The assessee derived profits from an SEZ unit before...

The assessee derived profits from an SEZ unit before depreciation. The issue was whether business losses of earlier years should be reduced from eligible profits for claiming deduction u/s 10AA. It was held that the Supreme Court in Yokogawa India Ltd. case decided that deduction u/s 10A is to be allowed while computing gross total income, not at the stage of computing total income under Chapter VI. The Bombay High Court in Black & Veatch Consulting and Techno Tarp cases also held that Section 10A deduction for eligible units should be allowed before setting off brought forward depreciation and losses. Hence, the assessee's appeal was allowed on this ground. Regarding disallowance of interest on delayed TDS payment u/s 37, it was held that such interest is penal in nature for violating the law by late deposit of TDS. The Madras High Court in Chennai Properties case held that interest u/s 201(1A) for late TDS payment is not a business expense and cannot be allowed as deduction. Hence, the coordinate benches' view allowing such interest was rejected, and the disallowance was upheld. On setting off business losses, the issue was remitted back to the AO to determine the available brought forward losses based on the outcome of earlier years' appeals and allow set-off accordingly. Regarding leasehold improvement expenses.