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2015 (12) TMI 126 - AT - Income TaxDeduction u/s. 10B - whether unabsorbed depreciation cannot be set off against the profit for the relevant assessment year as the assessee being a 100% Export Oriented Unit (EOU) - Held that:- We have gone through the approval granted by Assistant Development Commissioner, Cochin Export Processing Zone dated 26.09.1997 in regard to M/s. Zenith Textiles, a unit of Zenith Exports Ltd. whereby it is declared as 100% EOU. It means that this concern was declared as 100% EOU w.e.f. 26.09.1997. As per the provisions of section 10B of the Act, which are attracted to EOUs like one of the units run by the assessee company i.e. Zenith Textiles, there is no controversy that under the provisions of section 10B(6) read with section 32 of the Act, if any deduction for any relevant assessment years ending before 01.04.2001 has been given full effect then the same neutralizes the provision of section 32(2) of the Act. However, in the present case, while working out unabsorbed depreciation for AY 1997-98, the AO has considered incorrect facts and figures. The fact is that M/s. Zenith Textiles was approved under Special Scheme of Govt. of India as a 100% EOU only on 26.09.1997 and accordingly, assessee claimed deduction u/s. 10B of the Act in respect this unit for and from AY 1998-99. According to us, there being no claim made for deduction u/s. 10B of the Act in AY 1997-98, the unabsorbed depreciation relatable to Zenith Textiles is not hit by the provision of section 10B(6) of the Act factually. Accordingly, we are of the considered view that the assessee's claim of unabsorbed depreciation relatable to AY 1997-98 is to be allowed and the AO is directed accordingly. The orders of the lower authorities i.e. the AO and that of the CIT(A) are reversed.- Decided in favour of assessee.
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