RSA Number | 570320114 RSA 2010 |
---|---|
Bench | Delhi |
Appeal Number | ITA 5703/DEL/2010 |
Duration Of Justice | 2 month(s) 6 day(s) |
Appellant | ITO, New Delhi |
Respondent | Damco Solutions Pvt. Ltd., New Delhi |
Appeal Type | Income Tax Appeal |
Pronouncement Date | 22-02-2011 |
Appeal Filed By | Department |
Order Result | Dismissed |
Bench Allotted | B |
Tribunal Order Date | 22-02-2011 |
Assessment Year | 2007-2008 |
Appeal Filed On | 16-12-2010 |
Judgment Text |
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.D. RANJAN ITA NO. 5703(DEL)2010 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER DAMCO SOLUTIONS PVT. LTD. WARD 10(2) CR BLDG. NEW DELHI. V. E-46/8 OKH LA INDL. AREA PHASE II NEW DELHI. (APPELLANT) (RESPO NDENT) APPELLANT BY: SHRI STEPHEN GEORGE CIT/DR RESPONDENT BY: SHRI V ED JAIN CA/RANO JAIN/V.MOHAN ORDER PER A.D. JAIN J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08 TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF U/S 10A OF THE INCOME TAX ACT 1961 AMOUNTING TO ` 2 25 49 018/-. 2. THE ASSESSEE WAS NOT A NEWLY ESTABLISHED UNDER TAKING. IT WAS REGISTERED WITH ROC DELHI ON 27.05.1996 AND WAS RE GISTERED WITH STPI IN THE YEAR RELEVANT TO ASSESSMENT YEAR 1998-9 9. EXEMPTION U/S 10A IS AVAILABLE TO THE NEWLY ESTABLISHED UNDERTAKI NG IN SOFTWARE TECHNOLOGY PARK/HARDWARE TECHNOLOGY. 2 3. THE COMPANY HAD FOR THE FIRST TIME CLAIMED EXEM PTION U/S 10A FOR THE ASSESSMENT YEAR 2001-02 ONLY IN VIEW OF THE PRO POSED AMENDMENT BY THE FINANCE BILL 2000 THAT THE BENEFIT U/S 10A WAS TO BE EXTENDED FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS. 4. AS PER THE PROVISIONS OF SECTION 80HHE(5) WHERE A DEDUCTION UNDER THIS SECTION IS CLAIMED AND ALLOWED IN RESPEC T OF PROFITS FOR ANY ASSESSMENT YEAR NO DEDUCTION SHALL BE ALLOWED IN R ELATION TO SUCH PROFITS UNDER ANY OTHER PROVISION OF THIS ACT FOR T HE SAME OR ANY OTHER ASSESSMENT YEAR. 5. THE ORDER PASSED BY THE ITAT IN THE CASE OF M/S . LEGATO SYSTEM INDIA(P)LTD.[93 TTJ 828] HAS NOT BEEN ACCEPTED BY T HE DEPARTMENT AND APPEAL FILED BY THE DEPARTMENT HAVE BEEN DISPOS ED BY THE HONBLE HIGH COURT IN VIEW OF THE FACT THAT ITAT HA D REMANDED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDE RATION. 2. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSES SEE HAS PLACED ON RECORD A COPY OF THE TRIBUNAL ORDER DATED 23.4.2010 IN THE ASSESSEES OWN CASE IN ITA NO. 709(DEL)2010 FOR ASSESSMENT YEAR 2006-07. THEREIN THE TRIBUNAL HAS FOLLOWED THE TRIBUNAL ORDER DATED 23. 3.2007 (COPY PLACED ON RECORD) IN THE ASSESSEES OWN CASE IN ITA NO. 3915( DEL)2004 FOR ASSESSMENT YEAR 2001-02. IT WAS HELD THAT THE ASSESSEE HAD FU LFILLED ALL THE CONDITIONS FOR EXEMPTION U/S 10A OF THE I.T. ACT FOR ASSESSMEN T YEAR 2006-07 AND THAT THE FACTS FOR THAT YEAR WERE THE SAME AS IN ASSESS MENT YEAR 2001-02. 