DCIT, New Delhi v. M/s Abhipra Capital Ltd, New Delhi

ITA 1021/DEL/2009 | 2005-2006
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 102120114 RSA 2009
Assessee PAN AABCA1702F
Bench Delhi
Appeal Number ITA 1021/DEL/2009
Duration Of Justice 1 year(s) 10 month(s) 11 day(s)
Appellant DCIT, New Delhi
Respondent M/s Abhipra Capital Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-01-2011
Date Of Final Hearing 13-01-2011
Next Hearing Date 13-01-2011
Assessment Year 2005-2006
Appeal Filed On 19-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NOS. 2935 /DEL/07 1021/DEL/09 & 22/DEL/10 ASSTT. YRS 2004-05 2005-06 & 2006-07 DCIT CEN. CIR.-1(1) VS. M/S ABHIPRA CAPITAL LTD . NEW DELHI. GF 58-59 WORLD TRADE CENTRE BARAKHAMBA ROAD NEW DELHI. PAN NO. AABCA1702F ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. ANUSHA KHURANA SR. DR RESPONDENT BY : DR. RAKESH GUPTA ADV. O R D E R PER R.P. TOLANI J.M : THESE ARE REVENUES APPEALS AGAINST SEPARATE ORDERS OF CIT(A) RELATING TO A.Y. 2004-05 2005-06 & 2006-07. SINCE COMMON IS SUE IS INVOLVED IN THESE APPEALS THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2. COMMON ISSUE RAISED BY REVENUE IS AS UNDER: 1. THE LEARNED CIT(A) APPEALS ERRED ON FACTS AND I N LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB WHICH HAD RIGHTLY BEEN DISALLOWED BY THE ASSESSING OFFICER ON MERITS. 2. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN RELYING UPON THE OBSERVATIONS OF THE HONBLE DELHI HIGH COU RT IN THE CASE OF A.R.J. SECURITY PRINTERS REGARDING CONSISTE NCY IN INCOME TAX ASSESSMENT PROCEEDINGS BECAUSE IN THAT B ECAUSE THE ISSUE OF FACT AND LAW HAD CONCRETIZED BEFORE THE IT AT WHEREAS ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 2 IT WAS NOT SO IN THE PRESENT CASE WHEREIN IT WAS NO T CLEAR IF THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE ISSUE AT HAND IN PROCEEDINGS FOR EARLIER ASSESSMENT YEARS. 3. BRIEF FACTS ARE THAT ASSESSEE IS ENGAGED IN VAR IOUS SECURITY MARKET RELATING ACTIVITIES ONE OF WHICH BEING APPROVED DE POSITORY PARTICIPANT OF NSDL AND CDS ( DEMAT SERVICES). AS A DEPOSITORY PAR TICIPANT ASSESSEES ACTIVITY INVOLVE ENTERING INTO AGREEMENT WITH NSD L TO CONVERT SHAREHOLDERS PHYSICAL CERTIFICATES IN DEMATERIASLI ZED FORM AND TO HOLD THEM ON THEIR BEHALF IN STORE UPDATE AND TRANSFER THE S AME AT SHAREHOLDERS REQUEST. THE ASSESSEE HAS DESCRIBED ITS ACTIVITY AS UNDER: COMING BACK TO THE ACTIVITIES OF THE ASSESSEE IN Q UESTION IT IS SEEN THAT ITS ACTIVITIES ARE AKIN TO THOSE OF A BAN K. A COMMERCIAL BANK HOLDS AND SAFEGUARDS THE MONEY OF ITS DEPOSITO RS AND MAKES NECESSARY CHANGES IN THEIR CASH BALANCE AS AN D WHEN MONEY IS DEPOSITED OR WITHDRAWN. IN LIKE FASHION T HE ASSESSEE HOLDS THE SHARES OF ITS CLIENTS IN A DEMATERIALIZED FORM AND GIVES THEM A PERIODIC STATEMENT OF VALUE OF THEIR SHARE H OLDING. THE ONLY ACTIVITY UNDERTAKEN BY THE ASSESSEE IS THAT OF PUNCHING IN DATA FROM THE SHARE CERTIFICATES ON TO THE COMPUTER AND THEN STORING THE SAME IN A STANDARD FORMAT. IT SHOULD BE MENTIONED THAT THE SHARE CERTIFICATE IS COPIED DETAIL FOR DET AIL ON TO THE COMPUTER AND NO CHANGES ARE MADE IN THE DATA/ INFOR