BLACK & VEATCH CONSULTING P. LTD, MUMBAI V. ACIT 10(3), MUMBAI

ITA 7465/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84323 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Depreciation; Question of law
• Section: 43B; 80C; 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUM BAI . , , BEFORE SHRI D. KARUNAKARA RAO, AM & SHRI AMIT SHUKL A, JM ./ ITA NO. 7465/MUM/2010 ( / ASSESSMENT YEAR: 2007-08) M/S. BLACK & VEATCH / VS. A C I T 10(3) CONSULTING PVT. LTD. 101, KENSINGTON A WING HIRANANDANI BUSINESS PARK POWAI, MUMBAI 400076 AAYAKAR BAHVAN, M.K. ROAD MUMBAI 400020 ./ PAN AACCB0522D / APPELLANT !' / RESPONDENT ./ ITA NO. 8705/MUM/2010 ( / ASSESSMENT YEAR: 2007-08) A C I T 10(3) / VS. M/S. BLACK & VEATCH AAYAKAR BAHVAN, M.K. ROAD MUMBAI 400020 CONSULTING PVT. LTD. 101, KENSINGTON A WING HIRANANDANI BUSINESS PARK POWAI, MUMBAI 400076 ./ PAN AACCB0522D / APPELLANT !' / RESPONDENT #$%& ' ( / ASSESSEE BY: SHRI NISHANT THAKKAR ) ' ( / REVENUE BY: SHRI PREMANAND J. #* ' + / DATE OF HEARING: 02.12.2014 ,-. ' + / DATE OF PRONOUNCEMENT: 02.12.2014 / O R D E R PER D. KARUNAKARA RAO, AM THESE ARE CROSS APPEALS FOR AY 2007-08 FILED AGAINS T THE ORDER OF THE CIT(A)-22, MUMBAI DATED 03.09.2010. ITA NO. 7465 & 8705/MUM/2010 M/S. BLACK & VEATCH CONSULTING P. LTD. 2 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL RELATES TO THE MANNER OF COMPUTATION OF DEDUCTION UNDER SECTION 10 A BY THE AO AND ITS CONFIRMATION BY THE CIT(A). 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE WAS ADJUDICATED BY THE COORDINATE BEN CH IN THE CASE OF VALUE PROCESS TECHNOLOGIES (I) P. LTD. 141 ITD 447 (MUM) AS WELL AS IN ASSESSEES OWN CASE FOR AY 2006-07 REPORTED IN 348 ITR 72 (BOM ). 4. AFTER HEARING BOTH THE PARTS ON THIS ISSUE WE PERUS ED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WHICH WAS APPROVED BY THE HON'BLE HIGH COURT DATED 9 TH APRIL, 2012 AND THE RELEVANT PORTION OF PARA 3 OF THE SAID JUDGEMENT IS REPRODUCED FOR COMPLETENESS OF THE ORD ER: - 3. SECTION 10A IS A PROVISION WHICH IS IN THE NATU RE OF A DEDUCTION AND NOT AN EXEMPTION. THIS WAS EMPHASISED IN A JUDGMENT OF A DIVISION BENCH OF THIS COURT WHILE CONSTRUING THE PROVISIONS OF SECTION 10B IN HINDUSTAN UNILEVER LTD VS. DEPUTY COMMISSIONER OF I NCOME TAX (2010) 325 ITR 102 AT PARA 24 . THE SUBMISSION OF THE REVENUE PLACED ITS RELIANCE O N THE LITERAL READING OF SECTION 10A UNDER WHICH A DEDUCTION OF SUCH PROF ITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF AR TICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE A SSESSMENT YEARS IS TO BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE . THE DEDUCTION UNDER SECTION 10A, IN OUR VIEW, HAS TO BE GIVEN EFF ECT 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 D EALS WITH THE CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. A DISTINCTI ON HAS BEEN MADE BY THE LEGISLATURE WHILE INCORPORATING THE PROVISIONS OF CHAPTER VI-A. SECTION 80A(1) STIPULATES THAT IN COMPUTING THE TOT AL INCOME OF AN ASSESSEE, THERE SHALL BE ALLOWED FROM HIS GROSS TOT AL INCOME, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH E CHAPTER, THE DEDUCTIONS SPECIFIED IN SECTIONS 80C TO 80U. SECTIO N 80B(5) DEFINES FOR THE PURPOSES OF CHAPTER VI-A 'GROSS TOTAL INCOME' T O MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS O F THE ACT, BEFORE MAKING ANY DEDUCTION UNDER THE CHAPTER. WHAT THE REVENUE IN ESSENCE SEEKS