TMI Blog2013 (1) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... day period is over i.e. sub-section 6 comes into play as per which, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of relevant assessment year, no loss under section 72 or 74 relating to business of the undertaking is to be allowed to be carried forward or set off if it pertains to any of the relevant assessment year before 01.04.2001. Thus interpreting the above definition and opening lines of sub-section 6, it emerges that sub-section (6) would apply in the previous year relevant to the assessment year immediately succeeding last of the relevant assessment year i.e. the previous year relevant to the first assessment year succeeding tax holiday period. To put in other words, since the assessee's exemption period is continuing as it chose to avail the benefit of tax holiday from assessment year 1999-2000, sub-section 6(ii) does not apply in this case. The aforesaid provisions that they apply during the assessment years after the end of the holiday period & as admittedly the present AY relates to the holiday period and therefore the above provisions are not applicable - AO as well as CIT(A) have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the impugned assessment year, it filed its 'return' on 21.11.2003 admitting total income of Rs. 1,36,36,175/-. Thereafter, the Assessing Officer completed scrutiny assessment vide assessment order dated 13.02.2006 computing taxable income of Rs. 1,75,58,720/- as under: "Profits of the business as computed by the assessee 5,33,38,428 Add: Difference in revenue as per P L A/c and TDS certificate (para 2) 1,36,617 Less: 5,34,75,045 10% of withholding tax added by the assessee 9,84,379 Add: 5,24,90,666 Entire Withholding tax Profits 98,43,786 6,23,34,452 Less: Gain on exchange fluctuation treated as 'Income from other sources Adjusted Profits 30,85,451 5,92,49,001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted. Per Assessing Officer, the assessee had claimed relief under section 10A in computing total income and therefore in claiming loss and depreciation pertaining to the assessment year 1997-98, violated section 10A(6)(ii) of the "Act". As the paper book reveals, since no representation was filed by the assessee in furtherance to the above said notice, the Assessing Officer passed rectification order dated 17.12.2007 under section 154 of the "Act" rejecting assessee's claim of brought forward loss and depreciation. 4. Aggrieved, the assessee preferred appeal; wherein, the Assessing Officer's findings have been upheld by the CIT(A) as herein below: "4. I have considered the submission of the Id. AR and the material on record. I find that an appeal has been filed against the order u/s 154 dated 17.12.2007. The merit as well as jurisdiction of the AO are the disallowance is the subject matter of the above appeal. As far as rectification order is concerned, I find that the A.O. is perfectly within his jurisdiction to carry out rectification. Under sub-section (1) of section 154, any mistake apparent from the record can be rectified i.e. a mistake which is obvious and patent and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also deem it appropriate to reproduce relevant portion of section 10A of the "Act" as follows: 10A. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: ** ** ** (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 76[ending before the 1st d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the last of relevant assessment year, no loss under section 72 or 74 relating to business of the undertaking is to be allowed to be carried forward or set off if it pertains to any of the relevant assessment year before 01.04.2001. It is the applicability of sub-section 6(ii), which the subject matter of interpretation before us. Regarding the construction of provision, the argument put forward by the assessee is that since it is still availing the tax holiday relief, the case is not governed by sub-section 6; whereas, the argument of the Revenue is to the contrary. We find that the contention of the assessee, qua the applicability of the provision to be on the right side of the law for the reason that in the definition clauses of the provision i.e. explanation 2 to 6 of the "Act", relevant assessment year has been defined as 'assessment year falling with the period of ten consecutive assessment years' referred to in this section. If we interpret the above definition vis- -vis opening lines of sub-section 6, it emerges that sub-section (6) would apply in the previous year relevant to the assessment year immediately succeeding last of the relevant assessment year i.e. the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the holiday period. Admittedly the present AY relates to the holiday period and therefore the above provisions are not applicable. In the case of Enercon Wind Farms (Krishna) Ltd. v. ACIT [2008] 21 SOT 29 (mum) this Tribunal has taken the view that provisions of Sec.10-B(6)(ii) are applicable only after the tax holiday period is over. The Tribunal held that if after allowing deduction u/s.10-B of the Act, there was certain income still left with the Assessee, the same will be total income of the Assessee to which all other sections of the Act, including Sec.72 would apply and carried forward losses could definitely be set off against such total income. Similar view was expressed by the ITAT Bangalore Bench in the case of Mindtree Consulting (P) Ltd. v. ACIT 102 TTJ (Bang) 691. Respectfully following the decisions referred to above, we direct the AO to allow the claim of the Assessee. Ground No.7 is allowed. Ground No.8 being general in nature does not call for any specific adjudication." 9. Accordingly, we are of the opinion that the Assessing Officer as well as CIT(A) have erred in subjecting the assessee's claim of brought forward loss and depreciation to sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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