TMI Blog2015 (11) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... not considered. Further, as pointed out by the learned Authorised Representative of the assessee in the computation, there appears to be a mistake in the computation made by the Assessing Officer. Be that as it may, we also observe that the assessee has not properly explained the contradictions in the claims made by the assessee both in the earlier years and in the year under consideration in respect of the issue of determination of book profits under Section 115JB of the Act. We also find that the reconciliation statement filed by the assessee before us was not filed before the authorities below. In view of the above factual matrix of the case on this issue, we are of the considered opinion that it would only be appropriate to remand the issue back to the file of the Assessing Officer for fresh consideration and adjudication thereon as per law after affording the assessee adequate opportunity of being heard and to file details/submissions required which shall be duly considered. - Decided in favour of assessee for statistical purposes. - ITA Nos.935 & 936/Bang/2014, ITA No.1016/Bang/2014 - - - Dated:- 4-11-2015 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) disposed off the appeal by order dt.28.4.2014 granting the assessee partial relief. 3.1 Aggrieved by the order of the CIT (Appeals) III, Bangaloredt.28.12.2006 for Assessment Year 2004-05, Revenue has preferred this appeal in ITA No.935/Bang/2014 raising the following grounds :- 1. The order of the learned CIT (Appeals) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in law in directing the Assessing Officer to exclude the reimbursement of certain expenses both from the export turnover as well as from total turnover for the purpose of computation of deduction under Section 10A, without appreciating the fact that the statute allows exclusion of such expenditure only from export turnover by way of specific definition of export turnover as envisaged by sub-clause (4) of Explanation 2 below sub-section (8) of Section 10A and the total turnover has not been defined in this section. 3. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in directing the Assessing Officer to compute deduction under Section 10A in the above manner by placing reliance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f loss or unabsorbed depreciation, whichever is less : Rs.1,25,979 Rs.1,49,75,252. Book Profits u/s. 115JB : Rs.1,66,60,438. 4.2 Aggrieved by the order of assessment under Section 144 rws 147 of the Act dt.29.12.2009 for Assessment Year 2004-05, the assessee preferred an appeal before the CIT (Appeals) III, Bangalore who disposed off the appeal vide order dt.28.4.2014 allowing the assessee partial relief. 4.3 Aggrieved by the order of the CIT (Appeals) III, Bangalore dt.28.4.2014 for Assessment Year 2004-05, both Revenue and the assessee have preferred appeals before the Tribunal raising the following grounds :- 4.4 Grounds in Revenue s appeal in ITA No.936/Bang/2014. 1. The order of the learned CIT (Appeals) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in directing the Assessing Officer to compute deduction under Section 10A without setting off of losses (depreciation / business)pertaining to non-10A unit against the profit of 10A unit by repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with section 143(3) even though all the material facts relating to the above mentioned assessment were available at the time of assessment proceedings under Section 143(3) of the Income Tax Act, 1961. 1.2 The learned CIT (Appeals) erred in not appreciating that there is no failure on the part of the appellant in fully and truly disclosing all the material facts for the assessment for this assessment year. 1.3 The learned CIT (Appeals) erred in not appreciating that no new material or new information has been brought on record to warrant reopening of assessment. 2. Reduciton of unabsorbed tax depreciation while computing book profits under Section 115JB Rs.1,18,20,816. The learned CIT (Appeals) erred in upholding the action of learned Assessing Officer in reducing lower of unabsorbed business loss or unabsorbed depreciation loss as per tax provisions amounting to ₹ 125,979 instead of reducing unabsorbed business loss or unabsorbed depreciation loss as per books of accounts amounting to ₹ 11,820,816. The appellant craves leave to add, to alter or amend all or any of the aforestated grounds of appeal. For the above and any other gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in conformity with the context in which it is used. When the statute prescribes a formula and in the said formula, 'export turnover' is defined, and when the 'total turnover' includes 'export turnover', the very same meaning given to the 'export turnover' by the legislature is to be adopted while understanding the meaning of the 'total turnover', when the 'total turnover', includes 'export turnover'. If what is excluded in computing the 'export turnover' is included while arriving at the 'total turnover', when the 'export turnover' is a component of 'total turnover', such an interpretation would run counter to the legislative intent and impermissible. If that were the intention of the legislature, they would have expressly stated so. If they have not chosen to expressly define what the 'total turnover' means, then, when the 'total turnover' includes 'export turnover', the meaning assigned by the legislature to the 'export turnover' is to be respected and given effect to, while interpreting the 'total turnover' which is inclusive of the 'export turn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the decision of the Hon'ble jurisdictional High Court in the case of Yokogawa India Ltd. (supra) directed the Assessing Officer to compute the deduction under Section 10A of