TMI Blog2014 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ting deduction us/ 10B of the Act - the issue relating to set off of brought forward unabsorbed depreciation against the profit of the eligible unit for computing deduction u/s 10B of the Act - the AO is directed to allow the claim of the assessee for deduction u/s 10B of the Act on the profit of the eligible unit without setting off the brought forward unabsorbed depreciation - Decided in favour of Assessee. - I.T.A. No.7089/Mum/2013, I.T.A. No.7090/Mum/2013 - - - Dated:- 18-6-2014 - Shri P. M. Jagtap, AM And Dr. S. T. M. Pavalan, JM,JJ. For the Appellant : Shri Girish Dave For the Respondent : Shri S. D. Srivastava ORDER Per P. M. Jagtap, A.M. These two appeals filed by the assessee are directed against two separate orders of the ld. CIT(A) II, Thane dated 17-09-2013 and 19-9-2013 for assessment years 2004-05 2006-07 respectively and since one of the issues involved in these two appeals is common, the same have been heard together and are being disposed of by this single consolidated order for the sake of convenience. 2. The assessee in the present case is a company which is engaged in the business of manufacture of injection blow mouldi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,45,96,056/-. Similarly, the income from other sources declared at Rs. 13,78,466/- was adjusted against the brought forward unabsorbed depreciation and the income for A.Y. 2004-05 was declared at nil in the return of income filed on 30-10-2004. Since the said return filed by the assessee for A.Y. 2004-05 was accepted u/s 143(1) of the Act on 30-12-2004, the assessment for A.Y. 2004-05 was reopened by the A.O. by invoking the provisions of section 147 of the Act and a notice u/s 148 was issued by him to the assessee on 7-3-2011 after recording the reasons. Thereafter the assessment u/s 143(3) r.w.s. 147 of the Act was completed by the A.O. vide an order dated 30-09-2011 setting off the brought forward loss against the income of Rs. 6,58,32,696/- declared by the assessee under the head profits and gains from business or profession and the deduction of Rs. 5,12,36,640/- allowed earlier u/s 10B of the Act was withdrawn by him. 4. Against the orders passed by the A.O. for A.Y. 2004-05 u/s 143(3) r.w.s. 147 and for A.Y. 2006-07 u/s 143(3) of the Act, appeals were preferred by the assessee before the ld. CIT(A). In its appeal for A.Y. 2004-05, the assessee challenged the validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elying on the decision of Hon ble Kerala High Court in the case of Patspin India Ltd. (supra) th4e ld. CIT(A) held that the deduction u/s 10B of the Act is to be allowed on the profit to the eligible unit computed after setting off the brought forward unabsorbed depreciation but not after setting off the unabsorbed business losses. He accordingly directed the A.O. to recompute the deduction allowable to the assessee u/s 10B of the Act thereby allowing part relief to the assessee on this issue. 5. In its appeal for A.Y. 2006-07, the solitary issue raised by the assessee before the ld. CIT(A) was similar to the one raised in its appeal for A.Y. 2004- 05 relating to deduction u/s 10B of the Act and following his conclusion drawn in A.Y. 2004-05, the ld. CIT(A) directed the A.O. to allow deduction u/s 10B of the Act, if any, on the profit of the eligible unit after setting of the brought forward unabsorbed depreciation. Aggrieved by the orders of the ld. CIT(A) for assessment years 2004-05 2006-07, the assessee has preferred the present appeals before the Tribunal. 6. In its appeal for A.Y. 2004-05, the issue raised in ground No. 1 by the assessee relates to the validity of reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Black and Veatch Consulting Pvt. Ltd. (supra). He also pointed out that even the Tribunal in its decision rendered in the case of Valueprocess Technologies (I) P. Ltd. Vs. ITO (2013) 141 ITD 447 has held, relying on the decision of Hon ble Bombay High Court in the case of Black and Veatch Consulting Pvt. Ltd. (supra), that the deduction u/s 10A of the Act is to be allowed without setting off the carried forward losses and unabsorbed depreciation. He contended that the ld. CIT(A) therefore was not justified in declining to follow the decision of Hon ble jurisdictional High Court in the case of Black and Veatch Consulting Pvt. Ltd. (supra) on the ground that the issue of set off of unabsorbed depreciation governed by provisions of section 32(2) of the Act was not considered by the Hon ble High Court. 9. The ld. D.R., on the other hand, relied on the circular No. 7/DV/2013 issued by the CBDT on 16-7-2013 clarifying that first the income/loss from various sources i.e. eligible and ineligible units under the same head are aggregated in accordance with the provisions of section 70 of the Act and thereafter the income from one ahead is aggregated with the income or loss of the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relating to set off of unabsorbed depreciation against the profit of the eligible unit for the purpose of computing deduction u/s 10B of the Act and the reliance of the ld. D.R. on the said circular in support of the Revenue s case on this issue thus is clearly misplaced. 12. It is observed that even the issue relating to set off of unabsorbed depreciation was also decided by the Tribunal in favour of the assessee in assessee s own case for A.Y. 2005-06 vide order dated 29-12-2006 relying on the decision of Hon ble Bombay High Court in the case of Black and Veatch Consulting Pvt. Ltd. (supra) and although the said decision cited on behalf of the assessee was also taken note of by the ld. CIT(A), he declined to follow the same on the ground that the Hon ble Bombay High Court in the case of Black and Veatch Consulting Pvt. Ltd. (supra) had not considered the issue relating to set off of unabsorbed depreciation which is governed by the provisions of section 32(2) of the Act. In this regard, the ld. Counsel for the assessee has cited not only the decision of Tribunal in the case of Valueprocess Technologies (I) (p) Ltd. (supra) but even the subsequent decision of Hon ble Bombay H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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