3. FOR ASSESSMENT YEAR 2001-02 VIDE THE AFORESAID ORDER DATED 23.3.2007 IN ITA NO. 3915(DEL)2004 THE TRIBUNAL HELD INTER ALIA AS FOLLOWS:- 3 6. IN THE INSTANT CASE THE CIT(A) HAS RECORDED A DETAILED FINDING THAT ALL THE CONDITIONS PRESCRIBED UNDER SEC. 10A OF THE ACT WHICH ARE AS FOLLOWS HAVE BEEN DULY COMPLIED WITH BY THE ASSESSE E. THEREFORE THERE IS NO REASON FOR DENYING THE DEDUCTION CLAIME D UNDER SEC. 10B OF THE ACT. THE CONDITIONS FOR DEDUCTION AS PER SECTION 10A ARE AS UNDER: I) IT HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE AR TICLE OR THINGS OR COMPUTER SOFTWARE ON OR AFTER 1 ST APRIL 1994. II) IT IS KNOT FORMED BY THE SPLITTING UP OR THE RECONS TRUCTION OF A BUSINESS ALREADY IN EXISTENCE. III) IT IS NOT FORMED BY TRANSFER TO A NEW BUSINESS OF M ACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. IV) IF THE SALE PROCEEDS OF THE ARTICLES OR COMPUTER SO FTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN OR BROUGHT IN TO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE WITH A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR WIT HIN SUCH FURTHER PERIOD AS COMPETENT AUTHORITY ALLOW IN THIS BEHALF. V) THE REPORT OF THE ACCOUNTANT IN THE PRESCRIBED FORM REGARDING DEDUCTION HAVE BEEN CORRECTLY CLAIMED. VI) WHERE DURING ANY PREVIOUS YEAR THE OWNERSHIP OR TH E BENEFICIAL INTEREST IN THE UNDERTAKING IS TRANSFERR ED BY ANY MEANS THE DEDUCTION SHALL NOT BE ALLOWED TO THE AS SESSEE. AS MENTIONED ABOVE THE APPELLANT COMPANY HAS FULFI LLED ALL THE CONDITIONS FOR EXEMPTION UNDER SEC. 10A OF THE INCO ME TAX ACT 1961 AS UNDER:- I) THE UNDERTAKING LOCATED AT FARIDABAD HAS STARTED OPERATION FROM 1997-98. II) THERE IS NO SPLITTING UP OR RECONSTRUCTION IN THE C OMPANY. 4 III) ALL THE PLANT AND MACHINERY IN THE UNDERTAKING LOCA TED AT FARIDABAD ARE NEW AND NO OLD MACHINERIES ARE PURCHASED. IV) THE APPELLANT COMPANY HAS BROUGHT INTO INDIA PAYMEN T IN CONVERTIBLE FOREIGN EXCHANGE WITHIN PERIOD OF SI X MONTHS OR EXTENDED PERIOD AS PER LETTER OF PUNJAB NATIONAL BANK FARIDABAD A COPY OF WHICH HAS BEEN FILED AT APPELLATE STAGE. V) THE REPORT OF CHARTERED ACCOUNTANT HAS BEEN FILED A LONG WITH THE RETURN OF INCOME. VI) THERE IS NO CHANGE IN THE SHARE-HOLDING OF THE COMPANY. 7. NOTHING WAS BROUGHT ON RECORD BY THE DEPARTMENT THAT ANY OF THE CONDITIONS MENTIONED ABOVE WERE NOT COMPLIED WITH O R THAT THE FINDINGS RECORDED BY THE CIT(APPEALS) WAS NOT AS PE R MATERIALS PLACED ON THE RECORD. 8. IN VIEW OF THE ABOVE DISCUSSION WE ARE INCLINED TO AGREE WITH THE LEARNED AR SHRI VED JAIN THAT THERE IS NO INFIR MITY IN THE ORDER OF THE CIT(APPEALS) FOR DIRECTING THE AO TO ALLOW CLAI M OF DEDUCTION UNDER SEC.10A OF THE ACT. 4. IN THE YEAR UNDER CONSIDERATION ALSO THE FACTS IT IS SEEN ARE NO DIFFERENT FROM THOSE IN ASSESSMENT YEARS 2001-02 AN D 2006-07. 5. FURTHER MORE BY WAY OF GROUND NO.5 THE DEPARTM ENT HAS CONTENDED THAT THE ORDER PASSED BY THE TRIBUNAL IN THE CASE O F LEGATO SYSTEMS INDIA PVT. LTD. 93 TTJ 828 WERE NOT ACCEPTED BY THE DEP ARTMENT AND THE APPEAL FILED BY THE DEPARTMENT WAS DISPOSED OF BY THE HON BLE HIGH COURT IN VIEW OF THE FACT THAT THE TRIBUNAL HAD REMANDED THE MATT ER TO THE FILE OF THE AO 5 FOR FRESH CONSIDERATION. IN THIS REGARD LEGATO (SUPRA) HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN CIT V. DAMCO SOLUTIONS P. LTD. (THE CASE OF THE PRESENT ASSESSEE IN ITA NO. 1233/2007 VIDE ORDER