TECHNO TARP & POLYMERS P.LTD, MUMBAI V. ITO 8(3)(3), MUMBAI

ITA 7261/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1711 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEKHAR L GAJBHIYE
• Assessee Lawyers: DEVANG DIVECHA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 10B

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 7261 / MUM/ 20 1 2 ( ASSESSMENT YEAR : 200 9 - 20 10 ) TECHNO TARP & POLYMERS PVT. LTD. B - 310, EVEREST GRANDE, 3 RD FLOOR, MAHAKALI CAVES ROAD, OPPOSITE AHURA CENTRE, ANDHERI (EAST), MUMBAI - 400 093. VS. ITO 8(3)(3) MUMBAI - 400 020 PAN/GIR NO. : A ACCT 3607 R ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. DEVANG DIVECHA /REVENUE BY : MR. SHEKHAR L.GAJBHIYE DATE OF HEARING : 14 TH JAN . , 201 3 DATE OF PRO NOUNCEMENT : 1 ST MARCH ,201 3 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 4 - 10 - 2012 OF LEANED CIT(A) - 18 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 9 - 10 . 2 . THE ASSESSEE IS OBJECTING IN CONFIRMING THE ORDER OF THE A O IN MAKING THE SET OFF OF UNABSORBED DEPRECIATION OF RS. 1,30, 43,510/ - FROM THE CURRENT BUSINESS PROFITS AND NOT GRANTING DEDUCTION U/S10B OF THE ACT AS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. ITA NO. 7261 /20 1 2 2 3 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 10B OF THE ACT AMOUNTING TO RS. 1,1 0,01,339 / - . THE AO FURTHER NOTED THAT THERE WAS UNABSOR B ED LOSS ON ACCOUNT OF DEPRECIATION PERTAINING TO A.Y. 2008 - 09 , WHICH HAS NOT BEEN SET OFF BY THE ASSESSEE BEFORE CLAIMIN G DEDUCTION UNDER SECTION 10B. ACCORDINGLY THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE UNABSORBED DEPRECIATION PERTAINING TO A.Y. 2008 - 09 SHOULD NOT BE SET OFF AGAINST THE BUSINESS PROFITS OF THE YEAR BEFORE GRANTING EXEMPTION UNDER SECTION 10B AND FOR THIS PURPOSE THE AO PLACED RELIANCE ON THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF JEWELLERY SOLUTIONS PRIVATE LIMITED (2009) 28 SOT 405 . IT WAS CONTENDED BEFORE THE AO THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF ACIT VS. YOKOGA WA INDIA LIMITED IN ITA NO, 248/2007 & OTHERS , WHEREBY IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE AO FOUND THAT IT CANNOT BE ACCEPTED AS THE HON B LE KER A LA HIGH COURT IN THE CASE OF CIT VS. PATSPIN INDIA LIMITED (2011) 245 CTR 97, HAS DECIDED THE ISSUE AGAINST THE ASSESSEE AND AGAINST THE DECISION OF THE HON BLE KARNATAKA HIGH COURT , THE HON BLE SUPREME COURT HAS GRANTED LEAVE IN THE SLP FILED BY THE DEPARTMENT IN SLP NO. 21101/2006 . 4 . THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) , WHO ALSO CONFIRMED THE ACTION OF THE AO. WHILE REJECTING THE APPEAL OF THE ITA NO. 7261 /20 1 2 3 ASSESSEE, LEARNED CIT(A) HAS CONSIDERED VARIOUS CASE LAWS I.E. IN THE CASE OF PATSPIN INDIA LIMITED 92011) 245 CTR 97 , WH ICH WAS DECIDED AGAINST THE ASSESSEE. IT WAS FURTHER SEEN THAT THE HON BLE KARNATAKA HIGH COURT HAS ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BUT THE HON BLE SUPREME COURT HAS GRANTED SLP TO THE DEPARTMENT. THE CIT(A) FURTHER NOTED THAT IN VARIOUS D ECISIONS, VARIOUS BENCHES OF THE TRIBUNAL DECIDED THE ISSUE AGAINST THE ASSESSEE. THE DECISION IN THE CASE OF JEWELLERY SOLUTIONS PRIVATE LIMITED (2009) 28 SOT 405 , WHEREBY IT WAS HELD THAT THE UNABSORBED DEPRECIATION HAS TO BE ADJUSTED BEFORE CLAIMING DED UCTION UNDER SECTION 10B AND THEREAFTER ON THE BASIS OF THE DECISION OF THE SPECIAL BENCH AND OTHER DIVISION BENCHES OF THE TRIBUNAL HA S NEGATED THE CLAIM OF THE ASSESSEE BY HOLDING THAT BROUGHT FORWARD DEPRECIATION HAS TO BE ADJUSTED BEFORE GRANTING EXEM PTION UNDER SECTION 10B . ALL THESE DECISIONS HAVE BEEN MENTIONED IN THE ORDER OF LEARNED CIT(A) . NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES, WERE REITERATED BY THE LEARNED AR HERE BEFORE THE TRIBUNAL. IT WAS FURTHER SUBMITTED THAT THE HON BLE KARNATAKA HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT IN A LATE ST DECISION, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. TEI TECHNOLOGIES (P) LTD. , REPORTED IN [2012] 210 TAXMAN 237 (DEL) , ITA NO. 7261 /20 1 2 4 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF YOKOGAWA INDIA LIMITED (SUPRA) , HAS BEEN FOLLOWED BY THE HON BLE DELHI HIGH COURT. THEREFORE, THE AS SESSEE DESERVES TO SUCCEED IN ITS APPEAL. 