9(3), MUMBAI V. RICHTER THEMIS MEDICAE INDIA P. LTD, MUMBAI

ITA 6721/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8004 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Opportunity of being heard; Revised return
• Section: 143(3); 14A; 115JB; 10B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./I.T.A. NO.6721/MUM/2011 ( ! ' # / ASSESSMENT YEARS : 2007-08) THE DY. COMMISSIONER OF INCOME TAX, 9 (3), ROOM NO.229, 2ND FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 / VS. M/S RITCHER THEMIS MEDICARE PVT.LTD., 11/12, UDYOG NAGAR, S V ROAD, GOREGAON (W), MUMBAI-400020. ( $% / APPELLANT) .. ( &'$% / RESPONDENT) $ ./ ( ./PAN/GIR NO. : AACCR8735L $% ) / APPELLANT BY : SHRI SANJEEV JAIN &'$% * ) /RESPONDENT BY : SHRI VIJAY KO THARI + , * - . / DATE OF HEARING : 15.7.2014 /0#' * - . /DATE OF PRONOUNCEMENT : 8.8.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 12.7.2011 PASSED BY THE LD. CIT(A)-20, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2007-08. 2. IN THE GROUNDS OF APPEAL AND ADDITIONAL GROUNDS OF APPEAL FILED, THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN RESPECT OF FOLLOWING ISSUES:- A) RESTRICTING THE DISALLOWANCE MADE U/S 14 OF THE INCOME TAX ACT, 1961 (THE ACT) TO RS.3,33,187/- AS AGAINST THE DISA LLOWANCE OF RS.83,14,059/-; B) ALLOWING SET OFF OF LOSS PERTAINING TO THE UNIT ELIGIBLE FOR DEDUCTION U/S 10B, EVEN THOUGH IT WAS REJECTED BY THE AO. I.T.A. NO.6721/MUM/2013 2 C) WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT , RESTRICTING THE DISALLOWANCE MADE U/S 14A OF THE ACT TO RS.3,33,187 /- AS AGAINST DISALLOWANCE OF RS.83,14,059/-; D) WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE AC T, ALLOWING THE DEDUCTION U/S 10B OF THE ACT TO THE TUNE OF RS.3,4 9,38,911/-, EVEN THOUGH THE CERTIFICATE GIVEN IN FORM 56G SHOWS THE DEDUCTION U /S 10B OF THE ACT AT NIL AMOUNT AND E) DIRECTING THE AO TO ALLOW SET OFF OF LOSS BROUGH T FORWARD FROM ASSESSMENT YEAR 2006-07, EVEN THOUGH THE AO HAS COM PUTED POSITIVE INCOME U/S 143(3) OF THE ACT. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING INTERME DIATES OF ACTIVE PHARMA INGREDIENT (API). THE AO COMPUTED THE TOTAL INCOME UNDER REGULAR PROVISIONS OF THE ACT BY MAKING VARIOUS DISALLOWANCES. IN THE SI MILAR MANNER, THE AO ALSO COMPUTED THE BOOK PROFIT U/S 115JB BY ALTERING/REJE CTING VARIOUS CLAIMS MADE BY THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE AND IN RESPECT OF THE SAME, THE REVENUE HA S FILED THIS APPEAL BEFORE US. 4 THE FIRST AND THIRD ISSUE PERTAINS TO DISALLOWANC E MADE U/S 14A OF THE ACT WHILE COMPUTING INCOME UNDER REGULAR PROVISIONS OF THE ACT AND WHILE COMPUTING BOOK PROFIT UNDER SEC. 115JB OF THE ACT. THE ASSE SSEE HAD DISCLOSED TAX FREE DIVIDEND INCOME OF RS.10.34 LAKHS IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE HAD ALSO MADE DISALLOWANCE OF RS.13,554/- AS PER TH E PROVISIONS OF SECTION 14A OF THE ACT. HOWEVER, THE AO TOOK THE VIEW THAT