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2015 (11) TMI 67 - AT - Income TaxDeduction under section l0A - profits derived by the eligible undertaking would be computed after set-off of brought forward unabsorbed depreciation from prior years - Held that:- This is settled principle of law that even after amendment to Section 10A by the Finance Act 2000 w.e.f. 01.04.2001, Section 10A continues to be an exemption provision, though it is termed as provision providing deduction. CIT Vs TEI Technologies (P) Ltd. [2012 (9) TMI 47 - DELHI HIGH COURT] held that Section 10A as it stands though decided as deduction provision is essential and in substances exemption provision. The ratio of the judgement in the case cited as Yokogawa India Ltd. (2011 (8) TMI 845 - Karnataka High Court) is inter alia that the profits and gains u/s 10A were not to be included in the income of the assessee at all and as such the question of setting off of loss of assessee of any profits & gains of business against such profits and gains of undertaking does not arise; that under Section 72(2) of the Act, unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current year depreciation u/s 32(2) is to be first set off; that since deduction u/s 10A has to be excluded from the total income of the assessee, the question of unabsorbed business loss being set off against such profits & gains of the undertaking does not arise. The case at hand is squarely covered by the judgement (supra) and as such, the A.O. and Ld. CIT(A) have erred in holding that the deduction u/s 10A of the Act in respect of the profits by the eligible undertaking would be computed after set off of brought forward unabsorbed depreciation from prior year. - Decided against revenue. Interest earned from mere parking the funds in the fixed deposits - eligibility of deduction u/s 10A - Held that:- For claiming the benefit of deduction available u/s 10A of the Act, there must be direct nexus between deposits and business activities. Since, this is a benefit given to the industrial activities only, interest earned from mere parking the funds in the fixed deposits is not eligible for exemption u/s 10A of the Act. So, the judgements relied upon by the Ld. A.R., are inapplicable to the facts and circumstances of the case. Even the Ld. A.R. has failed to point out as to how the surplus money deposited with the bank amounts to activities in the course of business and the interest accrued thereon is to be treated as income from business activities. So, the interest income has been rightly declared as income from other sources by the A.O. and affirmed by Ld. CIT(A). - Decided against assessee.
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