the Act without setting off the losses carried out forward from earlier years pertaining to non-10A units against the profits of the 10A units for the current year. 9.3.1 We have heard the rival contentions of both parties and perused and carefully considered the material on record. We find that the issue of setting off losses against the income from 10A units has been settled by the decision of the Hon'ble High Court of Karnataka in the case of Yokogawa India Ltd. (supra) wherein the Hon'ble Court has held that in respect of Section 10A of the Act , the phrase total income in Section 10A(1) is to be understood as the income of each such 10A unit and cannot mean total income as computed in accordance with the normal provisions of the act. It was also held that as the relief under Section 10A of the Act is in the nature of exemption even though termed as deduction, the profits from such 10A units is neither subject to the charge of income tax nor includible in total income. The Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or computer software bears to the total turnover of the business carried on by the undertaking. Therefore, it is clear that though the assessee may be having more than one undertaking for the purpose of section 10A it is the profit derived from export of articles or things or computer software from the business of the undertaking alone that has to be taken into consideration and such profit is not to be included in the total income of the assessee. It is only after the deduction of the said profits and gains, the income of the assessee has to be computed. 32. The provisions of this sub-section will apply even in the case where an assessee has opted out of section 10A by exercising his option under sub-section (8). As discussed, it is permissible for an assessee to opt in and opt out of section 10A. In the year when the assessee has opted out, the normal provisions of the Act would apply. The profits derived by him from the STP undertaking would suffer tax in the normal course subject to various provisions of the Act including those of Chapter VI-A. If in such a year, the assessee has suffered losses, such losses would be subject to inter source and inter head set off. The bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1 to 1.3) , the assessee had challenged the reopening of the assessment for Assessment Year 2004-05 by initiating proceedings under Section 147 of the Act and by issue of notice under Section 148 of the Act. However, in the course of proceedings before us, the learned Authorised Representative for the assessee submitted that the assessee is not pressing these grounds at 1 (1.1 to 1.3) pertaining to the reopening of assessment. We, therefore, dismiss the Grounds raised at S.Nos.1 (1.1 to 1.3) as not pressed. 12. Ground No.2 Computation of Book Profits u/s.115JB . 12.1 Ground No.2, therefore remains the only issue for adjudication i.e. in respect of the question of losses considered by the Assessing Officer while computing the book profits under Section 115JB of the Act. 12.2.1 In the computation of income, the assessee had determined book profits under Section 115JB of the Act at ₹ 28,20,390 while computing the book profits, the assessee reduced an amount of ₹ 1,18,20,816 towards the amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of accounts. While concluding the assessment under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Year 2003-04. iii) In the revised return of income filed by the assessee for Assessment Year 2003-04 on 31.10.2004, the total loss claimed is ₹ 5,26,18,845, comprising of business loss of R.63,08,389 and depreciation of ₹ 4,63,10,456. iv) The figure of loss as per the books of account of Makino Asia Ltd. i.e. business loss of ₹ 1,18,20,816 and depreciation of ₹ 1,30,97,205 are not reflected; v) During the proceedings for Assessment Year 2003-04, the assessee claimed that the Indian Branch of Makino does not have any accumulated losses (business loss and unabsorbed depreciation). In view of the above reasons, the learned CIT (Appeals) held that the assessee's claim is not in order and rejected the contentions of the assessee and upheld the Assessing Officer s finding in the matter. 12.3 In the course of appellate proceedings before us, on 24.9.2015, the learned Authorised Representative for the assessee submitted that there was errors in the Assessing Officer s computation of book profits and filed the following reconciliation statement giving a comparison between the book profits computed by both the assessee as well as the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised Representative of the assessee in the computation, there appears to be a mistake in the computation made by the Assessing Officer. Be that as it may, we also observe that the assessee has not properly explained the contradictions in the claims made by the assessee both in the earlier years and in the year under consideration in respect of the issue of determination of book profits under Section 115JB of the Act. We also find that the reconciliation statement filed by the assessee before us was not filed before the authorities below. In view of the above factual matrix of the case on this issue, we are of the considered opinion that it would only be appropriate to remand the issue back to the file of the Assessing Officer for fresh consideration and adjudication thereon as per law after affording the assessee adequate opportunity of being heard and to file details/submissions required which shall be duly considered. It is ordered accordingly. Ground No.2 is, therefore, treated as allowed for statistical purposes. 13. In the result, the assessee's appeal for Assessment Year 2004-05 is treated as partly allowed for statistical purposes. 14. To sum up, Revenue s appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
