Income Tax Appellate Tribunal Mumbai Dcit2(3), Mumbai vs M/S. Zensar Technologies Ltd., Mumbai on 19 April, 2023 1 ITA 5653/Mum/2009 M/s Zensar Technologies Ltd IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "J", MUMBAI BEFORE AMIT SHUKLA (JUDICIAL MEMBER) AND MS. PADMAVATHY S. (ACCOUNTANT MEMBER) I.T.A. No.5653/Mum/2009 (Assessment year 200405) DCIT2(3), Mumbai vs M/s Zensar Technologies Ltd Room No.555, Aayakar Bhavan Magnet House, 2nd Floor M.K. Road, Mumbai400 020 N.M. Marg, Ballard Estate Mumbai400 001 PAN : AAACF0742K APPELLANT RESPONDENT Assessee represented by Shri Nitesh Joshi Department represented by Shri Manoj Kumar CIT DR Date of hearing 12042023 Date of pronouncement 19042023 ORDER PER : MS PADMAVATHY S. (AM) This appeal of the Revenue is against order of the Commissioner of Income tax (Appeals)XXXII, Mumbai [hereinafter 'Ld.CIT(A)] dated 23/07/2009 for the assessment year 200405. 2. The Revenue raised the following grounds of appeal: "On the facts and in the circumstances of the case and in law. the learned C1T(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 2 ITA 5653/Mum/2009 M/s Zensar Technologies Ltd 1. The Ld.CIT(A) erred in deleting the disallowance of Rs.43.90.000/ by way of noncompete fees and holding that the expenditure incurred for noncompete fees should be allowed as revenue expenditure in full in the relevant assessment year without appreciating the fact that the assessee derived continued benefit over the agreement period in respect of the noncompete fees and hence, the relevant expenditure by way of noncompete fees should have been spread over the period of the benefit in view of the decision of the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. vs. C1T [225 ITR 802 (SC)]. 2. The CIT(A) erred in deleting the disallowance of Rs.22,08,494/ being the employees' stock option expenses claimed by the assessee without appreciating the fact that no such option was exercised by the assessee during the relevant previous year. 3. (a)The C1T(A) erred in directing the A.O. to grant the assessee deduction u/s.SOHHE in respect of "profit of the business" without setting off of the brought forward business loss relying on the decisions of the Mumbai I'l'A'L in case of Unichem Laboratories Limited and Cabot India Limited, which, in turn, were based on the decision of the Hon'ble Bombay High Court in the case of Shirke Construction Equipment Limited, without appreciating the fact that the decision of the Hon'ble Bombay High Court in the case of Shirke Construction Equipment Limited has been overruled by the Hon'ble Supreme Court in the case of M/s. IPCA Laboratories Limited vs. DC IT in 266 ITR 521 (SC). (b)The CIT(A) ought to have held that the Section 80AB had an overriding effect over all other sections in the Chapter VlA and hence, no deduction U/S.80HHE was available to the assessee on account of there being no business income of the nature referred to in the Section 80HHE was included in the gross total income after setoff of brought forward business losses. 4. The CIT(A) erred in allowing the depreciation of Rs.6,33.792/ on account of software expenses in respect of STP units, without appreciating the fact that the depreciation claimed in respect of such units was adjustable against the income exempt u/s. 10A and not against the profits of other units. 3 ITA 5653/Mum/2009 M/s Zensar Technologies Ltd 5. The CIT(A) erred in directing the A.O. to delete the disallowance of depreciation of Rs. 1.61,18.819/ in the computation of total income, being the adjustment of depreciation not done by the assessee in respect of the income exempt u/s.l0A without appreciating the fact that in the computation of business income of the nonexempt units, the assessee has added back depreciat