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2016 (6) TMI 120 - ITAT PUNE

2016 (6) TMI 120 - ITAT PUNE - TMI - Deduction u/s. 10B computation - Held that:- The assessee is entitled to the claim of deduction under section 10B of the Act before setting off of brought forward depreciation losses. The Assessing Officer is directed to compute the said deduction under section 10B of the Act, accordingly. - Decided in favour of assessee. - ITA No.904/PN/2015 - Dated:- 27-4-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri R.G. Nahar For Th .....

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for re-opening of the assessment u/s. 147 is without satisfying the conditions prescribed in the section and therefore such reopening proceedings are unlawful, unwarranted, not tenable in law and not in accordance with the provisions of the Act. The assessment framed thereunder is therefore be declared as null and void. Just and proper relief be granted to the appellant on this score. 2. Assuming without admitting that the proceedings of reopening are lawful and tenable in law, on facts and circ .....

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. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is in respect of claim of deduction under section 10B of the Act to be allowed before setting off of unabsorbed depreciation / losses, is squarely covered by the order of Tribunal in the case of M/s. Vishay Components India Pvt. Ltd. Vs. Addl.CIT in ITA No.551/PN/2014 and Addl.CIT Vs. M/s. Vishay Components India Pvt. Ltd. in ITA No.736/PN/2014, relating to assessment ye .....

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igh Court in CIT Vs. KEI Industries Ltd. (2015) 373 ITR 574 (Del). 5. In rejoinder, the learned Authorized Representative for the assessee pointed out that the said decision referred to the earlier provisions of the Act. It was further pointed out by the learned Authorized Representative for the assessee that the ground of appeal No.1 against reopening of assessment under section 147 of the Act would become academic in case the ground of appeal No.2 is decided in favour of the assessee. 6. We ha .....

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eing not charged to the profits of Mahad unit, resulted in excess claim of deduction under section 10B of the Act. Accordingly, reasons were recorded for reopening the assessment under section 147 of the Act and notice under section 148 of the Act was issued. In response thereto, the assessee submitted a letter stating that its return earlier filed may be treated as filed in response to notice under section 148 of the Act. The assessee had claimed the deduction under section 10B of the Act of Ma .....

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ofits of said unit and thereafter, deduction under section 10B of the Act should have been allowed on the balance profits of Mahad unit. The assessee argued that since section 10B of the Act was covered in Chapter II of the Act, provisions of Chapter VA(c) should not be applied in the case. Reliance was placed on the ratios laid down by the Hon ble Bombay High Court in CIT Vs. Black & Veatch Consulting (P.) Ltd. (supra) and in Hindustan Unilever Ltd. Vs. DCIT (2010) 325 ITR 102 (Bom). The As .....

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in CIT Vs. Himatasingike Seide Ltd. (2006-TIOL-448-HC-KAR-IT) and also Delhi Bench of Tribunal in Global Vantedge Pvt. Ltd. Vs. DCIT (2010- TIOL-24-ITAT -DEL). The Assessing Officer thus, held that brought forward depreciation of ₹ 6.87 crores is to be set off from the income of Mahad unit at ₹ 7.31 crores for the year under consideration and the assessee was eligible to claim deduction under section 10B of the Act on the balance income of ₹ 43,88,461/-. The CIT(A) upheld the r .....

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rose before the Tribunal in M/s. Vishay Components India Pvt. Ltd. Vs. Addl.CIT (supra) and it was held as under:- 27. We have heard the rival contentions and perused the record. The issue arising vide ground of appeal No.3 is in relation to the computation of deduction under section 10B of the Act after the amendment to section w.e.f. 01.04.2001. The persons invoking the said provisions are entitled to a deduction under the Act, as compared to the pre-amended provisions of the section, under wh .....

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10B of the Act is to be allowed in the hands of the assessee without considering the brought forward unabsorbed losses / depreciation, which can be set off against the other income of assessee. Both the authorities below had denied the claim to the assessee, in view of the ratio laid down by the Hon ble Supreme Court in Himasingka Seide Ltd. Vs. CIT (supra). The perusal of the judgment of Hon ble Karnataka High Court in the said case reflects that the years under appeal related to assessment ye .....

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s under:- The deduction under s. 10A, has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of s.72 which deals with the carry forward and set off of business losses. A distinction has been made by the Legislature while incorporating the provisions of Chapter VI-A. Section 80A(1) stipulates that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with .....

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rovision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. Thus ITAT was correct in holding that the brought forward unabsorbed depreciation and losses of the unit the Income which is not eligible for deduction under s.10A of the Act cannot be set off against the current profit of the eligible unit for computing the deduction under s.10A of the IT Act. 28. The said proposition of law has further been applied by the Hon ble Bombay High Court in CIT Vs. M .....

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ble Supreme Court in Synco Industries Ltd. Vs. AO, (2008) 299 ITR 444 (SC), wherein the issue was whether while computing the quantum of deduction under section 80I(6) of the Act, the Assessing Officer has to treat the profits derived from an industrial undertaking as only source of income in order to arrive at deduction under Chapter VI-A. The Hon ble Supreme Court held that the gross total income under section 80B(5) of the Act, which is also referred to in section 80I(1) of the Act, was requi .....

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tch Consulting Pvt. Ltd. (supra), wherein deduction under section 10A of the Act was to be computed in the hands of assessee and the same was whether the brought forward losses had to be adjusted before computing deduction under section 10A of the Act. It may be pointed out that the provisions of section 10A and 10B of the Act are at parametria. Following the ratio laid down by the Hon ble Bombay High Court, we hold that the deduction under section 10B of the Act is to be computed in the hands o .....

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