ASB INTERNATIONAL P. LTD, THANE V. DCIT CIR 1, KALYAN

ITA 7090/MUM/2013

• Counselvise Citation: 709019914 RSA 2013
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Keywords: Depreciation; Carry forward of business losses; Validity of assessment; Unabsorbed depreciation
• Section: 143(3); 10B; 147; 148

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI .. , . . . . BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM ./ I.T.A. NO.7089 /MUM/2013 ( / ASSESSMENT YEAR : 2004-2005 ./ I.T.A. NO.7090 /MUM/2013 ( / ASSESSMENT YEAR : 2006-2007 ASB INTERNATIONAL PRIVATE LIMITED, E-9, ADDL. AMBERNATH IND. AREA, MIDC, ANANDNAGAR, AMBERNATH (E), THANE 421 506. / VS. A .C.I.T. CIRCLE - 1, KALYAN. ./ PAN : AAACA 8424F ( % / APPELLANT ) .. ( &'% / RESPONDENT ) A PPELLANT BY SHRI GIRISH DAVE R E SPONDENT BY : SHRI S.D. SRIVASTAVA * / DATE OF HEARING : 21-05-2014 * / DATE OF PRONOUNCEMENT : 181612014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A) II, THANE DATED 17-09-2013 AND 19-9-2013 FOR ASSESSMENT YEARS 2004-05 & 2006-07 RESPECTIVELY AND SINCE ONE OF THE ISSUES INVOLVED IN THESE TWO APPEALS IS COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SINGLE C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA 7089/M/13 & ITA 7090/M/13 2 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF INJECTION BLOW MOULDING MACHINES. THE RETURN OF INCOME FOR A.Y. 2006-07 WAS FILED BY IT ON 6-12-200 6 DECLARING TOTAL INCOME AT NIL. IN THE SAID RETURN, INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION WAS DECLARED BY THE ASSESSE E AT RS. 23,22,65,348/- AGAINST WHICH DEDUCTION U/S 10B OF THE INCOME TAX A CT, 1961 WAS CLAIMED TO THE EXTENT OF RS. 18,13,09,250/-. THE ASSESSEE HAD BROUGHT FORWARD BUSINESS LOSS AGGREGATING TO RS. 15,48,41,315/- PERTAINING T O EARLIER YEARS AND AFTER SETTING OFF THE SAID LOSS AGAINST THE BALANCE BUSIN ESS PROFITS AMOUNTING TO RS. 5,09,58,098/-, THE BALANCE LOSS OF RS. 10,38,67,217 /- WAS CARRIED FORWARD BY THE ASSESSEE. THE ASSESSEE HAD ALSO DECLARED BROUG HT FORWARD UNABSORBED DEPRECIATION AGGREGATING TO RS. 41,07,46,592/- AND AFTER ADJUSTING THE SAME AGAINST INCOME FROM OTHER SOURCES DECLARED FOR THE YEAR UNDER CONSIDERATION TO THE EXTENT OF RS. 8,46,590/-, THE BALANCE UNABSO RBED DEPRECIATION AMOUNTING TO RS. 40,99,00,002/- WAS CARRIED FORWARD BY THE ASSESSEE. ACCORDING TO THE A.O., AS PER THE PROVISIONS OF SEC TION 72(2) READ WITH SECTION 32(2) OF THE ACT, THE BROUGHT FORWARD LOSS AND UNAB SORBED DEPRECIATION WAS LIABLE TO BE SET OFF FIRST AGAINST THE INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION BEFORE ALLOWING THE DEDUCTION U/S 10B OF THE ACT. HE THEREFORE SET OFF THE ENTIRE BROUGHT FORWARD BUSINESS LOSS OF RS. 15,48,41,315/- AND UNABSORBED DEPRECIATION TO THE EXTENT OF RS. 7,74,2 4,033/- AGAINST THE INCOME OF RS. 23,22,65,348/- DECLARED BY THE ASSESS EE UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION AND SINCE THE INCOME UNDER THE SAID HEAD AFTER SUCH SET OFF WAS NIL, HE HELD T HAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM ANY DEDUCTION U/S 10B OF THE ACT. CONSEQUENTLY, HE ALLOWED ONLY THE UNABSORBED DEPRECIATION TO THE EXTENT OF R S. 33,24,75,969/- TO BE CARRIED FORWARD TO THE SUBSEQUENT YEAR VIDE ASSESSM ENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 29-12-2009. ITA 7089/M/13 & ITA 7090/M/13 3 3. IN THE RETURN OF INCOME FILED FOR A.Y. 2004-05, A SIMILAR TREATMENT AS GIVEN IN A.Y. 2006-07 WAS GIVEN BY THE ASSESSEE BY CLAIMING DEDUCTION U/S 10B OF THE ACT TO THE TUNE OF RS. 5,12,36,640/- AGA INST THE INCOME DECLARED UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION AMOUNTING TO RS. 6,58,32,696/- AND THE BALANCE AMOUNT OF PROFIT OF RS. 1,45,96,056/- WAS ADJUSTED AGAINST THE BROUGHT FORWARD BUSINESS LOSS TO THE EXTENT OF RS. 1,45,96,056/-. SIMILARLY, THE INCOME FROM OTHER SOU RCES DECLARED AT RS. 13,78,466/- WAS ADJUSTED AGAINST THE BROUGHT FORWAR D UNABSORBED DEPRECIATION AND THE INCOME FOR A.Y. 2004-05 WAS DE CLARED AT NIL IN THE RETURN OF INCOME FILED ON 30-10-2004. SINCE THE SAI D RETURN FILED BY THE ASSESSEE FOR A.Y. 2004-05 WAS ACCEPTED U/S 143(1) O F THE ACT ON 30-12-2004, THE ASSESSMENT FOR A.Y. 2004-05 WAS REOPENED BY THE A.O. BY INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT AND A NOTICE U /S 148 WAS ISSUED BY HIM TO THE ASSESSEE ON 7-3-2011 AFTER RECORDING THE REA SONS. THEREAFTER THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT WAS COM PLETED BY THE A.O. VIDE AN ORDER DATED 30-09-2011 SETTING OFF THE BROUGHT F ORWARD LOSS AGAINST THE INCOME OF RS. 6,58,32,696/- DECLARED BY THE ASSESSE E UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION AND THE DEDU CTION OF RS. 5,12,36,640/- ALLOWED EARLIER U/S 10B OF THE ACT WA S WITHDRAWN BY HIM. 4. AGAINST THE ORDERS PASSED BY THE A.O. FOR A.Y. 2 004-05 U/S 143(3) R.W.S. 147 AND FOR A.Y. 2006-07 U/S 143(3) OF THE A CT, APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A). IN ITS APPEA L FOR A.Y. 2004-05, THE ASSESSEE CHALLENGED THE VALIDITY OF ASSESSMENT MADE BY THE A.O. U/S 143(3) R.W.S. 147 OF THE ACT AND ALSO DISPUTED THE DISALLO WANCE MADE BY THE A.O. ON ACCOUNT OF ITS CLAIM FOR DEDUCTION U/S 10B OF THE A CT BY SETTING OFF THE BROUGHT FORWARD LOSSES FIRST AGAINST THE INCOME UND ER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION BEFORE ALLOWING ITS CLAIM FOR DEDUCTION U/S 10B OF THE ACT. THE LD. CIT(A) DID NOT FIND MERIT I N THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF ASSESSMENT MADE BY THE ITA 7089/M/13 & ITA 7090/M/13 4 A.O. U/S 143(3) R.W.S. 147 OF THE ACT AND DECIDED T HE SAME AGAINST THE ASSESSEE FOR THE REASONS GIVEN IN PARA 4 AND 4.1 OF HIS APPELLATE ORDER FOR A.Y. 2004-05. AS REGARDS THE OTHER ISSUE RELATING TO AS SESSEES CLAIM FOR DEDUCTION U/S 10B OF THE ACT, RELIANCE WAS PLACED BY THE ASSE SSEE ON THE DECISION OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR A.Y. 200 5-06 VIDE ORDER DATED 29-6-2012 WHEREIN A SIMILAR ISSUE WAS DECIDED BY TH E TRIBUNAL IN FAVOUR OF THE ASSESSEE RELYING ON THE