TMI Blog2009 (2) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding in his order under section 263 that the assessment order under section 143(3) of the Act dated March 20, 2006 is erroneous and prejudicial to the interest of the revenue within the meaning of section 263 of the Act. 4. That the learned CIT erred in holding that the brought forward business losses and unabsorbed depreciation for the assessment years from 1998-99 to 2002-03 should be set off before allowing deduction under section 10A of the Act. 5. That without prejudice to the grounds mentioned herein above, the learned CIT erred in setting aside the assessment order under section 263 and directing the Assessing Officer to recompute the deduction under section 10A of the Act. 6. That without prejudice to the grounds taken above and even assuming but not admitting that the deduction under section 10A is to be computed after adjusting brought forward business loss and unabsorbed depreciation, the learned CIT erred in not specifically directing the Assessing Officer to adjust such brought forward business loss and unabsorbed depreciation as per provisions of section 70, 71, 72 and 32(2) of the Act in determining the total income of the appellant for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to manufacture or produce such articles or things or computer software as the case may be, shall be allowed from the total income of the assessee. 9. As per the above section, deduction of such profit and gains as derived by an undertaking from the export of articles is to be allowed from the total income of the assessee. Such deduction is subjected to the provisions of section 10A. Total income is defined in section 2(45) of the IT Act and it means the total amount of income referred in section 5 computed in the manner laid down in this Act. Section 5 of the IT Act defines the scope of total income. Scope of total income includes income received or deemed to be received, accrued or arise or deepned to accrue or arise. Section 4 is the charging section and tax is to be charged in respect of the total income of the previous year of every person. Tax is charged only on the total income as computed as per the provisions of the IT Act. Hence it is clear that the word 'total income' mentioned in section 10A of the IT Act refers to the total income as computed under the provisions of the Act. This Bench in the case of ACIT vs. Yokogava India Ltd. In ITA No.1802/Bang/2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bears to the profits of the undertaking, the same proportion as the export turnover bears to total turnover. Here again the words used are 'profits and gains of the business o the undertaking'. This is not to the total profit or business of the assessee. Thus for computing deduction u/s 10A, one has to ascertain the total income as per the provisions of the Act in respect of that undertaking and the amount so determined is to be reduced from the total income. 12. Learned Apex Court in the case of Canara Workshop Pvt. Ltd. (supra) had an occasion to consider the allowability of deduction u/s 80E. Section 80E at that relevant time was as under: 80E. Deduction in respect of profits and gains from specified industries in the case of certain companies:- (1) in the case of a company to which this section applies, where the total income (as computed in accordance with the other provisions of this Act) includes and profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t u/s 10A for five years. In case, the assessee wants to put the income under the normal computation provision then there appears to be no bar for doing so. In view of that, it was held that loss of 10A unit can be adjusted against non 10A unit as the assessee is not claiming benefit u/s 10A. This decision is not applicable in the instant case. 16. Keeping in view the discussion as contained in earlier paragraphas, it is held that learned CIT(A) was justified in directing the Assessing Officer to allow deduction u/s 10A without setting off brought forward and current year losses of non 10A unit. 6. In the second case law cited, the Tribunal held a under: 8. We have respectfully perused the decisions of Hon'ble tribunal. In the case of Webspectrum Software (P) Ltd., the issue was that the total income as per the provisions of the IT Act was arrived at after set off of brought forward losses and depreciation. Hence, the benefit u/s 10A was restricted to the extent of total income after set off of brought forward losses and depreciation. On appeal, it was contended that section 10A falls under Chapter III which has a title 'Income which do not form part of total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king from the export of articles is to be allowed from the total income of the assessee. Such deduction is subjected to the provisions of section 10A. Total income is defined in section 2(45) of the IT Act and it means the total amount of income referred in section 5 computed in the manner laid down in this Act. Section 5 of the IT Act defines the scope of total income. Scope of total income includes income received or deemed to be received, accrued or arise or deemed to accrue or arise. Section 4 is the charging section and tax is to be charged in respect of the total income of the previous year of every person. Tax is charged only on the total income as computed as per the provisions of the IT Act. Hence it is clear that the word 'total income' mentioned in section10A of the IT Act refers to the total income as computed under the provisions of the Act. This Bench in the case of ACIT vs. Yokogava India Ltd. In ITA No. 1802/'Bang/2005 dt.4/8/2006 held that substituted section 10A cannot be interpreted to mean that profits as mentioned u/s 10A should not be included in the total income. It is true that an issue identical to the issue under reference has been decided by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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