TMI Blog2013 (12) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of a non-section 10A unit - Decided in favour of assessee. - ITA No.8032,7739/Mum/2011 - - - Dated:- 11-10-2013 - P M Jagtap And Vivek Varma, JJ. For the Appellant : Shri Pitambar Das For the Respondent : Shri Vijay Mehta ORDER:- PER : Vivek Varma The cross appeals filed by the assessee the revenue are against the order of CIT(A) 13, Mumbai, dated 13.07.2011. ITA 8032/Mum/2011 (Assessee's appeal, AY 2005-06): The following grounds have been raised by the assessee: "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the stand of the learned Assessing Officer (A.O.)'s in reopening of the assessment under section 147 of the Act. The appellant prays that the reopening of assessment under section 147 of the Act may be declared as bad in law and reassessment order may please be cancelled. 2. Without prejudice to Ground no.1, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the loss of an unit eligible to claim deduction under section 10A of the Act amounting to Rs.43,88,484/- cannot be set off against other business of the assessee Each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of profits and gains and the word such mentioned before the profits and gains refers to the profits and gains of the undertaking, which is engaged in the export of articles or things or computer software. Before the word 'undertaking', it is qualified by the word 'an'. It means that it refers to a single undertaking. The words 'profits and gains' and its computation are mentioned under section 29. As per section 29, profits and gains of business or profession are to be computed in accordance with the provisions contained under sections 30 to 43D. section 70 governs the setting off a loss from one source against income from another source under the same head of income. Section 10A is not part of the section mentioned in section 29. Hence, business losses of the undertaking whose income is not exempt under section 10A cannot he set off to ascertain the profits and gains derived by an undertaking from the export of computer software. Hence, business losses of other units will not be set off against the profits of the undertaking engaged in export of computer 'software for the purposes of determining the allowable deduction under section 10A. Unabsorbed business loss is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue authorities, which clearly held that exemption provisions under section 10, 10A etc. are to be treated separately then the provisions dealing with computation. The AR referred to the decision of Hon'ble Bombay High Court in the case of CIT vs Black and Veatch Controlling Pvt. Ltd. reported in 348 ITR 72 (Bom), wherein it was held, "Section 10A of the Income-tax Act, 1961, is a provision which is in the nature of a deduction and not an exemption. The deduction under section 10A has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of section 72 which deals with the carry forward and set off of business losses. A distinction has been made by the Legislature while incorporating the provisions of Chapter VI-A. Section 80A(1) stipulates that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the Chapter, the deductions specified in sections 80C to 80U. Section 80B(5) defines for the purposes of Chapter VI-A "gross total income" to mean the total income computed in accordance with the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. Therefore, if there is a loss then it has to be removed. This is exactly, what the decisions of Bangalore ITAT in the case of Tata Consultancy Services Ltd (supra) and the Hon'ble Bombay High Court in the case of Black and Veatch (supra) and Hindustan Unilever Ltd. (supra) has taken. 15. We, therefore, respectfully following the decisions of the Coordinate Bench at Bangalore and Hon'ble Bombay High Court, reverse the orders of the revenue authorities and direct the AO to allow the claim under section 10A as computed by the assessee. Ground no. 2 is allowed. 16. Ground no. 1 pertains to reopening of the regular assessment framed under section 143(3). 17. The facts are that the regular assessment under section 143(3) was framed on 30.12.2008. The AO initiated reassessment proceedings by the issue of notice under section 148 on 29.03.2010, which was served on the assessee on 30.03.2010. As a prelude to the initiation, the AO recorded the following reasons: "2.2 The reasons for re-opening the assessment under section. 147 are as under: "Assessee has claimed exemption/deduction under section. 10A of Rs.17,87,90,827/- and it has shown income from Business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe that there was any escapement of income, rather, it was merely a change of opinion on the facts already on record. 19. The assessee placed reliance on various decisions before the revenue authorities, which were rejected and it was held that there was neither anything new or the change in law or change in law or change in judicial decisions contrary to the already existing decisions, which would justify the initiation of reassessment proceedings. 20. The DR relied on the orders of the AO and justified the reopening. 20. We have heard the rival arguments and heave perused the various case laws cited. The first and foremost "reason" which justifies the initiation is failure on the part of the assessee to fully and truly disclose material facts. This cannot be the fact with the AO, because, the assessee had computed its income following the ratio of the decisions rendered by various fora, and as per law. 21. The fact is also pronounced in the decision of Hon'ble Bombay High court in the case of Hindustan Unilever Ltd (supra), where there were identical facts and the Hon'ble Bombay High Court quashed the reassessment proceedings "(iv) That the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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