TMI Blog2007 (7) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... which the petitioner has filed the return of income for the year 1999-00. This by itself clearly demonstrates that there was total non application of mind on the part of the respondent No.1 and consequently, the notice based on that reason would amount to non application of mind. So far as the second contention is concerned, the learned counsel has drawn our attention firstly to the provisions of section 4 of the Act which sets out that any Act enacted by the Income Tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be be charged for that year in accordance with and subject to the provisions, including the provisions for the levy of additional income tax in respect of the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly assessed to income-tax. The petitioner has several EOU/STP units engaged in the business of export of software. The nature of business of these units is mainly on-site projects at customer s site abroad and off-shore projects, which are executed from India. The petitioner filed return of income for the assessment year 1999-00 relevant to the previous year ended 31st March, 1999 on 27th December, 1999 declaring loss of Rs. 14,62,89,330/-. An intimation under section 143(1) (a) of the Act dated 8th February, 2002 was issued accepting the returned loss. 2. On 27th March, 2006 the respondent No.1 issued notice under section 148 of the Act in which it was stated that he had reason to believe that the petitioner s income chargeable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section allowing deduction u/s. 10A of the I.T. Act which states that- Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertakings begins 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. The decision of Bombay ITAT E Bench in the case of Navin Bharat Industries Ltd. V. DCIT 90 ITD 1 is applicable to the facts of the case, wherein, it has been held in principle that losses on non 10A u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed without there being reason to believe that any income has escaped assessment. In the alternate, the submission is that in fact no income has escaped assessment and consequently, the notice is liable to be quashed and set aside. On behalf of the respondents, the learned counsel supports the notice and also relies on the Judgment of the Karnataka High Court in the case of Commissioner of Income-Tax V/s. Himatasingike Seide Ltd. reported in (2006) 255 I.T.R. 255 (Karn.). 5. The first issue that we are called upon to answer is whether in fact, the respondent had reason to believe to enable him to exercise jurisdiction to issue the notice. We have already reproduced the contents of the notice containing reasons to believe wherein the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was entitled to set off the loss incurred by SEEPZ not against other business income of the assessee. The judicial member held that it was not allowable. The third member noted that the assessee had taken the benefit of the provision of section 10A for a period of three years, but for the relevant assessment year had not taken the benefit and opted to get the profits of the new industrial undertaking assessed under the normal provisions. On these facts, the learned third member held that a privilege cannot be to a disadvantage and an option cannot become an obligation and if the assessee does not want to avail of the benefit entitled in that respect for some reasons, that benefit cannot be forced upon him. It would be clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly sets out that subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which the section applies shall not be included in the total income of the assessee. In other words, it is clear that the income derived from an industrial undertaking by the assessee to which section 10A applies could not be included in the total income of the assessee. Once that is the case, the petitioner was right in filing the income by excluding the income of income in terms of section 10A. The learned counsel for the respondents has drawn our attention to the Judgment of the Karnataka High Court in the case of Himatasingike Seide Ltd (supra) which was considering the provisions of section 10B. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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