TMI Blog2011 (9) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ation should be set off in the computation of business profit even during the period assessee enjoys exemption under Section 10B(4) of the Act. - Decision in CIT v. Himatasingike Seide Ltd. (2006 (8) TMI 125 - KARNATAKA High Court) followed - Decided in favor of revenue. - IT Appeal Nos. 49, 67, 75, 89 and 146 of 2010 - - - Dated:- 6-9-2011 - C.N. RAMACHANDRAN NAIR AND BHABANI PRASAD RAY, JJ. P.K.R. Menon and Jose Joseph for the Appellant. S. Parthasarathi, V. Sreekumar and P. Balakrishnan for the Respondent. JUDGMENT Ramachandran Nair, J The short question arising in all the connected appeals filed by the Revenue against the very same assessee is whether deduction of export profit for 100% export oriented ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for 2001-02 to 2004-05 holding that deduction under section 10B(4) on export profit of both the 100% EOUs have to be computed after setting off carried forward unabsorbed depreciation as provided under Section 32(2) of the Act. Similarly, the Commissioner held that the treatment of interest income as business income is incorrect and excess deduction allowable under Section 35D was also ordered to be corrected. So far as the assessment year 2005-06 is concerned, the original assessment itself was completed by computing deduction under Section 10B with reference to profit obtained after setting off carried forward unabsorbed depreciation, against which assessee filed first appeal before the CIT (Appeals), who dismissed the same. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee is entitled to deduction under Section 10B(4) on the profit of eligible industrial units determined under the provisions of the Act but before setting off unabsorbed depreciation carried forward from earlier years as provided under Section 32(2) of the Act. It is against this common order of the Tribunal the Revenue has filed these appeals. We have heard Senior counsel Sri.P.K.R. Menon appearing for the Revenue and Adv. Sri.Parthasarathi appearing for the respondent-assessee. 2. Before proceeding with the matter Senior counsel for the Revenue submitted that the same issue stands decided by decision of the Karnataka High Court in CIT v. Himatasingike Seide Ltd. [2006] 286 ITR 255/156 Taxman 151. However, counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. (5) ** ** ** (6) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,- (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years ending before the 1st day of April, 2001, in relation to any building, machinery, plant or furnitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of profits on business of the undertaking. Respondent-assessee has no case that the business profit has to be computed in any way other than by applying Sections 30 to 43D as stated under Section 29 of the Act. This is exactly what the Commissioner of Income Tax has directed in the order issued under Section 263 of the Act for the first four years and by CIT (Appeals) for 2005-06. However, respondent-assessee raised the contention that since Section 10B is an exemption clause, exclusion has to be first allowed before computation of business income including set off of carried forward depreciation. It is this claim of the respondent-assessee that was accepted by the Tribunal against which Revenue has filed the appeals. 4. Senior couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to export turnover of each of the units and that has to be done after computing the business profit from the industrial units which necessarily has to be done after setting off unabsorbed depreciation carried forward from previous years. We are also constrained to notice that the principle of computation of deduction under Section 10B(4) is similar to determination of eligible export profit for deduction under Section 80HHC(3) of the Act. 5. Even though the Tribunal has not relied on sub-section (6) of Section 10B to uphold the claim of respondent-assessee, they have referred to the said provision and said that sub-section (6) of Section 10B also supports the case of the respondent-assessee. We are unable to accept this observ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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