TaxTMI 
TaxTMI 
2011 (12) TMI 414
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....ow set off of the loss of the undertaking eligible for deduction u/s 10A against the profit of the undertaking eligible for deduction u/s 80HHE of the Income-tax Act, 1961 [hereinafter referred to as "the Act"]; and (ii) whether the CIT(A) has erred in deleting the addition of Rs.28,73,947/- being the provision for gratuity while determining the book profits u/s 115JB of the Act. 2. Let us take up the first issue relating to set off of loss of the undertaking eligible for deduction u/s 10A against profit of the undertaking eligible for deduction u/s 80HHE. The relevant grounds read as under: "2. The learned CIT(Appeals) was not justified in directing the Assessing Officer to allow set off of the loss of the undertaking e....
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.... ii. Bangalore Unit I ... Rs.1,60,96,009/- iii. Hyderabad Unit II ... loss Rs.67,25,055/- In order to arrive at the total income under the head 'profits and gains from business and profession', net income of these three units was clubbed. It was submitted that as per sect.70, where the net result for any assessment year in respect of any source falling under any head of income other than 'capital gains' was a loss, the assessee shall be entitled to have the amount of such loss set off against its income from any other source under the same head. With effect from 1-4-2001, section 10A was a deduction section. Hence, as per the provisions of sec.70, in order to compute the total income of the assessee, net income of these....
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....laim deduction u/s 10A in respect of its Hyderabad Unit since there was a taxable loss in Hyderabad Unit-II. However it was submitted that Bangalore Unit-I had a profit of Rs.1,60,96,009/- which was eligible for deduction u/s 10A. Certificate in Form 56F was attached with the return of income for assessment year 2004- 05. However, the AO was of the view that in the absence of declaration in writing that the provisions of sec.10A might not be made applicable to it, in violation of the provisions of sec.10A(8), the provisions of sec.10A shall apply. In other words, due to the assessee's failure to furnish a declaration in respect of both the 10A units, the AO opined that the assessee had claimed deduction u/s 10A on the said units, whether it....
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....sub-section will apply even in the case where an assessee has opted out of section 10-A by exercising his option under subsection (8). As discussed, it is permissible for an assessee to opt in and opt out of section 10-A. In the year when the assessee has opted out, the normal provisions of the Act would apply. The profits derived by him from the STP undertaking would suffer tax in the normal course subject to various provisions of the Act including those of Chapter VI-A. If in such a year, the assessee has suffered losses, such losses would be subject to inter source and inter head set off. The balance if any thereafter can be carried forward for being set off against profits of the subsequent assessment years in the normal course. Unabsor....
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....n the decision of the Bombay High Court in the case of Echjay Forgings Pvt. Ltd. (251 ITR 15)(Bom). However, according to the AO, actuarial valuation could not be treated as ascertained liability as the same was made taking into account the probabilities of death, leaving service or retirement of employees. Therefore, in his view, it cannot be ascertained liability. Thus, he did not accept the contention of the assessee and added back the same for computing the book profits u/s 115JB. 3.2 Aggrieved, the assessee moved the matter before the first appellate authority. The decision of the Bombay High Court in the case of Echjay Forgings Pvt. Ltd. (supra) was relied upon. The CIT(A) relied on the decision of the Hon'ble Supreme Court ....