DATED 21.10.2010)(COPY PLACED ON RECORD). IT WAS H ELD THEREIN AS FOLLOWS:- THE DEPARTMENT HAD FILED APPEAL AGAINST THE JUDGM ENT OF THE TRIBUNAL IN THE CASE OF LEGATO SYSTEMS INDIA PVT. LTD. ITA NO. 1400/2005. THIS APPEAL WAS DISMISSED IN LIMINE BY PASSING THE FOLLOWING ORDER ON 12.07.2005: THE TRIBUNAL HAS RECORDED A FINDING OF FACT THAT T HE RESPONDENT ASSESSEE WAS NOT AN OLD UNIT ALREADY IN EXISTENCE SO AS TO BE DISENTITLED TO THE BENEFIT OF EXEMPTION UN DER SEC. 10A OF THE I.T. ACT 1961. IT HAS ON THAT FINDING REMIT TED THE MATTER BACK TO THE AO WITH THE FOLLOWING DIRECTIONS. WE THEREFORE SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO ALLOW EXEMPTION UNDER SEC. 10A IN BO TH THE YEARS IN CASE OF THE ASSESSEE IS FOUND TO HAVE SATISFIED ALL OTHER REQUISITES ENVISAGED IN THE SCHEME OF SEC. 10A OF T HE ACT. IN CASE THE EXEMPTION UNDER SEC. 10A CANNOT BE ALLOWED FOR THE REASONS OF NOT SATISFYING THE REQUISITES THE CLAIM OF DEDUCTION UNDER SEC. 80HHE SHALL BE ALLOWED AFTER PROVIDING O PPORTUNITY TO MEET THE REQUISITE. THE ABOVE DIRECTION IS IN OUR VIEW JUST AND PROPE R HENCE DOES NOT CALL FOR ANY INTERFERENCE ESPECIALLY WHEN THE Q UESTION (WHETHER THE ASSESSEE) SATISFIES THE PRE-REQUISITE S STIPULATED FOR THE PURPOSE OF GETTING BENEFIT UNDER SEC.10A IS A M ATTER LEFT TO BE DETERMINED BY THE AO. SO ALSO THE ENTITLEMENT OF THE ASSESSEE TO SEEK DEDUCTION UNDER SEC. 80HHE HAVING BEEN LEFT TO BE DETERMINED BY THE AO SUBJECT TO ASSESSEES S ATISFYING THE PRE-REQUISITES STIPULATED FOR THE GRANT OF SUCH A B ENEFIT UNDER THE SAID PROVISION. NO QUESTION OF LAW MUCH LESS A SUBSTANTIAL 6 QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THI S APPEAL TO WARRANT ITS ADMISSION. THE APPEAL IS ACCORDINGLY DISMISSED IN LIMINE. IT IS THUS CLEAR THAT THIS COURT HAS ACCEPTED THE I NTERPRETATION GIVEN BY THE TRIBUNAL TO THE AFORESAID PROVISIONS AND HELD T HAT THE BENEFIT ON EXEMPTION UNDER SEC. 10A OF THE ITAT ACT 1961 WOUL D BE ADMISSIBLE TO THE ASSESSEE IN THAT PARTICULAR YEAR. OF COURSE AT THE SAME TIME THE COURT MADE IT CLEAR THAT IT WOULD BE PERMISSIBL E FOR THE AO BEFORE GRANTING BENEFIT UNDER SEC. 10A OF THE ACT TO THE DEPARTMENT AS TO WHETHER THE ASSESSEE IS FULFILLING ALL THE ELIGIBIL ITIES CONDITIONS PRESCRIBED FOR GRANT OF BENEFIT UNDER SEC. 10A OF THE ACT OR NOT. WE MAY NOTE THAT IN THE PRESENT CASE THE ITAT HAS OBSERVED THAT CIT(A) HAS RECORDED ITS FINDINGS HOLDING THAT CONDI TIONS PRESCRIBED UNDER SEC. 10A OF THE ACT HAVE BEEN DULY COMPLIED W ITH BY THE ASSESSEE AND THEREFORE THERE WAS NO REASON FOR DE NYING THE DIRECTIONS GIVEN IN THE SAID CASE. THESE FINDINGS ARE AFFIRMED BY THE TRIBUNAL AS WELL. IN VIEW OF THE AFORESAID DECISION OF THIS COURT WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. THE AP PEAL IS DISMISSED. 