TMI Blog2008 (8) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... , brought forward losses and unabsorbed depreciation allowance relatable to other units of the assessee be not deducted from the eligible profits of the STP Unit in the process of computing deduction u/s 10A. d) The AO be directed to eliminate the amount of expenditure and income relatable to STP Unit, debited and credited to the profit and loss account respectively, in the process of computation of book profits under section 115JB; e) Interest levied u/s 234 B be deleted. f) Interest levied u/s 234D be deleted. g) .................. 2. The assessee engaged in manufacturing, trading and distribution of process control instruments and undertaking related services. On verification of details filed alongwith the return, the AO o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be understood as commercial profits or book Profits and v. The instructions to fill in form-1 speaks of elimination at source, of the profits of business eligible for the said deduction, while computing the profits and gains of the business or profession. 4. Learned AR also submitted that the ratio in case of M/s. Himatsingike Seide Ltd.,(2006) 286 ITR 255(Kar.) is not applicable to the facts of the assessee's case, because the assessee owned two units, one STP unit(Software Division), the other anon-STPI Unit (Product and Systems Service Division) and the said deduction is claimed on the profits of business of the STPI Unit. But, incase of M/s. Himatsingike Seide Ltd.,(supra) had only one STPI Unit in respect of which business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. I Gate Global Solutions Ltd., in ITA No. 248 and 249(B)/2007, ACIT vs M/s. Webspectrum Software (P) Ltd., in ITA No. 3879B)/2006 and ACIT vs M/s. Yokogawa India Ltd., in ITA No. 1802(B)/2005. In sum and substance, learned AR submitted that deduction should be held allowable from profit and gains of eligible undertaking uninfluenced by the results of the other units so, exemption u/s 10A be allowed as claimed by the assessee. On the other hand, learned DR supported the order of the authorities below. 5. We find that the Bangalore Bench of the Tribunal in the case of assessee for the assessment year 2002-03 in ITA No. 1802(B)/2005 vide paras-10 to 15 held as under; 10. We have heard both the parties. It will be relevant to reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articles or things or computer software] in such free trade zone or export processing zone: [Provided also that for the assessment year beginning on the 1st day of April, 2003, the deduction under this sub-section shall be ninety per cent of the profits and gains derived by an undertaking from the export of such articles or things or computer software:] Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years. Section 2(45) 2. In this Act, unless the context otherwise requires,- 45) total income means the total amount of income referred to in section 5, computed in the manner laid down in this Act; Section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation at all. But there are other sources which for certain economic reasons are not included or excluded by the 'will' of the Legislature. In such a case we must look to the specific exclusion that has been made. 13. In view of the above referred judgment, we have to consider the exclusion or deduction as per sec. 10A. As pointed out earlier, sec. 10A specifically states that a deduction is to be given. The deduction is in respect of profit and gains and the word 'such' mentioned before the profit and gains refers to the profit and gains of the undertaking, which Is related in the export of articles or things or computer software. Before the word 'undertaking', it is qualified by the word 'an'. It m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit derived from export of computer software. As already observed 'unabsorbed business losses of Other units cannot be set off and therefore unabsorbed depreciation which is to be set off after the unabsorbed business loss as per sec. 72(2) also cannot be set off for ascertaining the deduction u/s 10A. 15. In the instant case, there is no unabsorbed depreciation or unabsorbed business loss in respect of software services division and therefore profits and gains of the software services division will be exempt u/s 10A without setting off the loss of other division or the setting off of carry forward losses of other division. 6. Facts being similar, so following same reasoning, we hold that deduction should be allowed from prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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