TH E PROVISIONS OF RULE 8D OF THE INCOME TAX RULES ARE APPLICABLE TO THE YEAR CON SIDERATION. SINCE THE DISALLOWANCE MADE BY THE ASSESSEE U/S 14A OF THE AC T WAS NOT ACCORDING TO RULE I.T.A. NO.6721/MUM/2013 3 8D OF THE IT RULES, THE AO COMPUTED THE DISALLOWANC E IN TERMS OF RULE 8D AT RS.83,14,059/- AND ACCORDINGLY ADOPTED THE SAME WHI LE COMPUTING TOTAL INCOME. WHILE COMPUTING THE BOOK PROFIT U/S 115JB ALSO, THE AO ADDED THE AMOUNT OF RS.83,14,059/- TO THE NET PROFIT. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) HEL D THAT RULE 8D OF THE RULES CANNOT BE APPLIED FOR ASSESSMENT YEAR 2007-08 IN VI EW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF G ODREJ & BOYCE MFG CO LTD VS DCIT (2010) 328 ITR 81 (BOM), WHEREIN THE HONBLE JURISDICTIONAL HIGH COUR T HAS HELD THAT THE PROVISIONS OF RULE 8D IS APPLICABLE F ROM ASSESSMENT YEAR 2008-09 ONWARDS ONLY. HOWEVER, THE HONBLE JURISDICTIONAL HIGH COURT HAD ALSO HELD THAT THE DISALLOWANCE TO BE MADE U/S 14A OF THE ACT IS R EQUIRED TO BE COMPUTED IN A REASONABLE MANNER. ACCORDINGLY, THE LD CIT(A) DETE RMINED THE AMOUNT OF DISALLOWANCE TO BE MADE U/S 14A OF THE ACT TO RS.3, 46,741/-. SINCE THE ASSESSEE HAD ALREADY DISALLOWED A SUM OF RS.13,554/-, THE LD . CIT(A) SUSTAINED THE DISALLOWANCE TO THE EXTENT OF RS.3,33,187/-. THE LD CIT(A) ALSO HELD THAT THE ABOVE SAID AMOUNT OF RS.3,46,741/- SHOULD BE ADDED WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THE REVENUE IS AGGRIE VED BY THE SAID DECISIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THESE ISS UES AND CAREFULLY PERUSED THE RECORD. THE ASSESSMENT YEAR UNDER CONSIDERATIO N IS ASSESSMENT YEAR 2007- 08. HENCE, IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG CO LTD (SUPRA), RULE 8 D OF THE RULES CANNOT BE APPLIED FOR THE INSTANT YEAR. HOWEVER, THE HONB LE JURISDICTIONAL HIGH COURT HAS HELD IN THE ABOVE STATED CASE THAT THE DISALLOW ANCE OF REASONABLE AMOUNT IS I.T.A. NO.6721/MUM/2013 4 REQUIRED TO BE MADE UNDER THE PROVISIONS OF SECTION 14A OF THE ACT. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OBSERVATIONS M ADE BY LD CIT(A) IN THIS REGARD:- 3.3. I HAVE PERUSED THE ASSESSMENT ORDER AND WRITT EN SUBMISSIONS OF THE APPELLANT. IT IS A FACT THAT RUL E 8D CANNOT BE APPLIED FOR A.Y.2007-08 IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF GODREJ BOYCE LTD. HOWEVER, THE HONBLE H IGH COURT HAS GIVEN SANCTION TO THE REVENUE AUTHORITIES TO COMPUT E DISALLOWANCE ON A REASONABLE BASIS. THE APPELLANT'S WORKING OF RS.13,554/- AS DISALLOWANCE DOES NOT APPEAR TO BE R EASONABLE. FOR EARNING A DIVIDEND INCOME CERTAIN AMOUNT OF HUMAN R ESOURCES IS DEPLOYED AND SO IT WOULD BE FAIR TO ATTRIBUTE 2% OF THE EXPENDITURE IN SALARY, WAGES AND BONUS TO BE THAT WHICH CAN BE ATT RIBUTED FOR MANAGING THE INVESTMENTS AND THE CORRESPONDING DIVIDEND INC OME. THIS COMES TO RS.3,38,679/-. FURTHER, THOUGH THE DIVIDEND IS CRED ITED TO THE BANK DIRECTLY, BUT CERTAIN PORTION OF BANK