TMI Blog2014 (11) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... f revenue.. - I.T.A. No.5558/Mum/2009, I.T.A. No.5607/Mum/2009, I.T.A. No.1996/Mum/2010, I.T.A. No.3771 and 3772/Mum/2012, I.T.A. No.5232/Mum/2013 - - - Dated:- 7-11-2014 - Shri H. L. Karwa And B. R. Baskaran (AM),JJ. For the Petitioner : Shri Hiro Rai For the Respondent : Shri Pitambar Das ORDER Per Bench: The assessee has filed appeals for assessment years 2004-05, 2006-07, 2007-08 and 2008-2009. The revenue has filed appeals for assessments years 2004-05 and 2005-06. All these appeals were heard together and hence these appeals are being disposed of by this common order, for the sake of convenience. 2. We shall first take up the appeals filed by both the parties for the assessment year 2004-05. In the assessee s appeal, following issues are contested: a) Rejection of claim for set off of unabsorbed depreciation of ₹ 6,40,171/- pertaining to assessment year 2001-02; b) Setting off of unabsorbed depreciation and unabsorbed business loss brought forward from assessment year 2003-04 before allowing deduction u/s 10A of the Income Tax Act, 1961 (the Act), thereby reducing the quantum of deduction claimed u/s 10A of the Act. 3. The reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is not entitled to claim set off either unabsorbed depreciation or unabsorbed business loss pertaining to assessment year 2001-02. Accordingly, the AO rejected the claim made by assessee. 6. The AO also noticed that the assessee has claimed deduction u/s 10A of the Act before setting off of brought losses and brought forward depreciation. The AO noticed that the assessee had unabsorbed depreciation of ₹ 51,79,844/- and unabsorbed business loss of ₹ 1,69,69,616/- aggregating to ₹ 2,21,49,460/- and both the losses pertained to AY 2003-04. The AO took the view that the unabsorbed loss and unabsorbed depreciation referred above should be deducted from the business income before allowing deduction u/s 10A of the Act. In this regard, he placed reliance on the decision of the Hon ble Supreme Court in the case of IPCA Laboratories Ltd reported in 266 ITR 521. Accordingly, he deducted unabsorbed depreciation loss referred above which resulted in business profit of ₹ 75,52,837/-. Accordingly, he restricted the deduction u/s 10A of the Act to ₹ 75,52,837/-. 7. In the appellate proceedings, the ld. CIT(A) directed the AO not to exclude travelling expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessment years, or of any previous year, relevant to any subsequent assessment year-- . A perusal of the above provision would show that the provisions of sec. 10A(6) shall come into effect only while computing the total income of the assessee for any of the assessment years succeeding the last of the relevant assessment year. The expression relevant assessment year is defined under Explanation 2(vi) to sec. 10A as under:- relevant assessment year means any assessment year falling within a period of ten consecutive assessment years referred to in this section It is pertinent to note that the deduction u/s 10A is allowed for a period of ten consecutive assessment years, meaning thereby the provisions of sec. 10A(6) shall not apply to any of the assessment year falling within the period of ten consecutive assessment years. The present assessment year falls within the period of relevant assessment year . Hence the restriction provided in sec. 10A(6) shall not apply to this year. Accordingly, we are of the view that the assessee is entitled to claim set off of business loss/unabsorbed depreciation pertaining to AY 2001-02. Accordingly, we set aside the order of Ld CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is required to be deducted before allowing deduction u/s 10A of the Act. However, the unabsorbed business loss has to be deducted only from the profit available after allowing deduction u/s 10A of the Act. Accordingly, we modify the order of Ld CIT(A) and direct the AO to compute the total income in terms of the above said discussion. 13. In the appeal preferred by the revenue for AY 2004-05, the only issue urged relates to the exclusion of Travelling expenses and Software development charges incurred in foreign currency from the amount of Export Turnover for the purpose of computing deduction u/s 10A of the Act. Eventhough the Ld CIT(A) held that the above said expenses are not required to be excluded from the amount of turnover, yet the Ld A.R submitted that he would not have grievance over the claim of the revenue, if the corresponding amount is excluded from the Total turnover also while computing deduction u/s 10A of the Act. We notice that the Hon ble Bombay High Court has held in the case of CIT Vs.Gem Plus Jewellery India Ltd (2011)(330 ITR 175) that the items excluded from the Export turnover are required from the total turnover also. Accordingly, by followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the above said amount of ₹ 3,19,458/-. 17. The ground numbered as 3 relates to the validity of the action of the AO in reducing the unabsorbed business loss and unabsorbed depreciation from the business profits before allowing deduction u/s 10A of the Act. We have considered an identical issue in AY 2004-05 supra and have held that the unabsorbed depreciation should be taken as part of current depreciation and the same is required to be deducted before allowing deduction u/s 10A of the Act. However, the unabsorbed business loss has to be deducted only from the profit available after allowing deduction u/s 10A of the Act. We direct the AO to compute the total income accordingly. 18. We shall now take up the appeal filed by the assessee for AY 2007-08, wherein the assessee has filed concise grounds of appeal. The Ld A.R did not press the ground numbered 1.1 relating to validity of deduction of expenses incurred in foreign currency from the amount of Export turnover while computing deduction u/s 10A of the Act. Accordingly the said ground is dismissed as not pressed. The Ld A.R submitted that the ground numbered as 1.2 relating to the claim for deduction of the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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