TaxTMI 
TaxTMI 
2011 (9) TMI 276
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....ed under the provisions of the Act which includes set off of unabsorbed depreciation carried forward from earlier years as provided under section 32(2) of Income-tax Act, (hereinafter called "the Act"). The assessments involved are for the years 2001-02 to 2005-06 (5 assessment years). The assessee filed returns for regular assessment on the profit determined under the provisions of the Act and in the alternative, for assessment on book profit as provided under section 115JB of the Act. The controversy arose in the determination of deduction admissible under section 10B(4) to both of the industrial units run by the assessee which are admittedly 100% EOUs eligible for deduction on export profits under the Act. The assessee computed eligible ....
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....sued by the Commissioner under Section 263 for the first four years and for the year 2005-06 second appeal was filed against the order of the CIT (Appeals) confirming the regular assessment. Even though several grounds were raised before the Tribunal, the assessee gave up their claim that interest income is business income and gave up claim of excess deduction under Section 35D by limiting the claim to the extent declared as eligible by the Commissioner of Income Tax and Commissioner of Income Tax (Appeals) etc. Ultimately the assessee pressed only one ground of appeal before the Tribunal i.e. whether as held by the Commissioner in the order issued under Section 263 that the deduction admissible under Section 10B(4) of the Act on the export....
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....y the Supreme Court, in SLP No.21101/2006. When the Supreme Court grants leave against the judgment relied on, we have to consider the issue on merit in our own way. 3. Since the issue pertains to method of computation of deduction eligible under Section 10B(4), we extract hereunder the relevant provisions of Section 10B of the Act: "S.10B. Special provisions in respect of newly established hundred per cent export-oriented undertakings.-(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant t....
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....een given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of subsection (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such allowances or deduction; ** ** ** There is no controversy that deduction on export profit under Section 10B(4) has to be determined with reference to the profit of eligible industrial unit i.e. 100% EOU. Assessee has two industrial units engaged in export qualifying both units for deduction under Section 10B(4). The only question, therefore, to be considered is t....
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....at business profit has to be first computed in accordance with Sections 28 to 43D of the Act and in the course of the same, unabsorbed depreciation carried forward should also be set off. However, in the two Tribunal decisions relied upon by the Cochin Bench the finding of the Tribunals is that in the course of computation of business profit, Section 10B(4) deduction has to be first made and thereafter only unabsorbed depreciation should be set off. We are unable to uphold the order of the Tribunal following two other Bench decisions of the Tribunal because business profit has to be first determined based on Sections 30 to 43D as provided under Section 29 of the Act and it is with reference to profit so determined deduction eligible under S....