9911796707
TMI Blog2017 (3) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... on restatement of external commericla borrowing (ECB) taken and utilized for capital expenditure. In doing so, the ld.AO failed to appreciate the fact that such gain is in the nature of capital and not in the nature of revenue and the Hon'ble Dispute Resolution Panel, Ahmedabad failed to adjudicate on the nature of such gain. Ground no.2 The ld.AO failed to adhere to the directions issued by the Hon'ble Dispute Resolution Panel, Ahmedabad by not following the same treatment for forex fluctuation on reinstatement of ECB consistently year on year. Ground no.3 The ld.AO erred on facts and law by computing the exemption under section 10B of the Act after setting off of the unabsorbed depreciation/business losses of earlier year. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be entitled for exemption under section 10B. The ld.AO thereafter made reference to the decision of the Hon'ble Karnataka High Court in the case of Himatasingike Seide Ltd. Vs. CIT, 56 taxmann 151 wherein Hon'ble Karnataka High Court has approved this interpretation of the department. He also observed that SLP against this judgment was rejected by the Hon'ble Supreme Court. Accordingly, the ld.AO disallowed the claim of the assessee under section 10B of the Act. 5. Before us, the ld.counsel for the assessee submitted that the issue in dispute is squarely covered in favour of the assessee by the decision of the Hon'ble Karnataka High Court rendered in the case of CIT Vs. Yokogawa India Ltd., 341 ITR 385. This decision has been upheld b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed losses and the depreciation from earlier assessment year or current assessment year either in the case of non-STP units or in the case of the very same undertaking ?" This question was answered in favour of the assessee. 7. The conclusions drawn by the Hon'ble High Court are worth to note, which reads as under: "..... After making all such computations the assessee would be entitled to the benefit of set off or carry forward of loss as provided under Section 72 of the Act, that is the benefit which is given to the assessee under the Act irrespective of the nature of business which he is carrying on. The said benefit is available even to undertakings under Section 10 B of the Act. The expression "deduction of such profits and gains as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to various provisions of the Act including those of Chapter VI-A. If in such a year, the assessee has suffered losses, such losses would be subject to inter source and inter head set off. The balance if any thereafter can be carried forward for being set off against profits of the subsequent assessment years in the normal course, Unabsorbed depreciation also merits a similar treatment. As the income of Section 10-A unit has to be excluded at source itself before arriving at the gross total income, the loss of non Section 10-A unit cannot be set off against the income of 10-A unit under Section 72. The loss incurred by the assessee under the head profits and gains of business or profession has to be set off against the profits and gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putation mechanism of total income as defined under the Act. Consequently, is the income of a Section 10A unit required to be excluded before arriving at the gross total income of the assessee? (ii) Whether the phrase "total income" in Section 10A of the Act is akin and pari materia with the said expression as appearing in Section 2(45) of the Act? (iii) Whether even after the amendment made with effect from 1.04.2001, Section 10A of the Act continues to remain an exemption section and not a deduction section? (iv) Whether losses of other 10A Units or non 10A Units can be set off against the profits of 10A Units before deductions under Section 10A are effected? (v) Whether brought forward business losses and unabsorbed depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
