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2012 (4) TMI 371 - AT - Income TaxDeduction u/s 10A/10B - Tribunal not allowed the deduction under sections 10A/10B on Rs. 14,31,96,372/- representing the amount of depreciation, which was not claimed but allowed by the AO while computing deduction - held that:- all expenses and allowances, deductible or not deductible, covered under these sections starting from 30 and ending with 43D have to be necessarily given full effect to for the purposes of computing income from business under section 28. The income so determined, in the absence of any definition of profits of business given in section 10A, shall constitute 'profits of the business'. As section 32 granting depreciation is included in sections 30 to 43D, there is no reason for excluding it for the purposes of computing the profits of the business of the undertaking. Assessee contended that the judgment of Indian Rayon Corpn. Ltd. (2003 -TMI - 11904 - BOMBAY High Court) should not be applied to section 10A because that judgment deals with deduction u/s 80HHC - held that:- The contention of the assessee would have merited acceptance if cognizance of the judgment in Indian Rayon Corpn. Ltd.'s (2003 -TMI - 11904 - BOMBAY High Court) had been taken while interpreting section 80HHC. Since we are concerned with sections 10A/10B having no definition of the expression "profits of the business", there is no scope for arguing that the judgment in the case of Indian Rayon Corpn. Ltd. (supra) is not applicable which, in fact, has interpreted the expression "profits of the business" in the context of section 80HH without there being any specific definition of it. Clause (i) of sub-section (6) makes it clear that in computing the total income of the assessee for the eleventh year (i.e. after the expiry of the benefit u/s 10A for the first ten assessment years), depreciation u/s.32 shall be computed on the written down value of the fixed assets as reduced by the full amount of depreciation allowable for the ten relevant assessment years from the actual cost of the assets. Further, clause (iv) makes it clear that the written down value of any asset used for the business of the undertaking in the eleventh year shall be computed as if the assessee had claimed and had been actually allowed the deduction in respect of depreciation for each of the relevant assessment years. We are unable to either expressly find or infer from the language of subsection (6) that in the first ten relevant assessment years, the assessee has a choice to claim or skip depreciation and if he chooses to dispense with the depreciation, then to compute the profits of business and the resultant deduction on the amount of profit before depreciation. The profits of the business for all the years in the first block need to be computed by considering that any expenditure or allowance which contributed to the earning of income and is permissible u/ss 28 to 43D, must be allowed. If that is the position, then it is difficult to accept that the assessee should be allowed to compute profits of business during the currency of the years of deduction u/s 10A without reducing the amount of depreciation. - the ld. CIT(A) has taken an unimpeachable view in echoing the action of the AO in deducting depreciation of Rs. 14.31 crore and odd from the profits of business for the purposes of computing deduction under sections 10A/10B. - Decided against the assessee.
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