TMI Blog2014 (4) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... h article or thing or computer software - The deduction is to be allowed from the total income of the assessee – the provisions of Chapter IV and Chapter VI shall also apply in computing the income for the purpose of deduction under section 10AA and 10BA of the Act subject to the conditions specified in the said sections - the Circular has clearly laid down that the loss from eligible unit would be eligible for carry forward and set off in accordance with the provisions of section 72 of the Act that loss from an ineligible unit can be carried forward and set off against the profits of eligible unit or ineligible unit in accordance with the provisions of the Act – Decided in favour of Assessee. Disallowance u/s 14A of the Act r.w Rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in confirming the AO's Addition on Account of Disallowance u/s 14A'of the I. Tax Act 1961. 3. The Appellant reserves the right to add, alter, amend, change, delete, modify omit, substitute and vary any one or more or all grounds of appeal. 2. Assessee-company, engaged in the business of providing various web-related services had filed its return of income on 25. 09. 2009 declaring total income at Rs 1, 86, 046/- The assessment in this case was completed u/s 143(3) on 19. 12. 2011 assessing total income of the assessee at Rs. 9, 39, 867/-. First ground of appeal is against disallowance of set off of Business Loss of STP Unit (STPU), amounting to Rs. 7, 23, 545/-, against the Profit of Non-STP Unit. During the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order, he held that the decision of Galaxy Surfactants Ltd. (343ITR108), relied upon by the assessee, could not come to the its rescue, that in the case of Galaxy Surfactants Ltd. (supra)Hon'ble jurisdictional High Court had dealt with different issues, that in the matter under appeal loss from STP unit was set off from non STP unit whereas in the case quoted, the assessee had several EOU units and the set off was in respect of one EOU to other EOU units. He referred to the decision of the Chennai Tribunal delivered in the case of Scientific Atlanta(129 TTJ 273) and held that the claim made by the assessee for allowing setting off of loss from STP unit to non- STP unit was not acceptable. 4. Before us, Authorised Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such article or thing or computer software. The deduction is to be allowed from the total income of the assessee. The term 'total income' has been defined in section 2 (45) of the IT Act and it means the total amount of income referred to in section 5, computed in the manner laid down in the Income-tax Act. XXXXX 5. 2. The income computed under various heads of income in accordance with the provisions of Chapter IV of the IT Act shall be aggregated in accordance with the provisions of Chapter VI of the IT Act, 1961. This means that first the income/l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, above Circular has clearly laid down that the loss from eligible unit would be eligible for carry forward and set off in accordance with the provisions of section 72 of the Act that loss from an ineligible unit can be carried forward and set off against the profits of eligible unit or ineligible unit as the case may be, in accordance with the provisions of the Act. Following the circular we decide ground no. 1 in favour of the assessee. 6. Next ground of appeal is about addition on Account of Disallowance u/s. 14A of the Act. During the assessment proceedings AO found that the assessee had received dividend of Rs. 4. 03 lakhs. He asked the assessee as to why disallowance u/s. 14A r. w. Rule 8D should not be made in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable in the year under consideration, that assessee had earned dividend income, that disallowance was worked out as per the provisions of the Act. 9. We have heard the rival submissions and perused the material before us. In the case of Godrej and Boyce Mfg. Co. Ltd. (328ITR1) Hon'ble Bombay High Court has held that Rule 8D has essentially put into place an artificial method of estimating the expenditure that can be regarded as being relatable to income that does not form part of the total income under the Act. While deciding the issue it has considered the judgment of Walfort Share and Stock Brokers P. Ltd. (supra). In our opinion sub-section 3 to the section 14A deals with the situation where assessee does not claim any expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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