TMI Blog2014 (1) TMI 1492X X X X Extracts X X X X X X X X Extracts X X X X ..... age 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 - Decided against Revenue. Whether the income and expenditure of eligible undertaking u/s. 10A be allowed while computing the book profit u/s 115JB - Held that:- As per the provisions existing prior to 1st April 2007, the explanation to Section 115JB referring to the term “Book Profit” included the expenditure and income relatable to any income to which section 10A or section 10B applied for the purpose of increase in the book profit and the income itself for the purpose of decreasing the book profit - It is precisely therefore that the CIT [A] has given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to eligible undertaking u/s. 10A of the I.T Act has to be allowed in the case of the assessee while computing the book profit u/s. 115JB of the I.T Act ? 2. Previously, in our order dated 25th March 2013, we had issued notice to the respondent only with respect to Question {iii}. In the said order, we had given reasons for not entertaining Questions {i} {ii}, even for issuance of notice. Such reasons read as under : 3. We have heard learned counsel Shri Pranav Desai for the Revenue. It is candidly pointed out to us that questions no (i) and (ii) are already considered in case of this very assessee in earlier assessment years in Tax Appeals No.687/2012 and 831/2012, whereby this Court has not entertained this issue. Relevant fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 VIA. 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 VIA gross total income to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. CIT [A] considered the issue in the following manner : 5. Next ground is on non consideration of income and expenditure attributable to eligible undertaking u/s. 10A while computing the book profits u/s. 115JB. As held in para 4.3 above, the undertaking STP Rajkot has to be treated as a separate undertaking eligible for deduction u/s. 10A. Therefore, the amount of expenditure relatable to eligible to which section 10A applies should be first added back to the profit and then the amount of income of this unit has to be deducted for working out the book profit for the purpose of section 115JB of the I.T Act. The A.O has not worked out the book profits as is required to be done. The A.O is directed to do the needful as directed above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the words section 10A or section 10B or were omitted. Thus, prior to 1st April 2007, the explanation to Section 115JB referring to the term Book Profit included the expenditure and income relatable to any income to which section 10A or section 10B applied for the purpose of increase in the book profit and the income itself for the purpose of decreasing the book profit. It is precisely therefore that the CIT [A] has given a direction for working out the book profit of the assessee by applying the said formula. This is in consonance with the provisions of Section 115JB and in particular explanation thereof, as it stood at the relevant time. The said provision was materially changed, however, later on. Since CIT [A] has given direction, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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