TaxTMI 
TaxTMI 
2010 (3) TMI 944
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....etting off the brought forward loss and as computed by the assessee. The Commissioner of Income-tax, on perusal of the records of the case found that the deduction under section 10A was given by the assessing authority without proper application of mind and against the provisions of the Income tax Act, 1961. The Commissioner of Income-tax held that the deduction under section 10A ought to have been allowed after setting off the brought forward business loss and unabsorbed depreciation relating to the earlier assessment years. After hearing the assessee in detail and examining the materials available on record, the Commissioner of Income-tax came to the conclusion that the assessment order passed by the assessing authority was erroneous and prejudicial to the interests of the Revenue. He, accordingly, set aside the computation of deduction under section 10A and directed the Assessing Officer to revise the deduction after setting off the business loss/unabsorbed depreciation relating to the earlier assessment years. The assessee is aggrieved and, therefore, this appeal before us. The grounds raised by the assessee in this appeal read as below: (i) There was no error in the o....
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....sively. He explained the facts of the case in a detailed manner and also explained the applicable law in an exhaustive manner. The first contention of the learned chartered accountant is that the view taken by the Assessing Officer was one of the views possible at that relevant point of time when the disputed assessment was completed. He invited our attention to the following decisions where it has been held that the deduction under section 10A has to be allowed without being reduced by the current year losses of other 10A units : (i) I Gate Global Solutions Ltd. v. Asst. CIT I. T. A. No. 248 and 249/ Bang/2007, dated November 27, 2007 [2007] 112 TTJ (Bangalore) 1002. (ii) Tata Consultancy Services Ltd. v. Asst. CIT I. T. A. No. 590/Bang/ 2008, dated November 14, 2008 [2009] TIOL-41-ITAT-Bang. He further pinpointed his arguments on the basis of the following decisions where it has been held that deduction under section 10A should be allowed in respect of the profits of 10A unit without reducing the brought forward losses and unabsorbed depreciation of the same unit : (i) KPIT Cummins Infosystems (Bangalore) P. Ltd. v. Asst. CIT [2008] 26 SOT 529 order dated August 29, 2008....
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.... of the above decisions is that two views were available regarding computation of deduction under section 10A at the relevant point of time when the assessment order was passed by the assessing authority. The decisions were available in support of the contention of the assessee that the profit of the current year should not be diluted and the decisions are also available in support of the contention that current year's profit should be adjusted for brought forward losses and unabsorbed depreciation. So what he makes out is that where the assessing authority has adopted one of the possible views on a subject, then the view taken by the assessing authority cannot be held to be erroneous. If that ratio is applied in the present case, it is the case of the learned chartered accountant that the order passed by the assessing authority cannot be held as erroneous. If the order of the Commissioner of Income-tax under section 263 is to be justified, it is necessary that the order passed by the assessing authority must be erroneous and prejudicial to the interests of the Revenue. If any of the above limbs is absent, then action under section 263 is not sustainable in law. In the present case....
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....earned chartered accountant, therefore, concluded that the order of the Commissioner of Income-tax passed under section 263 is not sustainable either in law or on facts. We heard Shri Jason P. Boaz, the learned Commissioner of Income-tax (DR)-1, for the Revenue, at length. The learned Commissioner of Incometax Departmental representative contended that the total income of a particular assessment year has to be computed after aggregation of the profits/ losses of the concerned assessment year under different heads of income and after setting off brought forward business losses/unabsorbed depreciation relating to the assessment years and the deduction under section 10A has to be worked out after setting off brought forward losses/unabsorbed depreciation. The learned Commissioner submitted that the above view has been upheld by the hon'ble jurisdictional High Court in the case of CIT v. Himatasingike Seide Ltd. [2006] 286 ITR 255, where the court has held that unabsorbed depreciation and unabsorbed investment allowance have to be adjusted against the current year's profit of the export oriented undertaking for the purpose of computing deduction under section 10B. The learned Com....
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....chartered accountant appearing for the assessee, the Income-tax Appellate Tribunal, Chennai Special Bench has also taken the very same view. The titles of those cases have already been mentioned elsewhere in this order. But de hors all these Tribunal orders, there is a binding judgment of the hon'ble jurisdictional High Court available before us which has been rendered by their Lordships in the case of CIT v. Himatasingike Seide Ltd. [2006] 286 ITR 255. Their Lordships examined the contention whether the deduction available to an assessee under section 10B has to be allowed before setting off unabsorbed depreciation and unabsorbed investment allowance. After examining the framework of law dealing with exemption under section 10B, their Lordships held that section 10B cannot be read in isolation of other provisions. This is only an exemption provision. The court went on to explain that after taking into consideration the unabsorbed depreciation, an assessee may get exemption but to a lesser extent and none the less it could not take only a portion of the depreciation just to suit its income for the purpose of nil liability and adjust the balance of unabsorbed depreciation against....