Income Tax Appellate Tribunal - Delhi
St Microelectronics Pvt. Ltd., New ... vs Department Of Income Tax on 28 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "G" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, AM AND
SHRI C.M. GARG, JM
ITA no. 5531/Del/2012
Assessment Year : 2003-04
DCIT, Circle 9(1) vs. ST Microelectronics P. Ltd.
New Delhi Plot no.1, Knowledge Park III
Greater Noida 201 308
PAN:AAACS 3406M
(Appellant) (Respondent)
Appellant by:-Sh. G.S.Virk, Sr. D.R.
Respondent by:- Sh.Salil Kapoor & Sh.Vikas Jain, Adv.
ORDER
PER J.SUDHAKAR REDDY, AM
This is an appeal filed by the Revenue directed against the order of the CIT(A)-XXIX, New Delhi dated 28.8.2012 pertaining to the Assessment Year 2003-04 on the following ground.
"1. The Ld.CIT(A) erred on facts and in law to appreciate that instead of deducting loss from 10B unit amounting to Rs.1,52,30,409/- in order to compute the profits of the business, the loss was added which resulted in excess allowance of deduction under Section 80 HHC of the Income Tax Act, 1961."
2. The assessee is engaged in the business of development of integrated circuit design, computer aided design tools and computer software. The assessee also provides local marketing information service support. The issue that arises for our consideration is whether the First ITA 5531/Del/2012 Page 2 of 4 Assessment Year 2003-04 DCIT vs. ST Microelectronics P.Ltd.
Appellate Authority was right in holding that the Assessing Officer was right in passing an order under Section 154 of the Income Tax Act, 1961 dt. 2.3.2010, rectifying his order under Section 143(3) of the Income Tax Act, 1961 dt. 30th March, 2006. The Assessing Officer passed the rectification order by observing as follows.
"Assessment in this case was completed under Section 143(3) on 30.3.2006 at an income of Rs.21,55,32,317/-. The total income was revised at Rs.19,24,01,852/- vide order dt. 5.9.2008 passed under Section 250/143(3). In the assessment order dt. 30.3.2006 the assessee was allowed deduction under Section 80 HHE at Rs.11,90,65,024/-. Subsequently, it was noticed from the order dated 30.3.2006 that while arriving at the deduction under Section 80HHE, instead of deducting the loss from 10B unit amounting to Rs.1,52,30,409/-, the loss was added resulting in excess allowance of deduction under Section 80HHE. This was a mistake apparent from record. In order to rectify the same, the assessee was issued a notice under Section 154 vide this office letter no. 2323 dt. 19.2.2010 pointing out the mistake. The assessee was asked to file reply/explanation on or before 26.2.2010 and it was further intimated that in case of failure in making any compliance it will be presumed that the assessee has nothing to say in the matter and the issue will be decided on merits. Till the fixed date of 26.2.2010, neither anybody appeared nor any reply have been filed by the assessee. Hence, it is presumed that the assessee has no objection on the proposed rectification. Accordingly, the mistake being apparent from record is rectified."
3. After hearing rival contentions, we are of the considered opinion that the order of the First Appellate Authority has to be upheld. At para 5 of his order the Commissioner of Income Tax (Appeals) has held as follows.
"5.1. I have carefully considered submissions of the appellant and other material placed on record. The issue involved is regarding method of computation of deduction available under Section 80HHE when the appellant is also having other units not eligible for such deduction. The scheme of computation of deduction available under Section 80HHE can be inferred from s.80A(4)/10B(6) and there is no dispute that no double deduction can be allowed under different sections on profit of one eligible unit. The appellant has considered the profits of EOU-I on separate basis ITA 5531/Del/2012 Page 3 of 4 Assessment Year 2003-04 DCIT vs. ST Microelectronics P.Ltd.
for working out deduction under Section 80HHE without clubbing with profit/loss from EOU-II and S&M unit. The appellant ahs followed this approach for subsequent years also. This approach of the appellant is correct because profits from EOU-II are eligible for deduction under Section 10B and same profits can not again be considered for deduction under Section 80HHE. Therefore, since consolidated profit from EOU-I, EOU-II and S&M unit have been returned by the appellant, eligible profits from EOU-I have to be worked out by taking out profit/loss from EOU-II and S&M unit from consolidated profit. In present case, there is loss in EOU-II and this loss has gone to reduce figure of consolidated profit. Now, when this loss of EOU-II is to be taken out from consolidated figure, the figure of loss has to be added so as to increase the consolidated profit to that extent. This is what has been done by the Assessing Officer in order under Section 143 and it is mathematical correct approach. In order under Section 154, the Assessing Officer has further reduced the figure of loss of EOU-II from consolidated profit. This is a mathematical mistake as minus of minus figure makes it a plus figure. In order under Section 143 or 154, the Assessing Officer has no where said that profit/loss of all the units is to be clubbed for purpose of computing deduction under Section 80HHE. This approach of Assessing Officer is correct because in a situation where there is profit in EOU-II and if it is to be clubbed with profit of EOU-I, then profit of EOU-II shall get double deduction under Section 10B and 80 HHE which is not as per scheme of the Income Tax Act, 1961. Therefore, it can be seen that Assessing Officer has just committed a mathematical mistake and he never intended to club profit/loss of all the units.
5.2. For argument sake, even if it is assumed that profit/loss of all units needs to be clubbed, it will be a debatable issue as there are several judicial decisions against this approach. On this ground also, action of Assessing Officer to pass order under Section 154 cannot be upheld.
5.3. In view of discussion supra, I hold that the Assessing Officer has wrongly computed deduction under Section 80 HHE by subtracting figure of loss from consolidated profit. The correct way is to add the figure of loss to consolidated figure and it has been rightly done so in assessment order under Section 143(3). Accordingly, the impugned order under Section 154 is quashed."
4. We find no reason to interfere in his well reasoned order of the First Appellate authority. The Assessing Officer has done a calculation ITA 5531/Del/2012 Page 4 of 4 Assessment Year 2003-04 DCIT vs. ST Microelectronics P.Ltd.
mistake while passing his order under Section 154 of the Income Tax Act, 1961.
5. In the result the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 4th January, 2013.
Sd/- Sd/-
(C.M.GARG) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 4th January, 2013
*manga
Copy of the Order forwarded to:
1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Dy. Registrar