2018 (10) TMI 1844 - AT - Income Tax

Tribunal Upholds Exemption Calculation Precedent

Deputy Commissioner of Income Tax, Corporate Circle – 1 (2), Chennai Versus M/s. Comstar Automotive Technologies Pvt. Ltd.

The tribunal dismissed the Revenue's appeal challenging the computation of exemption claimed under section 10B. The tribunal upheld the decision of the ... Exemption u/s. 10B computation - whether at the stage prior to arriving at the gross total income i.e., before allowing set off for carry forward of losses or the carry forward losses must be set off against the gross total income & then exemption u/s. 10B should be allowed? - HELD THAT:- Since, it is a recurrent issue and the issue has been allowed in the assessee’s own case [2018 (2) TMI 1998 - ITAT CHENNAI] relying on the judgement of the Hon’ble Apex Court in the case of CIT vs Yokagawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] the Revenue’s appeal is dismissed. Issues:1. Computation of exemption claimed u/s. 10B - Whether before allowing set off for carry forward of losses or after setting off the losses against gross total income.Analysis:The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-9, Chennai, for the assessment year 2003-04. The main issue in this appeal was the computation of exemption claimed u/s. 10B - whether it should be calculated before allowing set off for carry forward of losses or after setting off the losses against gross total income. The Assessing Officer (AO) adjusted the unabsorbed depreciation from the profits earned by the export-oriented undertaking and then computed the deduction u/s. 10B based on the decision of the Hon’ble Karnataka High Court in the case of CIT vs. Himatasingike Seide Ltd. The assessee, however, appealed to the Ld. CIT(A), who allowed the appeal following the Supreme Court's judgment in the case of Yohogawa India Ltd.The Revenue, aggrieved by the decision of the Ld. CIT(A), filed an appeal with various grounds challenging the order. The Revenue contended that the Ld. CIT(A) erred in allowing the claim u/s. 10B without setting off the unabsorbed depreciation loss of earlier years. The Revenue also argued that the Ld. CIT(A) failed to consider the decision of the Apex Court in the case of Himatsingike Seida Ltd vs. CIT and that the profits eligible for deduction u/s. 10B should be computed after setting off unabsorbed depreciation losses of earlier years. The Ld. DR presented the case based on the grounds of appeal.The Ld. AR, on the other hand, relied on an ITAT decision in the assessee’s own case for other assessment years, wherein applying the ratio of the Apex Court in the case of CIT vs. Yokogawa, the tribunal allowed the assessee’s appeal. After hearing both parties, the tribunal noted that since it was a recurrent issue and the issue had been decided in favor of the assessee in their own case, relying on the judgment of the Hon’ble Apex Court in the case of CIT vs. Yokogawa India Ltd, the Revenue's appeal was dismissed.In conclusion, the tribunal dismissed the Revenue's appeal based on the precedent set in previous decisions and the interpretation of the relevant legal provisions and judgments.