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2016 (4) TMI 470 - ITAT BANGALORE

2016 (4) TMI 470 - ITAT BANGALORE - TMI - Set off of brought forward losses/unabsorbed depreciation against 10A profits disallowed - Held that:- Following the latest judgment of the Hon’ble High Court in case of M/s Yokogawa India Ltd (2011 (8) TMI 845 - Karnataka High Court ) as well as Co-ordinate Bench decision in case of M/s Safran Aerospace India Pvt. Ltd.,(2015 (1) TMI 773 - ITAT BANGALORE ) we decide this issue in favour of assessee and direct the AO to allow the claim of deduction u/s 10 .....

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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 of the Act. b. The ld.CIT(A) has erred in placing reliance on Cambay Electric Supply Industrial Co. Vs CIT(SC) 113 ITR 84, which pertains to claiming of deduction under sec .....

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10/-. b. The ld.CIT(A) ought to have directed theld.AO to setoff the unabsorbed depreciation against the income from other sources amounting to ₹ 2,291,810/- C. Set off of unabsorbed depreciation against book profit under MAT provisions of the Act. a. The ld.CIT(A) has erred in holding that no separate adjudication is required for set-off of book loss or unabsorbed depreciation while computing the book profits under minimum Alternate Tax(MAT) provisions. b. The ld.CIT(A) ought to have dire .....

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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 jurisd .....

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order dated 31-12-2014 has decided the issue in favour of the assessee. 5. On the other hand, learned DR has submitted that judgment of the Hon ble jurisdictional High Court in the case of CIT Vs M/s Himatasingike Seide Ltd. 286 ITR 255(Kar.)(Supra) has been confirmed by the Hon ble Supreme Court, as the SLP filed by the assesssee has already been dismissed by the Hon ble Supreme Court. 6. Having considered the rival submissions as well as the relevant material on record, we find that the judgme .....

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/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. .....

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reducing the assessee s income for assessment purposes at nil . The AO accepted the said claim of the assessee and assessed the total income at nil . However, the Commissioner of Income-tax (CIT) revised the order u/s 263 stating that the order passed by the AO was erroneous and prejudicial to the interests of the Revenue as exemption u/s 10B was allowed on an inflated amount without deducting unabsorbed depreciation. The CIT directed that unabsorbed depreciation should be adjusted against the .....

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he Act and therefore after a combined reading of the definition of exemption, total income-tax liability, deductibility etc., one has to come to a conclusion that calculation as far as possible is to be in terms of the Act. To arrive at a profit 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 pu .....

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claimed exemption u/s 10A for its STPI unit before set off of brought forward losses and depreciation. The AO, therein, had also observed that 10A benefit can be given only after adjusting brought forward loss and depreciation from the total income of the assessee. Aggrieved, the assessee preferred an appeal before the CIT(A) who granted relief to the assessee and on further appeal by the Revenue to the Tribunal, it was held that business loss of other units cannot be set off against the profit .....

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earlier assessment year or current assessment year either in the case of non-STP units or in the case of the very same undertaking? The Hon ble High court has considered the issue at length and at para 31 of its order has held that as deduction u/s 10A has to be excluded from the total income of the assessee, the question of unabsorbed business loss being set off against such profits and gains of undertaking would not arise and in that view of the matter, the approach of the AO was quite contrar .....

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owed 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 decision of the Hon ble High Court in the case of Yokogawa India Ltd.(supra) is dated 9th August, 2011. As regards the dismissal of the SLP by the Hon ble Supreme Court against the decision of the Hon ble Karnataka High Court in the case of Himatsingike Siede (supra) is concerned, .....

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