TaxTMI 
TaxTMI 
2010 (6) TMI 439
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....nai, Bangalore and Kochi respectively. It filed its return of income for the year on 30-11-2003 at a loss of Rs. 81,83,600, which stood later revised to Rs. 83,04,385 per the revised return (30-10-2004), both of which stood processed under section 143(1) on 16-3-2004 and 24-3-2005 respectively. The assessee's case was selected for verification procedure under the Act by the issue of notice under section 143(2) on 5-10-2004, whereat the exemption under section 10A, claimed in respect of the Bangalore Unit at Rs. 58,67,861, i.e., at the rate of 90 per cent of the proportionate profit derived from the said Unit (Rs. 66,10,020), was called into question. This is as the Assessing Officer was of the view that the loss from the other two Units had to be first adjusted (set-off), and as that left the assessee with no positive income, it would not be entitled to any exemption under section 10A. For this proposition, he relied on the decision by the Hon'ble Apex Court in the case of IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521. It would be, at this stage, in order to set out the computation by the assessee, and as modified by the Assessing Officer, for the sake of clarity : (Amount in....
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....(Chennai) in the case of Scientific Atlanta India Technology (P.) Ltd. v. Asstt. CIT [2010] 38 SOT 252 placing a copy of the same on record. After an at length discussion in the matter, it stands clarified therein that the profits of the eligible undertaking(s) under section 10A have to be computed separately and would not enter the computation (of gross total income) process. As such, the matter should be considered as resolved insofar as the Tribunal is concerned. As regards the second issue, reliance was placed by him on the decision in the case of C.W.P. Taylor v. Dy. CIT [IT Appeal No. 695 (Coch.) of 2008, dated 28-7-2009], wherein it stands held that the decision in the case of Goetze (India) Ltd. (supra) does not in any manner impinge on the power of the Tribunal under section 254 of the Act to entertain for the first time a point of law where the facts in relation thereto are not in dispute. The ld. DR, though supported the orders of the authorities below, could not bring to our notice any decision by any higher appellate forum with regard to the treatment of income from section 10A Unit(s), i.e., vis-a-vis non-section 10A Units. With regard to the second issue, it was sub....
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....essment year 2002-03) and at 90 per cent thereafter (refer para # 23, 40 of the order). This follows its understanding that the income falling under section 10A, though not an exempt income inasmuch as the section speaks of a deduction and not of exemption and, besides, limits the same to ninety per cent of the qualifying income, yet qualifies to be a separate class of income by itself. The balance ten per cent, i.e., which remains after giving effect to the permissible deduction under section 10A, referred to by the Tribunal as 'unabsorbed claim under section 10A', not forming part of the total income, cannot, therefore, be aggregated with other income(s) of the assessee falling under Chapter IV, i.e., that go to comprise the gross total income (GTI). It would, thus, stand to be taxed, albeit independently. As such, there would be two parallel computations of income, i.e., qua section 10A income(s) and non-section 10A incomes (assessable u/c. IV), with no interface or transfer from one to another, so that neither the profits nor the losses of one category (say, from section 10A units, which we have referred to as 'section 10A income') would enter the computation of income of the o....
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....an eligible undertaking (source), it would warrant being set off or adjusted prior to the grant of deduction under section 10A. The Tribunal indicates so in no uncertain terms when it states, at para # 27 of its order, of the position being different where the loss - which is to be set off - is from an eligible undertaking, and that its decision (regarding the non-set off of loss of an non-eligible unit) shall have no application in such a case; the relevant part of its order reading as : "27. Having held that . . .Of course, if there are more than one undertaking which is eligible for deduction under section 10A and if some of the units have profit and other units have loss, it would be an entirely different case which is before us. Hence, the decision rendered in this appeal would not be applicable to such cases where there are more than one eligible undertaking claiming deduction under section 10A. In this case there is only one eligible undertaking claiming deduction under section 10A and hence, the loss from the non-eligible unit cannot be set off against the profits of the eligible unit while determining deduction under section 10A." In respect of this matter, therefore, wh....
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....g an eligible one, and income there-from, subject to any limitation provided in its respect under the provision itself, would fall to be considered as only from a non-eligible source. The question here is not of the singular or plural sense in which the word 'undertaking' is used in the section, or is capable of being read, but whether there is any positive relationship between the incomes derived from two eligible sources. The provision is completely silent in the matter, so that the only conclusion is an emphatic no, and the same are to be considered de hors each other. The issue before the Special Bench was the admissibility of the set off of loss of an non-eligible unit against the profit from an eligible one, for the purpose of computation of deduction under section 10A. It is well-settled that a decision is an authority on what it actually decides. Its observations at para 27 of its order, therefore, are to be read in the context of the issue that was before it and, further, limited to that. When it states that its decision would have no application to a case where the loss (to be set off) is from an eligible unit, the same has to be read as just that, i.e., that it has not e....