TMI Blog2005 (11) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... oss against the business income, there is still a loss and such loss has to be set off against income from other sources in the same year as per the provisions of s. 71 of the Act. The decision of the Tribunal in the case of Navin Bharat Industries Ltd.[ 2004 (3) TMI 318 - ITAT BOMBAY-E] also supports our view that the income of unit eligible for deduction u/s 10B is merely a deduction from income and not exemption. Accordingly, the assessee is eligible to set off the loss of such unit under ss. 70 and 71 of the Act. The AO is accordingly directed to set off the loss and compute the income. In the result, the appeal is allowed. - Member(s) : DEEPAK R. SHAH., R. S. PADVEKAR. ORDER-DEEPAK R. SHAH, A.M.: This appeal by assessee is directed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The appellant's submissions are carefully considered. Sec. 10A/10B is placed under Chapter III of the Act which deals with the income not forming part of total income. Further, the objective of s. 10A/10B is not to tax the export profits from EOU. The provisions of s. 10A/10B provide for complete exemption. If the intention behind the amended provision was to change over to a pattern of allowing a deduction similar to 80HHC or 80HHE, it would have been shifted to Chapter VI-A. As such, the word 'deduction' used in the amended provisions of s. 10A/10B have to be considered as an exemption only. Even if it is assumed that s. 10A provides for a deduction, the deduction or exclusion is required to be done at source from the total income and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is income from other sources by way of interest offered as such. The business loss declared by assessee is much more than such income. The business loss can be set off against income from other sources in the same year as per provisions of s. 70 of the Act. Learned CIT(A) has wrongly concluded that provisions of s. 10A/10B provides for complete exemption as they are in Chapter III. There is a retrospective amendment in s. 10B(6) which provides for deduction instead of exemption w.e.f. 1st April, 2001. Thus, in view of amended provisions of s. 10B(6) and provisions of s. 70 as well as s. 71 of the Act, business loss is to be set off against other business income and income from other sources in the same year. 2.2 Learned CIT Smt. Swati Pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that ss. 10A and 10B are in pari materia and hence in the present case also, the loss should be allowed to be set off. 3. We have carefully considered the relevant facts and the arguments advanced. Sec. 10B(1) provides that subject to the provision of this section, a deduction of such profits and gains as are derived by 100 per cent export-oriented undertaking from the export of articles or things or computer software, shall be allowed from the total income of the assessee. Thus, though s. 10B falls in Chapter III, which is titled as "Income which do not form part of total income" yet what is granted to the assessee is deduction as per the amended provisions of s. 10B w.e.f. 1st April, 2000. Sec. 10B(6)(ii) restricts carry forward and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formulated by the Government for taxability of units set up in the export processing zone. As such, it cannot be compared with s. 10. Coming to the applicability of s. 10A(4)(ii), it put interdict qua ss. 72 and 74. It does not preclude the operation of ss. 70 and 71. Sec. 14A is applicable in respect of 'expenditure'. Loss is different from expenditure. As such, the assessee was entitled to setting-off of the loss incurred by the SEEPZ unit". The decision of the Tribunal also supports our view that the income of unit eligible for deduction under s. 10B is merely a deduction from income and not exemption. Accordingly, the assessee is eligible to set off the loss of such unit under ss. 70 and 71 of the Act. The AO is accordingly directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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