CHARGES CAN B E ATTRIBUTED FOR RENDERING THIS SERVICE. THUS, 5% OF BANK CHARGES CA N BE LINKED TO EARNING OF DIVIDEND INCOME AND THE SAME COMES TO RS .8,062/-. REST OF THE EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUN T DO NOT HAVE ANY PROXIMATE OR IMMEDIATE NEXUS FOR EARNING OF INCOME NOT CHARGEABLE TO TAX AND SO THEY ARE NOT BEING TOUCHED. TO SUM UP, T HE TOTAL DISALLOWANCE COMES TO RS.3,46,741/-. SINCE THE APPE LLANT HAS ALREADY OFFERED RS.13,554/-, HENCE THE NET DISALLOWANCE WHI CH CAN BE CONSIDERED TO BE ON SCIENTIFIC AND REASONABLE BASIS WOULD BE RS.3,33,187/- THE APPELLANT GETS PARTIAL RELIEF ON THIS GROUND. 7 . BEFORE US, THE LD. DR SUPPORTED THE ORDER OF AO, W HEREIN THE AO HAS FOLLOWED RULE 8D FOR COMPUTING THE DISALLOWANCE. O N THE CONTRARY, THE LD A.R SUPPORTED THE ORDER PASSED BY LD CIT(A). WE HAVE AL READY NOTICED THAT THE PROVISIONS OF RULE 8D IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION. HOWEVER, THE REVENUE DID NOT PLACE ANY OTHER MATERI AL BEFORE US TO SHOW THAT THE AMOUNT OF DISALLOWANCE COMPUTED BY THE LD CIT(A ) WAS NOT REASONABLE. IN THE ABSENCE OF ANY MATERIAL, WHICH MIGHT HAVE COMPE LLED US TO INTERVENE WITH THE COMPUTATION MADE BY LD. CIT(A), WE ARE INCLINE D TO CONFIRM THE ORDER OF LD. CIT(A) ON THIS ISSUE. I.T.A. NO.6721/MUM/2013 5 8. NOW WE SHALL TURN TO THE ISSUE RELATING TO THE D ISALLOWANCE TO BE MADE U/S 14A OF THE ACT WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. SINCE THE DISALLOWANCE OF RS.83.14 LAKHS MADE BY THE AO U/S 1 4A OF THE ACT WAS REDUCED TO RS.3,46,741/- BY THE LD. CIT(A), THE FIRST APPEL LATE AUTHORITY HELD THAT THE AMOUNT TO BE ADDED TO THE NET PROFIT TOWARDS THE DI SALLOWANCE MADE U/S 14A OF THE ACT FOR COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT SHOULD ALSO BE RESTRICTED TO THE AMOUNT DETERMINED BY HIM. SINCE, WE HAVE UPHELD THE AMOUNT OF DISALLOWANCE COMPUTED BY THE LD. CIT(A), WE ARE OF THE VIEW THAT THE FIRST APPELLATE AUTHORITY IS JUSTIFIED IN DIRECTING THE AO TO ADOPT THE SAME FIGURE FOR COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. AC CORDINGLY, WE UPHOLD THE ORDER OF LD. CIT(A) ON THIS ISSUE. 9. THE NEXT ISSUE PERTAINS TO THE DECISION OF THE A O IN NOT ALLOWING CARRY FORWARD OFF OF THE LOSS OF THE UNIT, WHICH IS ELIGI BLE FOR DEDUCTION U/S 10B OF THE ACT. (HEREINAFTER 10B UNIT). THE AO COMPUTED THE LOSS INCURRED BY 10B UNIT RS.3,49,38,911/-. HOWEVER, WHILE COMPUTING TOTAL INCOME, THE AO HELD THAT THE ABOVE SAID LOSS IS NOT ALLOWED TO BE CARRIED FORWAR D AS THE SAME PERTAINS TO EXEMPTED INCOME. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) TOOK THE VIEW THAT THE DEDUCTION PROVIDED U/S 10B OF THE ACT DOE S NOT FALL UNDER THE CATEGORY OF EXEMPTION, SINCE THE RELEVANT SECTION USES THE WORD DEDUCTION ONLY. ACCORDINGLY, THE LD CIT(A) REVERSED THE ORDER OF AO AND HELD THAT THE LOSS SHOULD BE ALLOWED TO BE CARRIED FORWARD. THE REVEN UE IS AGGRIEVED BY THE SAID DECISION. I.T.A. NO.6721/MUM/2013 6 10. