TMI Blog2013 (3) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(A) has erred both in law and on facts in confirming the action of the Assessing Officer of reducing the deduction u/s. 10A of the Income Tax Act at ₹ 6,70,900/- by erroneously calculating the same. The learned CIT(A) erred in law and on facts in confirming the reduction of the brought forward loss and depreciation of Assessment Year 2001-02, 2002-03 and 2003-04 aggregating to ₹ 34,10,405/- from the current year eligible profit of STPI (Sec. 10A) Unit. The learned CIT(A) ignored the records of the assessment wherein the above loss/ unabsorbed depreciation was duly returned and accepted as Non-STPI loss/ depreciation. It be so held now that the deduction u/s. 10A was allowable at ₹ 41,51,891/- as claimed without re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was reproduced by the A.O. in his order as under:- Para No.5 of submission dated 24/11/2008 With regard to the point NO. 3(iv) of your query on this item. Please note that as per provisions of section 10A, which says that subject to provisions f that section 10(A), a deduction of such profits/gains as derived by an undertaking from export of articles or thing or computer software for specified period of assessment years shall be allowed from that the total income of the assessee. In other words in respect of profit earned in section 10A unit is to be given a DEDUCTION in computing the total income. Therefore, Profit and Gains is to be first of the total profits of the company amounting to ₹ 44,46,871/- profit pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, any depreciation/loss pertaining to other activities (in our case non STPI activities) cannot be taken in to account. Therefore, the deduction u/s. 10A is first to be determined and given deduction under the provisions of section 10A itself. If any income of activities other than STPI activities is earned, the loss/depreciation brought forward in respect of such nits can be set-off against such income on which we have already done as per the State of income. Identical issue has been considered by the Hon ble Chennai Tribunal in the case of Changepond Technologies (P) V/s. ACIT in ITA No. 731/Mds/2007(2008) 119 TTJ(Chennai) 18. A copy of relevant portion of the said decision is enclosed. With regard to the claim of loss (difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Onsite service 620378 0 8305001 0 Total Expenditure 1450835 1223985 It is apparent from the above chart that there is no business activities/receipt of Mumbai Unit of the company from F.Y 2001-02 and onward though, the assesses has debited expenses for Mumbai unit. Thus, it is clear that the assessee's claim of expenditure in Mumbai Unit is only an adjustment entry and diversion of the expenditure of the company to enhance the profit of STPI unit i.e. Ahmedabad unit to claim more deduction u/s 10A. Actually, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the lower authorities. 7. After hearing both the parties and perusing the record, we find that the issue is now covered in favour of the assessee and against the Revenue by the decision of Hon ble jurisdictional High Court in the case of CIT(A) vs. Ace Software Exports Ltd. (supra) wherein Hon ble High Court has observed as under:- 1. Revenue has challenged the judgment of the Tribunal dated 22.05.2012 raising following questions for our consideration: 1. Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal is right in holding that deduction claimed by the assessee u/s10A of the IT Act in respect of STP Rajkot unit should be allowed without adjustment of losses of other units and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Deputy CIT [2010] 325 ITR 102 (Bom) at paragraph 24. The submission of the Revenue placed its reliance on the liters reading of section 10A under which a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years is to be allowed from the total income of the assesses. The deduction under section 10A, in our view, 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 section 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 Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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