TaxTMI 
TaxTMI 
2010 (10) TMI 618
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....s. There are also loss and unabsorbed depreciation in these units that have been carried forward. The assessee, while filing the return, quantified the deduction u/s 10A and worked out without considering the results of operation of other units for the relevant year, has also the unabsorbed depreciation and brought forward business loss of non 10A units. 3.1 The Assessing Officer in the course of scrutiny assessment noticed that the assessee had claimed deduction u/s 10A of the Act at Rs.5,31,74,620/- whereas it was entitled only to a deduction of Rs.4,78,57,158/-, being 90% of such amount for the asst. year in question. The Assessing Officer further observed that since the net result was a loss of Rs.1,43,34,605/-, the assessee was not entitled to deduction u/s 10A for the relevant asst. year. The relevant finding of the Assessing Officer reads as follows:- "The assessee company did not have any profits left for allowing the deduction computed u/s 10A of the Income Tax Act. Hence, the deduction claimed u/s10A to the tune of Rs.4,78,57,158/- determined as above was not allowed to the assessee for the asst. year 2003-04". 4. Disenchanted by the assessme....
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.... considered by the Special Bench, Chennai, in Stumpp Schuele and Somappa Pvt.Ltd. 102 ITR 320 (Kar.) mentioned at Pg. 14 of 26 in the case of Scientific Atlanta India Technology Ltd.(supra) has already been considered by the Karnataka High Court in the case of Himatsingike Seide Ltd.(supra) ii. Other decisions relied upon by the Special Bench, Chennai, are:- (a) Enercon Wind Farms (Krishna) Ltd. vs ACIT - 21 SOT 29 (Mum) (b) Tyco Electronics Corprn. India Pvt. Ltd. - ITA No.1229/2007 (Bang) mentioned at Page 15 of the decision in the case Scientific Atlanta India Technology Ltd. (supra) While the first decision, viz., Enercon Wind Farms (Krishna) Ltd. is not applicable in view of the jurisdictional High Court decision in the case of Himatsingike Seide Ltd., the second decision, viz. Tyco Electronics Corprn. India Pvt. Ltd. is no longer applicable after the decision in the case of Intellinet Technologies (I) Pvt.Ltd. on the similar issue, the case has been decided in favour of the Revenue by the ITAT, Bangalore Bench (ITA.494,495 and 710/Coch/2007) dated 26.04.2010, and therefore, reliance on this decision is not applicable in the present case....
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....ier AY., and therefore not applicable. v. Without prejudice to the argument against the decisions of various Tribunals that section 80A,80AB is not applicable to section 10A/10B deductions, it is alternatively argued that the amended sections 10A and 10B itself clearly brings out that the deduction is to be allowed from the total income of the assessee. This clear wording of the section cannot be tampered with and total income has to be calculated, no doubt that the income eligible for deduction per eligible undertaking, has to be calculated separately as provided in law. The legislature has specifically used the word 'assessee' and 'undertaking' at different places in the section and these are meant to be interpreted accordingly. vi. It is also pointed out that while the heading under chapter III says' Incomes which do not form part of Total Income', there is a sub heading only before section 10 as "Incomes not included in total income" whereas before section 10A, w.e.f. 01.04.2001,a separate subheading is provided which reads as "Specific Provision in r/o newly established undertaking in free trade Zone etc." This was not the case prior to the amendment where ....
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....ction 2 prescribes certain conditions to be fulfilled by the undertaking for being eligible to the benefits of section 10A; - Under sub-section 4, it is profits of the business of the undertaking that qualify for deduction. Similarly, the definition of export turnover refers to the sale proceeds of the exports made by the undertaking ; - Under sub-section 5, an audit report is to be furnished in support of claim of deduction. Such an audit report is to be submitted for each eligible undertaking. 9.2 The decision relied on by the learned DR mainly in the case of Himatsingike Seide Ltd. 286 ITR 255 is distinguishable since in that case, the assessee owned only one 100% export oriented unit. The unabsorbed depreciation allowance was in relation to the same unit. However, in the present case, as stated earlier, the respondent operates through three units. Out of the three units, one unit was registered under STPI scheme and was eligible for exemption u/s 10A. The other two units were non 10A units. It was in the non 10A units, that the losses were incurred. The facts of the present case and the facts before the Karnataka High Court in Himatasingike Seide's....
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....ofits of the unit eligible for deduction u/s 10A of the Act would form part of the income computed under the head "Profits and gains of business and profession" but however, in order that the same will not suffer tax, deduction will have to be made in respect of such profits while computing the income under the head "profits and gains of business and profession" and not from the gross total income as envisaged under Chapter VIA. 9.5 The relevant finding of the Tribunal at para 60 of its order read as follows:- "Even though it is a deduction to be given, it is to be deducted while arriving at the profits of business and profession and not from the gross total income as envisaged under Chapter VI-A. Thus, we hold that deduction under section 10A under Chapter III of the Income-tax Act is to be granted while computing the profits and gains of business and profession itself and not from the gross total income". 9.6 Further, the Special Bench of Tribunal at paa 65 of its order held that when assessee is having more than one Industrial undertaking, the profits and gains of that 'particular undertaking', which qualify for deduction u/s 10A is being separately....