TMI Blog2016 (1) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... by considering the comparable uncontrolled transactions, it should be kept in mind that the uncontrolled transactions should be least influenced by the RPT. Assessee is purely a software development service provider to its parent company thus companies functionally dissimilar with that of assessee need to be deselected from final list. Deduction under Section 10A - not allowing the deduction of telecommunication and conveyance charges incurred in foreign exchange outside India while computing the total turnover of the company - HELD THAT:- This issue is covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court of Karnataka in the case of CIT V Tata Elxsi Ltd Others [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it has been held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator. Not allowing deduction under Section 10A of the Act before set off of brought forward business losses - HELD THAT:- By virtue of the amendment and substitution of provisions of sec.10A and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile determining the Arm's Length Price of the international transactions of the Appellant, but for an adjustment towards .. differences Working capital position between the Appellant and the entrepreneurial comparable companies. 4. That the learned AO and the learned Panel erred both in facts and law in confirming the action of the learned TPO of making an adjustment to the transfer price of the Appellant and thereby adjusting the transfer price by ₹ 13,325,968 holding that the international transactions do not satisfy the arm's length principle envisaged under the Act and in doing so grossly erred in: 4.1. Upholding the act of the learned TPO of collecting selective information of the companies by exercising power granted to him under section 133(6) of the Act. that was not available to the Appellant in the public domain and relying on the same for comparability purposes in denial of natural justice to be observed in the assessment proceedings. 4.2. Disregarding application of multiple years prior year data as used by the Appellant in the TP documentation and holding that current year (i.e. Financial Year 2005-06) data for comparable co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of telecommunication expenses of ₹ 2,735,887 in computing the total turnover of the Assessee for the purpose of computing deduction under section lOA of the Act. 8. (i) That on the facts and in the circumstances of the case, the learned AO erred in considering the insurance expenses of ₹ 29.995, which comprises of y'-hicle. insurance, as 'expenditure attributable to delivery of software outside India' under E.g-$flation 2(iv) to Section lOA of the Act and reducing the same from 'export turnover' while computing deduction under section lOA of the Act. (ii) That the learned AO has erred in not allowing the reduction of insurance expenses of ₹ 29,995 in computing the total turnover of the Assessee for the purpose of computing deduction under section lOA of the Act. 9. (i) That on the facts and in the circumstances of the case, the learned AO erred in reducing the expenses incurred in foreign currency towards travelling and conveyance of ₹ 4,602,235 from 'export turnover' while computing deduction under section 10A of the Act, merely because these expenses were incurred in foreign currency. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant in its TP Report. 3. To reject Accel Transmatic Limited ( Accel ) from the finalist of comparables, even though Accel was selected by the Appellant as a comparable in its TP Report. 4. To reject Geometric Software Limited ( Geometric Software ) from the final list of comparables, even though the Appellant had accepted for its inclusion before the lower authorities. 5. To allow the Appellant to contest the exclusion of the below mentioned comparables on the basis of application of turnover filter of INR 1-200 crores, though the application of this filter was not put forward before the lower authorities: a. iGate Global Solutions Limited b. Infosys Limited c. Mindtree Limited d. Persistent Systems Limited e. Sasken Communication Limited. f. Flextronics Software Systems Limited. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. Further, this ground of appeal is independent of the grounds of appeal already filed by the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... design and development services to various units of Textron group. The assessee also provides resources of material service to other units of Textron group. The assessee reported the international transactions during the year as under :- 1. Receipts for Software Development Services ₹ 18,74,21,274/- Readjustment done by TPO 2. Receipts for Sourcing of Materials Services ₹ 60,18,598/- Treated at Arm s Length by the TPO 3. Reimbursement of Expenses - Paid ₹ 48,35,170/- 7. As regards the receipt for sourcing of material service, the TPO accepted the same at Arm s Length. Therefore there is no dispute regarding the international transactions in respect of sourcing of material services provided to its Associated Enterprises (AEs). The assessee has bench marked for its international transactions by adopting Transactional Net Margin Method (TNMM) as Most Appropriate M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gy Ltd. 15% 19 Pentamedia Graphics Ltd. 21% 20 Satyam Computers Services Ltd. 28% 21 Shree Tulsi Online Com Ltd. 2% 22 Sonata Software Ltd. 15% 23 Sun Beam Infotech Ltd. 6% 24 Synergy Log-In Systems Ltd. -11% 25 Transworld Infotech Ltd. 32% 26 VJIL Consulting Ltd. 7% 27 VMF Soft Tech Ltd. 17% 28 Zensar Technologies Ltd. 9% 29 Onward Tecnologies Ltd. 12% 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. iGate Global Solutions Limited 15.61 4. Infosys Limited 40.38 5. KALS Info Systems Limited 39.75 6. Mindtree Consulting Limited 14.67 7. Persistent Systems Limited 24.67 8. R Systems International Limited 22.20 9. Sasken Communication Limited (seg.) 13.90 10. Tata Elxsi Ltd (seg.) 27.65 11. Lucid Software Limited 8.92 12. Mediasoft Solutions Private Limited 6.29 13. R S Software (India) Limited 15.69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. Companies whose employee cost to Operating Revenues from Software Development Services is less than 25% were excluded. Companies whose onsite revenue is more than 75% of the export revenues from Software Development Services were excluded. Companies that are functionally different from that of taxpayer, after giving valid reasons, were excluded. 