TMI Blog2015 (10) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of setting off the loss of the current year’s or the brought forward business loss (and unabsorbed depreciation) against the s. 10A profits does not arise. Therefore the decision of the Hon’ble Karnataka High Court in the case of Himatasingike Seide (2006 (8) TMI 125 - KARNATAKA High Court) will not apply to the facts of the present case. In view of the aforesaid decision of the Hon’ble Karnataka High Court in the case of Yokogawa India Ltd. (supra), we are of the view that there is no merit in this appeal by the Revenue. - Decided against revenue - IT(TP)A No.1374/Bang/2014 - - - Dated:- 7-8-2015 - SHRI N.V. VASUDEVAN AND SHRI ABRAHAM P. GEORGE, JJ. For The Revenue : Shri Sunil Kumar Agarwal, Jt. CIT(DR) For The Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed from the total income of the assessee. Section 2(45) defines total income as the total amount of income referred to in section 5 computed in the manner laid down in the Act. Thus, total income of the assessee computed under the Act is income after setting off the brought forward losses as provided u/s. 72, from which deduction u/s. 10B would be allowed. He therefore held that deduction u/s.10B is to be allowed only after setting off the brought forward losses of ₹ 96,89,359 as follows:- Rs.4,24,07,123 Less: B/f losses for earlier years set off A.Y. 2007-08 Business loss 38,03,998 A.Y. 2008-09 Depreciation loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in which the under-taking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : (emphasis supplied) 8. The expression Deduction and shall be allowed from the total income of the Assessee used in the aforesaid provisions was considered by the Hon ble High Court and it held in para 13 to 15 of its judgment that the expression shall be allowed from the total income of the Assessee does not mean total income as defined u/s.2(45) of the Act but that expression means profits and gains of the STP undertaking as understood in its commercial sense or the total income of the STP unit. Thus the view expressed is that income of the STP undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 1992-93 it claimed the said benefits for a connective period of 5 years. In AY 1994-95, the assessee computed the profits of the EOU without adjusting the brought forward unabsorbed depreciation of AY 1988-89. It claimed that as s. 10B conferred exemption for the profits of the EOU, the said brought forward depreciation could not be set-off from the profits of the EOU but was available to be set-off against income from other sources. It was also claimed that the profits had to be computed on a commercial basis. The AO accepted the claim though the CIT revised his order u/s 263 and directed that the exemption be computed after set-off. On appeal by the assessee, the Tribunal reversed the order of the CIT. On appeal by the department, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imatasingike Seide Ltd. (supra). As we have already seen, in Yokogawa India Ltd. 341 ITR 385 (Kar), it was held that even after s. 10A/10B were converted into a deduction provision w.e.f 1.4.2001, the benefit of relief u/s 10A/10B is in the nature of exemption with reference to commercial profits and that as the income of the s. 10A unit has to be excluded at source itself before arriving at the gross total income, the question of setting off the loss of the current year s or the brought forward business loss (and unabsorbed depreciation) against the s. 10A profits does not arise. Therefore the decision of the Hon ble Karnataka High Court in the case of Himatasingike Seide (supra) will not apply to the facts of the present case. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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