TO ATTAIN IS TO TELESCOPE THE PROVISI ONS OF CHAPTER VI-A IN THE CONTEXT OF THE DEDUCTION WHICH IS ALLOWABLE UND ER SECTION 10A, WHICH WOULD NOT BE PERMISSIBLE UNLESS A SPECIFIC ST ATUTORY PROVISION TO THAT EFFECT WERE TO BE MADE. IN THE ABSENCE THEREOF , SUCH AN APPROACH CANNOT BE ACCEPTED. IN THE CIRCUMSTANCES, THE DECIS ION OF THE TRIBUNAL WOULD HAVE TO BE AFFIRMED SINCE IT IS PLAIN AND EVI DENT THAT THE DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE F IRST INSTANCE. SO ITA NO. 7465 & 8705/MUM/2010 M/S. BLACK & VEATCH CONSULTING P. LTD. 3 CONSTRUED, THE APPEAL BY THE REVENUE WOULD NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND SHALL ACCORDINGLY S TAND DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. THE ABOVE EXTRACT MENTIONS THAT THE PROVISIONS OF S ECTION 10A ARE IN THE NATURE OF DEDUCTIONS AND NOT EXEMPTIONS AND THE DED UCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFIT OR GAINS OR BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. AS PER THE JUDGEMEN T OF THE COORDINATE BENCH IN THE CASE OF VALUE PROCESS TECHNOLOGIES (I) P. LTD. (SUPRA), WHICH IS RELEVANT FOR THE PROPOSITION, EXEMPTION UNDER SECTI ON 10A HAS TO BE ALLOWED WITH SETTING OFF CARRIED FORWARD UNABSORBED LOSS AND DEPRECIATION FROM EARLIER ASSESSMENT YEARS OR CURRENT ASSESSMENT YEAR EITHER IN THE CASE OF NON-STPI UNIT OR IN THE CASE OF VERY SAME U NDERTAKING. CONSIDERING THE ABOVE SAID PROPOSITION OF LAW, WE ARE OF THE OP INION THAT THE ASSESSEE SHOULD SUCCEED ON THE GROUND RAISED BEFORE US. ASSE SSEES GROUNDS ARE ALLOWED. 5. THE REVENUE HAS RAISED A COUPLE OF ISSUES IN ITS AP PEAL RELATING ALLOWABILITY OF EMPLOYEES CONTRIBUTION TO PF, WHICH WAS ACTUALLY MADE DURING THE GRACE PERIOD AND THE OTHER ISSUE BEING T HE ONE RELATED TO THE ISSUE RAISED IN ASSESSEES APPEAL, WHICH IS ALREADY ADJUDICATED BY US AS PER THE CONCLUSIONS GIVEN IN THE ABOVE PARAGRAPHS OF TH IS ORDER. 6. WE FIND THAT GROUND NO. 1 STANDS COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT I N THE CASE OF ALOM EXTRUSIONS LTD. 319 ITR 306, WHICH IS RELEVANT FOR THE PROPOSITION THAT AFTER OMISSION OF THE SECOND PROVISO TO SECTION 43B THE P AYMENTS MADE BEFORE FILING OF RETURN OF INCOME IS AN ALLOWABLE DEDUCTIO N. ACCORDINGLY, CONSIDERING THE FACT THAT THE PAYMENT IS MADE WITHIN THE GRACE PERIOD THE CONCLUSION DRAWN BY THE CIT(A) IN THIS REGARD IS FAIR AND REAS ONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THEREFORE, GROUND NO. 1 IS RE JECTED. 7. GROUND NO. 2 & 3 RELATE TO THE GROUND RAISED BY THE ASSESSEE IN ITS APPEAL WHEREIN WE HAVE ALLOWED THE GROUNDS OF THE A SSESSEE. HENCE, GROUND NO. 2 & 3 OF THE REVENUE STAND REJECTED. ITA NO. 7465 & 8705/MUM/2010 M/S. BLACK & VEATCH CONSULTING P. LTD. 4 8. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS ALLO WED AND THE APPEAL FILED BY THE REVENUE IS REJECTED. &/ #$%& ' 0 1 ' ) 23 / ) ' 0 &) ' ) 23 ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DECEMBER, 2014. ' ,-. 0 5#/ 02.12.2014 - ' 6* SD/- SD/- ( AMIT SHUKLA ) ( D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 7* MUMBAI, 5# DATED: 2 ND DECEMBER, 2014 COPY TO: 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ( )/ THE CIT(A) 22, MUMBAI 4. / THE CIT 10, MUMBAI CITY 5. 896 !#:$ , + :$ , 7* THE DR, B BENCH, ITAT, MUMBAI 6. 6% ;* / GUARD FILE. # / BY ORDER '8 ! //TRUE COPY// ASSISTANT REGISTRAR , 7* ITAT, MUMBAI BENCHES, MUMBAI N.P.