6 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF THE AO AND LEARNED CIT(A) . 7 . AFTER CONSIDERING THE ORDER OF THE AO, CIT(A) AND VARIOUS OTHER DECISIONS RELIED UPON BY THE LEARNED CIT(A) AND LE ARNED AR OF THE ASSESSEE, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON THE ISSUE INVOLVED. I NOTED THAT THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BLACK & VEATCH CONSULTING (P) LTD. [2012] 208 TAXMAN 144 , HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE, THOUGH LEARNED CIT(A) HAS TRIED TO DISTINGUISH THIS DECISION BECAUSE IN THIS DECISION, THE HON BLE BOMBAY HIGH COURT HELD THAT THE PROFITS OF THE THREE UNITS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AND THE LOSS OF ANOTHER UNIT CANNOT BE ADJ USTED AGAINST PROFIT OF THREE UNITS. IN MY CONSIDERED VIEW, LEARNED CIT(A ) HAS WRONGLY DISTINGUISHED THIS CASE. WHETHER THE LOSS OF CURRENT YEAR IN A UNIT OR BROUGHT FORWARD LOSS OF EARLIER YEAR IS ALLOWED TO BE SET OFF AGAINST PROFIT OF THE CURRENT YEARS INCOME OR NOT TO BE ADJUSTED, DOES NOT MATTER. THE QUESTION IS AS TO WHETHER THE LOSS OF ONE UNIT OF CURRENT YEAR IS TO BE SET OFF AGAINST OTHER PROFITS OF OTHER THREE UNITS OR BROUGHT FORWARD LOSS IS TO BE ADJUSTED FIRST BEFORE ITA NO. 7261 /20 1 2 5 CLAIMING DEDUCTION UNDER SECTION 10B, HAVE THE SAME MEANING. THE HON BLE BOMBAY HIGH COURT HAS HELD THAT THE PROFITS OF INDEPENDENT UNITS ARE EXEMPTED UNDER SECTION 10B AND LOSS OF ANOTHER UNIT CANNOT BE SET OFF FOR THE PURPOSE OF GRANTING EXEMPTION UNDER SECTION 10B. THE MUMBAI BE NCH IN THE CASE OF GANESH POLYCHEM LIMITED VS. ITO, DECIDED IN ITA NO. 8515/MUM/2010, FOR THE ASSESSMENT YEAR 2006 - 07, VIDE ORDER DATED 10 - 8 - 2012 , HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF BLACK & VEATCH CONSULTING (P) LTD. (SUPRA) . THIS DECISION IS LATEST DECISION, THEREFORE, IN MY VIEW, THIS DECISION IS LIABLE TO BE CONSIDERED. MOREOVER, THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF YOKOGAWA INDIA LIMITED (SUPRA) , IS DIR ECTLY ON THE ISSUE WHEREBY IT HAS BEEN HELD THAT THE BROUGHT FORWARD LOSS ON ACCOUNT OF DEPRECIATION ETC. CANNOT BE SET OFF FOR THE PURPOSE OF GRANTING EXEMPTION UNDER SECTION 10B FOR CURRENT YEAR. THE HON BLE DELHI HIGH COURT HAS ALSO FOLLOWED THIS DECISI ON IN THE CASE OF TEI TECHNOLOGIES (P) LTD. (SUPRA) . THOUGH THE HON BLE KARNATAKA HIGH COURT IS AGAINST THE ASSESSEE, HOWEVER, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCT , 188 ITR 192 , WHEREIN IT HAS BEEN HELD THAT IF THERE ARE TWO DIVERGENT VIEW ARE AVAILABLE THEN THE VIEW FAVOURING THE ASSESSEE SHOULD PREVAIL UPON. THEREFORE, FOLLOWING THE DECISION OF THE HON BLE BOMBAY HIGH COURT, HON BLE KARNATAKA HIGH COURT AND HO NBLE DELHI HIGH COURT, I AM OF THE VIEW THAT T HE ITA NO. 7261 /20 1 2 6 BROUGHT FORWARD DEPRECIATION CANNOT BE SET OFF AGAINST THE CURRENT YEARS INCOME FOR THE PURPOSE OF EXEMPTION UNDER SECTION 10B . ACCORDINGLY, I ALLOW THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO ALLOW THE DEDUCTION UNDER SECTION 10B AS CLAIME D BY THE ASSESSEE. 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST DAY OF MAR . 201 3 . 201 3 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 01 / 03 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDE NT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI