TMI Blog2013 (12) TMI 1531X X X X Extracts X X X X X X X X Extracts X X X X ..... s and finally determining the tax liability u/s 115 JB at ₹ 7,96,886/-. 3. Aggrieved the assessee carried the matter in appeal. The First Appellate Authority granted part relief. 4. Further aggrieved the assessee is in appeal before us on the following grounds. 1. That having regard to the facts and circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the action of the Ld.A.O. in setting off the brought forward business loss for the Assessment Year 2006-07 amounting to ₹ 94,80,657/- from the income of the undertaking for the current year while calculating deduction u/s 10A. 2. That having regard to the facts and circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming the action of the Ld.A.O. in making disallowance of ₹ 8,45,602/- u/s 40(a)(ia) by treating supply of man power for the purpose of maintenance support for application remedy of ARS system as professional services liable to TDS u/s 194J in place of contract u/s 194C of the Act. 3. That having regard to the facts and circumstances of the case, the Ld.Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption u/s 10 A have to be excluded from the computation of total income under Chapter III, as it is income which does not form part of the total income . Under those circumstances the Ld.Counsel submits that the set off of brought forward losses against the income which never formed part of the total income cannot be done. 6.1. He submitted that this issue is no more res integra as it is measured by the following decisions. (i) KPIT Luminus Infosystems (Bangalore) P.Ltd. vs. ACIT, 120 TTJ 956 (Bangalore) : Wherein the decision of the Hon ble Karnataka High Court in the case of CIT vs. Himmatasinghike Seide Ltd. (2006) 286 ITR 255 (Kar), was found not applicable as the facts and law applicable were different. (ii) Patspin (I) Ltd. vs CIT (2010) 132 TTJ 227 (Coch). He submitted that profits of the undertaking means profit of the undertaking for that year only . He referred to S.72 and submitted that the Legislature has used the words profits and gains of the business . He distinguished the decision of the Hon ble Karnataka High Court in the case of CIT vs. Himmatasinghike Seide Ltd. (supra). (iii) He also relied on the decision of Hon ble A.P.High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Tribunal in the case of Hero Motor Corp., no disallowance can be made u/s 40(a)(ia). 6.3. On ground no.3 he submitted that the expenditure in question was paid for debonding for disposal of its fixed assets and hence is in the revenue field. 6.4. He submitted that ground no.4 is not pressed. Ground no.5 is general in nature. Ground no.6 is consequential and ground no.7 is general. 7. The Ld.D.R. Smt.Renuka Jain Gupta submitted that the issue of set off of carry forward of losses against income u/s 10A is covered in our favour by the decision of Delhi Bench of the Tribunal in the case of Global Vantedge (P) Ltd (supra). She further submitted that the Hon ble A.P.High Court has adjudicated the issue in this case and an SLP on the same is admitted by the Hon ble Supreme Court. She relied on the order of the Ld.Commissioner of Income Tax (Appeals) and submitted that the profits except u/s 10A should be set off against the brought forward losses and unabsorbed depreciation. On a query from the Bench as to whether she would rely on any decision of the High Court which is contrary to the decision of Hon ble Karnataka High Court in the case of M/s Yoko Gawa India Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of computer ;software for the purposes of determining the allowable deduction u/s 10-A of the Income Tax Act. Unabsorbed business loss is to be set off u/s 72 of the Act and the same is not mentioned u/s 29 of the Act. Hence, unabsorbed business losses will not be set off against the profit of the undertaking engaged in the export of computer software for the purposes of ascertaining the deduction admissible u/s 10-A. As per Section 72(2), unabsorbed business loss is to be first set off and thereafter the unabsorbed depreciation treated as current years depreciation u/s 32(2) is to be set off. For computing deduction u/s10-A, only the profit derived from export of computer software is to be taken into consideration. The unabsorbed business losses of other units cannot be set off and therefore the unabsorbed depreciation which is to be set off after the unabsorbed business loss u/s 72(2), also cannot be set off for ascertaining the deduction u/s 10-A. Therefore, the Tribunal upheld the order of the appellate Commissioner and dismissed the appeal. Aggrieved by the same, the Revenue is in appeal. 8.2. Substantial question of law admitted was as follows. (i) Whether the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n treated as current years depreciation u/s 32(2) is to be set off. As deduction u/s 10-A has to be excluded from the total income of the assessee, the question of unabsorbed business loss being set off against such profit and gains of the undertaking would not arise. In that view of the matter, the approach of the assessing authority was quite contrary to the aforesaid statutory provisions and the appellate Commissioner as well as the Tribunal were fully justified in setting aside the said assessment order and granting the benefit of s.10-A to the assessee. Hence, the main substantial question of law is answered in favour of the assessee and against the Revenue. 8.5. No contrary decision of any High Court is brought before us on this issue. This being the sole judgement of the High Court on this issue as on the date and being the latest decision, we apply the same and uphold the contentions of the assessee. In the result ground no.1 of the assessee is allowed. 9. In ground no.2 the issue is whether deduction u/s 40(a)(ia) can be made when tax has been deducted at source u/s 194C instead of 194J. This Bench of the Tribunal in the case of Hero MotorCorp followed the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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