ACIT 8(3), MUMBAI V. SYNTEL INTERNATIONAL P.LTD, PUNE

ITA 6861/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4280 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M M UTTURE
• Assessee Lawyers: DINESH VYAS
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 80C

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI E BENCH , ,, , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.6861/MUM/2012, /ASSESSMENT YEAR-2008-09 ACIT-RANGE-8(3) ROOM NO.217, AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS M/S. SYNTEL INTERNATIONAL P.LTD. PLOT NO.B-1, SOFTWARE TECHNOLOGY PARK, MIDC, TALAWADE, PUNE- 412 114. PAN: AAICS 0960 L ( / APPELLANT) ( / RESPONDENT) '# /ASSESSEE BY : SHRI DINESH VYAS (AR) / REVENUE BY : SHRI M.M. UTTURE -DR / DATE OF HEARING : 05-11 -2015 / DATE OF PRONOUNCEMENT : 01.01. 2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) %&# ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.14.8.12 OF CIT(A)-18, MUMB AI THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL 2. ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF DEVELO PMENT AND EXPORT OF COMPUTER SOFTWARE SERVICES ETC. FILED ITS RETURN OF INCOME ON 30.9.20 08 DECLARING TOTAL INCOME AT RS.4.72 CRORES.DURING THE AY 2008-09 IT STARTED OPERATION A T SOFTWARE TECHNOLOGY PARK (STP).THE PUNE STP UNITS SUFFERED A LOSS OF RS.3.79 CRORES (UNABSO RBED DEPRECIATION ALLOWANCE). THE AO ASSESSED THE LOSS AS BUSINESS LOSS AS UNABSORBED DE PRECIATION WHILE COMPLETING THE ASSESSMENT. DURING THE ASSESSMENT PROCEEDINGS THE CO. CONTENDED BEFORE THE AO THAT DEDUCTION U/S. 10A OF THE ACT SHOULD BE ALLOWED WITHOUT SETTING OFF THE B ROUGHT FORWARD UNABSORBED DEPRECIATION, THAT THE UNABSORBED DEPRECIATION SHOULD BE SET OFF AGAI NST THE NON-10A INCOME. HOWEVER, THE AO HELD THAT DEDUCTION U/S. 10A COULD NOT BE ALLOWED WITHOUT SETTING OFF THE BROUGHT FORWARD UNABSORBED DEPRECIATION CLAIMED FOR THE AY 2007-08. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSION O F THE ASSESSEE AND THE FAA, THE FAA REFERRED TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT DELIVERED IN THE CASE OF BLACK & VEATCH CONSULTING PVT.LTD.(PS 206-HC-2012)(BOM.).HE FURTHER MENTIONED THAT IN THE CASE OF M/S. SYNTEL LTD. SISTER CONCERN OF THE ASSESSEE IDE NTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE HIGH COURT. ACCORDINGLY HE DIRECTED THE AO TO COMPUTE THE INCOME AFTER SETTING OFF THE BROUGHT FORWARD UNABSORBED DE PRECIATION/LOSS AGAINST OTHER TAXABLE INCOME AS CLAIMED BY THE ASSESSEE. ITA6861/M/12-M/S. SYNTEL INTL. P.LTD. 2 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO. THE AUTHORISED REPRESENTATIVE (AR) STATE THAT SIMILAR QUESTION HAD ARISEN IN THE CASE OF SHANTI VIJAY JEWELS LTD. (ITA 7006/MUM/2010 - AY-04-05-DT.16.11.2012), THAT THE ORDER OF THE TRIBUNAL WAS CONFIRMED BY THE HON'BLE BOMBAY HIGH COURT IN APRIL 2015. 5.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL BEFORE US. WE FIND THAT THE AA HAD DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQ UESTED THE AO TO ADJUST THE UNABSORBED DEPRECIATION AGAINST THE NON-10A INCOME,THAT THE AO REJECTED THE CLAIM MADE BY THE ASSESSEE, THAT THE FAA FOLLOWING THE JUDGMENTS OF THE JURISDI CTIONAL HIGH COURT ALLOWED THE APPEAL FILED BY THE ASSESSEE.WE FIND THAT THE HONBLE HIGH COURT IN THE CASE OF BLACK & VEATCH CONSULTING PVT.LTD.(SUPRA), HAD DECIDED THE ISSUE AS UNDER :- SECTION 10A OF THE INCOME-TAX ACT, 1961, IS A PROV ISION WHICH IS IN THE NATURE OF A DEDUCTION AND NOT AN EXEMPTION. THE DEDUCTION UNDER SECTION 10A H AS TO BE GIVEN EFFECT TO AT THE STAGE OF COMPUTING THE PROFITS AND GAINS OF BUSINESS. THIS I S ANTERIOR TO THE APPLICATION OF THE PROVISIONS OF SECTION 72 WHICH DEALS WITH THE CARRY FORWARD AN D SET OFF OF BUSINESS LOSSES. A DISTINCTION HAS BEEN MADE BY THE LEGISLATURE WHILE INCORPORATING TH E PROVISIONS OF CHAPTER VI-A. SECTION 80A(1) STIPULATES THAT IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, THERE SHALL BE ALLOWED FROM HIS GROSS TOTAL INCOME, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE CHAPTER, THE DEDUCTIONS SPECIFIED IN SECTIONS 80C TO 80U . SECTION 80B(5) D EFINES FOR THE PURPOSES OF CHAPTER VI-A GROSS TOTAL INCOME TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, BEFORE MAKING ANY DEDUCTION UNDER THE CHAPTER. THER EFORE, THE DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE DEDUCTIO N UNDER SECTION 10A IN RESPECT OF THE ALLOWABLE UNIT UNDER SECTION 10A HAS TO BE ALLOWED BEFORE SETTING OFF BROUGHT FORWARDED LOSSES OF A NON-SECTION 10A UNIT. . RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT,WE CONFIR M THE ORDER OF THE FAA AND DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISS ED. . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2016. 01 , 2016 SD/- SD/- ( / SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 01.01.2016 . . . .. . JV.SR.PS. ITA6861/M/12-M/S. SYNTEL INTL. P.LTD. 3 (# ) # / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ #& '( , 4. THE CONCERNED CIT / #& '( 5. DR A BENCH, ITAT, MUMBAI / $* , , . . . 6. GUARD FILE/ - //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.