DCIT 11(2)(1), MUMBAI vs. SITEL INDIA P.LTD, MANGALORE

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ITA 4340/MUM/2016Status: DisposedITAT Mumbai29 November 2022AY 2007-086 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that business losses incurred by the assessee are eligible to be set off against other business income in the same year. The CIT(A)'s order allowing such set-off was confirmed.

What were the facts?

The assessee, engaged in call centre and IT services, had multiple STPI units, some profitable and some incurring losses. The Assessing Officer (AO) disallowed set-off of losses, which was later rectified by the AO. The assessee appealed the rectification order.

What were the issues?

Whether losses from STPI units can be set off against other business income, including income arising from transfer pricing adjustments and disallowances.

Which sections of the Income-tax Act were involved?

Section 154,Section 92CA,Section 40(a)(i),Section 10A,Section 70,Section 71

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI

Before: SHRI PRASHANT MAHARISHI, AM & SHRI SANDEEP SINGH KARHAIL, JM

For Appellant: Shri. Sidhhesh Choughule
For Respondent: Shri. Vatsala Jha CIT DR
Hearing: 01.09.2022Pronounced: 29.11.2022
1.

This appeal is filed by the DCIT 11(2)(1)1 Mumbai [ the ld AO ] against the Appellate order passed by The CIT(A)-58 [the ld. CIT(A)] for A.Y. 2007-08 allowing appeal of the assessee against rectification order passed u//s 154 of The Income Tax Act , 1961 [The Act] by the ld AO (Assessment Year 2007-08) “1. Whether on the facts and in the circumstances of the case, the Ld CIT(A) was correct in directing the assessing officer to adjust the losses of 10A Unit against the adjustment u/s 92CA of the Act and 40(a)(i) of the ACT without appreciating the fact that TP adjustment and the disallowance is question in altogether a separate adjustment/disallowance, which cannot be apportioned to a specific unit.?

2.

Whether in law, facts and circumstances of the case, the Ld CIT(A) was justified in directing the assessing officer to allow set off of losses which is contrary to his own earlier decision directing to carry forward of losses in the order dt.16.12.2011 effect to which was given by the assessing officer.?

3. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the A.O. be restored.”

3.

The assessee also filed CO No. 2/MUM/2018 raising following grounds of appeal:

“ 1. On the facts, and in the circumstance of the case, and the directions issued by the learned Commissioner of

2. On the facts, and in the circumstances of the case, and in law, the directions of the learned CIT(A) to allow the set- off of losses of 10A units against the adjustments made to total income was not contrary to the learned CIT(A)'s order dated 16 December 2011, in as much as the ground of appeal

referred to and adjudicated in the said order dated

16. December 2011 pertained to set off of loses of 10A units against profits of other 10A units while computing the deduction under Section 10A of the Act and not carry forward/ set off of losses as per Sections 70 to 72 of the Act.”

4.

The brief facts of the case shows that, assessee is engaged in the business of call centre and IT enabled services providing contact centre services to the customer of its associated enterprises. The assessee has 4 different units in STPI Software Technology Park in Mumbai, Hyderabad, Chennai and Gurgaon. These undertakings are eligible for deductions u/s. 10A of the Act.

5.

For A.Y. 2007-08 Assessee filed its return of income on 31.10.2007 declaring net loss of ₹ 8,22,97,184/-. The computation shows that assessee earned profit from its Mumbai and Hyderabad undertaking however, it suffered losses in Chennai and Gurgaon undertakings. With respect to the undertakings, where it earned profit, assessee claimed deduction u/s. 10A of the Act. Where assessee incurred losses, same were carried forward for set off of such loss against future business income.

Order pronounced in the open court on 29.11.2022.

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