10. The assessee challenged the inclusion of the various companies by the TPO and also raised objection of adopting the filter of Related Party Transactions (RPT) at 25% by the TPO instead of 15% sought by the assessee. The DRP did not accept the objections of the assessee and confirmed the action of the TPO in determining the ALP and consequential adjustment. 11. Before us, the learned Authorised Representative of the assessee has submitted that has applied that the issue of filter of RPT has been decided by this Tribunal in assessee's own case for the Assessment Year 2005-06 wherein the Tribunal has held that the CIT/TPO ought to have adopted a threshold limit of 15% which is attributable to the RPT as a ground for rejecting the comparable company. Thus the learned Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the comparable uncontrolled transactions, it should be kept in mind that the uncontrolled transactions should be least influenced by the RPT. In the case of DCIT Vs. Textron Global Technology Centre Pvt. Ltd. in IT(TP)A No.29/Bang/2012 C.O. No.40/Bang/2012 Dt.20.3.2015 for the Assessment Year 2005-06. The Tribunal has held in para 17 as under :- 17. In view of the conclusion above that exclusion of comparable companies with RPT of less than zero percent is not valid, and that companies where RPT is less than 15% alone can be considered, then the comparable rejected by the CIT (Appeals) on the basis of the said filter will have to be included along with the four comparable retained by the CIT (Appeals). Although 12 comparable which were rejected on the basis of RPT being more than zero percent, one comparable viz., Four Soft Ltd, will have to be excluded since the RPT is at 19.89% and thus in excess of 15%. Sathyam Computers Ltd. and Infosys Technologies Ltd. will get excluded for the reason that the financial results are not reliable in the case of Sathyam Computers Ltd. and for the reason that the high turnover, brand value, high risks etc. The remaining 9 compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions :- CASES PERTAINING TO ASSTT. YEAR : 2006 - 07 CASES PERTAINING TO OTHER ASSTT. YEARS Cypress Semiconductor technology India Private Limited IT (TP) A No. 1167/Bang 2010 Trilogy E Business Software India Pvt. Ltd vs. DCIT (AY : 2007-08) ITA No. 1054/BANG/2012. Verisign Services India Private Limited IT(TP)A No 1404 bang 2010 Conexant Systems India Pvt. Limited (AY : 200607 2007-08) (ITA No. 1429/Hyd/2010, ITA No. 1978/Hyd/2011). Misys Software Solutions India Private Limited IT(TP) A No.1425/Bang/2010 Symbol Technologies India Private limited Vs IT (TP) (AY 2007-08) A No. 1352/Bang/2010. Thoughtworks Technologies (India)Private Limited- IT(TP)A No.1326/Bang/2010 13.1.2 On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that the TPO has considered the objections of the assessee and has decided that this company is functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny is engaged in the R D activity resulting in creation of Intellectual Property Rights (IPRs). This company is not only into software products as explained in the Annual Report of this company but also is engaged in the embedded product development based on current and emerging technologies such as Multi-media, Wimax, Imaging, Imaging Process etc. The company actively engaged in developing house expertise in current and emerging markets through house development products and training. Further the software development business segment of this company also comprising of diversified activities such as hardware design, industrial design, engineering design and visual computing. Even this company in its response to notice under Section 133(6) has accepted that this company is not comparable with the software development services provider. In support of his contention, he has relied upon the following decisions :- CASES PERTAINING TO ASSTT. YEAR : 2006 - 07 CASES PERTAINING TO OTHER ASSTT. YEARS Cypress Semiconductor technology India Private Limited IT (TP) A No 1167/Bang 2010 Conexant Sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment of software product. The learned AR has tried to distinguish by pointing out that product development expenditure in this case is around 39% of the capital employed by the said company, and, therefore, such a company cannot be considered as tested party. Even as per the information received in response to notice under Section 133(6), the company has described its business as software development company or pure software development service provider. This information itself is very vague as the segmental details of operating revenue has not been made available to examine how much is the ratio of sale from software product and sale of software service and development. Looking to the fact that it has developed a software product named as Muulam which is used for civil engineering structures and the product development expenditure itself