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2012 (9) TMI 47 - HC - Income TaxComputation of deduction u/s 10A - losses suffered in the Non-EPZ Unit need not be set off from the profit/income of the EPZ Unit as allowed by ITAT - Revenue appeal - Held that:- All the sections referred to in Section 10A (6) refer either to the eligible undertaking or business/ profits & gains of the undertaking. The provisions of section 10A refer only to the eligible undertaking and not to all the units operated by the assessee. Further, under section 10A the exemption has been prescribed to the computed separately with reference to the profits/ gains of the undertaking in question and does not contemplate computation of such exemption with reference to the aggregate profits of all the undertakings of the assessee. Section 10A is a provision exempting a particular kind of income even after being amended by the Finance Act, 2000 w. e. f. 01.04.2001 as decided in CIT Versus Yokogawa India Ltd. [2011 (8) TMI 845 - KARNATAKA HIGH COURT] the substituted section 10A continues to remain in Chapter III. It is titled as "Incomes which do not form part of total income" , thus it is clear that the income of the section 10A unit has to be excluded before arriving at the gross total income of the assessee - the income eligible for exemption under section 10A would not enter into computation as the same has to be deducted at source level. Though sub-section (1) provides for a deduction of the eligible profits, there is good reason to think that it is not to be considered as a deduction because the sub-section further says that the deduction “shall be allowed from the total income of the assessee” - The return of income in Form No.ITR-6 shows shows that after aggregating the income from salary, house property, profits and gains from business, capital gains and income from other sources, the total is arrived at and it is from this total that the losses of the current year and the brought forward losses from the past years are to be set off. The resultant figure gives the gross total income of the assessee from which deductions under Chapter VIA are to be made in order to arrive at the total income. The steps given in the income tax return form also are an indication that it is before the adjustment of the losses of the current year and the brought forward losses from the past year that the profits eligible for the relief under Section 10A have to be given the relief. The form of return is also an indication that the relief under Section 10A has to be given before adjustment of the current as well as the past losses. The sole object of the sub-section (4) of Section 80A is to ensure that double benefit does not result to an assessee in respect of the same income, once under Section 10A or Section 10B or under any of the provisions of Chapter VI-A and again under any other provision of the Act. This sub-section does not militate against the view that Section 10A or Section 10B is an exemption provision. As decided in Hindustan Unilever Limited Versus Deputy Commissioner of Income tax & Union of India [2010 (4) TMI 206 - BOMBAY HIGH COURT] such profits have to be eliminated at the first stage itself, that is, as soon as they are computed, suggesting that it is an exemption provision - the implication of an exemption provision is that the particular income which is exempt from tax does not enter the field of taxation and is not subject to any computation. The computation provisions of the Act do not get attracted at all to the exempted income - in favour of assessee.
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