Income Tax Appellate Tribunal - Delhi
Niit Ltd.,, New Delhi vs Department Of Income Tax on 20 May, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'E': NEW DELHI
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER
AND
SH. O.P. KANT, ACCOUNTANT MEMBER
ITA No. 4961/Del/2012
Assessment Year: 2007-08
ACIT, Circle 9(1), Room No. 163, Vs. M/s. NIIT Ltd, B-234, Okhla Indl.
C.R. Building, New Delhi Area, Phase-I, New Delhi
GIR/PAN : AAACN0085D
(Appellant) (Respondent)
Appellant by Ms. Paramita M. Biswas, CIT(DR)
Respondent by Sh. Rohit Jain & Ms. Bhavita Kumar
Date of hearing 05.04.2016
Date of pronouncement 20.05.2016
ORDER
PER O.P. KANT, A.M.:
This appeal of the Revenue is directed against order dated 05/07/2012 of learned Commissioner of Income-tax (Appeals)-XXXII, New Delhi, for assessment year 2007-08, raising following grounds:
1) That the Commissioner of Income Tax(Appeals) erred in law and on facts in admitting the additional evidence under Rule-46A. of the Income Tax Rules, 1962 without properly appreciating the facts and circumstances of the case.
2) That the Commissioner of Income Tax(Appeals) erred in law and on facts in holding that the deduction u/s 10B of the Income Tax Act, 1961 is allowable at the source itself and not after computation of gross total income as per the provisions of the Act.
3) That the Commissioner of Income Tax(Appeals) erred in law and on facts in allowing the relief to the assessee ignoring the fact that after amendment to section-108 of the Income Tax Act, 1961 w.e.f. 01.04.2001 deduction u/s 10B is to be allowed from the total income of the assessee in respect of profits and gains derived by the eligible units as opposed to the earlier provisions where such profit or gain was not included in the total income of the assessee.
4. (a) The order of the Commissioner of Income Tax(Appeals) is erroneous and not tenable in law and on facts.
(b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.
2 ITA No. 4961/Del/2012AY: 2007-08
2. The facts in brief as culled out from the orders of the authorities below are that the assessee filed return of income for the year under consideration on 31/10/2007 declaring income of Rs. 1,53,75,663/- under normal provisions of the Income Tax Act, 1961 (in short "the Act"), however, the tax was paid on book profit of Rs. 25,81,92,595/- under section 115JB of the Act. In the return of income filed, the assessee claimed deduction under section 10B of the Act in respect of the profit derived from two hundred percent Export Oriented Undertakings (EOU), namely, NIIT-KTWO (Rs. 2,98,43,200/-) and NIIT- Mumbai (Rs. 1,33,87,610/-) . The case of the assessee was selected for scrutiny and in the assessment completed under section 143(3) of the Act the income as assessed at Rs. 26,65,16,460/-. In the scrutiny assessment, the deduction claimed by the assessee under section 10B of the Act was re-computed by the Assessing Officer holding that all the eligible Export Oriented Undertakings (EOU) and non-eligible EOU were one single unit and the brought forward unabsorbed depreciation was adjusted while computing profit of eligible unit under the head "profit and gains of business" before allowing deduction under section 10B of the Act. In the appeal filed before the learned Commissioner of Income- tax(Appeals), the assessee submitted additional evidences, which were admitted. The ld. Commissioner of Income-tax(Appeals) held that both the EOUs were independent unit and, therefore, deduction was to be allowed in the ratio of the export turnover of such unit to the total turnover of such unit. On the second issue, the CIT(A) held that the deduction under section 10B was allowable at the source itself and not after computation of gross total income. Aggrieved, with the above second finding of the ld. Commissioner of Income-tax(Appeals), the Revenue is in appeal before the Tribunal.
3. In the ground No. 1, the Revenue has challenged the admission of the additional evidence under Rule 46A of the Income Tax Rules by the ld. Commissioner of Income-tax (Appeals).
3 ITA No. 4961/Del/2012AY: 2007-08 3.1 The list of documents which are admitted by the ld. Commissioner of Income-tax(Appeals) under Rule 46A of the Income Tax Rules are mentioned in para 2.3 of the impugned order, which are reproduced as under:
S. No. Particulars Papper
Book
Page No.
1.
Copies of Customs licences of each unit; 77-87
List of fixed assets purchased at various units at the time of 112-114
2.
formation of EOUs
3. Separate Audit Report in Form No. 56 G- along with separate audited Profit & loss Account have been prepared for each eiigible 50-61 unit.