is substantial vis- -vis the capital employed by the said company, this criteria for being taken as comparable party, gets vitiated. For the purpose of comparability analysis, it is essential that the characteristics and the functions are by and large similar as that of the assessee company and T.P. analysis/study can be made with fewest and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection either before the TPO or before the DRP. Thus, this plea raised by the assessee does not pertain to any finding of the authorities below and therefore this issue does not emanate from the orders of the authorities below. Moreover, the assessee company sought exclusion of selected companies from the list of comparables of the TPO on the ground of turnover filter. If such a criteria has to be applied in selection of the comparables then, all the comparables selected by the TPO are to be tested by applying such filter of turnover. The assessee cannot be permitted to pick and choose certain companies on the ground of turnover filter which supports the interest of the assessee Even otherwise, the turnover filter of ₹ 1 Crore to ₹ 200 Crores as sought by the assessee if applied will give absurd results which are not acceptable as per the minimum common logic. Applying such a filter of turnover of ₹ 1 Crore to ₹ 200 Crores, means that difference of 200 times of turnover is acceptable for selecting the company but at the same time it defies the said criteria when a company of ₹ 200 Crores turnover cannot be compared with that of a company of ₹ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is functionally not comparable. The TPO as well as DRP rejected the contentions of the assessee. 15.2 Before us, the learned Authorised Representative of the assessee has submitted that the assessee is seeking exclusion of this company as this company provides software design and development product services. Since this is a software product company and therefore is functionally dis-similar to the assessee. Therefore, this company is not a good comparable for the purpose of determining the ALP. The learned Authorised Representative has submitted that as per the Annual Report of this company, it is engaged in the product manufacturing activity as well as diversified business activity like transmatic system, technology, Accel International Transactions Academy and Accel Studio. He has further contended that the functional comparability has been considered by the Tribunal in a number of cases and it was held that this company is functionally dis-similar to the software development services provider company. In support of his contention, he has relied upon the following decisions :- CASES PERTAINING TO ASSTT. YEAR : 2006 - 07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software development services to its AEs. It is submitted that apart from software development services, this company is engaged in provision of Accel Animation Studies Services in the form of ACCEL IT and ACCEL Animation Services for 2D and 3D Animation. It was also engaged in various business activities, some of which are Ushus Technologies for off shore development centre for embedded software network system, imaging technologies; Accel IT Academy for training services in hardware and networking, VLSI designs, CAD/CAM/BPO, etc., the learned Authorised Representative for the assessee contends that in view of the above services rendered, it is evident that this company is functionally different from the assessee in the case on hand and therefore ought to be excluded from the list of comparables to the assessee. In support of this contention, the learned Authorised Representative for the assessee placed reliance on the decision of the co-ordinate bench of this Tribunal in the case of Huawei Technologies India Pvt. Ltd. for Assessment Year 2006-07 (supra). 7.3 Per contra, the learned Departmental Representative supported the orders of the TPO in including these two comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted an extract on pages 185-186 of the Paper Book from the website of the company to establish that it is engaged in providing of I T enabled services and that the said company is into development of software products, etc. All these aspects have not been factually rebutted and, in our view, the said concern is liable to be excluded from the final set of comparables, and thus on this aspect, assessee succeeds. Based on all the above, it was submitted on behalf of the assessee that KALS Information Systems Limited should be rejected as a comparable. 47. We have given a careful consideration to the submission made on behalf of the Assessee. We find that the TPO has drawn conclusions on the basis of information obtained by issue of notice u/s.133(6) of the Act. This information which was not available in public domain could not have been used by the TPO, when the same is contrary to the annual report of this company as highlighted by the Assessee in its letter dated 21.6.2010 to the TPO. We also find that in the decision referred to by the learned counsel for the Assessee, the Mumbai Bench of ITAT has held that this company was developing software products and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50. We have considered the submissions and are of the view that the plea of the assessee that the aforesaid company should not be treated as comparables was considered by the Tribunal in Capgemini India Ltd (supra) where the assessee was software developer. The Tribunal, in the said decision referred to by the ld. counsel for the assessee, has accepted that this company was not comparable in the case of the assesses engaged in software development services business. Accepting the argument of the ld. counsel for the assessee, we hold that the aforesaid company should be excluded as comparables. 