Karnataka High Court
The Commissioner Of Income Tax vs M/S Tyco Electronics Tools on 12 December, 2011
Bench: V.G.Sabhahit, S.N.Satyanarayana
-1-
IN THE HIGH COURT OF KARNATAKA AT BANGAV/.3«...l_._§3R:l'_E4E:"'V;~
DATED THIS THE 12" DAY OF DEcEMBERI«'-2:011: "
PRESENT 5
THE HON'BLE MR. JUSTICE v ;v_G;."SABH AHI'Tv = a "
AND~~.f~~..S '
THE HON'BLE MR. J,u*S.TIcE=S'; 'f\I.:.'j'SI5{TYANAR'AYAvNA
I.T.A. NO. -:43
4'1._,TIA. lNo.:/1.30 OF" '/_jjO.1_Q__f'
I.T.A. NO. 431
BETwEE7N_:
1.
THE COMMISSIONE'RT_}O*E*"LINcOME-TAX,
LTD," '
JSS'=TOw'ERs,
«I00 FEETRING ROAD,
' .-B"S*:<_III'ST'AGE.,
, "Es-A__N GA EOREQW'
. THE A'SSTfcOMMISSIONER OF INCOME-TAX,
cIRCLE*--2(1),
"RANGE -- 2,
'IRERNAKULAM.
THE DEPUTY COMMISSIONER OF INCOME~TAX,
LTU, JSS TOWERS,
100 FEET RING ROAD,
BSK III STAGE,
BANGALORE.
' COM'M.O._N._?
(BY SRI K.V. ARAVIND, ADV-.)_ I
AND: T " I
M/S TYCO ELECTR}'1}i\lICS'-- TOOLS _IN_D'IA"(*P') LTD.,
CSEZ, PLOTgN'C"_««44F~,v-"1;_ A
KAKKANAD,_.*H; ".'*
ERNAKULAM _ '
RESPONDENT
<_'4'_'Q,=,*,'_ COMMON (BY SRI K;P_ KUMAR, '~S'ENI'QR' COUNSEL FOR M/S KING &1.IRATRIDGE,' ADVS.) _ IVDT/3{D"N0.'~431/20'01H'0 IS FILED UNDER SECTION 260--A ':_OF ~I.VT.IAc:T~,2._1961 ARISING OUT OF ORDER DATED *26.0_4.201.0 PASvS.ED IN ITA NO. 495/Coch/2007, FOR THE ASS"ESSME0NT'_'D:YEAR 2002-2003, PRAYING THAT THIS T . HON"'BLE'----':COURT MAY BE PLEASED TO FORMULATE THE '0"'fSUBSTAN'TIAL QUESTIONS OF LAW STATED THEREIN, f"é$L9¥%'eTEHEA'T'f'P§A'Né'/5I%EETIRSETE Tr'J*<§. °4P9"%§E':§c$i'/*§&§?, DATED 26.04.2010 AND CONFIRM THE RDER OF TH 6 REEEDATR fiS'é"' 9\"§§?§'FE§'% c%'RNf§ RTE'? n§?88fi§ TAX, CIRCLE*2(1), ERNAKULAM, IN THE INTEREST'-._»OF JUSTICE AND EQUITY.
ITA NO.430/2010 IS FILED UNDER.S7ECTION._21610;;-. _ OF I.T.ACT, 1961 ARISING OUTI'«V"C5-FIVAITIORDEIR.DATEDIVT' 26.04.2010 PASSED IN ITA NO..§,}I~94/C5ch/2007,"'EOR"THE ASSESSMENT YEAR 2001-20002;"_;PR'AYINS""THAT THIS HON'BLE COURT MAY BE v"'fvOT?.';MULATE THE SUBSTANTIAL ILAIAI 'V THEREIN, ALLOW THE THE ORDERS PASSED BY IIN'-'PITA; NO. 494/Coch/2007, DATED THE ORDER OF THE APPELLATE"'COMM'ISSI.ONER CONFIRMING THE ORDER PASSED E§Y THE "ASSISTANT COMMISSIONER OF INCOME ..CIRVCLE~TV2f'(1.), ERNAKULAM, IN THE INTEREST OF JOS-TI'C'E AN'--t:--;1EfQIJITY.
