DCIT, Hyderabad V. M/s Continental Coffee Ltd.,(Now M/s CCL Products(India)Ltd., Hyderabad

ITA 851/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59270 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 16-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARI LAL NAIK
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 10B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.851/HYD/2009 ASSTT. YEAR: 2001-02 DCIT, CIR - 1(2), HYDERABAD. VS M/S. CONTINENTAL COFFEE LTD., (NOW CCL PRODUCTS (INDIA) LTD.HYDERABAD. PAN:AAACC9552G APPELLANT RESPONDENT APPELLANT BY : SRI HARILAL NAIK RESPONDENT BY : NONE DATE OF HEARING : 28-02-2012. DATE OF PRONOUNCEMENT : 02 -03-2012. ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 8-6-2009 PASSED BY THE CIT (A)- II, HYDERABAD IN ITA NO.0292 & 0293/CIT(A)-II/08-09 DATED 8-6-2009 PERTAINING TO THE ASSESSMENT YEARS 2 001- 02 AND 2002-03. THE PRESENT APPEAL IS CONFINED TO T HE ASSESSMENT YEAR 2001-02 ONLY. 2. THE ONLY ISSUE ON WHICH THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE IS WHETHER THE CIT (A) IS CORRECT IN HOLDING THAT THE DEDUCTION UNDER SECTION 10B IS TO BE ALLOWED BEFORE SET OFF OF BROUGHT FORWARD LOS SES. ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A MANUFACTURER OF INSTANT COFFEE AND IT IS 100% E.O.U . FOR THE ASSESSMENT YEAR UNDER DISPUTE WHILE COMPUTING I TS TOTAL INCOME, THE ASSESSEE CLAIMED A DEDUCTION OF RS.11,78,21,412/- UNDER SECTION 10B OF THE INCOME-T AX ACT ( HEREINAFTER CALLED THE ACT ) FROM THE NET BUSINESS INCOME BEFORE SETTING OFF OF BROUGHT FORWARD BUSINE SS LOSS AND DEPRECIATION. INITIALLY, THE RETURN WAS PROCESS ED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT. ULTIMATELY, THE ASSESSMENT WAS COMPLETED UNDER SECT ION 147 OF THE ACT ON 19-12-2008. IN THE ASSESSMENT OR DER WHILE COMPUTING THE TOTAL INCOME, THE ASSESSING OFF ICER AFTER CONSIDERING THE AMENDMENT BROUGHT INTO EFFECT FROM 1-4-2001 TO SEC. 10B WAS OF THE VIEW THAT BROUGHT FORWARD LOSSES AND DEPRECIATION HAVE TO BE SET OFF FIRST FROM THE PROFIT OF THE BUSINESS AND IF ANY POSITIVE INCOME STILL REMAINS THEN DEDUCTION UNDER SECTION 10B WILL BE ALLOWED. ACCORDINGLY, HE COMPUTED THE TOTAL INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). ON APP EAL, THE CIT (A) BY FOLLOWING HIS OWN ORDERS PASSED EARL IER FOR THE ASSESSMENT YEARS 2000-01, 2004-05 AND 2003-04 CAME TO HOLD THAT THE DEDUCTION UNDER SECTION 10B O F THE ACT HAS TO BE ALLOWED FIRST BEFORE SET OFF OF THE B ROUGHT FORWARD BUSINESS LOSS AND DEPRECIATION AND DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 10B OF ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 3 THE ACT. BEING AGGRIEVED BY THE ORDER OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 5. IT WILL BE PERTINENT TO MENTION HERE THAT AGAINS T THE ORDER PASSED BY THE CIT (A) FOR THE ASSESSMENT YEAR S 2000-01 AND 2004-05, THE REVENUE HAD ALSO FILED AN APPEAL BEFORE THE ITAT. THE ITAT ON 11-9-2009 VIDE ITS ORDER PASSED IN ITA NOS. 150/HYD/2009 AND ITA NO.949/HYD/2008 PERTAINING TO THE ASSESSMENT YEARS 2000-01 AND 2004-05 DISPOSED OF THE APPEALS BY OBSERVING IN PARAGRAPH-10 OF ITS ORDER WHICH READS AS UNDER:- COMING TO THE FACTS OF THE CASE BEFORE US, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 10B OF THE IT ACT. ONCE THE DEDUCTION U/S 10B HAS TO BE ALLOWED, THE TOTAL INCOME OF THE UNDERTAKING WILL ENTER THE COMPUTATION AND THEN ONLY DEDUCTION WILL BE GIVEN TO THE ASSESSEE. IN THIS EVENT THE FINDINGS OF THE CIT (A) CANNOT BE ACCEPTED THAT S.10B IS A SECLUDED PROVISIONS. HAD IT BEEN A CASE WHERE TOTAL EXCLUSION FROM INCOME WAS PROVIDED FOR, THEN FOR US THE OBSERVATION OF THE CIT (A) THA T SUCH INCOME CANNOT BE TAKEN INTO CONSIDERATION FOR SET OFF UNDER