13. In view of the aforesaid decision of the Tribunal, Kals Info Systems Ltd., and Accel Transmatics Ltd. are to be excluded for the purpose of comparison while determining the ALP of the impugned transaction in this appeal. It is ordered accordingly. 7.4.2 Following the aforesaid decision of the co-ordinate bench of this Tribunal in the case of Huawei Technologies India Pvt. Ltd. for Assessment Year 2006-07 (supra), we hold and direct that these two companies, namely KALS Infosystems Ltd. and Accel Telemetrics Ltd. are to be excluded from the set of comparable companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CSR India Pvt. Ltd. (AY : 2007-08) ITA No. 1119/Bang/2011, [2013] Thoughtworks Technologies (India)Private Limited- IT(TP)A No.1326/Bang/2010 - Turnover Witness Systems Software India Pvt Ltd (AY : 2007-08) ITA No. 1366/Bang/2011. FOR CASES INVOLVING JOINT OPERATION, LARGE INTANGIBLES, HIGH BRAND VALUE, RISK BEARING HIGH PROFIT MARGIN CASES Agnity India Technologies Pvt Ltd ITA No. 3856(Del)/2010], ITAT Delhi This ruling has been upheld by the High Court (ITA No. 1204/2011, dated July 2013). Scale of operation, brand value etc. NTT Data India Enterprise Application Services Pvt. Ltd. [ITA No. 1612/Hyd/2010.] Motorola India Electronics Private Limited vs. ACIT ITA No. 1274 1413/Bang/2008. Logica Pvt. Ltd. Vs ACIT (ITA No. 1129/Bang/2011 16.2 On the other hand, the learned Departmental Representative has submitted that the TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale revenue, stage of business cycle and company s growth cycle. In the case of Infosys, there are huge intangible assets which as per the information provided by the learned AR are valued at ₹ 69,522 crores, which comprises of brand value itself at ₹ 22,915 crores. Based on such fund valuation, the profit of Infosys is predominantly due to its premium branding. It is India s No.2 software service exporter and Third in the World as an IT Service company. It is a giant company which is evident from its revenue fund from the sales which itself is more than ₹ 13145 crores and expenditure on advertisement/sales promotion and expenditure on R D is at ₹ 69 crores and ₹ 167 crores respectively, whereas in the case of the assessee the revenue is only 10.7 crores with no expenditure on advertisement, sales and promotion etc., which are borne by the associated enterprises. Even from the test of FAR ie. function performed, assets employed and risk assumed, comparability analysis miserably fails in this case. The comparison of function and profile as has been reproduced in para 6(iv) above, mostly shows that the profit level indicators in relation to return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-similarity, this company is also not functionally comparable with the assessee. 17.3 On the other hand, the learned Departmental Representative has submitted that the TPO has used the segmental data of this company and given a finding that this company is functionally comparable with the assessee. He has relied upon the orders of the TPO and DRP. 17.4 Having considered the rival submissions and relevant material on record, we note that the objection raised by the assessee regarding the activity of this company in R D and also acquiring IPRs has not been dealt with by the authorities below. Accordingly, in the facts and circumstances of the case, we direct the A.O/TPO to readjudicate this issue after considering the objections of the assessee on functional dis-similarity. 17.5 Since we have directed to exclude certain comparables from the set of comparables, therefore, the TPO/A.O is directed to recompute the ALP, as directed above. 18. The next ground of the assessee is regarding not allowing the deduction of telecommunication and conveyance charges incurred in foreign exchange outside India while computing the total turnover of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of turnovers. Apportionment of profits on the basis of turnover was accepted as a method of arriving at export profits. In the case of section 80HHC, the export profit is to be derived from the total business income of the assessee, whereas in section 10-A, the export profit is to be derived from the total business of the undertaking. Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover. To the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term total turnover in section 10A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinent to note that the said decision of the Hon'ble jurisdictional High Court was in respect of the dispute for the assessment year 1994-95 and there is an amendment in the provisions of sec.10A and 10B of the Act vide Finance Act, 2000 w.e.f. 1/4/2001. By virtue of the amendment and substitution of provisions of sec.10A and 10B, the incentive u/s 10A and 10B was no longer in the nature of exemption but it is in the nature of deduction. By considering the amendment/substitution of sec. 10A and 10B vide Finance Act, 2000 w.e.f. 1/4/2001, Hon'ble jurisdictional High Court vide judgment in the case of Yokogawa India Ltd.(supra) has held in paras.16 to 23 as under: 16. The substituted s. 10A continues to remain in Chapter III. It is titled as Incomes which do not form part of the total income . It may be noted that when s. 10A was recast by the Finance Act, 2001 (sic2000), the Parliament was aware of the character of relief given in Chapter III. Chapter III deals with incomes which do not form part of total income. If the Parliament intended that the relief under s. 10A should be by way of deduction in the normal course of computation of total income, it could h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion it is clear that the income of 10A unit has to be excluded before arriving at the gross total income of the assessee. The income of 10A unit has to be deducted at source itself and not after computing the gross total income. The total income used in the provisions of s. 10A in this context means the global income of the assessee and not the total income as defined in s. 2(45). Hence, the income eligible for exemption under s. 10A would not enter into computation as the same has to be deducted at source level. 2nd substantial question of law 20. Prior to the introduction of sub-s. (6) of s. 10A and s. 10B by the Finance Act, 2000, which came into effect from 1st April, 2001, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year, sub-s. (2) of s. 32, cl. (ii) of sub-s. (iii), s. 32A cl. (ii) of sub-s. (3) of s. 32A, cl. (ii) of sub-s. (2) of s. 33 and sub-s. (4) of s. 35 of the Act or the second proviso to cl. (ix) of sub-s. (1) of s. 36 shall not be applicable in relation to any su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation has not been made in s. 10C which provides for exemption in respect of profits of certain undertakings in north eastern region. This makes clear the legislative intention of providing relaxation wherever it deems fit and in the present case, such relaxation has been made in s. 10A but not in s. 10C. 23. It is to be noted that the aforesaid amendment read with the Board circular does not militate against the proposition that the benefit of relief under this section is in the nature of exemption with reference to the commercial profits. However, in order to give effect to the legislative intention of allowing the carry forward of depreciation and loss suffered in respect of any year during the tax holiday for being set off against income post tax holiday, it is necessary that the notional computation of business income and the depreciation as per the provisions of the Act should be made for each year of the tax holiday period. While so computing, attention will have to be given to provisions of ss. 70, 71, 72 and s. 32(2). The amount of depreciation and business loss remaining unabsorbed at the end of the tax holiday period should be determined so that the same may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be given to the provisions of section 72 of the Act, even in respect of profits of the 10B unit. Accordingly, the claim of the assessee for carry forward of loss of non10B unit was not allowed by the AO. On appeal by the assessee, it was contended that the provisions of section 10A and section 10B are exemption provisions and therefore the profit of 10A and 10B units will not enter the computation of total income at all and therefore the profits of these units need not be set off against the loss of non-10B unit by invoking the provisions of section 72 of the Act. The CIT(Appeals) did not agree with the contention of the assessee and in doing so, he placed reliance on the decision of the Hon ble Karnataka High Court in the case of CIT v. Himatsingike Seide Ltd., 286 ITR 255 (Kar). In the aforesaid decision, the Hon ble High Court has taken the view that deduction u/s. 10B has to be allowed after set off of unabsorbed depreciation and unabsorbed investment allowance. The Hon ble Court took the view that the aforesaid provision was only an exemption provision. The CIT(Appeals) noticed that the aforesaid decision was followed by the ITAT Bangalore Bench in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such profits and gains as are derived by undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the Previous-year in which the under-taking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee : (emphasis supplied) 64. The expression Deduction and shall be allowed from the total income of the Assessee used in the aforesaid provisions was considered by the Hon ble High Court and it held in para 13 to 15 of its judgment that the expression shall be allowed from the total income of the Assessee does not mean total income as defined u/s.2(45) of the Act but that expression means profits and gains of the STP undertaking as understood in its commercial sense or the total income of the STP unit. Thus the view expressed is that income of the STP undertaking gets quarantined and will not be allowed to be set off against loss of either another STP undertaking or a non STP undertaking. The Hon ble Court thereafter held that though the expression used in Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Karnataka High Court, the Hon ble Supreme Court observed as follows while dismissing the appeal:- Having perused the records and in view of the facts and circumstances of the case, we are of opinion that the civil appeal being devoid of any merit deserves to be dismissed and is dismissed accordingly. 67. Thus the ratio has to be confined to the facts and circumstances of the case. The aforesaid observations have to be confined to the facts of that case and as applicable to a case where brought forward losses and depreciation of the very same STP undertaking are not adjusted while arriving at the profits of the 10B unit for allowing deduction u/s.10A/10B of the Act and not in respect of brought forward losses and depreciation of other undertakings/non-10A/10B units. S. 10A/10B(6) as amended by the FA 2003 w.r.e.f. 1.4.2001 provides that depreciation and business loss of the eligible unit relating to the AY 2001-02 onwards is eligible for set-off carry forward for set-off against income post tax holiday which means that they need not be so set off as mandated in the decision of the Hon ble Karnataka High Court in the case of Himatasingike Seide L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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