Y ETHESIE APPEALS COMING ON FOR ADMISSION THIS 1f_I'~1DAY;'SABHAHIT 1., DELIVERED THE FOLLOWING:
Jupemenjg These appeals are being aggrieved by the the Income Tax Appellate Tribunal, Nos.495 and 494 of the order passed by the in exercise of power Income Tax Act has been set aside andtyhel by the assessee have been allo':wed_.. if H 2 A if The material facts of the case leading up to if this ap.p'ea'l arefas follows:-
.V4The Assessing Officer, by order dated 032.113.2005, processed the return filed by the respondent the assessment year 2002-2003, which was filed on mH31.10.2002 declaring total income as nil after claiming exemption under Section 10A and set off of unabsorbed depreciation carried forward from Assessment years 1993-
1994 and 1994-1995 and a book profit of Rs.77,34,727/-- under Section 115 JB of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The return was processed under Section 143(1) of the Act on and it was found that the assessee had treaterj""inCVo'njé business income and had claimed exemption..u_:r'ider-9.:Sectio'n-.0 10A of the Act and set off of against the same pertaining to as*sessmenVt7yVears 1';993--:', 1994 and 1994~1995. Noticevivtunjderg SeVctio"n1':48z:'of the Act was issued on 31.07.2003. said notice, the assessee filed a The Assessing 'after he'a;rin"gé:::thVe"V-representative of the assessee, overruled the oDJ'ect::iVons anidiiiihveid that the assessee is not en't'itie'dVfo'r.:_c'afrrj/ and set off of unabsorbed depreciation ..for-.i'he"- assessment years 1993-1994 and 19'9.4--1995--,,Aagaifnvstwythe income determined for the 2001-2002. Being aggrieved by the said order of _t4i."i€AK Assessing Officer, the assessee preferred appeai..V__b'efore the Commissioner of Income Tax (Appeals) Kochi.
-6- 2.2 The appellate authority, by order .g""dated 28.11.2005, allowed the appeal in part and assessee was entitled for carry forward and set. off'o.f_ unabsorbed depreciation for the§ass'essme_nt'ye'ar_s,_1'§9'9$? 1994 and 1994~1995 against the?i_nc0_me d:e_teA'rmin'ed0*fo'r'-.. the assessment year 2001-20021. Thereafter} ainvolrdler of' assessment was pass,e'd..V_on 1=i".'0'1'V,.[20'0s6_égivinlgeffect to the order passed by the 2.3 Tax in exercise of Dower under while reviewing the omertpaissea;;,b,A ' Zlassessirggwallfricer dated 1 1.01.2006, issuedxdnotiice and held that the Assessing Officer while ._:c0m.Tplet-indgs the assessment on 03.03.2005, allow thvéllldset off of unabsorbed depreciation re_l.atisngf-..:to4VdVassessment years 1993-1994 to 1994-1995 against.~th:ei'..--business income of the assessment year 2002- 2003"by3'inv0king the provisions of Section 10A (6) of the The relevant assessment year for the purpose of _Section 10A(6) of the Act is not the present assessment year 2002-2003, but the assessment year 2003-2004 i.e., preferred appeal before the_In_come'*-Tax Appevl-ll-ate Bangalore Bench, in 'NosV§'4.9'{1; and 701/Coch/2007. it '0 2.4 They' Tribu'nVa.lV:,'§ 26.04.2010, allowed the in respect of the assessmeriiréyyp and 2002-2003 and dismisisedv assessment year 2003-2004. Being order of the Tribunal allowing the g.anpeals"inV'respect ofsthe assessment years 2001-2002 anidia 21.002"-2003,ithese two appeals are filed by the rever'.u'e--.._g " W
3.. have heard the learned counsel appearing for the appellants and the learned senior counsel "':V'_A'ap_p'earing for the respondent.
4. The learned counsel appearing for the appellants submitted that the order passed by the revisional authority was justified as the subject matter of revision was not pending in appeal and the Tribunal was -9- not justified in holding that the issue unabsorbed depreciation, which was revisional authority was neither d;ecid'ed. nor ad_ilu"dI_CE:3ted the Appellate authority in apVpeals'1'a_n»d--_lthe in'j_p.u'g.nedV passed by the Tribunal is liaVb'l'e:t'ogbe set
5. The learned...A_sen'ior'lceojunselgg appelaring for the respondent submitted that of law that arises for cofnsiiduejiratiéin .:'t:he'sAeféfi3vP.§§Tl*S: is as to whether the profitifor':.f'h'>e""pur:p:os'e§pof._Vdeductilon under Section 10A of a'l~Vlo'wedé"_b'e'fo:re or after deduction for set ofltgolf depreciation. The learned senior coun-se'l su--bm5_tte*d' that the said question of law has alread:,Ic.gbe.en answered against the revenue and in favour cf by this Court in I.T.A. No.78/2011 and .c'o_nVnectecl't:"caises disposed of on 09.08.2011.