DECISION OF HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. BLACK & VEATCH CONSULTING (P) LTD. (ITA NO. 1237 OF 2011) AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF ACIT VS. M/S YOKOGAWA INDIA LTD. ALTHOUGH THE LD. CIT(A) TOOK NO TE OF THIS DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 ON A SIMILAR ISSUE, HE FOUND THAT IN THE CASE OF BLACK & VEATCH CONSULTING (P) L TD. (SUPRA) RELIED UPON BY THE TRIBUNAL, THE HONBLE BOMBAY HIGH COURT HAD ONL Y HELD THAT DEDUCTION U/S 10B OF THE ACT HAS TO BE COMPUTED BEFORE ADJUST ING THE BROUGHT FORWARD BUSINESS LOSSES AND THERE WAS NO FINDING GIVEN IN R ESPECT OF SET OFF OF UNABSORBED DEPRECIATION WHICH IS GOVERNED BY SECTIO N 32(2) OF THE ACT. AS REGARDS THE DECISION OF HONBLE KARNATAKA HIGH COUR T IN THE CASE OF YOKOGAWA INDIA LTD. (SUPRA) RELIED UPON BY THE TRIBUNAL, THE LD. CIT(A) NOTED THAT THERE WAS A SUBSEQUENT DECISION RENDERED BY THE HONBLE K ERALA HIGH COURT IN THE CASE OF CIT VS. PATSPIN INDIA LTD. (2011) 245 CTR 9 7 (KER.) WHEREIN THE ISSUE RELATING TO SET OFF OF UNABSORBED DEPRECIATION WAS DECIDED IN FAVOUR OF THE REVENUE HOLDING THAT THE ELIGIBLE PROFIT FOR THE PU RPOSE OF COMPUTING DEDUCTION U/S 10B OF THE ACT HAS TO BE DETERMINED B ASED ON SECTION 30 TO 43D AS PROVIDED U/S 29 AND THE SAME ACCORDINGLY HAS TO BE DONE AFTER SETTING OFF THE UNABSORBED DEPRECIATION CARRIED FORWARD FRO M THE EARLIER YEARS. ACCORDINGLY, RELYING ON THE DECISION OF HONBLE KER ALA HIGH COURT IN THE CASE OF PATSPIN INDIA LTD. (SUPRA) TH4E LD. CIT(A) HELD THAT THE DEDUCTION U/S 10B OF THE ACT IS TO BE ALLOWED ON THE PROFIT TO THE EL IGIBLE UNIT COMPUTED AFTER SETTING OFF THE BROUGHT FORWARD UNABSORBED DEPRECIA TION BUT NOT AFTER SETTING OFF THE UNABSORBED BUSINESS LOSSES. HE ACCORDINGLY DIRECTED THE A.O. TO ITA 7089/M/13 & ITA 7090/M/13 5 RECOMPUTE THE DEDUCTION ALLOWABLE TO THE ASSESSEE U /S 10B OF THE ACT THEREBY ALLOWING PART RELIEF TO THE ASSESSEE ON THIS ISSUE. 5. IN ITS APPEAL FOR A.Y. 2006-07, THE SOLITARY ISS UE RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS SIMILAR TO THE ONE RAISED IN ITS APPEAL FOR A.Y. 2004- 05 RELATING TO DEDUCTION U/S 10B OF THE ACT AND FOL LOWING HIS CONCLUSION DRAWN IN A.Y. 2004-05, THE LD. CIT(A) DIRECTED THE A.O. TO ALLOW DEDUCTION U/S 10B OF THE ACT, IF ANY, ON THE PROFIT OF THE ELIGIB LE UNIT AFTER SETTING OF THE BROUGHT FORWARD UNABSORBED DEPRECIATION. AGGRIEVED BY THE ORDERS OF THE LD. CIT(A) FOR ASSESSMENT YEARS 2004-05 & 2006-07, THE ASSESSEE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 6. IN ITS APPEAL FOR A.Y. 2004-05, THE ISSUE RAISED IN GROUND NO. 1 BY THE ASSESSEE RELATES TO THE VALIDITY OF REOPENING OF TH E ASSESSMENT BY THE A.O. U/S 147/148 OF THE ACT WHEREAS GROUND NO. 2 TO 6 INVOLV E A COMMON ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION U/S 10B FROM THE PROFITS OF THE ELIGIBLE UNIT AS COMPUTED BEFORE SETTING OFF THE BR OUGHT FORWARD UNABSORBED DEPRECIATION. 