9911796707
TMI Blog2013 (1) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... er the CIT(A) has erred in confirming the decision of the Assessing Officer in not allowing the assessee's set off of business losses from unit under section 10B of the Act against the income from other sources or other heads of income, as asserted by the assessee and denied by the Revenue." 3. Brief facts apropos of the issue are that the assessee is a company engaged in the business of IT Enabled Services. Regarding Assessment Year 2007-08, it filed its 'return of income' on 31.10.2010 declaring loss of Rs.2,55,38,201/-. We also find from the assessment order dated 29.12.2009 that the assessee had shown the following receipts regarding the impugned Assessment Year. "Receipts Rs. IT Enabled Services 2,90,31,345/- Interest income 13,54,906/- Difference in exchange 8,74,972/- Rent Received 32,25,614/- Amenities Received 3,96,594/- Closing WIP 6,10,022/- Misc. Income. 67,389/-" Similarly, the expenses incurred and claimed read as under:- Expenses Rs. Administrative and other expenses 1,94,36,479/- Financial charges 2,03,23,148/- Depreciation 2,13,39,417/- In the light thereof, the assessee's plea was that though it is an assessee availing 10B deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst income from another contemplate loss from a source, the income from which is liable to tax. If the income from a source is altogether exempt from tax, loss from that source cannot be set off against taxable income from a different source or income under a different head. Since the income is not taxable, the loss incurred also cannot be set off against income from other heads of income. Reliance is placed on the decisions of; 1. Commissioner of Income Tax V. S.S.Thiagarajan [129 ITR 115(Mad)] 2. Commissioner of Income Tax V. Harprasad & Co (P) Ltd. [99 ITR 118(SC)] In view of the above said discussions, I uphold the decision of the Assessing Officer in not allowing the set off of loss from business eligible under section 10B of the Act against the income from other sources or other heads of income. All the grounds of appeal, taken by the Appellant, are therefore dismissed. In the result, the appeal is dismissed." Therefore, the assessee is aggrieved. 5. The A.R has reiterated grounds of appeal as pleaded and vehemently submitted that the assessee's claim of set off(supra) has been wrongly decline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious heads, it has declared receipts as incomes as reproduced(supra). In such a case, in our opinion, Section 70 & Section 71, more particularly Sec.71 providing intra head setting off is applicable. We also find that the Hon'ble Bombay High Court in M/s.Galaxy Surfactants Ltd.(supra) has also held as under:- "5. At the outset, while dealing with the submission which has been urged on behalf of the Revenue, it must be noted that Section 10B when it was originally introduced by the Finance Act,1988, with effect from 1 April 1989, provided for an exemption of the profits and gains derived by the assessee from a hundred percent export oriented undertaking. The earlier provision specifically stipulated that profits and gains derived by an assessee from a hundred percent export oriented undertaking to which the section applies shall not be included in the total income of the assessee. Section 10A as at present stands, came to be substituted by the Finance Act, 2000 with effect from 1 April 2001. The section as it now stands, is not a provision for exemption, but a provision which enables an assessee to claim a deduction. As it now stands, the section contemplates a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Crab Stick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income. In these circumstances, the basis on which the assessment is sought to be reopened is contrary to the plain language of Section 10B." This decision of the Division Bench has been followed by another Division Bench of this Court in the case of Commissioner of VBC 8 itxa 3465.10.7.2. Income Tax-II vs. Patni Computers Systems Ltd.3. 6. Quite apart from the fact that the issue stands covered against the Revenue by the view taken by the Division Benches in the aforesaid two cases, even as a matter of first principle, we find no justification in the submission which has been urged on behalf of the Revenue. Section 70 provides for a setting off of a loss from one source falling under any head of income (other than capital gains) against income from any other source under the same head. Section 71 provides for the setting off of a loss sustained with reference to one head of income against income from another head (save ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions, profits and gains of an eligible business to which subsection(1) applies are for the purposes of determining the quantum of deduction to be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year. A provision akin to subsection(5) of Section 80IA or for that matter akin to subsection(6) of Section 80I has not been introduced by the Legislature when it enacted Section 10B. The fact that unabsorbed depreciation can be carried forward to a subsequent year does not militate against the entitlement of the assessee to set off a loss which is sustained by an eligible unit against the income arising from other units under the same head of profits and gains of business or profession. The Legislature not having introduced a statutory prohibition, there is no reason to deprive the assessee of the normal entitlement which would flow out of the provisions of Section 70. 7. In this view of the matter, for the reasons which we have already indicated earlier, we follow the earlier decision of a Division Bench of this Court on this aspe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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