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2021 (2) TMI 856 - AT - Income TaxDeduction u/s. 10B - Deduction after set off of income/loss from other units/heads of income OR allowing the said deduction on standalone basis - whether the Revenue is right in law in holding that assessee is not entitled to the benefit of deduction given by the Act under S. 10A/10B as amended with retrospective effect by the Finance Act, 2003 with effect from 01.04.2001 qua individual eligible undertaking? - HELD THAT:- We find that identical issue arose before Hon'ble Supreme Court in the case of Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] as held though s. 10A/10B were amended by FA 2000 w.e.f. 01.04.2001 to change their tenor from "exemption" to "deduction", the "deduction" contemplated is S. 10A/S. 10B 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. The deduction of the profits and gains of the business of an eligible undertaking has to be made independently and before giving effect to the provisions for set off and carry forward contained in s. 70, 72 and 74. It was further held by the Hon'ble Supreme Court that the deductions u/s. 10A/10B are prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. While examining the issue, the Hon'ble Supreme Court has also considered the provisions of Section 10A of the Act (pari materia with S. 10B of the Act) as it stood prior to the amendment made by Finance Act, 2000 with effect from 01.04.2001 as well as the amended Section 10A thereafter and also the amendment made by Finance Act, 2003 with retrospective effect from 01.04.2001. Hence, the CBDT Circular being in conflict with the judgment of Hon'ble Supreme Court cannot be taken in reckoning. Governed by the judicial fiat, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of total income under Chapter VI. All consequences under sections 70, 72 and 74 of the act would consequently flow unit wise. In view of the resounding conclusion drawn in favour of the assessee.
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