TMI Blog2010 (10) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The solitary issue that is raised in this appeal is whether the CIT(A) is justified in directing the Assessing Officer to allow deduction u/s 10A without setting off of the brought forward loss and unabsorbed depreciation of other units. 3. Brief facts of the case are as follows:- The assessee is a public limited company. It is primarily engaged in the industrial automation and information technology. It has a software division registered with the STPI. The software service division was making profits. The same has been claimed as a deduction u/s 10A of the Act. The operation in other two units resulted in a loss. There are also loss and unabsorbed depreciation in these units that have been carried forward. The assessee, while filing the return, quantified the deduction u/s 10A and worked out without considering the results of operation of other units for the relevant year, has also the unabsorbed depreciation and brought forward business loss of non 10A units. 3.1 The Assessing Officer in the course of scrutiny assessment noticed that the assessee had claimed deduction u/s 10A of the Act at Rs.5,31,74,620/- whereas it was entitled only to a deduction of Rs.4,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated while determining deduction u/s 10A, the basic concept of total income, and the arguments raised by the assessees have already been discussed by the Karnataka High Court in coming to their conclusion of calculation of total income as per the Act and law. In such a situation, any decision, be it of a Special Bench in differing from this concept of total income, deductions and exemptions as considered and relied upon by the jurisdictional High Court, cannot be followed by ignoring the Karnataka High Court decision. It is to also point out that the decisions considered by the Special Bench, Chennai, in Stumpp Schuele and Somappa Pvt.Ltd. 102 ITR 320 (Kar.) mentioned at Pg. 14 of 26 in the case of Scientific Atlanta India Technology Ltd.(supra) has already been considered by the Karnataka High Court in the case of Himatsingike Seide Ltd.(supra) ii. Other decisions relied upon by the Special Bench, Chennai, are:- (a) Enercon Wind Farms (Krishna) Ltd. vs ACIT - 21 SOT 29 (Mum) (b) Tyco Electronics Corprn. India Pvt. Ltd. - ITA No.1229/2007 (Bang) mentioned at Page 15 of the decision in the case Scientific Atlanta India Technology Ltd. (supra) While the first deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax and Ors.293 ITR 548(BOM). A copy of this decision is enclosed at Page100-103. As seen at Page 4 of order (Pg 103 of submission), this decision has simply brushed aside the decision of Karnataka High court in Himatsingke Siede Ltd...(Supra). Therefore reliance on this decision is misfounded and cannot be accepted by ignoring the decision of Jurisdictional High Court. Moreover, the issue before the Bombay High Court was primarily the issue of reopening u/s147 after change in law by applying the amended law to an earlier AY., and therefore not applicable. v. Without prejudice to the argument against the decisions of various Tribunals that section 80A,80AB is not applicable to section 10A/10B deductions, it is alternatively argued that the amended sections 10A and 10B itself clearly brings out that the deduction is to be allowed from the total income of the assessee. This clear wording of the section cannot be tampered with and total income has to be calculated, no doubt that the income eligible for deduction per eligible undertaking, has to be calculated separately as provided in law. The legislature has specifically used the word 'assessee' and 'undertaking' at diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion dated 29.8.2008-AY 2004-05-Bangalore Tribunal. 9.1 Deduction u/s 10A is available in respect of each undertaking. The provisions of sections 28 to 44D are to be applied to each undertaking and not each business. This is because, section 10A is undertaking specific. That, the section is undertaking specific is discernible from the following:- - Under sub-section 1 profits derived by the undertaking from the export of articles and things qualify for deduction; - Sub-section 2 prescribes certain conditions to be fulfilled by the undertaking for being eligible to the benefits of section 10A; - Under sub-section 4, it is profits of the business of the undertaking that qualify for deduction. Similarly, the definition of export turnover refers to the sale proceeds of the exports made by the undertaking ; - Under sub-section 5, an audit report is to be furnished in support of claim of deduction. Such an audit report is to be submitted for each eligible undertaking. 9.2 The decision relied on by the learned DR mainly in the case of Himatsingike Seide Ltd. 286 ITR 255 is distinguishable since in that case, the assessee owned only one 100% export oriented unit. The un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was considering the following question of law:- "Whether the business loss of a non-eligible unit, whose income is not eligible for deduction u/s 10A of the Act, has to be set off against the profits of the undertaking eligible for deduction u/s 10A for the purpose of determining the allowable deduction u/s 10A of the Act? The Special Bench of the Tribunal was of the view that under the scheme of the Act, the profits of the unit eligible for deduction u/s 10A of the Act would form part of the income computed under the head "Profits and gains of business and profession" but however, in order that the same will not suffer tax, deduction will have to be made in respect of such profits while computing the income under the head "profits and gains of business and profession" and not from the gross total income as envisaged under Chapter VIA. 9.5 The relevant finding of the Tribunal at para 60 of its order read as follows:- "Even though it is a deduction to be given, it is to be deducted while arriving at the profits of business and profession and not from the gross total income as envisaged under Chapter VI-A. Thus, we hold that deduction under section 10A under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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