4 Copies of custom bonded register maintained by each unit on 88-91 sample basis Copies of Monthly / Annual performance reports on sample basis 92-1.11 Copies of softex forms, invoices and foreign inward remittance certificates on sample basis 115-218 3.2 The above documents were sent by the ld. Commissioner of Income- tax(Appeals) to the Assessing Officer for his objections for admission. The objections of the Assessing Officer were forwarded to the assessee and after considering rejoinder of the assessee, the ld. Commissioner of Income-tax (Appeals) admitted the additional evidence.
3.3 The ld. Commissioner of Income Tax (Departmental Representative) addressing the ground of appeal submitted that the additional evidences have been admitted in contravention to the Rule 46A of the Income Tax Rules. 3.4 On the other hand, the ld. Authorized Representative of the assessee relied on the observation of the ld. Commissioner of Income-tax(Appeals), submitted that the additional evidences have been admitted by the ld. Commissioner of Income-tax( Appeals) in accordance to the Rule 46A of the Rules. 3.5 We have heard the rival submission and perused the material on record. The ld. Commissioner of Income-tax(Appeals) has dealt the issue in detail in para 2.4 and 2.4.1 of the impugned order, which are reproduced as under:
4 ITA No. 4961/Del/2012AY: 2007-08 "2.4 I have carefully considered the facts of the case , the arguments of the appellant, the observations made by the AO in his remand report and the rejoinder of the appellant. First of all , I would like to decide the issue of the admission of the additional evidence as sought to be adduced by the appellant. In their application for admission of additional evidence, the appellant have taken the following grounds:
i) That the aforesaid additional evidence only seek to further corroborate/substantiate the contention of the appellant that all the eligible EOU's are separate and independent units, which is also supported by the documents already on record.
ii) That the appellant was prevented by a sufficient cause from producing evidence before the A.O. as the appellant was never issued any notice or afforded any opportunity to demonstrate, that the various units operating during the year under consideration have independent and separate existence and could not be treated as one common business.
iii) That the assessment was completed in haste without raising specific query based on which final order has been passed thereby denying sufficient and adequate opportunity to the appellant to adduce the entire evidences.
iv) That the evidence being produced are critical and material for adjudication of the grounds raised in appeal.
2.4.1 The AD, on the other hand, has vehemently opposed admission of the additional evidence on the ground that the appellant was given due opportunities during the assessment proceedings and therefore neither the appellant was prevented from filing any evidence by the AO nor the assessment was completed is undue haste so as to debar ,the appellant from filing the relevant evidence. The appellant has pointed out that the same evidence were allowed to be admitted during the appeal proceedings for A.Y. 2006-07 in the appellant's own case after due examination of record . Be that as it may, the appellant has submitted these evidences to support its claim that the two EOUs eligible for deduction U/s 10B of the Act were independent of each other as well as of the other non-eligible units. The documents that the appellant seeks to admit at this level are mainly documents relating to Customs Licenses issued to each of the eligible units and the registers maintained by those units under the Custom rules, details of fixed assets purchased at the time of formation of the EOUs and separate monthly performance reports of the EOUs. The Assessing Officer has not raised any doubts about the veracity of these documents but has only argued that these may not be taken on record at this stage. To my mind, these documents are material to decide the question as to whether the EOUs are to be treated as separate undertakings or they are in fact expansion of the business of the appellant company as held by the Assessing Officer . The Hon. jurisdictional High Court in the case of CIT vs. Text Hundred India Pvt. Ltd.: 239 CTR 263, held that Rule 29 enables the Tribunal to admit any additional evidence which would be necessary to do substantial justice in the matter. Their Lordships further observed that the various procedures, including that relating to filing of additional evidence, is handmade for justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence. In the case of CIT v. Virgin Securities & Credits (P) Ltd.: 332 ITR 396 (Del), the Hon. jurisdictional High Court held that the CIT(A) may admit additional evidence, after obtaining. a remand report from the assessing officer, if the 5 ITA No. 4961/Del/2012 AY: 2007-08 evidence sought to be adduced by the applicant is crucial to the disposal of the appeal. Hon'ble ITAT Delhi have also held in the case of Electra (Jaipur) (P) Ltd. vs. lAC (26 ITD 236). that if the evidence is genuine, reliable, proves the assessee's case, then the assessee should not be denied the opportunity. Similarly it was held in Dwarka Prasad VIs ITo. 63 ITO 1 (TM) that additional evidence if in the interest of justice" and renders assistance to the authority in passing order, may be admitted: Other similar rulings are 68TTJ 722, 231 ITR 1 ,21 SOT 218, 293 ITR 53, 94 ITD 79 etc. Since the AO has not given any adverse comments about the veracity of the documents sought to be admitted as additional evidence, it is held that they are acceptable as evidence. In view of the guidance available in the afore-cited .judicial pronouncements, I hold that the additional evidence as mentioned in para 2.3 above are admissible u/r 46A and are taken on record"
3.6 We find that the ld. Commissioner of Income-tax(Appeals) has dealt all the objections of the Assessing Officer in remand report with regard to admission of additional evidence. The Ld. Commissioner of Income-tax (Appeals) has also taken into consideration the judgments of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Text Hundred India Private Limited (supra) and CIT Vs. Virgin Securities and Credits Private Limited (supra). In our opinion, the findings of the ld. Commissioner of Income-tax (Appeals) in admitting additional evidences are well reasoned and no interference on our part is required. Accordingly, we dismiss the ground No. 1 of the appeal.
