Tribunal affirms CIT(A) order on deduction u/s. 10B, allows set off

The Tribunal upheld the order of the Ld. CIT(A) granting deduction u/s. 10B and allowing the set off of carried forward losses and unabsorbed depreciation. The revenue's appeal was dismissed, affirming the decision in favor of the assessee.

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Issues:
Appeal against order granting deduction u/s. 10B - Set off of carried forward losses and unabsorbed depreciation.

Analysis:
The case involved the revenue's appeal against the order of the Ld. CIT(A)-, Valsad granting deduction u/s. 10B of the Act amounting to Rs. 98,34,684 before setting off the carried forward loss and unabsorbed depreciation of the previous year. The assessee, engaged in manufacturing and exporting premier quality socks, claimed the deduction u/s. 10B for the year under consideration, being the 10th year of manufacturing activities. The AO disallowed the deduction, stating that after setting off the carried forward losses, no positive income was available for claiming the deduction. However, the Ld. CIT(A) directed the AO to grant the deduction based on a precedent in the assessee's own case for the assessment year 2005-06, which was confirmed by the Tribunal. The Tribunal referred to various decisions, including the case of Ford Business Service Centre L. Ltd, to support the allowance of deduction u/s. 10B. It was emphasized that the total income of the undertaking should be considered before granting the deduction, and the set off of unabsorbed business losses and depreciation should be done after availing the deduction u/s. 10B. The Tribunal also highlighted that section 10B(6) applies only for the last year of deduction. Based on these precedents and lack of contrary decisions, the Tribunal upheld the Ld. CIT(A)'s findings, dismissing the revenue's appeal.

Conclusion:
The Tribunal concluded that the order passed by the Ld. CIT(A) granting deduction u/s. 10B and allowing the set off of carried forward losses and unabsorbed depreciation was upheld. Consequently, the revenue's appeal was dismissed, affirming the decision in favor of the assessee.

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