6 PERTINENTLY IN ITS ORDER DATED 23.3.2007 (SUPRA) FOR ASSESSMENT YEAR 2001-02 THE TRIBUNAL FOLLOWED ITS DECISION IN LEG ATO (SUPRA) HOLDING AS FOLLOWS:- 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. CONT ROVERSY REVOLVES AROUND THE RESTRICTIONS IMPOSED UNDER SUB-SECTION ( 5) OF SEC. 80HHE WHERE IT HAS BEEN STATED THAT WHERE DEDUCTION UNDE R THE SECTION IS CLAIMED AND ALLOWED IN RESPECT OF PROFIT OF THE BUS INESS REFERRED TO IN SUB-SECTION(1) FOR ANY ASSESSMENT YEAR NO DEDUCTIO N SHALL BE ALLOWED IN RELATION TO SUCH PROFITS UNDER ANY OTHER PROVISI ONS OF THIS ACT FOR THE SAME OR ANY OTHER ASSESSMENT YEAR. THIS ISSU E HAS BEEN ELABORATELY DEALT WITH BY THE ITAT CO-ORDINATE BEN CH IN THE CASE OF LEGATO SYSTEMS INDIA PVT. LTD. 93 TTJ 828 WHEREIN IT WAS HELD THAT 7 SUB-SECTION (5) OF SEC. 80HHE WAS INSERTED IN THE S TATUTE BOOK WITH A VIEW TO AVOID DOUBLE DEDUCTION INASMUCH AS THE PR OFITS CALCULATED IN ACCORDANCE WITH SUB-SEC.(1) OF SEC. 80HHE FOR A PAR TICULAR ASSESSMENT YEAR CANNOT BE CLAIMED AS A DEDUCTION FO R THE SAME ASSESSMENT YEAR UNDER ANY PROVISION OF THE ACT OR F OR ANY OTHER ASSESSMENT YEAR. SIMILAR PROVISION PLACING RESTRI CTION IS CONTAINED IN SEC. 80 IA ALSO. THE PHRASE SUCH PROFITS APPEAR ING IN SUB- SECTION(5) OF SEC.80 HHE SUGGESTS PROFITS OF THE BU SINESS IN RELATION TO WHICH A DEDUCTION IS ALLOWABLE UNDER THIS SECTION F OR A GIVEN ASSESSMENT YEAR. THE LAST ANTECEDENT IN THE GIVEN CONTEXT REFERS TO PROFITS DERIVED WHICH ARE ELIGIBLE FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME OF AN ASSESSEE FOR A PARTICULAR ASSESS MENT YEAR. IN OTHER WORDS NO DEDUCTION SHALL BE ALLOWED UNDER ANY OTH ER PROVISION FOR THE SAME OR ANY OTHER ASSESSMENT YEAR IN RESPECT OF THE PROFITS OF THE BUSINESS IN RELATION TO WHICH A DEDUCTION IS ALLOWE D UNDER THIS SECTION. THEREFORE IF DEDUCTION HAS BEEN CLAIMED IN RESPECT OF ELIGIBLE PROFITS DERIVED BY THE ASSESSEE FROM SUCH BUSINESS FOR A PARTICULAR ASSESSMENT YEAR AS ENUNCIATED IN SUB-SEC .(1) OF THE SAID SECTION THEN THE ASSESSEE IS NOT ENTITLED TO CLAIM ANY DEDUCTION UNDER ANY OTHER PROVISIONS FOR THE SAME OR ANY OTHER ASSE SSMENT YEAR IN RESPECT OF PROFITS WHICH HAVE ALREADY BEEN A SUBJEC T MATTER OF DEDUCTION COMPUTED UNDER SEC. 80HHE. A HARMONIOUS READING OF THE ENTIRE PROVISION THEREFORE IS THAT THE EXPRESSION SUCH PROFITS AS APPEARING IN SUB-SECTION (5) REFERS TO THE PROFITS OF A PARTICULAR ASSESSMENT YEAR AND THE SECTION DOES NOT PLACE REST RICTION TO SHIFT FOR THE CLAIM OF DEDUCTION OR EXEMPTION UNDER ANY OTHER PROVISION IN RESPECT OF PROFITS FOR WHICH NO DEDUCTION HAS BEEN CLAIMED AND ALLOWED IN THE PREVIOUS YEAR. SINCE BOTH THE SECT IONS I.E. SECTION 80HHE AND SEC. 10A ENTITLE THE BENEFIT THE ASSESSE E WOULD LEGITIMATELY BE ENTITLED TO CLAIM THE BENEFIT OF TH AT PROVISION OF LAW WHICH ENABLES A LARGER BENEFIT BEING EARNED BY HIM. 7. IT IS THESE FINDINGS OF THE TRIBUNAL WHICH WERE UPHELD BY THE HONBLE HIGH COURT VIDE ITS ORDER DATED 21.10.2010 (SUPRA). 8 8. THE FACTS IN THE YEAR UNDER CONSIDERATION HAVE N OT BEEN SHOWN TO BE ANY DIFFERENT FROM THOSE DISCUSSED IN THE AFORESAID TRIBUNAL AND HIGH COURT ORDERS. 9. THEREFORE FINDING NO MERIT THEREIN THE GROUNDS RAISED BY THE DEPARTMENT ARE REJECTED. 10. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.02.2011. SD/- SD/- (K.D. RANJAN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.02.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR
|