2010 (12) TMI 1238 - AT - Income Tax

Summary

Issues involved: Appeal filed by Revenue and Assessee against CIT(Appeals)-V, Chennai regarding deduction u/s 10A for assessment year 2004-05.

Issue 1: Deduction u/s 10A - Set off of losses

The Special Bench of the Tribunal had previously decided in favor of the assessee regarding the claim of deduction u/s 10A. The Revenue challenged the setting off of losses of the Delhi unit against the profits of the Chennai unit for the computation u/s 10A. The Tribunal, following the Special Bench decision, dismissed grounds 2.1 and 2.2 of the Revenue's appeal.

Issue 2: Deduction u/s 10A - Profits derived from interest income

The learned CIT(A) directed the Assessing Officer to allow deduction u/s 10A for profits derived by the undertaking from items of income like interest. However, the Tribunal noted that deduction u/s 10A is specifically for income derived from the export of articles or things. Citing a decision of the jurisdictional High Court, it was held that interest income from bank deposits, even if used for business purposes, did not establish a direct nexus with the industrial undertaking to claim benefit u/s 10A. Consequently, the Tribunal partly allowed the Revenue's appeal on grounds 3.1, 3.2, and 3.3.

In conclusion, the Tribunal allowed the appeal of the assessee and partly allowed the appeal of the Revenue. The order was pronounced on 10/12/10.