TaxTMI 
TaxTMI 
TaxTMI 
2007 (6) TMI 268
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....of earlier assessment years against the profits and gains of a unit eligible for deduction under s. 10B of the IT Act, 1961 ('the Act'). 2. The assessee is engaged in the business of IT enabled accounting services and also in the development of computer software. While determining the total income the AO did not consider the carried forward business loss and carried forward unabsorbed depreciation which were claimed to be set off by the assessee against the income of the unit on which deduction under s. 10B was claimed. The CIT(A) observed that section 10B was included in Chapter III which was titled as "Incomes which do not form part of total income" and there was a distinction between the provisions contained in Chapter VI-A of the Act a....
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....ars in which the deduction was available. In other words, it was contended that once the assessee had exhausted his deduction under s. 10B during all the years of eligibility, the unabsorbed losses and depreciation could not be set off in the years succeeding the years of eligibility for deduction under s. 10B of the Act. But within the 10 year period during which deduction is allowable, there was no such prohibition. 4. The learned Departmental Representative referred to the judgment of the Karnataka High Court in the case of CIT vs. Himatasingike Seide Ltd. (2006) 206 CTR (Kar) 106 : (2006) 286 ITR 255 (Kar). It was contended that as per the said judgment the entire income had first to be computed according to the provisions of the Act, ....
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....ng within any of the following clauses shall not be included-". The language of this "sentence clearly indicates that the incomes of the type falling within the clauses in s. 10 will not be included in the total income of a person. In other words, these incomes do not enter the computation part at all. Subsequently also when s. 10A was first introduced by the Finance Act, 1981 w.e.f. 1st April, 1981, the said provision provided for total exemption of the income described in s. 10A. Similarly, when s. 10B was introduced for the first time by the Finance Act, 1988 w.e.f. 1st April, 1989, sub-s. (1) thereof provided for a clear exclusion of the income referred to in the said section from the total income of an assessee. Since these provisions ....
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....nsel and accordingly we direct the AO to consider the set off of unabsorbed business losses and depreciation after availing deduction under s. 10B of the Act. We also agree with the contention that s. 10B(6) is applicable only for the last year of deduction and not for the earlier years of deduction. Accordingly, the claim of the assessee is allowed. 8. There is an additional ground raised by the assessee whereby it has challenged the direction of the CIT(A) that reimbursement received in foreign exchange amounting to Rs. 21,71,040 is to be excluded from "business profits" and "local turnover" for the purpose of deduction under s. 10B of the Act. The contention of the learned counsel is that the assessee itself has excluded this reimbursem....
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.... any assets, to the extent certain expenditure relates to development of a particular software, such expenditure should be taken as cost of development of that particular software and allowed to be set off against the income from that software. In case it is a general expenditure which cannot be apportioned to any asset or any particular software, such expenditure is to be capitalized and allowed over next four years @ 25 per cent. Thus, it can be seen that the CIT(A) did not stop at merely making an observation but went into the computational aspect of four subsequent years to direct the AO to grant deduction at a particular rate for a specific period. This exercise of jurisdiction by the CIT(A) was not warranted because he had no such jur....