SECTION 70, 71 OR 72 WOULD NOT BE PROPER. IN THE LIGHT OF THE ABOVE, WE ARE INCLINED TO AGREE WITH THE CONSENT WITH THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ACCORDINGLY WE CONFIRM THE ORDER OF THE ASSESSING OFFICER THAT 10B DEDUCTION TO BE COMPUTED AFTER SET OFF OF THE UNABSORBED BUSINESS LOSSES AND DEPRECIATION CARRIED FORWARD FROM EARLIER YEARS FOR THE ASSESSMENT YEAR 2004-05. THIS VIEW OF OURS IS ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 4 FORTIFIED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF E-FUNDS INTERNATIONAL (P) LTD. VS. DCIT (120 TTJ (DEL.) 305) WHEREIN HELD THAT CARRIED FORWARD UNABSORBED BUSINESS LOSS OF UNIT ENTITLED FOR DEDUCTION U/S 10A CAN BE SET OFF WITH THE INCOME OF THE OTHER BUSINESS OF THE ASSESSEE. APPLYING THE SAME PRINCIPLE CARRIED FORWARD UNABSORBED BUSINESS LOSS OR UNABSORBED DEPRECIATION TO BE SET OFF WITH THE BUSINESS INCOME OF THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE COMPUTING THE 10B DEDUCTION. 6. THE APPEALS RELATING TO THE YEARS 2001-02, 2002- 03 AND 2003-04 WHERE IDENTICAL ISSUE REGARDING ALLOWAN CE OF DEDUCTION UNDER SECTION 10B OF THE ACT ALSO CROPPED UP CAME UP BEFORE THE TRIBUNAL IN ITA NOS. 851 TO 853/HYD/09. THE ITAT FOLLOWING ITS EARLIER ORDER P ASSED IN ITA NO.150/HYD/09 AND ITA NO.949/HYD/09 DATED 11 - 9-2009 DISPOSED OF THE APPEAL OF THE REVENUE BY HOL DING THAT THE AMENDED PROVISIONS OF SECTION 10B WILL APP LY TO THE ASSESSMENT YEARS 2002-03 AND 2003-04 AND THEREFORE DEDUCTION UNDER SECTION 10B IS TO BE ALLO WED ONLY AFTER SET OFF OF BROUGHT FORWARD LOSS AND DEPR ECIATION. SO FAR AS THE ASSESSMENT YEAR 2001-02 IS CONCERNED, THE ITAT IN ITA NO.851 /HYD/09 HELD THAT SINCE THE PERI OD RELATES PRIOR TO THE AMENDMENT OF SECTION 10B OF TH E ACT, DEDUCTION HAS TO BE ALLOWED BEFORE SET OFF OF THE B ROUGHT FORWARD LOSS AND DEPRECIATION. THE REVENUE THEREAF TER FILED A MA. NO.127/HYD/10 BEFORE THE ITAT. THE I TAT, B- BENCH HYDERABAD, AFTER HEARING THE MA FILED BY T HE REVENUE , ALLOWED THE SAME AND RECALLED ITS ORDER D ATED 15-10-2009 PASSED IN ITA NO.851/HYD/2009. ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 5 7. DURING THE COURSE OF HEARING OF THE APPEAL BEFO RE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE AMENDMENT TO SECTION 10B OF THE ACT HAS BE EN MADE EFFECTIVE FROM 1-4-2001 BY THE FINANCE ACT, 20 00, THE AMENDED PROVISION IS APPLICABLE TO THE ASSESSME NT YEAR 2001-02 AND THEREFORE THE ORDER PASSED BY THE ITAT, HYDERABAD BENCH B, HYDERABAD IN THE ASSESSEES OW N CASE FOR ASSESSMENT YEARS 2000-01 AND 2004-05 SQUAR ELY APPLIES TO THE FACTS OF THE INSTANT CASE. 8. AT THE TIME OF HEARING OF THIS APPEAL, NONE APPE ARED ON BEHALF OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE AND EXAMINING THE PROVISIONS OF SECTION 10B OF THE ACT, WE ARE OF THE VIEW THAT THE AMENDMENT EFFECTED WITH EFFECT FROM 1-4-2001 OF SECTION 10B OF THE ACT BY T HE FINANCE ACT, 2000, IS APPLICABLE TO THE ASSESSMENT YEAR 2001-02. WE THEREFORE FOLLOWING THE ORDER DATED 1 1-9- 2009 PASSED BY THE ITAT, HYDERABAD BENCH IN ITA NO. 150/HYD/2009 AND ITA NO.949/HYD/2008 FOR THE ASSESSMENT YEARS 2000-01 AND 2004-05 IN ASSESSEES OWN CASE, ALLOW THE CLAIM OF THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02 -03-2012. SD /- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER DATED THE 2 ND MARCH, 2012. ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 6 COPY FORWARDED TO: 1. M/S. CONTINENTAL COFFEE LTD., (NOS M/S. CCL PRODUCT S (INDIA) LTD.,) 7-1-24/2/D, GREENDALE, AMEERPET, HYDERABAD. 2. DCIT, CIR-1(2), AAYAKAR BHAVAN, HYDERABAD. 3. CIT (A)-II, HYDERABAD. 4. THE CIT CONCERNED, HYDERABAD 5. THE DR, ITAT, HYDERABAD JMR* ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 7