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2006 (8) TMI 448 - AT - Income TaxFree trade zone - exemption u/s 10A - losses from the non-10A unit - profits and gains derived by an undertaking - export of articles or things or computer software - HELD THAT:- As per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current years depreciation u/s 32(2) is to be set off. For computing deduction u/s 10A, we are concerned only with the profit derived from export of computer software. As already observed unabsorbed business losses of other units cannot be set off and therefore unabsorbed depreciation which is to be set off after the unabsorbed business loss as per section 72(2) also cannot be set off for ascertaining the deduction u/s 10A. In the instant case, there is no unabsorbed depreciation or unabsorbed business loss in respect of software services division and therefore profits and gains of the software services division will be exempt u/s 10A without setting off the loss of other division or the setting off of carry forward losses of other division. In view of above discussion we hold that learned CIT(A) was justified in directing the Assessing Officer to allow exemption u/s 10A without setting off loss of non-10A unit and consequentially allowed carry forward of such losses and depreciation of non-10A unit. In the result, the appeal is dismissed.
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