Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY, JM
आदेश / ORDER PER VIKAS AWASTHY, JM :
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals) – Pune – 1 dt.28.04.2016 for assessment year 2011-12.
The appeal has been filed with the delay of 3 days. The ld.D.R. made oral request for condoning the delay. The delay of 3 days in filing the appeal is condoned and the appeal is taken up for hearing on merits.
ITA No.1546/PUN/2016
The Revenue in appeal has assailed the order of CIT(A) on
following grounds :
“1. The order of the Ld. Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case.
The Ld. Commissioner of Income-tax (Appeals) grossly erred in deleting the addition mode by the Assessing Officer U/S 10A of the I.T. Act of Rs.2,69,76,031/- instead of confirming the said addition as the same is not allowable to the assessee.
The Ld. CIT(A) erred in allowing the ground in favour of assessee ignoring the CBDT's Circular No.07/DV/2013 issued on 16/07/2013, when the same is applicable in the case of assessee and binding on the Revenue Authorities.
For these and such other grounds as may be urged at the time of hearing, the order of the Ld. Commissioner of Income-tax (Appeals) may be vacated and that of the assessing office be restored.
The appellant craves to add, amend, alter or delete any of the grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal.”
Shri C.H. Naniwadekar appearing on behalf of the assessee
submitted at the outset that the solitary issue raised in the appeal by
the Department is against deleting the addition made u/s 10A of the
Income Tax Act, 1961 (hereinafter referred to as “the Act”). The
assessee is a Private Limited Company engaged in the business of
software development services. The assessee has two undertakings.
One undertaking is 100% export oriented unit and is registered with
Software Technology Parks of India. In respect of eligible
undertaking, the assessee claimed deduction of Rs.2,69,76,031/- u/s
10A of the Act. The assessee had claimed deduction before setting off
brought forward losses of eligible undertaking, as per the law laid
down by the Hon’ble Bombay High Court in the case of CIT Vs. Black
& Veath Consulting (P) Ltd., reported as 348 ITR 72. The AO rejected
ITA No.1546/PUN/2016
assessee’s claim of deduction. In first Appellate proceedings, the
CIT(A) allowed the claim of assessee by following the decision of
Hon’ble Bombay High Court in the aforesaid case. The ld.A.R. further
submitted that the issue is now squarely covered by the decision of
Hon’ble Apex Court in the case of CIT Vs. Yokogawa India Ltd.,
reported as 391 ITR 274.
On the other hand, Shri Ajay Dhoke representing the
Department vehemently defended the assessment order. The ld.D.R.
in support of his submissions placed reliance on the CBDT Circular
No.07 dt.16.07.2013.
We have heard the submissions made by representatives of
rival sides and perused the orders of authorities below. The only
issue arising in the appeal by the Revenue is against allowing of
deduction u/s 10A of the Act before setting off of brought forward
losses of eligible unit. It is not in dispute that the brought forward
losses set off by the assessee are of eligible unit. It is no more res
integra that the assessee can claim deduction u/s 10A of the Act
before claiming setting off of brought forward losses. The Hon’ble
Bombay High Court in the case of Black & Veath Consulting Pvt. Ltd.,
(supra) and the Hon’ble Karnataka High Court in the case of CIT Vs.
Yokogawa India Ltd., reported as 341 ITR 385 has held that the
deduction u/s 10A of the Act can be claimed before setting off of
brought forward losses of non-eligible units. The Hon’ble Apex Court
in the case of CIT & another Vs. Yokogawa India Ltd., (supra) has
upheld the decision of Hon’ble Karnataka High Court. The Hon’ble
ITA No.1546/PUN/2016
Supreme Court of India while rendering the decision has considered
various CBDT Circulars including Circular No.7 dated 16.07.2013
and has held as under :
From a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 dated 9.8.2000 which states in paragraph 15.6 that,
"The export turnover and the total turnover for the purposes of sections 10A and 10A shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision." 17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression "total income of the assessee" in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression “total income of the assessee” in Section 10A as ‘total income of the undertaking’.
Thus, in view of settled position, we find no infirmity in the order of
CIT(A) in allowing the benefit of deduction u/s 10A of the Act to the
ITA No.1546/PUN/2016
assessee. The impugned order is upheld and the appeal of Revenue is dismissed being devoid of any merit.
In the result, the appeal of Revenue is dismissed.
Order pronounced on Wednesday, the 30th day of January, 2019.
Sd/- Sd/- (R.S. SYAL) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER
पुणे Pune; �दनांक Dated : 30th January, 2019. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :
अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-1, Pune. 4. Pr. CIT-1, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “ए” Pune; 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER
// True Copy //
व�र�ठ �नजी स�चव / Sr. Private Secretary y // आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.