" We have given careful consideration to the c0_n:t'entions of the learned counsel appearing for the ___parties and scrutinized the material on record.-10-
7. The material on record would clearly the only question of law that would arise for ' between the parties to this appeal.. is profit for the purpose of deduction the Act should be allowed-~....xwithout . unabsorbed loss and deprecia.t:iVo:jn»._or__Aincludi--n.g the same. The fact that the said ifias'4'a-lc'r:e:a'd-y_Vbeen answered by this Court in-favou'r' against the revenue in connected cases dispute. In the said appeals, theAVVtoi.lo.w'i'ng"substantial questions of law were framedzli if A A i if 'u':(__/l') Appellate Authorities failed :5 into consideration that the if to Section 10A by Finance Act of 2000ri'?--.V_m}/tn effect from 01.04.2011, the .deduction of profits and gains as earned by ~ an undertaking from the export of articles or things or computer software is required to be allowed from the total income of the assessee and consequently the loss from the non-STP Unit is required to be set off against the income of the other STP Unit before "'"'l .11.
allowing deduction u/s 10A of the Amended Act. "
(ii) "Whether the Tribunal was correct" if ' in holding that the deduction under. .
10--A or 10--B of the Act during'the;_currenf_.'V" in assessment year has to be"'a//oiiied setting off brought";_forzwar'dv. Vunabi::';orb.edtt losses and the depreciation from!" earlier assessment year or current: assessment" year either in the case 'of- n'onf'+»S:VvTPV"uriiits"» or in the case of the verysarne Vun»dertal§ing"'?"
Vibe~.exc|Vuxded:y'atyiésoiurce "itself before arriving at they4grossV».totaly_4i'r'icVoihe, the loss of non 10--A ._,unit"ca_ni*uot'- be. set off against the income of uni't"und.e'r Section 72. The loss incurred .,by.y-the._assessee under the head profits and if of-"'business or profession has to be set o.ff':a:ga.inst the profits and gains if any, of any .. business or profession carried on by such assessee. Therefore, as the profits and gains under Section 10--A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such In the said3._':vI4Jfi§;A'_. No'-.78/2.'C)1_.:_'1',s._VV"'th'i's*:Court has held as fo||ows:~ "
""" ..t..f"31.""f:,AS the'-i'nco"r'he"of 10--A unit has to Cu.' ,,,...,,,m...,...............w,. ............,_\,.....,i.,,, , -12- profits and gains of the undertaking would arise. Similarly, as per Section unabsorbed business loss is to be first~--.4's:etVoff"e:" g and thereafter unabsorbed d__ep.reciat_Eon't'r:ea.t'ed as current years depreciat:i_on:..uAnfder 32(2) is to be set Off: AsAA"dA§d_ucti0gl.l.'i.i,lijrider V' Section 10--A has to be -ejkcluded froinVAt'l15e"tota'l income of the assess_eef,».:_'the questionf of unabsorbed busin.é";=s loxssi. off against such profit and gaiVn~s'Vofl'V't'né would not arise..::'Zn that"bf.V_'thegrhatter, the approach theéljasseissingijg-a'u'tVh'ority was quite contrav.ry:fi_4_"toV.the afiofelsaiid statutory provisions :a'nd"t'heivi,apVp:el'i'at'e~.§ommi'ssioner as well as the Trib-ulna! in setting aside the and granting the benefit of Seuction' to the assessee. Hence, the r;'i'!.E:}ll'..._ subs'ta'n--ti~al question of law is answered in fa_V'Ou.rg°'vof the assessees and against the V. Thelreforeivél following the reasons assigned in the said j:u'd"g.«em'ent of this Court passed in ITA No.78/2011 and 'connected cases, we answer the substantial question of law that has arisen for determination in these appeals in favour of the respondent - assessee and against the °""l Z3-VUDGMENT WRITER -13- revenue. We hold that no other substantial question »:)':.f"l.aw arises for determination in these appeals parties. Since we are following the I.T.A. No.78/2011 and connected express any opinion about the j4'urisd'i--ct'i'on of authority and the observationsi'a»..nfiad'e sTax Appellate Tribunal in that»behaltlialsiltliejquestionl ofxlaw that arises for determinatiointlinl'f'_tVhese.;.:_::'an:5p'eals is already answered aga;_i"nsi:.t'l'lVe we hold that the appeals' pass the following order:
of 2010 are dismissed.
Note:
"Thai above is"-true transcription "t-h'e?--jud'gment dictated to me by-»l_ateV Honfb-l,e_ Shri Justice V.G. ¥.Sa_bhah_i"L-.._é "presji..ding over the Division' 'Bench with Hon'ble Shri Justice ,-S_.l\jl.~.A Satyanarayana in 'V Open zC'ourt'on 12--12--2011. i "
U3', sci/...
Chief Justice Sd/-
JUDGE