7. IN ITS APPEAL FOR A.Y. 2006-07, THE SOLITARY ISS UE RAISED BY THE ASSESSEE IS THE SAME AS RAISED IN GROUND NO. 2 TO 6 IN THE A SSESSEES APPEAL FOR A.Y. 2004-05 RELATING TO ITS CLAIM FOR DEDUCTION U/S 10B OF THE ACT FROM THE PROFITS OF THE ELIGIBLE UNIT AS COMPUTED BEFORE ALLOWING TH E SET OFF OF THE BROUGHT FORWARD UNABSORBED DEPRECIATION. 8. AS REGARDS THE COMMON ISSUE INVOLVED IN BOTH THE APPEALS OF THE ASSESSEE RELATING TO DEDUCTION U/S 10B OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME IS SQUARELY COVERE D BY THE DECISION OF THE TRIBUNAL FOR A.Y. 2005-06 RENDERED VIDE ITS ORDER D ATED 29-06-2012 PASSED IN ITA NO. 7040 TO 7042/MUM/2011 WHEREIN IT WAS HELD, RELYING INTER ALIA ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. BLACK & ITA 7089/M/13 & ITA 7090/M/13 6 VEATCH CONSULTING (P) LTD. (SUPRA), THAT DEDUCTION U/S 10B OF THE ACT IS TO BE COMPUTED FROM THE PROFIT OF ELIGIBLE UNIT BEFORE SE TTING OFF THE BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION. HE CONTE NDED THAT THIS DECISION OF THE TRIBUNAL WAS CITED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) AND EVEN AFTER TAKING NOTE OF THE SAME, THE LD. CIT(A) PREFERRED TO FOLLOW THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE O F CIT VS. PATSPIN INDIA LTD. (SUPRA) HOLDING THAT THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BLACK & VEATCH CONSULTING (P) LTD. (SUPRA) RELIED UPON BY THE TRIBUNAL WAS LIMITED TO THE ISSUE OF ADJUSTMENT OF BROUGHT F ORWARD BUSINESS LOSSES AND THERE WAS NO FINDING RECORDED IN RESPECT OF THE SET OFF OF UNABSORBED DEPRECIATION WHICH IS GOVERNED BY SECTION 32(2) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD RELIED ON THE SUBSE QUENT DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/ S GANESH POLYCHEM LTD. (INCOME TAX APPEAL LODGING APPEAL NO. 2083 OF 2012 DTD. 25TH FEB. 2013) WHEREIN THE ISSUE RELATING TO SET OFF OF BROUGHT FO RWARD UNABSORBED DEPRECIATION FOR THE PURPOSE OF COMPUTING PROFIT EL IGIBLE FOR DEDUCTION U/S 10B WAS DECIDED BY THE HONBLE BOMBAY HIGH COURT IN FAVOUR OF THE ASSESSEE FOLLOWING THEIR EARLIER DECISION IN THE CASE OF BLA CK AND VEATCH CONSULTING PVT. LTD. (SUPRA). HE ALSO POINTED OUT THAT EVEN THE TR IBUNAL IN ITS DECISION RENDERED IN THE CASE OF VALUEPROCESS TECHNOLOGIES ( I) P. LTD. VS. ITO (2013) 141 ITD 447 HAS HELD, RELYING ON THE DECISION OF HO NBLE BOMBAY HIGH COURT IN THE CASE OF BLACK AND VEATCH CONSULTING PVT. LTD . (SUPRA), THAT THE DEDUCTION U/S 10A OF THE ACT IS TO BE ALLOWED WITHO UT SETTING OFF THE CARRIED FORWARD LOSSES AND UNABSORBED DEPRECIATION. HE CONT ENDED THAT THE LD. CIT(A) THEREFORE WAS NOT JUSTIFIED IN DECLINING TO FOLLOW THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BLACK AND VEATCH CONSULTING PVT. LTD. (SUPRA) ON THE GROUND THAT THE ISSUE OF SET OFF OF UNABSORBED DEPRECIATION GOVERNED BY PROVISIONS OF SECTION 32(2) OF THE ACT WAS NOT CONSIDERED BY THE HONBLE HIGH COURT. ITA 7089/M/13 & ITA 7090/M/13 7 9. