TMI Blog2017 (1) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign currency loans for acquiring an asset, such loss on account of rate fluctuation should go to add to the cost of the asset in terms of section 43A of the Act is also not tenable. Quite clearly, section 43A of the Act deal with an asset acquired by the assessee “from a country outside India” and in the present case it has been found by the CIT(A) that the asset acquired by the assessee by utilizing the foreign currency loans was from within India. Therefore, the CIT(A) made no mistake in allowing the claim of the assessee - Decided in favour of assessee Determination of deduction under section 10A of the Act in relation to the STPI unit - Held that:- Having regard to the judgments of the Hon'ble Bombay High Court in the cases of Black And Veatch Consulting Pvt. Ltd. (2012 (4) TMI 450 - BOMBAY HIGH COURT ) and Techno Trap and Polymers Pvt. Ltd.(2015 (12) TMI 909 - BOMBAY HIGH COURT), we find no error on the part of the CIT(A) in directing the Assessing Officer to determine the deduction under section 10A of the Act before reducing the loss of the other unit. Thus, Revenue fails on this Ground also. - Decided in favour of assessee - ITA No.122/Mum/2013 - - - Dated:- 18-11- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t imported, without appreciating at though the assets were not imported, they had been acquired through External Commercial Borrowings and therefore the expenditure being in the capital field was rightly capitalized by the AO at par with section 43A of the Act since the said expenditure was not allowable u/s 37(1) of the Act. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the loss of the SEZ unit should not have been set off against the profits of the STPI unit before allowing deduction under section 1OA In resl2ect of the STPI unit on the ground that each unit is a separate unit and separately eligible or otherwise for deduction u/s 1OA of the Act without inter se the set off of losses, without appreciating that though section 1OA forms part of Chapter III of the Act, the same is a deduction section and governed by Chapter VIA i.e. sections 80A 80AB thereunder and therefore the total income eligible for deduction under section 1OA has to be computed after setting off the losses of the various units. 3. In so far as Grounds of appeal No.1 to 3 are concerned, they deal with a common issue relating to the loss on exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause section 43A relates to assets which have been acquired from a country outside India, whereas in the instant case, the asset has been acquired from within India itself. On the basis of the aforesaid reasoning, the CIT(A) has deleted the disallowance, against which Revenue is in appeal before us. 4. At the time of hearing, Ld. Departmental Representative has primarily reiterated the reasoning of the Assessing Officer, which we have already adverted to in the earlier paras and is not being repeated for the sake of brevity. Though Revenue has canvassed before us that the ratio of the judgment of the Hon ble Supreme Court in the case of Woodward Governor India Ltd.,(supra) is not attracted in this case yet, there is no cogent distinction in law or on facts has been brought out. Even with regard to the decision of the CIT(A) regarding nonapplication of section 43A of the Act relating to the loss of ₹ 73,83,330/-, the factual matrix to the effect that the assets have been purchased from within India has not been controverted by the Ld. Departmental Representative. 5. On the other hand, Ld. Representative for the assessee has relied upon the finding of the CIT(A) in suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2,18,49,802/-. Since the STPI unit of the assessee has been set-up in 2005, this was the 4th year of the claim of deduction under section 10A of the Act . In principle, the Assessing Officer has not disputed assessee s claim for deduction under section 10A of the Act. The Assessing Officer noticed that while assessee had profits from STPI unit, assessee had incurred a loss of ₹ 4,07,75,879/- in its SEZ unit. The assessee was show caused as to why the profit derived from the STPI unit should not be first adjusted with the loss of the SEZ unit before allowing deduction under section 10A of the Act. In response, assessee pointed out that so far as the loss incurred in the SEZ unit was concerned, no deduction under section 10AA of the Act was claimed and such loss was carried forward to subsequent years. According to the assessee, SEZ unit was an independent unit and, therefore, the losses were carried forward. The Assessing Officer disagreed with the assessee and he restricted the deduction under section 10A of the Act in relation to the STPI unit to the extent of profit available after reducing the loss of SEZ unit. As a consequence, assessee s claime for deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truing the provisions of section 10B, in Hindustan Uniliver Ltd. vs. Deputy CIT (2010) 325 ITR 102 (Bom) at paragraph 24. The submission of the Revenue placed its reliance on the literal 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 assessee. 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 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 and subject to the provisions of the Chapter the deductions specified in sections 80C to 80U. Section 80B(5) defines for the purposes of Chapter VI-A gross total income to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this Court in Black Veatch Consulting (P) Ltd. (supra) Ganesh Polychem Ltd. vs. ITO (supra). However, he submits that the question as framed would require consideration as the contrary view taken by Karnataka High Court in CIT vs. Himatasingike Seide Ltd.[(2006) 156 Taxman 151 (Kar)] has now been upheld by the Apex Court in its order dated 19 September 2013 as under:- 1. We have heard the learned Counsel for the parties to the lis. 2. Having perused the records and in view of the facts and circumstances of the case, we are of the opinion that the Civil Appeal being devoid of any merit deserves to be dismissed and is dismissed accordingly. Ordered accordingly 5. We find that the decision of Karnataka High Court in Himatasingike Seide Ltd. (supra) which was undisturbed by the Apex Court was in respect of Assessment Year 1994-95. Thus, it dealt with the provisions of Section 10B of the Act as existing prior to 1 April 2001 which was admittedly different from Section 10B as in force during Assessment Year 2009-10 involved in this appeal. Section 10B of the Act as existing prior to 1 April 2001 provided for an exemption in respect of profits and g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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