MATION CONTAINED IN THE SHARE CERTIFICATE. FOR PROCESSING TO TAKE PLACE SOME OPERATIONS HAVE TO BE PERFORMED ON THE RAW DAT A WHEREBY THE SAME IS TRANSFORMED INTO A COMMERCIALLY DISTINC T FORM. NO SUCH TRANSFORMATION TAKES PLACE IN THE CASE IN QUES TION. THERE IS VIRTUALLY NO DIFFERENCE IN THE NATURE OF THE PRODUC T/ INFORMATION BEFORE AND AFTER IT PASSES THROUGH THE ASSESSEES H ANDS SAVE THAT THE INFORMATION THAT WAS ONCE CONTAINED WITHI N THE MARGINS OF A SHARE CERTIFICATE IS NOW STORED ON AN ELECTRONIC/ DIGITAL MEDIA. ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 3 3.1. ASSESSEE IN ITS RETURN OF INCOME AS ALLOWED IN EARLIER YEARS CLAIMED DEDUCTION U/S 80-IB IN RESPECT OF DATA PROCESSING A CTIVITY. ASSESSMENTS FOR ASSESSMENT YEARS 1999-2000 2000-01 2002-03 & 2003 -04 WERE MADE U/S 143(1). THE SAME WERE REOPENED U/S 148 ON THIS ISSU E AND IN REASSESSMENT ASSESSEES CLAIM ABOUT ELIGIBILITY U/S 80-IB WAS AC CEPTED. ASSESSMENT FOR A.Y. 2001-02 WAS FRAMED U/S 143(3) ACCEPTING THE C LAIM. 3.2. AO RAISED AGAIN DOUBTS ABOUT THE ELIGIBILITY O F ASSESSEES CLAIM U/S 80-IB IN THESE YEARS ON THE BASIS THAT IT WAS NOT E NGAGED IN THE ACTIVITY OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING A S PRESCRIBED BY SEC. 80- IB. ASSESSEE AGAIN EXPLAINED THAT ALL OTHER ELIGIB LE CONDITIONS QUA 80-IB WERE SATISFIED EXCEPT ABOUT THE DOUBT IN RESPECT OF ASSESSEES ACTIVITY AMOUNTING TO MANUFACTURE OR PRODUCTION OF ANY ARTIC LE OR THING. THE SAME WAS SOUGHT TO BE EXPLAINED BY FOLLOWING WRITTEN SUB MISSIONS: THE APPELLANT COMPANY IS PROVIDING THE FOLLOWING S ERVICES INCLUDING CONSULTANCY IN DEPOSITORY DIVISION ON THE SUBJECT OF THE CAPITAL MARKET IN ACCORDANCE WITH THE NEED OF T HE USER. THE DATA IS PROCESSED ELECTRONICALLY FOR FOLLOWING PROD UCTS/ ARTICLES:- STATUTORY WORK SCOPE:- (A) OPEN DEMAT ACCOUNT (B) DEMATELISATION OF SHARES/ COMMODITIES (C) REMATELISATION OF ABOVE (D) PLEDGE OF SECURITIES (E) DEPLEDGE OF SECURITIES (F) FURNISHING HOLDING STATEMENT AS PER RULES NOT W ITH VALUE. OTHER ACTIVITIES:- (A) SECURITIES HOLDING STATEMENT AT ANY POINT TIME. ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 4 (B) ADDITION AND DELETION OF THE SECURITIES DATE WI SE AS WELL SCRIP WISE (C) SEGREGATION OF SCRIPS FAST MOVING SLOW MOVING (D) SEGREGATION OF SECURITIES/ COMMODITIES ON YIELD BASIS (E) TRANSACTION STATEMENT OF SCRIP AT DESIRED INTER VAL DAILY WEEKLY FORTNIGHTLY OR MONTHLY AS PER DEMAND OF USER ELIGIBILITY OF THE CORPORATE BENEFIT AND AVAIL BY THE INVESTORS . (F) VALUATION OF THE STOCK AT DESIRED DATE AND PERI ODICALLY (G) PROFIT/LOSS ON THE STOCK AT ANY GIVEN TIME INCL UDING CALCULATION OF NOTIONAL PROFIT/LOSS. (H) TECHNICAL ANALYSIS REPORT ON THE BASIS OF THE M OVEMENT OF THE STOCK AND REPORT/ADVISE TO THE INVESTOR TO MANG E ITS PORTFOLIO. (I) ANALYSIS OF THE REPORT ON THE BASIS OF DATA AN D CALCULATION OF THE PROFIT/LOSS LONG TERM/SHORT TERM TO THE INVESTOR. (J) TO FACILITATE THE FACILITY OF DISPOSING OF THE STOCK AT GIVING LEVEL PROFIT ON THE PORTFOLIO. (K) THE ABOVE REFERRED TECHNICAL ASSISTANT AND REPO RTS ARE NOT BEING PROVIDED BY THE BANK TO THEIR ACCOUNT HOLDER. (L) OTHER TECHNICAL SERVICES/ CONSULTANCY AS REQUIR ED BY THE ACCOUNT HOLDER. THE SERVICES MENTIONED ABOVE ARE THE PRODUCTS/ARTIC LES WHICH ARE GENERATED BY PROCESSING OF CLIENT DATA WITH THE AID OF COMPUTER. 