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TMI Blog2012 (12) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income tax (Appeal) erred in upholding the Assessing Officer's order of not allowing to set off the brought forward assessed unabsorbed depreciation of the previous assessment year 2004-05 against the current year's Income from Other Sources on the ground or grounds and in the circumstances of the case and law. 4. The Commissioner of Income tax (Appeal) erred in upholding the Assessing Officer's order for making addition of Profit of 1OA Unit located in SEZ Mumbai, to arrive at the Book Profit u/s 115JB of the c, in respect of on the ground or grounds as alleged in the assessment order." 2. Both the representatives of parties submitted that facts and grounds of appeal for assessment year 2009-2010 are similar to assessment year 2008-09 and ld CIT(A) has also followed his own order for assessment year 2008-09 while deciding the grounds of appeal for assessment year 2009-2010. Therefore, we have heard these appeals together and dispose off the same by a common order for the sake of convenience. 3. During the course of hearing, it was submitted that ld CIT(A) has wrongly mentioned assessment year 2006-07 in para 2.3.1 due to typographical mistake in his orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal by its order dated 31.8.2012 after considering the decision of Hon'ble Jurisdictional High Court in the case of Hindustan Unilever Ltd. (supra) has held that while computing the income, assessee was entitled to set off the losses sustained by section 10A eligible unit against normal business income and the income from other sources. In view of above and following earlier order of Tribunal in assessee's own case (supra), we allow Ground Nos.2 & 3 of appeal taken by assessee for assessment year 2008-09 subject to the direction that whatever is final figures of loss after giving effect to order of earlier years, set off if any, to that extent, will be allowed as per provisions of law. Hence, Ground Nos.2 & 3 of appeal taken by the assessee is allowed for assessment year 2008-09. 10. In Ground No.4, the issued involved as to whether ld CIT(A) is justified to confirm the action of AO to make the addition of profit u/s.10A unit located in SEEPZ Mumbai to arrive at book profit u/s.115JB of the Act. 11. The relevant facts giving rise to this ground of appeal are that assessee, while computing tax liability u/s.115JB of the Act, deducted the income of Rs. 10,86,10,248 in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scope of Minimum Alternate Tax (MAT) was widened by including the income exempt u/s.10A/10B of the Income tax Act in the book profit. AO after considering explanatory notes i.e. Circular No.3/2008 dated 12.3.2008 held that MAT provisions are applicable to a company on the income which is from any business or services derived from unit or Special Economic Zone. He further stated that section 115JB(6) was inserted by Special Economic Zones Act, 2005, when section 10AA was also inserted by the same Act. Section 10AA provides a deduction of such profits and gain derived by an assessee being entrepreneur referred to in clause (f) of Section 2 of Special Economic Zone Act, 2005 from its unit. AO stated that by inserting sub-section (6) in Section 115JB, the legislature has provided an exemption under MAT also to such units. Therefore, section 115JB(6) is applicable to an assessee claiming deduction under section 10AA of the Act and not an assessee claiming deduction under 10A of the Act. AO stated that assessee has claimed deduction of 10A of the Act under normal provisions of the Act. Therefore, for computing book profit u/s.115JB of the Act, income relates to sec. 10A unit is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2007 in clause (f) of Explanation (1) to section 115JB(2) i.e. from A.Y. 2008-09, the units set up in STP, EHTP, SEZ, FTZ and EOU units are eligible for tax benefit under normal provisions of the Act but will be subject to levy of MAT. However, units in SEZ will continue to get the benefit of provisions of section 115JB of the Act in view of sub-section (6) of section 115JB of the Act, which was inserted w.e.f. 10.2.2006 by the Special Economic Zones Act, 2005. He submitted that the term 'unit' and 'SEZ' are not defined under section 115JB or under section 2 of the Income tax Act. The definition of these terms is provided under section 2 of Special Economic Zones Act, 2005 (hereinafter to be referred as SEZ Act). It is relevant to state that section 2 of SEZ Act, define the term 'Special Economic Zone' and 'unit' as under: "(za) Special Economic Zone - means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section(1) of section 4(including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone" "(zc) Unit- means a unit set up by an entrepreneur in a Special Economic Zone and includes an existing un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the legislature. He submitted that ld CIT(A) has rightly confirmed the action of AO that while computing book profit u/s.115JB of the Act, that income relating to assessee's unit located in SEZ, Mumbai is to be included in the book profit. 20. We have considered submissions of ld representatives of parties and orders of authorities below. We have also carefully considered the relevant provisions of the Act. There is no dispute to the fact that assessee's unit in Mumbai is located in SEZ. Section 10A provides deduction of profits derived by the undertaking in respect of units which are located not only in SEZ but also in the following areas: "*Free Trade Zone (FTZ) * Electronic Hardware Technology Park (EHTP) * Software Technology Par (STP) * Export Oriented Units (EOUs) By Special Economic Zone Act, 2005 w.e.f 10.2.2006, a new section 10AA has been inserted which provide exemption to the units located in SEZ. Section 2 of SEZ Act, defines SEZ as under: "(za) Special Economic Zone - means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4(includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a proviso to section 115JB(6) of the Act, which reads as under: "Section 15JB(6)........... Provided that the provisions of this sub-section shall cease to have effect in respect of an previous year relevant to the assessment year commencing on or after the 1st day of April, 2012." ** ** ** 22. Hence, we hold that authorities below were not justified to include the book profit in respect of SEZ unit at Mumbai of the assessee while computing book profit u/s.115JB of the Act for assessment year 2008-09. Therefore, we reverse the orders of authorities below by holding that income relating to SEZ unit at Mumbai is to be excluded while computing book profit u/s.115JB of the Act for assessment year 2008-09. Hence, Ground No.4 of appeal taken by the assessee for assessment year 2008-09 is allowed. 23. Now we take up appeal for assessment year 2009-2010 being I.T.A. No.609/M/2012. 24. Grounds raised by assessee read as under: "1. The Commissioner of Income tax (Appeal) erred in upholding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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