TMI Blog2016 (4) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-3-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Assessee : Shri K.R.Vasudevan, CA For The Revenue : Dr. P.K.Srihari, Addl.CIT ORDER PER SHRI VIJAY PAL RAO, JM: This appeal of the assessee is directed against the order dated 21-10- 2011 of the CIT(A)-III, Bangalore for Assessment year: 2005-06. 2. The assessee has raised the following grounds; A. Set off of brought forward losses/unabsorbed depreciation against 10A profits. a. The ld. CIT(A) has erred in confirming the order of the AO on setting off the b/f losses and unabsorbed depreciation of the unit amounting to ₹ 2,91,37,636/- before computing the profits eligible for deduction u/s 10A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und -A regarding disallowance of claim of deduction u/s 10A of the IT Act, without setting off of brought forward losses unabsorbed depreciation. 3.1 The assessee company is engaged in the business of software development. The assessee had claimed deduction u/s10A of ₹ 2.91 Cores, without setting of brought forward losses. The AO while passing the assessment u/s 143(3) of the IT Act, set off of the brought forward losses against the income eligible for deduction u/s10A of the IT Act, to the full extent and directed the balance loss to be carried forward. 3.2 The assessee challenged the action of the AO before the ld. CIT(A). The ld.CIT(A) has confirmed the action of the AO by following the judgment of the Hon ble jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Yokogawa India Ltd (341 ITR 385)(Supra) the Co-ordinate Bench of this Tribunal in the case of M/s Safran Aerospace India Pvt.Ltd Vs DCIT in ITA No.1261(B)/2010, had considered and adjudicated an identical issue in para-4.4 and 4.5 as under; 4.4 Having regard to the rival contentions and the material on record, we find that it is not clear from the record as to whether brought forward losses and depreciation loss pertain entirely to non-STPI unit only or part of it also pertains to STPI unit. The Hon ble Karnataka High Court in the case of Himatsingika Siede (supra) was considering the case of an assessee which was 100% export oriented unit in terms of sec.10B of the Act and was claiming exemption u/s 10B. In the case of the said ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and gain, one has to necessarily take into consideration total income in terms of the Act and to arrive at the income, one has to take into consideration various additions and deletions in terms of the Act, such as allowability of depreciation for the purpose of calculation of total income. The Hon ble Supreme Court has dismissed the SLP filed by the assessee against the order of the Hon ble High Court. 4.5 The Hon ble High Court of Karnataka, in the case of Yokogawa India Ltd (supra) was considering the case of an assessee which was in the business of manufacture and trading of process controlled instruments and it had filed return of income declaring loss. During the assessment proceedings u/s 143(3), the AO had observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO was quite contrary to the aforesaid provision and the appellate Commissioner as well as the Tribunal were fully justified in setting aside the said assessment order and granting the benefit of sec.10A to the assessee. Thus, the question of law was answered in favour of the assessee. Thus, there are two judgments of the Hon ble Karnataka High Court contrary to each other. When there are two judgments of the very same High Court by benches of equal strength, then the later judgment of the High Court has to be followed as held by the Hon ble Apex Court in the case of Bhika Ram and others vs. UOI reported in 238 ITR 113. The decision of the High Court in the case of Himatsingike Siede (supra) is dated 4th August 2006 whereas the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act and under the MAT provisions of the Act. 9. We have heard the learned AR as well as the learned DR and considered the relevant material on record. Since brought forward losses/unabsorbed depreciation were set off against 10A profit by the authorities below, therefore, the issue raised in ground no.B C were not adjudicated by the ld. CIT(A). In view of our findings on the issue of allowing deduction u/s 10A without set-off of brought forward losses/unabsorbed depreciation, ground no.B C are set aside to the record of the ld.CIT(A) for adjudication as per law, after affording an opportunity of being heard to the assessee. 10. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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