Income Tax Appellate Tribunal - Pune
Nihilent Technology P. Ltd., Pune vs Department Of Income Tax on 21 January, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES "A", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND SHRI G.S. PANNU, ACCOUNTANT MEMBER
ITA No.2489/PN/2012
(Assessment Year : 2006-07)
Income Tax Officer,
Ward 2(3), Pune. .... Appellant
Vs.
Nihilent Technology Pvt. Ltd.,
'D' Block, 4th Floor, 403/404,
Weikfield IT Citi Infopark,
Nagar Road, Camp,
Pune - 411 014.
PAN : AABCN0867G .... Respondent
Department by : Shri P. L. Pathade
Assessee by : Shri Nikhil Pathak
Date of hearing : 21-01-2014
Date of pronouncement : 27-01-2014
ORDER
PER G. S. PANNU, AM
This appeal by the Revenue is directed against an order of the Commissioner of Income Tax (Appeals)-II, Pune dated 31.08.2012 which, in turn, has arisen from an order dated 23.12.2009 passed by the Assessing Officer u/s 143(3) of the Income-tax Act, 1961 (in short "the Act"), pertaining to the assessment year 2006-07.
2. In this appeal, the Revenue has raised the following Grounds of Appeal :-
"1. The learned Commissioner of Income-tax (Appeals) erred in allowing set off of brought forward losses and depreciation.
2. The learned Commissioner of Income-tax (Appeals) erred in not appreciating that as the assessee has been claiming deduction u/s 10A, the loss of the undertaking which relates to an A.Y. ending before 1st day of April, 2011, cannot be allowed to be set off."2 ITA No.2489/PN/2012
A.Y. 2006-07
3. In order to appreciate the controversy raised in the present appeal, the brief facts are summarized as follows. Assessee is a company engaged in software development business and it filed a return of income for assessment year 2006-07 declaring total income at Rs.1,20,03,885/- wherein it had claimed deduction u/s 10A of the Act in respect of profits arising from the STP unit. The Assessing Officer completed the assessment u/s 143(3) of the Act on 23.12.2009 determining the total income of Rs.1,62,78,218/- which was carried in appeal before the CIT(A) and the CIT(A) vide his order dated 09.09.2010 deleted the addition made by the Assessing Officer. In consequence to the order passed by the CIT(A), the Assessing Officer passed an order u/s 154 of the Act giving effect to the order of the CIT(A) wherein the revised total income was determined at Rs.1,20,03,884/-. The said order of the Assessing Officer is the subject-matter of controversy in the present appeal. Against the said order of the Assessing Officer, assessee went in an appeal before the CIT(A) contending that the unabsorbed losses and depreciation pertaining to the assessment years 2001-02 and 2002-03 ought to have been set-off by the Assessing Officer while arriving at the total income after giving effect to the order of the CIT(A) dated 09.09.2010. The CIT(A) by way of an impugned order considered the plea of the assessee as justified and accordingly directed as follows :-
"3.5 ....... The appellant in the ground of appeal raised before had sought the claim of set off of carried forward losses and depreciation relating to A.Y. 2001-02 and A.Y. 2002-03 amounting to Rs. 6,43,35,153/- against the income arising during after giving effect to the order of the CIT (Appeals) dated 09.09.2010. It has already been seen that, the A.O. has already given the set off of the brought forward losses and depreciation while giving effect to the appellate order for A.Y. 2005-06, however, the same has remained to be considered while giving appeal effect for A.Y. 2006-07. The Assessing Officer is, therefore, directed to verify the correctness of the figures of losses and depreciation brought forward from the earlier year in the balance-sheet and consider the same to be set off against the income determined after giving effect to the order of the CIT (Appeals).
3.6 In view of the above, grounds of appeal no. 1 and 2 raised by the appellant are treated as allowed subject to the above remarks and verification of brought forward losses and depreciation sought to be set off."3 ITA No.2489/PN/2012
A.Y. 2006-07
4. Against the aforesaid direction of the CIT(A), Revenue is in appeal before us.
5. The learned Departmental Representative appearing for the Revenue has merely referred to the Grounds of Appeal filed without pointing out any specific error in the aforesaid directions of the CIT(A).
6. On the other hand, the learned counsel for the respondent-assessee pointed out that there was no error in the approach of the CIT(A) inasmuch as assessee is entitled to set-off brought forward losses/depreciation which pertain to assessment year ending after 01.04.2001, a position which has been upheld by the Pune Bench of the Tribunal in the case of Opus Software Solutions (P.) Ltd. vs. ACIT, (2012) 139 ITD 427 (Pune). Apart therefrom the learned counsel pointed out that the Ground of Appeal No. 2 preferred by the Revenue is misconceived because the losses/depreciation sought to be set-off do not relate to an assessment year starting before 01.04.2004 as is evident from the details contained in the order of the CIT(A).
7. We have carefully considered the rival submissions. At the outset, we may say that the Ground of Appeal No.2 preferred by the Revenue claiming the losses of an undertaking pertaining to an assessment ending before 01.02.2001 cannot be allowed to set-off in terms of section 10A of the Act, cannot be faulted. So however, in the present case losses/depreciation sought to be set-off relate to assessment years 2001-02 and 2002-03 as detailed in para 3.3 of the order of the CIT(A). The aforesaid position has also been appreciated by the CIT(A) as a part of his operative order giving directions to the Assessing Officer to verify the correctness of losses/depreciation brought forward and allow the same. There is no material to distract from the finding of the CIT(A) and therefore, in our view, the learned counsel for the assessee is correct in asserting that the Ground of Appeal No.2 preferred by the Revenue is misconceived as it is factually 4 ITA No.2489/PN/2012 A.Y. 2006-07 unsustainable. In so far as the directions of the CIT(A) to allow the brought forward losses/depreciation as per the record, in our view, does not require any interference as no infirmity in the same has been pointed out. Accordingly, the order of the CIT(A) is hereby affirmed and Revenue fails on this aspect.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 27 th January, 2014.
Sd/- Sd/-
(SHAILENDRA KUMAR YADAV) (G. S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated : 27 th January, 2014
Sujeet
Copy of the order is forwarded to: -
1) The Assessee;
2) The Department;
3) The CIT(A)-II, Pune;
4) The CIT-II, Pune;
5) The DR, "A" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True Copy//
Sr. Private Secretary
I.T.A.T., Pune