TMI Blog2008 (5) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... he solvent plant for computing deduction under s. 80HH in respect of solvent plant. Hence, if there are brought forward losses (including unabsorbed depreciation) of STPI unit then the same is to be considered for the purpose of computing deduction under s. 10A. Following the orders of Tribunal in the case of Huawei Technologies (India) (P) Ltd. held that for computing deduction u/s 10A, one has to ascertain the total income as per provision of the Act in respect of that undertaking and the amount so determined, to be reduced from the total income, meaning thereby, the s. 10A deduction is to be allowed from the total income without setting off of brought forward and current year's loss of non-s. 10A unit. Therefore, AO is directed not to set off business loss or unabsorbed depreciation of non-STPI unit from the income of the STPI unit for computing deduction u/s 10A. Export (sic-expenses) incurred in foreign exchange - CIT(A) confirmed that on site payments should be reduced for the purposes of arriving at the export turnover - HELD THAT:- The CBDT Circular No. 694, stated that computer programmes are not physical goods but are developed as a result of an intellectua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record by the assessee that it requested for copy of the reasons recorded for issuing of notice under s. 148. Ground of appeal raised before the learned CIT(A) that the condition precedent for reopening is absent. This ground of appeal has not been disposed of by the learned CIT(A). Hence, it is clear that when an issue has not been adjudicated by the learned CIT(A) and the facts on record are not there for us to dispose of such appeal then we have no alternative but to set aside this issue on the file of the learned CIT(A). Accordingly, this issue is restored back on the file of the learned CIT(A) to dispose of this issue as per law. 4, The second grievance of the assessee is that the learned CIT(A) has erred in confirming the finding of the AO that the brought forward loss of non-STPI unit should be adjusted against profit of STPI unit and the balance should be allowed as exemption/deduction. 5, The AO has discussed this issue in the assessment order as under: A notice under s. 154 was issued for the asst. yr. 2003-04 to set off the carry forward loss as well as the current loss before availing the deduction under s. 10A. After giving an opportunity of being heard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard both the parties. In the case of Yokogawa India Ltd. It has been held that s. 10A allows deduction from total income and does not allow exemption from total income as s. 10A has been amended w.e.f. 1st April, 2001. Deduction is undertaking specific as the word an undertaking is used. Income of that undertaking is to be computed as per provisions of the Act, as if it was the only undertaking. The jurisdictional High Court in the case of CIT vs. Siddaganga Oil Extractions (P) Ltd. (1993) 109 CTR (Kar) 119 : (1993) 201 ITR 968 (Kar) held that loss in respect of hydrogenation plant cannot be set off from the profits of the solvent plant for computing deduction under s. 80HH in respect of solvent plant. Hence, if there are brought forward losses (including unabsorbed depreciation) of STPI unit then the same is to be considered for the purpose of computing deduction under s. 10A. 9. It will be useful to reproduce the following paras from the order of the Tribunal in the case of Huawei Technologies (India) (P) Ltd.: 3. We have heard both sides. At the outset, learned counsel for the assessee has submitted that this issue is now covered by the decision of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. The assessee may have more than one undertaking and in that case one has to consider the profits and gains of that undertaking which qualifies for deduction under s. 10A Similarly, in s. 10A(4), the deduction is to be computed in the same proportion which bears to the profits of the undertaking, the same proportion as the export turnover bears total turnover. Here again the words used are 'profits and gains of the business of the undertaking'. This is not to the total profit or business of the assessee. Thus, for computing deduction under s. 10A, one has to ascertain the total income as per the provisions of the Act in respect of that undertaking and the amount so determined is to be, reduced from the total income. 14. As per s. 10A(1), the assessee is entitled to deduction of profit and gains from the undertaking which is entitled for deduction. It is mentioned that such deduction is subject to provisions of s. 10A It is nowhere mentioned in the section that such deduction should be restricted to the total income of the assessee computed under the provisions of the Act before allowing such deduction. Wherever the legislature wanted to restrict the deduction, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be charged for that year in accordance with and subject to the provisions, including the provisions for the levy of additional income-tax in respect of the total income of the previous year of every person. Our attention is invited to S. 2(45) 'total income' means the total amount of income referred to in s. 5, computed in the manner laid down in this Act. Next, our attention is invited to what is gross total income under s. 80B(5). The gross total income has been described to be the total income computed in accordance with the provisions of the Act before making any deduction under the relevant chapter. A perusal of s. 10A(1), as it stood at the relevant time, clearly sets out that subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which the section applies shall not be included in the total income of the assessee. In other words, it is clear that the income derived from an industrial undertaking by the assessee to which s. 10A applies could not be included in the total income of the assessee. Once that is the case, the petitioner was right in filing the income by excluding the income of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (ITA No. 315/Bang/2006 order dt. 16th Oct., 2007) [reported at (2008) 115 TTJ (Bang) 423 : (2008) 1 DTR (Bang)(Trib) 237-Ed.]; (3) I. Gate Global Solutions Ltd. vs. Asstt. CIT. 15. We have heard both the parties. Deduction under s. 10A is available in respect of profit or gains derived from an undertaking from the export of articles or things or computer software. One has to understand the meaning of computer software with reference to the fact that it is preceded by articles or things. Deduction under s. 10A was allowed if export proceeds are from the export of articles or things or computer software. It means that such export proceeds must relate to the goods and not for the services. Computer software is developed by providing off site expenses and on site expenses. The amount receivable in respect of computer software does not include any reimbursement of on site expenses. Payments made to engineers employed on site are for the development of software. By such development, the assessee has not rendered any technical services relevant to cl. (iv) of Expln. 2 of s. 10A, technical services have not been defined. The CBDT vide Circular No. 694, dt. 23rd Nov., 1994 [(1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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