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M/s Safran Engineering Services Ind. Pvt. Ltd. Versus The Deputy Commissioner of Income-tax Circle-12 (3) Bangalore

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)845 - Karnataka High Court ) as well as Co-ordinate Bench decision in case of M/s Safran Aerospace India Pvt. Ltd.,(2015 (1)773 - ITAT BANGALORE ) we decide this issue in favour of assessee and direct the AO to allow the claim of deduction u/s 10A of the IT Act,, without setting off of brought for .....

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ses/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 section 80E placed under chapter VI-A of the IT Act.. c .....

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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 directed the ld.AO to setoff the lower of book loss or u .....

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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 High Court in the case of CIT Vs M/s Himata .....

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ur 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 judgment of the Hon ble jurisdictional High Court in the c .....

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dinate 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 Hima .....

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ses 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 income of the export oriented business undertaking a .....

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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 purpose of calculation of total income. The Hon ble Su .....

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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 profits of the undertaking engaged in the business of comp .....

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ither 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 contrary to the aforesaid provision and the appellate Commi .....

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f 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, we find that the Hon ble Supreme Court has dismissed .....

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