4. In ground No. 2 and 3, the Revenue has challenged the findings of the ld. Commissioner of Income-tax(Appeals) that deduction under section 10B of the Act was allowable at the source itself ignoring the amendment to section 10B of the Act w.e.f. 01/04/2001, according to which, the deduction under section 10B was to be allowed from the total income of the assessee in respect of profit and gains derived by the eligible unit.
5. At the outset of the hearing, the Ld. Authorized Representative of the assessee submitted that the issue in dispute was decided in favour of the assessee by the Tribunal in the case of the assessee itself for AY 2006-07 in ITA No. 1112/Del/2012. The Ld. Commissioner of Income Tax (Departmental Representative) could not controvert the above submission of Ld. AR, however, she relied on the order of the Assessing Officer.
6 ITA No. 4961/Del/2012AY: 2007-08
6. We find from the order of the Tribunal (supra) that an identical question was raised by the revenue in grounds No. 2 and 3, which are reproduced as under:
"2. That the Commissioner of Income Tax(Appeals) erred in law and on facts of the case in holding that the deduction u/s 10B of the Act is allowable at the source itself and not after the computation of Gross Total Income.
3. That the Commissioner of Income Tax(Appeals) erred in law and on facts of the case in allowing that deduction u/s 10B of the Act after deducting unabsorbed depreciation from the profit of business without appreciation that the Assessing Officer has rightly recomputed the unabsorbed depreciation for earlier year as a result of which no unabsorbed depreciation was available for set off in the assessment year under consideration."
7. After considering the arguments of both side, the Tribunal decided the issue as under:
15. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the assessee was not having any unabsorbed depreciation relating to the eligible Export Oriented Units (EOU's). Therefore, adjustment in the eligible profits of the EOU was not to be made on account of brought forward unabsorbed depreciation. The said unabsorbed depreciation was adjusted by the assessee against certain income from other sources and not against the eligible profits of the 100% EOU.
16. On a similar issue the Hon'ble Karnataka High Court in the case of CIT Vs Yokogawa India Ltd. 341 ITR 385 held as under:
"That as the profits and gains under section 10A were not to be included in the income of the assessee at all, the question of setting off the loss of the assessee from any business against such profits and gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current year's depreciation under section 32(2) is to be set off. As the deduction under section 10A has to be excluded from the total income of the assessee, the question of unabsorbed ITA No. 1112/Del/2012 NIIT Ltd. 16 business loss being set off against such profit and gains of the undertaking would not arise."
17. Similarly, the Hon'ble jurisdictional High Court in the case of CIT Vs TEI Technologies Pvt. Ltd. 361 ITR 36 (Del.) held as under:
"That for computing deduction under section 10A in respect of an export processing zone unit, the losses suffered in the non-export processing zone unit need not be set off against the profits/income of the export processing zone unit. The 7 ITA No. 4961/Del/2012 AY: 2007-08 brought forward losses of the non-export processing zone unit need not be deducted or reduced."
18. Therefore, by keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court & the Karnataka High Court, we do not see any valid ground to interfere with the findings of the ld. CIT(A). Accordingly, we do not see any merit in these two grounds of the departmental appeal."
8. Thus we find that the Tribunal did not accept the submission of the Revenue and affirmed the action of the ld. Commissioner of Income- tax(Appeals) in allowing unabsorbed depreciation of non-eligible unit after computation of gross total income. Respectfully following the above decision of the Tribunal, we also do not find any infirmity in the order of the ld. Commissioner of Income-tax(Appeals) on the issue in dispute and accordingly the grounds of appeal are dismissed.
9. Grounds No. 4 and 5 of the appeal are general in nature and, therefore, not required to adjudicate by us.
10. In the result, the appeal filed by the Revenue is dismissed.
The decision is pronounced in the open court on 20th May, 2016.
Sd/- Sd/-
(DIVA SINGH) (O.P. KANT)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 20th May, 2016.
Laptop/-
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi