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2013 (1) TMI 294 - AT - Income TaxRectification u/s 154 - whether AO was correct to take the recourse of rectification u/s 154 when the assessee claimed the issue to be highly debatable - mistake to allow the carried forward loss of a year prior to assessment year 2001-02 as loss pertained to A.Y. 1997-98 - disallowance was made as per clear provisions of section 10A (6)(ii) - assessee contested that the assessee is very well entitled to relief of brought forward loss and depreciation for the assessment year 1997-98 as accepted in the assessment order - Held that:- Section 10A was incorporated with effect from 01.04.1981 providing tax holiday of five consecutive year beginning with the assessment year relevant to the previous year in which the concern undertaking begins manufacturing or production of the article, things or computer software with the amendment incorporated w.e.f. 01.04.2001 where the period of tax holiday of five assessment year stands extended to ten consecutive assessment years with certain conditions that while computing the income after the tax holiday period is over i.e. sub-section 6 comes into play as per which, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of relevant assessment year, no loss under section 72 or 74 relating to business of the undertaking is to be allowed to be carried forward or set off if it pertains to any of the relevant assessment year before 01.04.2001. Thus interpreting the above definition and opening lines of sub-section 6, it emerges that sub-section (6) would apply in the previous year relevant to the assessment year immediately succeeding last of the relevant assessment year i.e. the previous year relevant to the first assessment year succeeding tax holiday period. To put in other words, since the assessee's exemption period is continuing as it chose to avail the benefit of tax holiday from assessment year 1999-2000, sub-section 6(ii) does not apply in this case. The aforesaid provisions that they apply during the assessment years after the end of the holiday period & as admittedly the present AY relates to the holiday period and therefore the above provisions are not applicable - AO as well as CIT(A) have erred in subjecting the assessee's claim of brought forward loss and depreciation to sub-section 6(ii) by invoking rectification under section 154 - in favour of assessee.
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