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TMI Blog2005 (11) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... seeking rectification of intimation to give effect to retrospective amendment to s. 10B(6)(i)(ii). The appellant claimed inter-head set off of business loss against income from other sources as permissible under s. 71 of the Act. A revised return was also filed on 19th Aug., 2003 declaring loss to be carried forward of Rs. 4,32,65,130 after setting off the income of other sources of Rs. 5,94,514. The AO concluded that the business income as returned by the assessee is loss of Rs. 4,26,73,854. The assessee has earned certain income of Rs. 13,40,575, which is not eligible for deduction under s. 10B. The same was accordingly treated as business income chargeable under the Act. He also taxed income from other sources of Rs. 5,94,514 as declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be applicable to the losses of EOU. Further, there is no specific provision in the Act to allow set off or carry forward of losses of EOU. As such, the losses of EOU cannot be set off against the income of other businesses. The case laws relied on by the appellant are also not relevant to the issue as s.10A is clearly an exemption section. In the circumstances. AO's action of denying set off and carry forward of losses and depreciation is upheld". The assessee is in further appeal before us. 2.1 Learned counsel for assessee Shri Pradeep, submitted that interest income is inextricably linked to EOU as deposits were pledged with the bank for credit facility and bank guarantee margin. Thus, the same is to be treated as income derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Pandian Chemicals Ltd. vs. CIT (2003) 183 CTR (SC) 99 : (2003) 262 ITR 278 (SC) for this proposition. Sec. 10B falls in Chapter III, which starts with the title "Income which do not form part of total income". Since income eligible for exemption under s. 10B do not form part of total income, similarly loss of such unit eligible for exemption under s. 10B also do not form part of total income and hence ss. 70 and 71 will have no operation. Thus, the order of learned CIT(A) is to be upheld. 2.3 In reply, learned counsel for assessee submitted that similar issue has been decided by the Tribunal, Mumbai in the case of Navin Bharat Industries Ltd. vs. Dy. CIT (2005) 92 TTJ (Mumbai)(TM) 166 : (2004) 90 ITD 1 (Mumbai)(TM). In the said ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t off of business loss against the business income in the same year as per provisions of s. 70 of the Act. Similarly, after setting off of the business loss 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 Tribunal in the case of Navin Bharat Industries Ltd. held thus: "In the instant case, the benefit of s. 10A was available to the assessee for five years. The assessee claimed benefit for three years. For the rest of the years, the assessee did not claim the benefit of s. 10A. The assessee opted to get the profits of new industrial undertaking assessed under the normal provisions. There is no provision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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