2019 (1) TMI 47 - AT - Income Tax

Tribunal Upholds CIT(A) Orders on Deductions under Section 10A

The Dy. Commissioner of Income Tax, Circle 1 (1), Pune Versus Avesta Computers Pvt. Ltd.

The Tribunal dismissed both appeals of the Revenue, upholding the CIT(A) orders allowing the alternate claim of deduction under section 10A and directing ... Denial of deduction u/s 10B - alternate claim of assessee for deduction under section 10A - Held that:- Present appeal is squarely covered by the decision of Pune Bench of Tribunal in Approva Systems Pvt. Ltd. Vs. DCIT [2018 (3) TMI 1031 - ITAT PUNE] and we hold that the assessee is entitled to the alternate claim of deduction under section 10A of the Act. The matter is set aside to the file of Assessing Officer for the limited purpose of computing the said deduction in accordance with law. There is no merit in the order of Assessing Officer in holding that the assessee is not entitled to the said deduction under section 10A of the Act, since the assessee in written submissions had claimed the deduction under section 10B of the Act and not 10A of the Act. The assessee is at liberty to raise the issue before the Assessing Officer or CIT(A) and make fresh claim in this regard as held in CIT Vs. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT]. Deduction u/s 10A before setting off of brought forward losses and unabsorbed depreciation - Held that:- This issue stands covered in favour of assessee by the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT] and the aforesaid deduction u/s 10B is to be computed before adjusting brought forward unabsorbed losses / depreciation. Revenue has pointed out that the issue stands covered in the case of Himatasingike Seide Ltd. Vs. CIT [2013 (10) TMI 823 - SUPREME COURT]. As held in Himatasingike Seide Ltd. Vs. CIT (supra) is with relation to pre-amended provisions of section 10A of the Act. However, after the amendment it is not case of exemption but a case of deduction under section 10A of the Act, hence, the said proposition is not to be applied. - Decided against revenue Issues Involved:- Appeal against CIT(A) orders for assessment years 2007-08 and 2009-10 under Income-tax Act, 1961.- Allowance of alternate claim of deduction u/s 10A by CIT(A).- Entitlement to deduction under section 10A or 10B.- Setting off of brought forward losses and unabsorbed depreciation before deduction under section 10A.- Application of tribunal decisions and relevant legal provisions.Analysis:Issue 1: Allowance of alternate claim of deduction u/s 10A by CIT(A)- The Revenue challenged the CIT(A) order allowing the alternate claim of deduction u/s 10A by the assessee. The Revenue contended that the assessee initially claimed deduction u/s 10B but later sought deduction u/s 10A. The CIT(A) relied on the Tribunal's decision in a similar case to allow the alternate claim.- The Tribunal noted that similar issues had been decided in various cases, including Approva Systems Pvt. Ltd. Vs. DCIT. The Tribunal held that the assessee was entitled to the alternate claim of deduction under section 10A. The matter was remitted to the Assessing Officer for computation of the deduction in accordance with the law.- The Tribunal emphasized that the assessee could raise the issue before the Assessing Officer or CIT(A) and make a fresh claim, citing the decision of the Hon'ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders Pvt. Ltd.Issue 2: Entitlement to deduction under section 10A or 10B- The Assessing Officer denied the deduction under section 10B as the unit was not a 100% Export Oriented Unit (EOU), leading to the inclusion of profits in the tax. The assessee then requested for deduction under section 10A, which was also initially denied.- The CIT(A) allowed the claim based on the Tribunal's decision in a similar case, emphasizing the eligibility of the assessee for deduction under section 10A. The Tribunal concurred with this decision, directing the Assessing Officer to verify and compute the deduction under section 10A for the assessee.Issue 3: Setting off of brought forward losses and unabsorbed depreciation- The Revenue raised concerns about allowing the deduction under section 10A before setting off brought forward losses and unabsorbed depreciation. The Tribunal referred to the decision of the Hon'ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd., stating that the deduction under section 10B should be computed before adjusting these losses.- The Tribunal dismissed the Revenue's appeal, noting that the Hon'ble Supreme Court's decision cited by the Revenue related to pre-amended provisions and did not apply to the current scenario of deduction under section 10A.Conclusion:- The Tribunal dismissed both appeals of the Revenue, upholding the CIT(A) orders allowing the alternate claim of deduction under section 10A and directing the computation of deductions in line with the law. The decisions were based on established legal principles, tribunal precedents, and relevant court rulings.This detailed analysis covers the key issues raised in the legal judgment, providing a comprehensive understanding of the case and the Tribunal's decisions on each matter.