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Tecnovate Esolutions Pvt. Ltd. Versus ITO Ward 16 (4) , Delhi

2015 (12) TMI 1184 - DELHI HIGH COURT

Deduction u/s 10A - Tribunal holding that Section 10A is a deduction provision and not an exemption provision - Held that:- Decided in favour of the Assessee and against the Revenue by holding that the ITAT was in error in considering Section 10A of the Act to be a deduction provision.

Whether brought forward losses should first be deducted from the total income of the current year and thereafter the deduction u/s 10A of the Act should be allowed? - Held that:- Brought forward losses .....

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Advocates For the Respondent : Mr. Rahul Chaudhary, Senior Standing counsel with Mr. Ruchir Bhatia, Advocate ORDER 1. This appeal by the Assessee under Section 260A of the Income Tax Act, 1961 ( Act ) is directed against the order dated 27th February 2015 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 104/Del/2011 for the Assessment Year ( AY ) 2003-04. 2. Admit. 3. The following questions of law are framed for consideration: (1) Whether the Tribunal is right in law in holding t .....

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for customers in and outside India. The Assessee was registered in September 2001 under the Software Technology Park Scheme of India (STPI). During the AY in question, the Assessee earned income of ₹ 1,31,17,439 from its business operations in the software technology park. Invoking Section 10A of the Act, the Assessee claimed exemption of 90% of such income being ₹ 1,18,05,695. It accordingly declared a net business income of ₹ 13,11,744. ₹ 32,367 on account of bank inte .....

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scrutiny. 5. The Assessing Officer ( AO ) by the order dated 29th March 2006 held that the income for the purposes of Section 10A of the Act should be deducted from the business income but only after set off of the brought forward losses. Accordingly, the income of the Assessee was recomputed as ₹ 67,69,267 and the tax liability was worked out as ₹ 15,40,579. In other words, the business loss brought forward from AY 2002-03 in the sum of ₹ 72,70,264 was reduced from the gross i .....

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vour of the Assessee by the decision of this Court in Commissioner of Income Tax v. Tei Technologies Pvt. Ltd. 2014 (361) ITR 36 (Del). He accordingly submits that as far as Question No.2 is concerned it after the income under Section 10A of the Act, which is completely exempt, is taken out from the total income that the brought forward losses have to be set off against the remaining business income of the Assessee. 8. Mr. Rahul Chaudhary, learned Senior Standing counsel for the Revenue first su .....

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the Central Board of Direct Taxes (CBDT) clarifying that Section 10A was only a deduction provision and not an exemption provision. 9. At the outset it requires to be noticed that the issue involved in the decision of the Karnataka High Court in Commissioner of Income Tax v. Himatsingke Seide Ltd. (supra) was regarding adjustment of unabsorbed depreciation against the exempt income under Section 10B of the Act. That is not the issue that arises in the present case. Secondly, a CBDT circular can .....

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