2017 (6) TMI 176 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on deduction eligibility & set-off, emphasizing legal precedents

ITO 8 (3) (2), 201, Aayakar Bhavan, M.K. Road, Mumbai Versus Technivision Ventures Ltd. (Formerly M.S. Solix Technologies Ltd.)

The Tribunal upheld the CIT(A)'s decision, affirming the eligibility of the assessee's claim for deduction u/s 10A and the set-off of unabsorbed ... Eligibility to deduction u/s 10A - whether brought forward unabsorbed depreciation and business losses of the Assessee was not liable to be set-off earlier to the set off claim of the assessee’s unit u/s.10A? - Held that:- Using the old machines nowhere disentitled the assessee to raise the claim u/s 10A of the Act and it is also held that the claim of the assessee is entitled to be set off u/s.10A of the Act earlier to the claim of brought forward unabsorbed depreciation and business loss. Technivision Ventures Ltd. Undoubtedly, the claim of the Assessee for deduction u/s 10A accepted. Thereafter, an application for giving effect to the order was filed in which brought forward unabsorbed depreciation and business loss was allowed subsequently to set off the claim of deduction u/s. 10A of the Act. See The Commissioner of Income Tax-10 Versus Black & Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT ] and Commissioner of Income Tax Vs. Yokojawa India [2016 (12) TMI 881 - SUPREME COURT] - Decided against revenue Issues:- Interpretation of set-off rules for unabsorbed depreciation and business losses of an assessee's 10A unit.- Application of relevant legal precedents in determining the eligibility for set-off against current year's profits.- Consideration of jurisdictional high court decisions and their binding effect on lower authorities.Analysis:1. Interpretation of Set-Off Rules:The main issue in this case revolved around the question of whether the brought forward unabsorbed depreciation and business losses of the assessee's 10A unit were eligible for set-off against the current year's profit of the same unit. The Revenue contended that the CIT(A) erred in holding that the set-off was not permissible, citing the case of CIT-10 vs. Black & Veatch Consulting Pvt. Ltd. The Revenue argued that the facts of the present case were different from the case cited, as the unabsorbed losses pertained to the eligible 10A unit itself. However, the CIT(A) relied on legal precedents and allowed the claim for deduction u/s 10A, stating that the claim was entitled to be set off earlier to the claim of unabsorbed depreciation and business loss.2. Application of Legal Precedents:The Tribunal analyzed the legal precedents cited by both parties, emphasizing the decision in the case of CIT-10 vs. Black & Veatch Consulting Pvt. Ltd. The Tribunal noted that the CIT(A) correctly applied the principles established in this case, which allowed for the set-off of losses against the current year's profits. The Tribunal also referenced the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Yokojawa India Ltd., supporting the position that the assessee's claim for deduction u/s 10A was valid. The Tribunal found that the facts of the present case aligned with the legal principles established in the cited cases, leading to the dismissal of the Revenue's appeal.3. Jurisdictional High Court Decisions:The Tribunal further considered the binding effect of jurisdictional high court decisions on lower authorities. Citing the decisions of various High Courts, including the Bombay High Court and the Punjab & Haryana High Court, the Tribunal emphasized that when a decision of the jurisdictional high court is available, it is binding on lower authorities. The Tribunal highlighted that in this case, the facts were squarely covered by the decision of the Hon'ble Bombay High Court, reinforcing the validity of the CIT(A)'s decision. By adhering to the legal principles established by the jurisdictional high court, the Tribunal concluded that the order passed by the CIT(A) was judicious and correct, warranting the dismissal of the Revenue's appeal.In conclusion, the Tribunal upheld the CIT(A)'s decision, affirming the eligibility of the assessee's claim for deduction u/s 10A and the set-off of unabsorbed depreciation and business losses against the current year's profits of the 10A unit. The judgment highlighted the importance of legal precedents and the binding effect of jurisdictional high court decisions in interpreting and applying tax laws.