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2012 (8) TMI 335 - AT - Income TaxDisallowance of deduction u/s 10B - AO stated that the deduction under section 10B is to be allowed after set off of brought forward business losses and unabsorbed depreciation - Held that:- The loss incurred by the assessee under the head "Profits and gains of business or profession" has to be set off against the profits and gains, if any, of any business or profession carried on by such assessee. Therefore, as the profits and gains under section 10A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such profits and gains of the undertaking would not arise - As deduction under section 10A has to be excluded from the total income of the assessee the question of unabsorbed business loss being set off against such profit and gains of the undertaking would not arise - Since the provisions of section 10A and 10B are similar in nature the contention of assessee that carry forward business losses and depreciation cannot be set off to the profits of the undertaking while working the claim u/s 10B is uphold - in favour of assessee. Non inclusion/deducting the amount credited/debited as income/expenses relatable to unit eligible for tax holiday under section 10B for computing book profits u/s 115JB - Held that:- Under the scheme of provisions of section 115JB Minimum Alternate Tax (MAT) is levied with reference to the book profit disclosed in the profit and loss account prepared in accordance with the provisions of Parts II and III of Schedule VI of Companies Act, as opposed to ‘profits or gains of business or profession’ as computed as per the provisions of the Act - Explanation to section 115JB(2) provides for the purposes of this section, ‘book profit’ means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by the amount or amounts of expenditure relatable to any income to which section 10 or section 10A or section 10B or section 11 or section 12 apply - - deduction claimed by the assessee under section 80HHE has to be worked out on the basis of adjusted book profit under section 115JA and not on the basis of the profits computed under regular provisions of law applicable to computation of profits and gains of business - while working out deduction under section 80HHC are equally applicable to the provisions of section 10B while working out deduction under section 115JB, respectfully following the same uphold assessee’s contentions - in favour of assessee Disallowance of deduction on provisions of fringe benefit tax while computing book profits under section 115JB - Held that:- Considering Board Circular FBT is a liability qua employer,an expenditure laid out or expended wholly and exclusively for the purposes of the business or profession of the employer. However, sub-clause (ic) of clause (a) of section 40 of the Income-tax Act expressly prohibits the deduction of the amount of FBT paid, for the purposes of computing the income under the head “profits and gains of business or profession”. This prohibition does not apply to the computation of ‘book profit’ for the purposes of section 115JB - in favour of assessee.
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