TaxTMI 
TaxTMI 
2013 (11) TMI 144
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.... turnover" ; and (ii) set-off of brought forward losses of the assessment year 2001-02 while calculating deduction under section 10B. The Assessing Officer held that brought forward losses should be set off before grant of deduction under section 10B. Aggrieved against the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), vide order dated March 20, 2008 allowed the appeal of the assessee holding that 50 percent of internet charges are to be excluded from total turnover as well. In order to support his findings, the Commissioner of Income-tax (Appeals) relied on the order of the Tribunal in I. T. A. No. 3348/Mds/2004 titled Deputy CIT v. SRA Systems Ltd. [2008] 305 ITR (AT) 427 (Chennai) decided on June 15, 2007. The Commissioner of Income-tax (Appeals) further held that the deduction under section 10B is to be computed without setting off any carried forward losses of earlier assessment years. In deciding the issue, the Commissioner of Income-tax (Appeals) relied on the order of the Tribunal in the case of Intimate Fashions (India) P. Ltd. in I. T. A. No. 2097/Mds/2006 decided on Novem....
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....ation brought forward by the assessee in respect of eligible undertaking got absorbed by the assessment year 200405, thereafter, nothing is left to be adjusted/set off for the assessment year 2005-06. But the assessee did not deduct the unabsorbed depreciation while computing the business profit in the assessment years 2003-04 and 2004-05. Now, the assessee is not entitled to claim the benefit of earlier year depreciation. To buttress his submissions, the Departmental representative relied on the order of the Special Bench of the Tribunal in the case of Scientific Atlanta India Technology P. Ltd v. Asst. CIT reported as [2010] 2 ITR (Trib) 66 (Chennai). The Departmental representative further relied on the judgment of the hon'ble Kerala High Court in the case of CIT v. Patspin India Ltd. reported as [2011] 62 DTR (Ker) 364 wherein it has been held that before granting exemption under section 10B, losses of the earlier assessment years have to be set off. Per contra, Shri Vepa Krishna appearing on behalf of the assessee submitted that the Commissioner of Income-tax (Appeals) has passed a well reasoned and detailed order. The authorised representative strongly supported the order ....
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....t of the internet charges from the "export turnover" only. On appeal, the Commissioner of Income-tax (Appeals) has excluded the said 50 percent internet charges from the "total turnover" as well. We are of the opinion that the expenditure incurred in foreign currency which are excluded from the export turnover should also be excluded from the total turnover in order to grant benefit of the provisions of the section. Similar issue has been decided by the Special Bench of the Tribunal in the case of Sak Soft Ltd. [2009] 313 ITR (AT) 353 (Chennai). The Special Bench while adjudicating the issue has held that expenses on freight, telecommunication charges, or insurance attributable to the delivery of the articles or things or computer software outside India or expenses incurred in foreign exchange in providing technical services outside India, which are required to be excluded from the export turnover as defined in Explanation 2(iii) of section 10B should also be excluded from the figure of total turnover while applying the formula prescribed by sub-section (4) of section 10B of the Act. The Special Bench relied on the judgment of the hon'ble Supreme Court of India in the case of ....
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....ay High Court has held that (headnote):"section 10A is a provision which is in the nature of a deduction and not an exemption. The deduction under section 10A has to be given effect to at the stage of computing the profits and gains of business". Since the provisions of section 10A are pari materia with the provisions of section 10B, the same ratio can be applied in the cases covered by section 10B. Therefore, from the aforesaid judgment of the hon'ble Karnataka High Court and the hon'ble Bombay High Court inference can be drawn that deduction under sections 10A and 10B has to be computed and allowed in respect of profits of eligible undertaking for the year under consideration without setting off brought forward, unabsorbed losses and depreciation of the eligible undertaking. On the other hand, the hon'ble Kerala High Court in the case of Patspin India Ltd. [2011] 62 DTR (Ker) 364 has taken a contrary view. The hon'ble Kerala High Court has held that deduction under section 10B has to be granted with reference to profit of the industrial unit computed under the provisions of the Act which includes set off of unabsorbed depreciation carried forward from earlier years. The Specia....