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TMI Blog2015 (10) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble High Court of Karnataka in the case of Yokogawa India Ltd., 341 ITR 385 (Karn) and allowing the claim of assessee for deduction u/s. 10B of the Income-tax Act, 1961 ["the Act"], without setting off the brought forward losses, on the ground that the Department has filed a SLP against the said decision. It is the further plea of the Revenue that the decision rendered by the CIT(Appeals) is not in tune with the Circular No.749 dated 9.8.2000 and Circular No.7/2003 dated 5.9.2003. 3. The Cross Objection by the assessee is purely supportive of the order of CIT(Appeals). 4. The facts under which the appeal arises for consideration are as follows. During the course of assessment proceedings, the AO noted that the assessee has claimed Rs. 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yokogawa India Ltd. (supra). The Hon'ble Karnataka High Court in the case of Yokogawa (supra) had to deal with two substantial question of law. The first substantial question of law was on the right of set off of loss of non-eligible unit against the profit of the eligible unit on which deduction u/s.10B was to be allowed. The Hon'ble Court in para 10 to 20 of its judgment dealt with the issue. The Hon'ble Court noticed that Sec.10-A(1) of the Act (which is in pari materia with Sec.10-B of the Act) read as follows: "10B. Special provisions in respect of newly established undertaking in free trade zone etc.,-(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by undertaking from the export of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Karnataka High Court in the case of Yokogawa (supra) was concerned with similar situation as set out above. In view of the aforesaid decision of the Hon'ble Karnataka High Court, we are of the view that the claim as made by the Assessee for carry forward of loss of the non-eligible unit had to be allowed without set off of profits of the 10A/10B unit. We hold accordingly and dismiss the relevant grounds of appeal of the Revenue. 10. We may also observe that the Hon'ble Karnataka High Court's decision in the case of Himatasingike Seide (supra) has held that unabsorbed depreciation (and business loss) of same (s. 10A/10B) unit brought forward from earlier years have to be set off against the profits before computing exempt profits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be dismissed and is dismissed accordingly." 11. Thus the ratio has to be confined to the facts and circumstances of the case. The aforesaid observations have to be confined to the facts of that case and as applicable to a case where brought forward losses and depreciation of the very same STP undertaking are not adjusted while arriving at the profits of the 10B unit for allowing deduction u/s.10A/10B of the Act and not in respect of brought forward losses and depreciation of other undertakings/non-10A/10B units. S. 10A/10B(6) as amended by the FA 2003 w.r.e.f. 1.4.2001 provides that depreciation and business loss of the eligible unit relating to the AY 2001-02 & onwards is eligible for set-off & carry forward for set-off against income p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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