3.3. ASSESSEE RELIED ON FOLLOWING JUDGMENTS FOR THI S PROPOSITION: - CIT VS. AJAY PRINTERS PVT. LTD. 58 ITR 811 (GUJ.) - CIT VS. COMP-HELP SERVICES PVT. LTD. 159 CTR 220 (M AD.) - PEERLESS CONSULTANCY SERVICES (2001) 116 TAXMAN (SC ) - CIT VS. TECHNOTIVE EASTERN PVT. LTD. 176 CTR 422 (G UH.). 3.4. AO HOWEVER DISALLOWED THE CLAIM OF THE ASSES SEE HOLDING THAT ASSESSEE WAS NOT CARRYING OUT ANY ACTIVITY WHICH CA N BE CLASSIFIED AS MANUFACTURING OR PRODUCING ANYTHING OR ARTICLE. ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 5 3.5. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL BEF ORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE FOR A.Y. 2004-05 AS UNDER: IT IS NOTED THAT ASSESSMENT ORDER FOR A.Y. 2001-02 WAS PASSED U/S 143(3) AND CLAIM OF 80IB WAS ALLOWED. DURING TH AT ASSESSMENT PROCEEDINGS THE APPELLANT HAD FILED THE DETAILS OF HIS CLAIM U/S 80-IB. THE DETAILS WERE FILED VIDE AP PELLANTS LETTER DATED 2.3.2004 AND THE ORDER ACCEPTING THE CLAIM U/S 80- IB WAS PASSED ON 19.3.2004. IN THE APPELLANT CASE THERE IS NO CHANGE IN THE BU SINESS OF THE APPELLANT. IN THE PRECEDING ASSESSMENT YEARS CLAIM OF THE APPELLANT HAS BEEN ALLOWED BY THE ASSESSING OFFICER . HAVING ACCEPTED THE CLAIM OF APPELLANT IN PRECEDING ASSESS MENT YEARS AS A RULE OF CONSISTENCY THE CLAIM OF APPELLANT CA N NOT BE DISALLOWED DURING THE YEAR UNDER APPEAL. THIS VIEW IS SUPPORTED BY THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. A.R. J. SECURITY PRINTERS 264 ITR 276 AND ITAT CHANDIGAR H BENCH A (THIRD MEMBER) IN CASE OF DCIT VS. UNITED VANAS PATI LIMITED (2004) 88 ITD 313. IN VIEW OF ABOVE FINDINGS AND VARIOUS CASE LAWS AS REFERRED I AM OF THE VIEW THAT ASSESSEE (DEPOSITORY DIVISION) IS A DATA PROCESSING UNIT AND ELIGIBLE FOR DEDUCTION U/S 80IB OF THE I.T. ACT. THIS VIEW FURTHER GETS STRENGTH BY THE FACT TH AT ASSESSEE COMPANY (DEPOSITORY DIVISION) HAS BEEN GRANTED PERM ANENT REGISTRATION CERTIFICATE AS A SMALL SCALE INDUSTRIA L UNDERTAKING SINCE ITS START OF DEPOSITORY ACTIVITY AS DATA PROC ESSING UNIT BY COMMISSIONER OF INDUSTRIES DELHI ADMINISTRATION. IN VIEW OF ABOVE ASSESSING OFFICER IS DIRECTED TO A LLOW THE CLAIM OF RS. 27 55 978/- U/S 80I AS CLAIMED BY THE APPELLANT. 3.6. THE ORDER OF CIT(A) 2004-05 WAS FOLLOWED IN SU BSEQUENT YEARS I.E. 2005-06 & 2006-07. AGGRIEVED REVENUE IS BEFORE US. 4. LEARNED DR RELIED ON THE ORDER OF AO. ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 6 5. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE ARGUMENTS TAKEN IN EARLIER YEARS. THE COPY OF ASSESSMENT ORDER ALLOWI NG CLAIM U/S 80-IB ON THE SAME FACTS AND CIRCUMSTANCES U/S 143(3) IS REFERRED . IT IS PLEADED THAT ASSESSEE IS REGISTERED AS AN INDUSTRIAL UNDERTAKIN G; DETAILS OF DATA ARE ELECTRONICALLY PROCESSED; ITS VALUATION BILLING AN D TECHNICAL ANALYSIS REPORTS ARE ON THE RECORD. REFERENCE IS MADE TO THE SUMMARY OF ARGUMENTS TAKEN BY THE ASSESSEE AND THE SUBMISSIONS MADE BEFORE THE AO . RELIANCE IS PLACED ON FOLLOWING JUDGMENTS: - MRL RESEARCH & CONSULTANCY GROUP P. LTD. VS. JCIT 1 07 ITD 438 (HYD.); - DATAMATICS FINANCIAL SERVICES LTD. VS. JCIT 95 ITD 944 (MUM.); - MEDICAL GENETIC CLINIC & LABORATORY VS. ITO 79 ITD 14 (MUM.); - KRISHNA ASSOCIATES VS. ITO 22 ITD 530 (BANG.); - CIT VS. PEERLESS CONSULTANCY & SERVICES (P) LTD. 24 8 ITR 178(SC); - CIT VS. CAMP-HELP SERVICES (P) LTD. 246 ITR 722 (MA D.); - CIT VS. COMPUTERIZED ACCOUNTING & MANAGEMENT SERVIC E P. LTD. 235 ITR 502 (KER.); - CIT VS. TECHNOTIVE EASTERN (P) LTD. 255 ITR 253(GAU .); - CIT VS. SHAW WALLACE & CO LTD. 201 ITR 17(CAL.); - CIT VS. SURESH AMIN FAMILY TRUST 288 ITR 101 (GUJ.) ; - CIT VS. PROFESSIONAL INFORMATION SYSTEMS & MANAGEME NT 274 ITR 242 (GUJ.); - CIT VS. N.C. BUDHRAJA & CO. & ANR. ETC. 204 ITR 4 12 (SC) 5.1. IN THE CASE OF MBL RESEARCH & CONSULTANCY GROU P (P) LTD. (SUPRA) ACTIVITIES OF COLLECTING DATA BASED ON PARTICULAR S TRATEGY PROCESSING AND ANALYZING THEM USING SOPHISTICATED COMPUTERS AND SO FTWARES IN ORDER TO PROVIDE MARKET RESEARCH AND CONSULTANCY SERVICES TO ITS CLIENTS HAVE BEEN HELD TO BE ENGAGED IN MANUFACTURE OR PRODUCTION ELI GIBLE FOR DEDUCTION U/S 80-IB. ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 7 5.2. SIMILARLY IN THE CASE OF DATAMATICS FINANCIAL SERVICES LTD. (SUPRA) MUMBAI BENCH OF THE ITAT HAS HELD THAT DATA PROCESS ING ACTIVITY CONSTITUTES MANUFACTURE OR PRODUCTION ELIGIBLE FOR DEDUCTION U/ S 80-IA. 5.3. HONBLE GUJARAT HIGH COURT IN THE CASE OF PRO FESSIONAL INFORMATION SYSTEMS & MANAGEMENT (SUPRA) HAS ALSO HELD THAT ACT IVITY OF DATA PROCESSING THROUGH THE USE OF COMPUTERS TO MANUFACTURE OR PROD UCTION OF ARTICLES OR THINGS AND THEREFORE THE UNIT UNDERTAKING SUCH CO MPUTER SERVICES FOR OTHER CONCERNS WOULD BE AN INDUSTRIAL UNDERTAKING ELIGIBL E FOR INVESTMENT ALLOWANCE ON THE COST OF COMPUTER. 5.4. LEARNED COUNSEL FOR THE ASSESSEE FURTHER CLAIM S THAT THERE BEING NO CHANGE IN FACTS CIRCUMSTANCES AND LAW IT IS NOT J USTIFIED ON THE PART OF DEPARTMENT TO BREACH THE PRINCIPLE OF CONSISTENCY A S ENUNCIATED BY HONBLE SUPREME COURT IN THE CASE OF RADHA SWAMI SATSANG VS . CIT 60 TAXMAN 248. SINCE IN EARLIER YEARS DEPARTMENT U/S 148 AND 143(3) HAS ACCEPTED ASSESSEES CLAIM CIT(A) WAS PERFECTLY JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. IT HAS NOT BEEN DISP UTED BY REVENUE THAT THERE IS NO CHANGE IN FACTS CIRCUMSTANCES AND LEGAL POSI TION IN THE CASE BEFORE US. IN EARLIER YEARS DEPARTMENT AFTER PROPER PROCEEDIN GS U/S 143(3) AND 148 HAVE ACCEPTED ASSESSEES CLAIM ALLOWING DEDUCTION U /S 80-IB. HONBLE SUPREME COURT IN VERY CLEAR TERMS HAS EMPHASIZED TH E RULE OF CONSISTENCY IN CASE OF TAX PROCEEDINGS WHEN THERE IS NO CHANGE IN FACTS CIRCUMSTANCES AND LAW. IN VIEW OF THESE FACTS WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) ITA 2935/D/07 1021/D/09 & 22/D/10 M/S. ABHIPRA CAPITAL LTD. 8 ALLOWING THE CLAIM OF THE ASSESSEE U/S 80-IB. WE UP HOLD THE SAME AND REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31-01-2011. SD/- SD/- (SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31-01-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR