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2007 (12) TMI 306 - ITAT MUMBAIDenied the claim of set off u/s 10B - Export oriented undertaking - setting off the business loss brought forward from assessment year 1999-2000 while computing income for the year under consideration - Whether the Assessing Officer invoked the provisions of section 10B(6)? - HELD THAT:- In sub-section (iv) of section 10B(6) it is clearly provided that the assessee has no option but to claim depreciation even during the tax holiday period, so that after the relevant assessment years, the assessee’s written down value for assets would be taken as if depreciation has actually been allowed as a deduction in each of the relevant assessment years during the tax holiday period of 10 years. Thus, the entire scheme of the section provides for a situation where the assessee is not allowed to postpone some of his claims of deduction under various sections during the tax holiday period, so that the profits in the tax holiday period are inflated and the profits of business after the tax holiday period are reduced by claiming these deductions at that particular point of time. Thus, in our humble opinion, the Assessing Officer was wrong in invoking the provisions of section 10B(6) during the current assessment year. We also find that the first appellate authority was wrong in his conclusions that total income does not refer to income computed under sections 28 to 44DB of the Act but has to be separately computed under section 10B(1). In our considered opinion, total income has to be computed under the provisions of the Act and thereafter a deduction has to be quantified under section 10B as provided in section 10B(4). The terms ‘profits’ and ‘turnover’ in sub-section (4) refers only to the current year’s profits and current year’s turnover. No other view can be taken. Thus, the Assessing Officer should have, in our considered view, taken the profits of the business of the undertaking of the current year and then multiplied it with export turnover and then divided the resultant figure with the total turnover to arrive at the deduction under section 10B. This figure should be deducted from the total income as computed under the rest of the provisions of the Act. This is exactly what the assessee has done. It is very important to note that the deduction under section 10B is not controlled by section 80AB as deduction under section 10B is not a deduction under Chapter VI-A. When the export turnover and total turnover pertained to a particular year, the profits and gains from the business of an undertaking should obviously be for that particular year and which are not adjusted against the previous losses or allowances. Any other interpretation would not yield logical conclusions while applying the formula. The amount of deduction under section 10B arrived in this particular manner would become an income which would form part of the total income of the assessee, under the Act. Thus, for all these reasons we fully agree with the arguments of the learned counsel for the assessee and allow its claim - In the result, the appeal filed by the assessee is allowed.
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