ITO 10(2)(2), MUMBAI V. CBAY SYSTEMS (I) P. LTD, MUMBAI

ITA 8560/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3975 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 29-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2011
• Court: TRIBUNAL
• Department Lawyers: S K KIRTHEY
• Assessee Lawyers: A V SONDE
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO.8560/M/2011 (ASSESSMENT YEAR: 2007 - 2008 ) ITO - 10(2)(2), R.NO.463, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S. CBAY SYSTEMS (I) P. LTD., GODREJ INDUSTRIES COMPLEX, GATE NO.4, EASTERN EXPRESS HIGHWAY, VIKHROLI, MUMAI - 79. ./ PAN : AAAC9165F ( / APPELLANT) .. ( / RESPONDENT ) C.O.NO. 178 /M/2013(ASSESSMENT YEAR: 2007 - 2008 ) (ARISING OUT OF ITA NO.8560/M/2011) M/S. MMODAL GLOBAL SERVICES PVT LTD, (FORMERLY KNOWN AS M/S. CBAY SYSTEMS (I) P. LTD), GODREJ INDUSTRIES COMPLEX, GATE NO.4, EASTERN EXPRESS HIGHWAY, VIKHROLI, MUMAI - 79. / VS. ITO - 10(2)(2), R.NO.463, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AAAC9165F ( / CROSS OBEJECTOR .. ( / APPELLANT IN APPEAL ) / ASSESSEE BY : SHRI A.V. SONDE / REVENUE BY : SHRI S.K. KIRTHEY, DR / DATE OF HEARING : 16.02.2016 / DATE OF PRONOUNCEMENT : 16.02.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THE CAPTIONED APPEAL ITA NO.8560/M/2011 IS FILED BY THE REVENUE AND THE CROSS OBJECTION NO.178/M/2013 IS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 2008. SINCE, THE ISSUES RAISED IN THE APPEALS ARE CONNECTED, THE THEREFORE, FOR 2 THE SAKE OF CONVENI ENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. GROUND OF APPEAL IN ITA NO.8560/M/2011: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S 10A IN COMPUTATION FILED DURING THE ASSESSMENT PROCEEDINGS AND IGNORING THE FACT THAT THIS CLAIM WAS NOT FILED IN THE REGULAR RETURN OF INCOME NOR I N THE REVISED RETURN AND CANNOT BE ACCEPTED IN VIEW OF THE APEX COURTS DECISION IN THE CASE OF GOETZE (INDIA) LTD 284 ITR 323. CROSS OBJECTION RAISED IN CO.NO.178/M/2013: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE HONBLE CIT (A) ERRE D IN RESTRING THE DEDUCTION U/S 10A OF THE ACT TO THE EXTENT OF TOTAL INCOME COMPUTED AFTER SET - OFF OF LOSSES OF OTHER UNIT. IT IS PRAYED THAT THE DEDUCTION U/S 10A BE ALLOWED FROM THE PROFITS AND GAINS OF THE ELIGIBLE UNIT AND LOSSES OF OTHER UNIT BE ALLOWED TO BE CARRIED FORWARD, AFTER SET OFF AGAINST INCOME FROM OTHER SOURCES. 2. THE ISSUES RAISED IN THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION (CO) OF THE ASSESSEE RELATES TO THE MANNER OF COMPUTATI ON ALLOWABLE U/S 10A OF THE ACT WHEN TWO DIFF ERENT UNITS OF THE ASSESSEE HAVE PROFIT AND LOSS AS THE CASE MAY BE. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER (325 ITR 102) (BOM), WHICH PR OVIDES FOR ALLOWING OF THE EXEMPTION OF GAINS FROM THE ELIGIBLE INDUSTRY AND GRANTING THE CARRY FORWARD OF LOSS INCURRING UNITS OF THE ASSESSEE. BRINGING OUR ATTENTION TO PAGES 10 TO 17 OF THE CIT (A)S ORDER LD COUNSEL FOR THE ASSESSEE MENTIONED THAT ASS ESSEES BANGALORE UNIT HAS THE PROFIT OF RS. 7.3 CRS (ROUNDED OFF), WHEREAS THE MUMBAI UNIT HAS THE LOSS OF RS. 1,35,67,920/ - . HE SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTION IN RESPECT OF THE SAID RS. 7.3 CRS. HOWEVER, AO SET OFF THE SAID LOSS OF RS. 1, 35,67,920/ - AGAINST THE PROFIT OF RS. 7.3 CRS THEREBY REDUCED THE ALLOWABLE DEDUCTION. THIS ASPECT WAS ADDRESSED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER (SUPRA) AND PRESCRIBED THE MANNER OF COMPUTATION IN SUCH CASES. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HINDUSTAN UNILEVER (SUPRA). ON PERUSAL CIT (A)S ORDER, WE FIND, THE CIT 3 (A) UNFAIRLY DISTINGU ISHED THE SAID JUDGMENT AND RESTRICTED THE DEDUCTION BY PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. IN OUR OPINION, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10A SO FAR AS THE PROFITS OF THE ELIGIBLE UNIT IS CONCERNED AND THE LOSS OF OTHER UNIT (MUMBAI UN IT) SHOULD BE ALLOWED TO BE CARRIED FORWARD AFTER SET OFF AGAINST THE INCOME FROM OTHER SOURCES AS REQUIRED BY THE IN ITS CROSS OBJECTION. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CO RAISED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH FEBRUARY, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16.2.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI