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2019 (11) TMI 1044 - AT - Income TaxSetting off of unabsorbed business losses before allowing deduction u/s.10A - HELD THAT:- A distinction has been made by the Legislature while incorporating the provisions of Chapter VI-A. Section 80A(1) stipulates that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the Chapter, the deductions specified in ss. 80C to 80U. S. 80B(5) defines for the purposes of Chapter VI-A "gross total income" to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter. What the Revenue in essence seeks to attain is to telescope the provisions of Chapter VI-A in the context of the deduction which is allowable u/s 10A. which would not be permissible unless a specific statutory provision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. ITAT was correct in holding that the brought forward unabsorbed depreciation and losses of the unit the Income which is not eligible for deduction u/s 10A of the Act cannot be set off against the current profit of the eligible unit for computing the deduction under s. 10A of the IT Act. Hon’ble Supreme Court of India in the case of CIT & Anrs. Vs. Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] held that “from a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. Hon’ble Apex Court is the view that the deduction u/s.10A of the Act should be allowed qua the eligible undertaking standing on its own without reference to the other eligible or non-eligible unit or undertakings. To put it simply, the profits of the eligible units should be considered on standalone basis. It is undisputed fact that otherwise, the assessee is eligible for claiming deduction u/s.10A of the Act. The dispute was at what stage this could be provided to the assessee. That now we have taken guidance from the binding judicial pronouncements as mentioned herein above and accordingly following the view as aforesaid, we allow the appeal of the assessee and direct the AO to allow deduction u/s.10A to the assessee before allowing set off of unabsorbed business loss. - Appeal of the assessee is allowed.
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