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. AS STATED EARLIER, THE AO HAS RECORDED IN THE COMPUTATION PORTION OF THE ASSE SSMENT ORDER THAT THE LOSS PERTAINING TO 10B UNIT IS NOT ALLOWED TO BE CARRIED FORWARD AS THE SAME PERTAINS TO EXEMPTED INCOME. ON THE CONTRARY, THE LD. CIT( A) HAS, AFTER EXAMINING THE PROVISIONS OF SECTION 10B, NOTED THAT THE PROVISIO NS OF SECTION 10B USES THE EXPRESSION DEDUCTION FOR FIVE TIMES AND HENCE THE DEDUCTION CLAIMED U/S 10B SHOULD BE CONSTRUED AS A DEDUCTION ONLY AND NOT AS EXEMPTION. ACCORDINGLY, THE LD. CIT(A) HAS REVERSED THE DECISION OF THE A O AND ALLOWED THE SAID LOSS TO BE CARRIED FORWARD. 11. WE NOTICE THAT THE PROVISIONS RELATING TO SE T OFF OF LOSS AND ALSO CARRY FORWARD OF LOSS ARE PROVIDED IN THE ACT IN SECTIONS 70 TO 75 OF THE ACT. IN SOME CASES, THE BAR OR RESTRICTION, IF ANY, IS PROVIDED IN THE SAME SECTION ITSELF OR IN SOME OTHER RELEVANT SECTION. WE NOTICE THAT THE AS SESSING OFFICER HAS NOT DRAWN SUPPORT OF ANY OF THE PROVISIONS OF THE ACT OR ANY OTHER AUTHORITY IN SUPPORT OF HIS DECISION. WE NOTICE THAT THE LD CIT(A) HAS ALL OWED THE RELIEF BY HOLDING THAT THE DEDUCTION PROVIDED U/S 10B FALLS IN THE CATEGOR Y OF DEDUCTION AND NOT UNDER THE CATEGORY OF EXEMPTION. IN EFFECT, THE LD CIT(A) HAS ALSO NOT DRAWN SUPPORT OF ANY OF THE PROVISIONS OF THE ACT OR ANY AUTHORITY IN SUPPORT HIS DECISION. IN OUR VIEW, THE APPROACH ADOPTED BY LD CIT(A) IS NOT CORRECT. IT IS A WELL SETTLED PROPOSITION THAT THE PROVISIONS OF THE ACT SHOULD BE CONSTRUED STRICTLY. HENCE, IN OUR VIEW, IT IS THE DUTY OF TH E AO TO RECORD THE BASIS OF HIS DECISION. SINCE THE ASSESSING OFFICER HAS NOT CITE D RELEVANT PROVISION OR ANY AUTHORITY TO SUPPORT HIS DECISION AND SINCE THE LD CIT(A) HAS ALSO FAILED ON THIS ASPECT, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END I.T.A. NO.6721/MUM/2013 7 OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASID E THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSES SING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH AFTER AFFORDING NECESSA RY OPPORTUNITY OF BEING HEARD AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH TH E LAW. 12. THE NEXT ISSUE IS REGARDING DEDUCTION CLAIMED U/S 10B OF THE ACT WHILE COMPUTING THE BOOK PROFIT U/S 115JB. FOR THE PURP OSE OF CLAIMING DEDUCTION U/S 10B OF THE ACT UNDER REGULAR PROVISIONS OF THE ACT, THE ASSESSEE IS REQUIRED TO FURNISH REPORT IN FORM NO.56G OBTAINED FROM A CH ARTERED ACCOUNTANT IN ACCORDANCE WITH RULE 16E OF THE RULES. IN THE SAID CERTIFICATE, THE CHARTERED ACCOUNTANT HAD REPORTED THE AMOUNT OF DEDUCTION U/S 10B AT (-) RS.4,32,52,965/-, MEANING THEREBY, THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION/S 10B. IN THE PROFIT AND LOSS ACCOUNT, T HE ASSESSEE HAD SHOWN AN AMOUNT OF RS.5.82 CRORES AS THE PROFIT GENERATED FR OM THE 10B UNIT. HENCE, WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT, T HE ASSESSEE DEDUCTED THE ABOVE SAID AMOUNT U/S 10B OF THE ACT. HOWEVER, TH E AO TOOK VIEW THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 10B WHILE COMPUTING BOOK PROFIT, SINCE THE AMOUNT OF DEDUCTION WAS SHOWN AT NIL FIGU RE IN FORM NO.56G AND FURTHER THE ASSESSEE BECAME INELIGIBLE TO CLAIM THE SAID DEDUCTION FROM THE TOTAL INCOME COMPUTED UNDER REGULAR PROVISIONS OF THE ACT . IN EFFECT, THE VIEW OF THE AO APPEARS TO BE THAT THE ASSESSEE SHOULD BECOME EL IGIBLE FOR DEDUCTION U/S 10B UNDER REGULAR PROVISIONS OF THE ACT AND THEN ONLY, HE COULD CLAIM DEDUCTION UNDER THE SAID SECTION WHILE COMPUTING THE BOOK PRO FIT U/S 115JB. HOWEVER THE LD. CIT(A), BY FOLLOWING THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD V/S CIT (327 ITR 3 05) (SC) AND ALSO THE I.T.A. NO.6721/MUM/2013 8 DECISION RENDERED BY THE ITAT IN THE CASES OF DCIT VS. ROCKSY INVESTMENTS PVT LTD (24 SOT 227) AND MOSEBEAR INDIA LTD VS. DCIT (1 7 SOT 510), HELD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM OF DEDUCTION U/S 10B WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. REVENUE IS AGGRIEVED BY THE SAID DECISION. 13. WE HAVE HEARD THE PARTIES ON THIS ISSUE. IT I S TRUE THAT THE FORM NO.56G SUBMITTED BY THE ASSESSEE SHOWS THAT THE ASSESSEE I S NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. HOWEVER, IT HAS BEEN HELD IN M ANY DECISIONS THAT THE COMPUTATION OF BOOK PROFIT U/S 115JB IS ALTOGETHER A SEPARATE EXERCISE. IT IS NOW WELL ESTABLISHED THAT SECTION 115JB IS A SEPARA TE CODE BY ITSELF AND THE BOOK PROFIT HAS TO BE COMPUTED AS PER THE METHODOLOGY PROVIDED IN THAT SECTION. FOR THAT PURPOSE, THE PROFIT AND LOSS ACCOUNT IS REQUIR ED TO BE PREPARED AS PER PART II AND PART III OF SCHEDULE VI OF THE COMPANIES ACT. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MOSERBEAR INDIA LTD V/S DC IT (SUPRA) HAS HELD THAT, WHILE COMPUTING THE PROFIT U/S 115JB, THE REFERENCE IS TO BE MADE ONLY TO PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH COMPA NIES ACT, 1956. IT WAS FURTHER HELD THAT WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT, THE AMOUNT TO BE REDUCED IS INCOME, WHICH IS ELIGIBLE F OR EXEMPTION U/S 10B, AS COMPUTED ON THE BASIS OF BOOK PROFIT AS PER PARTS I I AND III OF SCHEDULE VI OF THE COMPANIES ACT AND NOT ON THE BASIS OF PROVISIONS OF THE ACT. THE SAID VIEW WAS ALSO FOLLOWED IN THE CASE OF DCIT V/S ROCKSY INVESTMENT PVT LTD (SUPRA), WHEREIN IT WAS HELD THAT THE AMOUNT OF INCOME WHICH CAN BE REDUCED BY AO FOR COMPUTING THE BOOK PROFIT UNDER CLAUSE (II) OF E XPLANATION TO SECTION 115JB(2) OF THE ACT WILL BE AMOUNT WHICH IS CREDITED TO PROF IT AND LOSS ACCOUNT AND NOT AMOUNT OF INCOME WHICH IS CLAIMED BY ASSESSEE OR D ETERMINED BY AO WHILE I.T.A. NO.6721/MUM/2013 9 ASSESSING THE INCOME UNDER REGULAR PROVISIONS OF A CT. THUS, WE NOTICE THAT THE DECISION RENDERED BY THE LD. CIT(A) IS IN ACCORDAN CE WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE ABOVE CITED CASES. IN THE INSTANT C ASE, THERE APPEARS TO BE NO DISPUTE ON THE FACT THAT THE AMOUNT OF RS.5.82 CROR ES CLAIMED BY THE ASSESSEE WAS RELATED TO THE 10B UNIT. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE CONCLUSION ARRIVED AT BY LD. CIT(A) ON THIS ISS UE. 14. THE LAST ISSUE PERTAINS TO THE SET OFF OF BROUG HT FORWARD LOSS PERTAINING TO THE ASSESSMENT YEAR 2006-07. FOR THE YEAR UNDER CO NSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME O F RS.68.69 LAKHS. SUBSEQUENTLY, IT FILED A REVISED RETURN OF INCOME, WHEREIN IT CLAIMED SET OFF OF BUSINESS LOSS OF RS.68.69 LAKHS RELATING TO THE PR ECEDING YEAR AND ACCORDINGLY DECLARED TOTAL INCOME AT NIL. THE AO NOTICED THAT THE INCOME OF THE ASSESSEE FOR AY 2006-07 WAS DETERMINED AT A POSITIVE FIGURE OF RS.1.33 CRORES IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. ACC ORDINGLY, THE AO TOOK THE VIEW THAT THE ASSESSEE DID NOT HAVE ANY BROUGHT FOR WARD LOSS ELIGIBLE TO BE SET OFF AGAINST THE CURRENT YEARS INCOME AND ACCORDIN GLY DISALLOWED THE SAID CLAIM. THE LD. CIT(A), HOWEVER, DIRECTED THE AO TO ALLOW T HE LOSS FINALLY COMPUTED FOR ASSESSMENT YEAR 2006-07 WHILE COMPUTING THE TOTAL INCOME FOR THE CURRENT YEAR. THE REVENUE HAS CHALLENGED THE SAID DECISION ON THE GROUND THAT THE INCOME ASSESSED AS PER ASSESSMENT ORDER WAS AT RS.1.33 C RORES AND HENCE THERE WAS NO QUESTION OF ALLOWING SET OFF OF ANY BROUGHT FORW ARD LOSSES. 15. WE NOTICE THAT THE LD. CIT(A) HAS GIVEN A DIREC TION TO ALLOW SET OFF OF LOSSES FINALLY COMPUTED FOR AY 2006-07. BOTH THE PARTIES DID NOT FURNISH THE I.T.A. NO.6721/MUM/2013 10 DETAILS RELATING TO APPEAL, IF ANY, FILED BY THE AS SESSEE AND THE RESULT THERE OF. EVEN THOUGH THE AO HAS DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.1.33 CRORES, YET IT MAY CHANGE DEPENDING UPON THE ORDERS , IF ANY, PASSED BY LD CIT(A) OR ANY OTHER HIGHER APPELLATE AUTHORITIES. HENCE, THE DIRECTION GIVEN BY THE FIRST APPELLATE AUTHORITY SHOULD BE READ IN THE ABOVE DISCUSSED SCENARIO. ACCORDINGLY, IF THERE IS NO LOSS TO BE CARRIED FORW ARDED IN AY 2006-07, THEN THE QUESTION OF ALLOWING SET OFF OF BROUGHT FORWARD L OSS WILL NOT ARISE FOR THE CURRENT YEAR. ALL WOULD DEPEND UPON THE SUBSEQUENT APPELLA TE ORDERS, IF ANY. HENCE, THIS ISSUE NEEDS TO BE CONSIDERED BY THE AO ON THE BASIS OF FACTS AVAILABLE ON RECORD. HENCE, WE ARE OF THE VIEW THAT THE ORDER P ASSED BY THE LD. CIT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COUR T ON 8TH AUG, 2014. /0#' + 1 2 3 8TH AUG,2014 0 * , 4 SD SD ( /SANJAY GARG) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + , MUMBAI: 8TH AUG,2014. . . ./ SRL , SR. PS I.T.A. NO.6721/MUM/2013 11 ! ' / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &'$% / THE RESPONDENT. 3. + 6- ( ) / THE CIT(A)- CONCERNED 4. + 6- / CIT CONCERNED 5. 78 &-9! , . 9! ' , + , / DR, ITAT, MUMBAI CONCERNED 6. : , / GUARD FILE. ; + / BY ORDER, TRUE COPY < (ASSTT. REGISTRAR) . 9! ' , + , /ITAT, MUMBAI