ACIT CEN CIR 37, MUMBAI v. MIRC ELECTRONICS LTD, MUMBAI

1 ITA NO.4191/MUM/2009 C.O. NO. 24/MUM/2010 ASSTT. YEAR : 1999-2000. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER I.T.A. NO. 4191/MUM/2009. ASSESSMENT YEAR : 1999-2000. ASSTT. COMMISSIONER OF INCOME-TAX MIRC ELECTRONICS LTD. CENTRAL CIRCLE-37 MUMBAI. VS. G-1 ONIDA HOUSE MIDC MAHAKALI CAVES ROAD ANDHERI (EAST) MUMBAI 400 093. PAN : AAACM 8055A APPELLANT. RESPONDENT. C .O. NO. 24/MUM/2010 (IN ITA NO. 4191/MUM/2009) MIRC ELECTRONICS LTD. ASSTT. COMMISSIONER OF MUMBAI. VS. INCOME-TAX CENTRAL CIR.-37 MUMBA I. CROSS OBJECTOR. RESPONDENT. DEPARTMENT BY : SHRI RAJARSHI DWIVEDY. ASSE SSEE BY : SHRI VINAY SETHI. O R D E R PER J. SUDHAKAR REDDY A.M. : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS) CENTRAL VIII MUMBAI DATED 13-04-2009 FOR ASSESSMENT YEAR 1999- 2000 ON THE FOLLOWING GROUND : 2 ITA NO.4191/MUM/2009 C.O. NO. 24/MUM/2010 ASSTT. YEAR : 1999-2000. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.44 82 4 52/- AND DIRECTING THE A.O. NOT TO REALLOCATE FURTHER R & D EXPENSES OF RS .1 49 41 506/- TO WADA UNIT WHICH RELATES TO ANDHERI UNIT RELYING ON ITS DECISION FOR EARLIER YEARS. 2. THE ASSESSEE FILED THE CROSS OBJECTION ON THE FO LLOWING GROUNDS: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN UPHOLDING THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 BY THE LEARNED ASSESSING OFFICER. THE RESPONDENT PR AYS THAT LEARNED CIT(A) IS TOTALLY UNJUSTIFIED IN CONFIRMING THE ACT ION OF THE LEARNED ASSESSING OFFICER IN REOPENING OF THE ASSESSMENT AN D THE SAID ACTION OF THE LEARNED A.O. AND SUBSEQUENTLY CONFIRMED BY L EARNED CIT(A) IS LIABLE TO BE QUASHED. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) IS FULLY JUSTIFIED IN DELETING THE ADDITION OF RS.44 8 2 452/- AND DIRECTING THE A.O. NOT TO REALLOCATE FURTHER R&D EXPENSES OF RS.1 49 41 506/- TO WADA UNIT (ELIGIBLE UNDERTAKING U/S 80IA). THE R ESPONDENT PRAYS THAT LEARNED CIT(A) IS FULLY JUSTIFIED IN HOLDING T HAT NO ALLOCATION OF R&D EXPENSES CAN BE MADE TO WADA UNIT (ELIGIBLE UND ERTAKING U/S 80IA). 3. WE HAVE HEARD MR. RAJARSHI DWIVEDY LEARNED DR A ND MR. VINAY SETHI LEARNED COUNSEL FOR THE ASSESSEE. ADMITTEDLY THE VE RY SAME ISSUE WAS CONSIDERED BY THE MUMBAI J-BENCH OF THE TRIBUNAL IN ITA NO. 95 79/MUM/2004 FOR THE ASSESSMENT YEAR 2001-02 ORDER DATED 30 TH DEC. 2008 WHEREIN THE TRIBUNAL AT PARA 8 HELD THAT ON THE VERY SAME ISSUE THE TRIBUNAL FOR THE ASSESSMENT YEARS 1998-99 TO 2000-01 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. THE TRIBUNAL IN ITA NO. 3 ITA NO.4191/MUM/2009 C.O. NO. 24/MUM/2010 ASSTT. YEAR : 1999-2000. 7985/MUM/2003 FOR THE ASSESSMENT YEAR 2000-01 ORDE R DATED 8-6-2004 AT PARA 32 HELD AS FOLLOWS : 32. ON CONSIDERATION OF THE MATTER WE HOLD THAT N O PART OF R&D EXPENDITURE SHOULD BE REDUCED FROM THE PROFITS OF W ADA UNIT. THE LEARNED COUNSEL HAS RIGHTLY POINTED THAT THIS EXPENDITURE H AS NOTHING TO DO WITH THE CURRENT OPERATIONS OF WADA UNIT. THE PROVISIONS OF SECTION 35 OF THE ACT COMPRISE OF SPECIAL DEDUCTION ON ASSUMING R & D EXP ENSES S REVENUE EXPENDITURE ON FULFILLMENT OF THE REQUIREMENTS OF T HAT SECTION. THE SAME HAS NO EFFECT OF REDUCING THE BUSINESS PROFIT OF WADA U NIT. WE THEREFORE DIRECT NO FURTHER R&D EXPENDITURE SHOULD BE REDUCED FROM W ADA UNIT. 4. CONSISTENT WITH THE VIEW TAKEN THEREIN WE UPHOL D THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISMISS THE APPEAL OF THE R EVENUE. 5. COMING TO THE CROSS OBJECTION IN VIEW OF OUR UP HOLDING THE ORDER OF THE CIT(APPEALS) WE DISMISS THE CROSS OBJECTION AS INF RUCTUOUS. 6. IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEBRUARY 2011. SD/- SD/- (N.V. VASUDEVAN) (J. SUDH AKAR REDDY) JUDICIAL MEMBER. A CCOUNTANT MEMBER MUMBAI DATED: 25 TH FEBRUARY 2011. WAKODE 4 ITA NO.4191/MUM/2009 C.O. NO. 24/MUM/2010 ASSTT. YEAR : 1999-2000. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR B-BENCH (TRUE COPY) BY ORDER ASSTT. REGI STRAR ITAT MUMBA I.