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2007 (7) TMI 365 - AT - Income TaxDeduction claimed u/s 10B to the extent of 90% remaining profit are eligible for set off of losses from earlier years ? - export-oriented undertaking - Remaining profit (i.e.10%) after the deduction u/s 10B should be treated as business profits? - HELD THAT:- Since the expression used in clause (ii) of sub-section (6) clearly mentions "in so far as such loss relates to the business of the undertaking", therefore, this restriction is applicable only in respect of loss which is directly relatable to the loss of the undertaking which is subject to the provision of section 10B. Therefore, in our view, this restriction is not applicable to the losses in respect of other businesses. The mere fact that section 10B is contained in Chapter III will not make much difference as the hon'ble Supreme Court in the case of Prakash Nath Khanna v. CIT [2004 (2) TMI 3 - SUPREME COURT] has clearly observed that marginal notes in an Indian statute, as in an Act of Parliament cannot be referred to for the purpose of construing the statute. In view of this observation merely because section 10B has been placed in Chapter III it does not mean that it relates to exempted income, particularly in view of the fact that only 90 per cent. of the profits from eligible undertaking is allowed to be deducted. Since the business profits have to be assessed and have indeed been assessed in this case as income from business, therefore whatever remains after allowing such 10 per cent. deduction has to be treated only as business income. Once such balance income has been treated as business income, the provisions of section 72 etc. would apply accordingly. As observed by us earlier, the losses were held to belong, to the business and had been allowed by the Tribunal in the earlier years, therefore such losses should have been allowed against the business income of the assessee. In these circumstances, we set aside the order of the learned CIT (A) and direct the Assessing Officer to allow set off of the loss claimed by the assessee. In the result, the appeal of the assessee is allowed.
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