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE C IRCULAR NO. 7/DV/2013 ISSUED BY THE CBDT ON 16-7-2013 CLARIFYING THAT FIR ST THE INCOME/LOSS FROM VARIOUS SOURCES I.E. ELIGIBLE AND INELIGIBLE UNITS UNDER THE SAME HEAD ARE AGGREGATED IN ACCORDANCE WITH THE PROVISIONS OF SEC TION 70 OF THE ACT AND THEREAFTER THE INCOME FROM ONE AHEAD IS AGGREGATED WITH THE INCOME OR LOSS OF THE OTHER HEAD IN ACCORDANCE WITH THE PROVISIONS OF SECTION 71 OF THE ACT. IT IS CLARIFIED THAT IF AFTER GIVING EFFECT TO THE PROVIS IONS OF SECTION 70 AND 71 THERE IS ANY INCOME AND THE SAME IS ELIGIBLE FOR DEDUCTIO N IN ACCORDANCE WITH THE PROVISIONS OF SECTION 10A, 10B ETC., THE SAME SHALL BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. HE CONTENDED THA T ALTHOUGH THE HONBLE BOMBAY HIGH COURT IN THE CASES RELIED UPON BY THE L D. COUNSEL FOR THE ASSESSEE HAS TAKEN A DIFFERENT VIEW, THE BENEFIT OF THIS CIRCULAR WAS NOT AVAILABLE TO THE HONBLE BOMBAY HIGH COURT. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE VS. ITO (1981) 131 ITR 597(SC), HE CONTENDED THAT THE CONTEMPORANEOUS EXPO SITION OF LAW IN THE BOARD CIRCULAR SHOULD BE GIVEN DUE WEIGHTAGE ESPECI ALLY WHEN THE INTENTION OF SUCH CIRCULAR IS TO AVOID ANY MISCHIEF. 10. IN THE REJOINDER, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE INTERPRETATION BY THE CBDT IN THE CIRCULAR ISSUED I N 2013 IS ADVERSE TO THE ASSESSEE AND SUCH ADVERSE CIRCULAR CAN BE APPLIED O NLY PROSPECTIVELY AND NOT RETROSPECTIVELY. HE ALSO CONTENDED THAT THE SAID CI RCULAR EXPLAINS THE UNDERSTANDING OF RELEVANT PROVISIONS OF LAW OF CBDT AND THE SAME CANNOT SUBSTITUTE THE INTERPRETATION GIVEN BY THE HONBLE BOMBAY HIGH COURT. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS PERTINENT TO NOTE HERE TH AT THE LD. CIT(A) VIDE HIS IMPUGNED ORDERS HAS ALREADY HELD, RELYING ON THE DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BLACK AND VEATCH CONSULTI NG PVT. LTD. (SUPRA), THAT THE BROUGHT FORWARD BUSINESS LOSS CANNOT BE SET OFF AGAINST THE PROFIT OF THE ITA 7089/M/13 & ITA 7090/M/13 8 ELIGIBLE UNIT FOR COMPUTING DEDUCTION U/S 10B OF TH E ACT AND SUCH PROFIT IS TO BE DETERMINED AFTER SET OFF OF BROUGHT FORWARD UNAB SORBED DEPRECIATION. THE ISSUE RELATING TO SET OFF OF BROUGHT FORWARD BUSINE SS LOSS THUS HAS ALREADY BEEN DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASS ESSEE HOLDING THAT THE BROUGHT FORWARD BUSINESS LOSS CANNOT BE SET OFF AGA INST PROFIT OF THE ELIGIBLE UNIT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10B OF THE ACT. THE CIRCULAR DTD. 16-7-2013 (SUPRA) ISSUED BY THE CBDT GIVING IT S CLARIFICATION ON THE ISSUE RELATING TO APPLICABILITY OF CHAPTER IV OF THE ACT AND SET OFF OF CARRY FORWARD OF BUSINESS LOSSES THUS IS NOT APPLICABLE IN THE PRESE NT CASE WHICH INVOLVED THE ISSUE ONLY RELATING TO SET OFF OF UNABSORBED DEPREC IATION AGAINST THE PROFIT OF THE ELIGIBLE UNIT FOR THE PURPOSE OF COMPUTING DEDU CTION U/S 10B OF THE ACT AND THE RELIANCE OF THE LD. D.R. ON THE SAID CIRCUL AR IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE THUS IS CLEARLY MISPLA CED. 12. IT IS OBSERVED THAT EVEN THE ISSUE RELATING TO SET OFF OF UNABSORBED DEPRECIATION WAS ALSO DECIDED BY THE TRIBUNAL IN FA VOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR A.Y. 2005-06 VIDE ORDER DAT ED 29-12-2006 RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF BLACK AND VEATCH CONSULTING PVT. LTD. (SUPRA) AND ALTHOUGH THE SAID DECISION CITED ON BEHALF OF THE ASSESSEE WAS ALSO TAKEN NOTE OF BY THE LD. CIT( A), HE DECLINED TO FOLLOW THE SAME ON THE GROUND THAT THE HONBLE BOMBAY HIGH COU RT IN THE CASE OF BLACK AND VEATCH CONSULTING PVT. LTD. (SUPRA) HAD NOT CO NSIDERED THE ISSUE RELATING TO SET OFF OF UNABSORBED DEPRECIATION WHICH IS GOVE RNED BY THE PROVISIONS OF SECTION 32(2) OF THE ACT. IN THIS REGARD, THE LD. C OUNSEL FOR THE ASSESSEE HAS CITED NOT ONLY THE DECISION OF TRIBUNAL IN THE CASE OF VALUEPROCESS TECHNOLOGIES (I) (P) LTD. (SUPRA) BUT EVEN THE SUBS EQUENT DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S GANESH POLYCHE M LTD. (SUPRA) WHEREIN IT IS HELD, FOLLOWING THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF BLACK AND VEATCH CONSULTING PVT. LTD. (SUPRA), THAT THE BROUGHT FORWARD UNABSORBED DEPRECIATION AND LOSSES OF THE UNIT, THE INCOME OF WHICH IS NOT ITA 7089/M/13 & ITA 7090/M/13 9 ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT, CANNOT B E SET OFF AGAINST THE CURRENT PROFIT OF THE ELIGIBLE UNIT FOR COMPUTING DEDUCTION US/ 10B OF THE ACT. IN OUR OPINION, THE ISSUE RELATING TO SET OFF OF BROUGHT F ORWARD UNABSORBED DEPRECIATION AGAINST THE PROFIT OF THE ELIGIBLE UNI T FOR COMPUTING DEDUCTION U/S 10B OF THE ACT THUS IS ALSO COVERED BY THE DECI SION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BLACK AND VEATCH CONSULTI NG PVT. LTD. (SUPRA) AND IN THE CASE OF M/S GANESH POLYCHEM LTD. (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B OF THE ACT ON THE PROFIT OF THE ELIGIBLE UN IT WITHOUT SETTING OFF THE BROUGHT FORWARD UNABSORBED DEPRECIATION. THE IMPUG NED ORDERS OF THE LD. CIT(A) ON THIS ISSUE ARE ACCORDINGLY REVERSED AND T HE A.O. IS DIRECTED TO ALLOW THE DEDUCTION U/S 10B OF THE ACT AS CLAIMED BY THE ASSESSEE. GROUND NO. 2 TO 6 OF THE ASSESSEES APPEAL FOR A.Y. 2004-05 AND ALL THE GROUNDS OF THE ASSESSES APPEAL FOR A.Y. 2006-07 ARE ACCORDINGLY A LLOWED. 13. AS A RESULT OF OUR DECISION RENDERED IN ASSESSE ES APPEAL FOR A.Y. 2004- 05 ALLOWING ITS CLAIM FOR DEDUCTION U/S 10B OF THE ACT ENTIRELY, THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 CHALLENGING THE VALIDITY OF THE REOPENING OF THE ASSESSMENT U/S 147 /148 OF THE ACT HAS BECOME INFRUCTUOUS AND WE DO NOT CONSIDER IT NECESS ARY OR EXPEDIENT TO ADJUDICATE UPON THE SAME. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2014. * 7 8 181612014 * SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 8 DATED 181612014 ITA 7089/M/13 & ITA 7090/M/13 10 [ .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. ; () / THE CIT(A)II, THANE. 4. ; / CIT II, THANE 5. > &@ , @ , / DR, ITAT, MUMBAI D BENCH 6. B / GUARD FILE. / BY ORDER, '> & //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI