TMI Blog2016 (2) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... es cannot be ruled out. Accordingly, we direct the Assessing Officer to disallow 2% of exempt income as expenditure towards earning that income. - Decided in favour of assessee Disallowance of setting off of loss u/sec. 10AA against the normal business income - Held that:- The assessee is having two separate units and as per the provisions of Secs.70 and 71 set off of loss from one source against the income from any other source under same head of income is allowed except capital loss and relied on CBDT circular No.07/2013. We after analyzing the provisions of set off and Sec.10A, the assessee company loss from the SEZ unit has to carried forward and set off against profit of eligible units only. We draw support from the decision of Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s.143(1) of the Act and was selected for scrutiny and notice u/s.143(2) was issued. In compliance to the notice the ld.AR of the assessee appeared from time to time and filed details. Further, the ld. Authorised Representative also furnished details of international transaction entered with the Associated Enterprises alongwith Accountant report u/s.92E in form No.3CEB. The Assessing Officer for the purpose of computing the Arms Length Price referred the case to Transfer Pricing Officer with necessary approval from the Commissioner of Income Tax and subsequently, Transfer Pricing Officer vide order dated 23.08.2011 has submitted the same to the Assessing Officer and held that no adjustment needed to the value of the International Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and relied on decisions and applicability of law. But, the Assessing Officer has calculated disallowance u/s.14A under Rule 8D relying on judicial decisions and attributed expenditure under Rule 8D ;46,82,087/- and added to the returned income. The Assessing Officer also further not allowed the set off of loss of the assessee company. The assessee company SEZ unit is eligible for deduction u/s.10AA of the Act and which has resulted in a loss of ;39,96,024/- and the same was claimed as set off with business income for taxation purpose. The assessee has filed explanations that there is no bar in set off of loss against business income as there is no specific provisions that business income/ income of the SEZ shall be separately considered an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urplus funds available and no part of borrowed funds have been utilized for the purpose of investment and during the financial year 2007-2008. The assessee company has received an amount of ;1,64,06,932/- as dividend income and further exhibited that there is no expenditure incurred in earning such dividend income. Therefore, there is no disallowance was made in the computation of income and relied on the judicial decisions of the Court and also argued on allowing setoff normal business profit with loss of SEZ unit u/sec.10AA of the Act. 6. On the other hand, the ld. Departmental Representative relied on the order of the Commissioner of Income Tax (Appeals) and contested the issues. 7. We heard the rival submissions of both the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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