ITO 9(2)(2), MUMBAI vs. CENVO PUBLISHER SERVICES LTD, MUMBAI

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ITA 1476/MUM/2015Status: DisposedITAT Mumbai18 November 2016AY 2010-115 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was covered by the jurisdictional High Court's decision in CIT vs. Techno Tarp and Polymers Pvt. Ltd., which dismissed the Revenue's appeal on similar grounds. The High Court had previously ruled in favour of the assessee in cases like CIT vs. Black & Veatch Consulting (P) Ltd.

What were the facts?

The assessee claimed deduction under Section 10A for its Mumbai and Chennai units without setting off brought forward business losses and unabsorbed depreciation. The Assessing Officer set off these losses and depreciation before allowing the Section 10A deduction, but the CIT(A) allowed the assessee's claim.

What were the issues?

Whether brought forward business losses and unabsorbed depreciation should be set off before or after computing the deduction under Section 10A.

Which sections of the Income-tax Act were involved?

Section 10A,Section 70,Section 71,Section 72

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, BENCH “C”,MUMBAI

Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGH

For Appellant: Shri C.W. Angolkar (DR), Shri Vijay Mehta (AR)
Hearing: 09.11.2016Pronounced: 18.11.2016

O R D E R

PER PAWAN SINGH, JM:

1.

This appeal u/s 253 of the Income-tax Act (‘Act’) is directed by the Revenue against the order of Commissioner of Income-tax (Appeals) (for short ‘the CIT(A)- 16, Mumbai dated 11.11.2014 for Assessment Year (AY) 2010-11. The Revenue has raised the following Grounds of appeal: 1. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction u/s 10A before computing the brought forward business losses and unabsorbed depreciation without appreciating that after the amendment, Sec 10A/10B has become "Deduction" and not "Exemption" and the income of the assessee has to be computed as per the Computation of income as defined in Sec 2(45) of the Act.

2. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction u/sl0A before computing the brought forward business losses and unabsorbed depreciation ignoring that the Hon'ble Karnataka High Court in the case of Commissioner of Income-tax Vs Himatasingike Seide Ltd reported in 286 ITR 255(2006) has clarified that loss of 10-A unit has to be first set off against 10-A profit and only on balance amount deduction is available and ignoring the fact that decision of Karnataka High 2 M/s Cenvo Publisher Services Ltd. Court was upheld by Hon'ble Supreme Court in CA 1501 of 2008 holding that appeal is devoid of any merit ?" 3. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction u/s 10A before computing the brought forward business losses and unabsorbed depreciation ignoring that the CBDT vide its Circular No. 7 of the 2013 dated 16.07.2013 has categorically clarified as under: ... "first the income/loss from various sources i.e. eligible and ineligible units, under the same head are aggregated in accordance with the provisions of section 70 of the Act. Thereafter, the income from one ahead is aggregated with the income or loss of the other head in accordance with the provisions of section 71 of the Act. If after giving effect to the provisions of sections 70 and 71 of the Act there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or sections 10A, 10B etc. of the Act, the same shall be allowed in computing the total income of the assessee. " 4. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing deduction u/s 10A before computing the brought forward business losses and unabsorbed depreciation by placing reliance upon the decision of Bombay High Court in the case of CIT V/s Black & Veatch Consulting P Ltd 20 Taxman.com 727(Bom) ignoring the fact that the department has not accepted the ratio laid down in the said case."

2.

Brief facts of the case are that the assessee-company is engaged in the business of Information Technology Enabled Content Processing & Data Management Services, filed its return of income for relevant AY on 28.09.2010. The assessee claimed exemption u/s 10A in respect of Mumbai unit of Rs.9,16,57,358/- and Chennai Unit at Rs. 11,34,68,460/- without setting off of brought forward business losses of Rs.16035036/- for AY 2005-06 and unabsorbed depreciation at Rs.18,04,004/- for AY-2006-07. The Assessing Officer (AO) set off and unabsorbed depreciation against the profit of assessee and accordingly allowed deduction u/s 10A. On appeal by assessee the ld. CIT (A) allowed the relief. Aggrieved by the order of CIT(A), the Revenue has filed the present appeal before us.

3.

We have heard the rival contentions of the parties. The ld. Departmental Representative (DR) for Revenue honestly supported the order of AO. Ld. Authorized Representative (AR) of the assessee argued that the Grounds of appeal raised in the present appeal are covered in his favour by the decision of jurisdictional High Court in CIT vs. Techno Tarp and Polymers Pvt. Ltd. in ITA No. 2134 of 2013 dated 05.12.2015 wherein the identical issue was examined by

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