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TMI Blog2020 (3) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... to reason to believe and the said reason do not constitute belief. 3. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the re-opening of the assessment as valid without considering the facts that Appellant had truly and fully disclosed all facts for setting off of losses of non-eligible unit against the eligible, filled report u/s 10AA and the same was disclosed in the Computation of Income, during the Original scrutiny assessment 4. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the re-opening of the assessment without considering the facts that re-opening of the assessment pursuant to audit objection cannot be said that the Ld AO had formed his own opinion that the income had escaped assessment 5. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not appreciating the facts the reopening of the assessment is after 4 years from the end of the assessment year and the earlier assessment was completed u/s.143(3} of the Act and there is no failure on the part of the Appellant to disclose all material facts for the computation of total income and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case and in law, the Hon'ble CIT(A) erred in not considering the facts and legal provision that the provisions of section 10A and 10AA are pari materia same with regards to this matter. 12. Without Prejudice to above, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not allowing set-off of losses of non-eligible unit against the income of eligible unit before claiming deduction u/s-10AA of the Act without considering the facts the Explanation has been added to section 10AA of the Act by Finance Act, 2017 w.e.f from 01.04.2018 13. Without Prejudice to above, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not allowing set-off of losses of non-eligible unit against the income of eligible unit before claiming deduction u/s-10AA of the Act treating the amendment to section 10AA of the Act by Finance Act, 2017 as clarification and hence retrospective in nature. 14. The Appellant prays that it may be allowed to add, alter or amend the above grounds of appeal and to make detailed submissions at the time of appeal 3. The brief facts of the case are that the assessee company is engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the available on record. At the outset, sec 10AA of the Act is reproduced hereunder: - "10AA(1) Subject to the provisions of this section, in computing the total income of an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, horn his Unit, who begins to manufacture or produce articles or things or provide any services during the previous year relevant to any year commencing on or after the 1st day or April, 2005, a deduction of...,." 6.2.5 The literal interpretation of the above section. As per the provisions (if section 10AA of the Act, a taxpayer having an eligible unit located in SEZ is entitled to a deduction of profits from exports. It is to be noted that as the legal interpretation of the deduction in "the income is first included in the total income and deduction in accordance with the provisions of each section is then reduced" Further, the said section also provides for computation of such deduction. In the computation of the deduction, it is requires aggregation of income of the units (i.e. inclusive result of eligible and non-eligible units) before giving effect to deduction under section 10AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um in this regard reads as below "section 10AA allows deduction in computing the total income of the assessee, hence, the deduction is to be allowed for the total income of the assessee as computed in accordance with the provision of the Act before giving effect to the provisions of section 6.2.8 From the above explanation, it is clearly understood that the interpretation of sec 10AA of the Act has been taken wrong by some taxpayer, as taxpayers having units eligible for tax holiday under section 10AA of the Act have been computing profits of the unit and claiming exemption of such profit prior to setting off losses of any other business unit. As a result, taxpayers were carrying forward entire losses under non-lax holiday units to subsequent years. It is important to consider that, this amendment has been passed to provide clarity to the interpretation of the sec 10AA of the Act. Before this amendment the act had been misinterpreted and as such the need to introduce this amendment arose Thus, the original section too provided the same interpretation which has been further clarified by the introduction of the amendment. Thus, the intent of the legislature has been further rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar view has been upheld by the Hon'ble Court. He, further submitted that in assesee own case for earlier years, the Tribunal held that it is plain and evident that the deduction u/s 10A has to be given at the stage, when the profits and gains of business are computed in the first instance. Therefore, he submitted that the Ld. AO, as well as the Ld.CIT(A) were incorrect in set off of loss of non eligible units against profit of eligible units before allowing deduction claimed u/s 10AA of the Act. 6. The Ld. DR, on the other hand, strongly supporting order of the Ld. AO, as well as the Ld.CIT(A) submitted that the Ld.CIT(A) has clearly distinguished decision of Hon'ble Supreme Court, in the case of CIT vs Yokogawa India Limited and observed that case before the Hon'ble Supreme Court is computation of deduction u/s 10A of the Act, whereas the claim of the assesee is u/s 10AA of the Act, and hence, the findings of the Hon'ble Supreme court is not applicable. Therefore, there is no reason to deviate from the findings recorded by the Ld. AO, as well as the Ld.CIT(A). 7. We have heard both the parties, perused the material available on record and gone through orders of the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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