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2015 (10) TMI 585 - ITAT BANGALORE

2015 (10) TMI 585 - ITAT BANGALORE - TMI - Claim for deduction u/s. 10B allowed without setting off the brought forward losses - CIT(A) allowed claim of assessee as relying on case of Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court] - Held that:- As already seen, in Yokogawa India Ltd. (supra), 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 “commerc .....

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n 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 Assessee : Shri Nainegli Mallinath, CA ORDER Per N.V. Vasudevan, Judicial Member The appeal is by the Revenue and Cross Obj .....

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he 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 ₹ 4 .....

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uted 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 13,61,856 .....

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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 fo .....

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ay 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 unders .....

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ch we are concerned in the present case is a situation where there is positive income of the eligible unit then the same should be allowed deduction u/s.10B of the Act without setting of the loss of non-eligible unit. The 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 .....

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up a 100% EOU in AY 1988-89. For want of profits it did not claim benefits u/s 10B in AYs 1988-89 to 1990-91. From 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 ava .....

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epreciation had to be adjusted against the profits of the EOU before computing the exemption allowable u/s 10B. In Civil Appeal No.1501 of 2008 dated 19.9.2013 against the aforesaid decision of the Hon ble Karnataka High Court, the Hon ble Supreme Court observed as follows while dismissing the appeal:- Having perused the records and in view of the facts and circumstances of the case, we are of opinion that the civil appeal being devoid of any merit deserves to be dismissed and is dismissed accor .....

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