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2015 (9) TMI 120 - AT - Income TaxComputation of amount of deduction u/s 10A - reducing the amount of brought forward loss for the A.Y. 2002-03 from the profits and gains of the undertaking for the current year - Held that:- We are confronted with a situation in which the assessee suffered loss from the eligible unit for the assessment year 2002-03, when section 10A is a deduction provision as is the case for the A.Y. 2003-04 under consideration. Not only the assessee suffered a loss of ₹ 72.70 lac in such preceding year from the eligible unit, it claimed and the Revenue allowed its carry forward to the subsequent year(s) as per law. Now, when there has arisen positive income for the year under consideration, such brought forward loss from the eligible unit suffered during the immediately preceding year is required to be reduced from the amount of eligible profits for the current year before granting deduction u/s 10A. The assessee cannot be allowed to eat the cake and have it too, by claiming on one hand that there is a business loss from the eligible unit for the preceding year which should be allowed to be carried forward and, at the same time, claim that such brought forward business loss should not be set off against the income of the eligible unit for the succeeding year while allowing deduction u/s 10A. If the assessee’s contention is accepted, it would make section 10A a deduction provision for the A.Y. 2002-03 and an exemption provision for the A.Y. 2003-04, which is manifestly impermissible because section 10A has been statutorily made a deduction provision from the A.Y. 2001-02. As the assessee rightly claimed the carry forward of loss from the eligible unit for the immediately preceding year, such loss is required to be set off against the income for the current year before allowing deduction u/s 10A. - Decided against assessee. Reopening of assessment - Held that:- It is a matter of record that the AO, without separately disposing off such objections, proceeded to make an assessment u/s 147 of the Act. This course of action followed by the AO is in contravention of the law laid down by the Hon’ble Supreme Court in GKN Driveshafts (I) Ltd. Vs. ITO (2002 (11) TMI 7 - SUPREME Court ). It has been held in this judgment that the AO is obliged to first dispose of the objections raised by the assessee by way of a separate order before proceeding to finalize the assessment. Since the AO has not disposed off the assessee’s objections, we set aside the assessment order and the impugned order and remit the matter to the file of AO for first disposing the assessee’s objections against the initiation of re-assessment proceedings by a separate order. It is only if he comes to a conclusion that the reasons are valid and the objections are not sustainable, that he will proceed to frame the assessment as per law. - Decided in favour of assessee for statistical purposes.
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