TMI Blog2018 (3) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... ust the brought forward unabsorbed depreciation before allowing deduction under section 10A. 2. That the order of the Ld. Pr. CIT is bad in law may be set aside. 3. The Appellant Company craves right to add, / amend any of grounds of appeal. 3. The brief facts of the case are that assessee filed its e-return u/s. 139 of the Income Tax Act, 1961 on 29.11.2011, declaring NIL income after claiming the exemption u/s. 10A of the Act. However, the assessee company has paid tax under MAT provisions declaring book profits at ₹ 21,23,520/- on which tax amounting to ₹ 3,93,701/- and interest of ₹ 37,002/- has been paid. The case of the assessee was selected for scrutiny. Notice u/s.143(2) and 142(1) of the Act was issued on 25.9.2012 and the same were complied with on 03.10.2013. In response to further notices u/s. 143(2) and 142(1) of the Act, the ARs of the assessee appeared from time to time and filed the information. The assessee company was engaged in the business of providing IT enable services (BPO) (Medical billing). During the year under consideration, the assessee company has declared foreign receipts at ₹ 97.43 lacs and Foreign Exchange ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter VI of the Income Tax Act, 1961. To support this contention he relied upon the following case laws:- - CIT Anr. Vs. Yokogawa India Ltd. 2017-391 ITR 274 (SC) - CIT vs. TEI Technologies Pvt. Ltd. 2012 25 Taaxmann.com 5 (Delhi) - Canam International Pvt. Ltd. vs. ACIT, Circle 3(1) 2014 ITA No. 1885/Del/2010 (ITAT, Delhi). 7. On the other hand, Ld. CIT(DR) controverted the various submissions and arguments advanced by the Ld. AR of the Assessee. He has strongly relied upon the impugned Order passed u/s. 263 by the Ld. Pr. CIT and has invited our attention to the finding recorded by the learned Pr. CIT in his impugned order. Accordingly, he stated that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue. Accordingly, he requested that the impugned order passed u/s. 263 of the Act passed by the Ld. CIT may be upheld and appeal of the assessee may be dismissed. 8. We have carefully considered the rival submissions and perused the relevant records available with us, especially the impugned order passed by the Ld. CIT u/s. 263 of the Act alongwith the legal position on the relevant issues which emanates from the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and that no amount of unabsorbed allowance or deduction is to be carried forward following the ten-year period. Similarly no loss under the head Profits and gains of business or profession under section 72(1) or under the head Capital gains under section 74(1) in respect of the relevant assessment years, will be carried forward or set off in computing the income of the undertaking after the period of benefit. 8.3 After perusing the aforesaid Circular, we note that in para 15.10 it is explicitly provided that the unabsorbed amounts cannot be carried forward or set off against profits of subsequent year. We also note that a combined reading of the above provisions of the law as well as Circular clearly show that deduction u/s 10A is to be allowed from total income as computed under chapter IV of the Income Tax Act, 1961 and not at the stage of computation of total income under chapter VI of the Income Tax Act, 1961. Therefore from this it is clear that while claiming deduction u/s 10A unabsorbed depreciation is not to be adjusted. 8.4 We further note that the above position of law has been accepted by various courts including the Hon ble Supreme Court of India. Some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITAT Bangalore (Karnataka) in the case of KPIT Cummins Infosystems (Bangalore) (P.) Ltd. (2008) 26 SOT 529 (Bangalore). The Bench discussed the judgement of CIT vs Himatasingike Seide Ltd. in para 22 of the order and observed as under: The lower authorities in support of their stand have relied on the decision of Karnataka High Court in the case of Himatasingika Seide Ltd. (supra). The Karnataka High Court held that unabsorbed depreciation and investment allowance have to be set off against income of eligible units before the computation of exemption under section 10B. It was also held that the income eligible for exemption has to be computed as per the provision of the Income-tax Act and not on a commercial basis. The case before the Karnataka High Court pertained to assessment year 1994-95. Section 10B at the relevant time excluded certain incomes in the process of arriving at the total income. Section 10B at the relevant time operated as an exemption section. The terminology of section lOB has not been changed. The section currently provides for a deduction from total income. This change was brought about when section 10B was substituted. Thus, the decision of the Karnat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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