TaxTMI 
TaxTMI 
2015 (2) TMI 108
X X X X Extracts X X X X
X X X X Extracts X X X X
....on u/s 10A of the Act amounting to Rs. 93,38,312/-. In the assessment completed u/s 143(3) of the Act, the claim of deduction was reduced to Rs. 81,55,777/-. The claim of deduction u/s 10A of the Act was reduced on account of adjustment of unabsorbed business loss and depreciation of Rs. 16,49,809/- [A.Y. 2004-05]. 5. On further appeal, the CIT (A) decided the issue against the assessee following the findings of the Delhi Tribunal in the case of Global Vantedge Pvt. Ltd v. DCIT (2010) 1 Taxmann.Com 12 [(2010) 001 ITR (Trib) 326 (Delhi)]. 6. The assessee, being aggrieved, is in appeal before us. The learned AR submitted that the issue in question is covered by the judicial pronouncements as listed out below: (i) CIT v. TEI Technologies Pvt. Ltd. 361 ITR 36 (Del); (ii) CIT v. Black and Veatch Consulting Pvt. Ltd 348 ITR 72 (Bom); (iii) CIT v. Yokogawa India Ltd 341 ITR 385 (Kar); (iv) CIT v. Tata Elxsi Ltd 349 ITR 98 (Kar); (v) CIT v. ACE Software Exports Ltd. in Tax Appeal No.831 of 2012 dt.1.3.2013; (vi) Valueprocess Technologies (I) (P) Ltd v. ITO 141 ITD 447 (M....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the gross total income, the loss of the non-section 10A unit cannot be set off against the income of the section 10A unit under section 72. The loss incurred by the assessee under the head 'Profits and Gains of business or profession' has to be set off against the profits and gains, if any, of any business or profession carried on by such assessee. Therefore, as the profits and gains under section 10A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such profits and gains of the under-taking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and therefore unabsorbed depreciation treated as current year's depreciation under section 32(2) is to be set off. As deduction under section 10A has to be excluded from the total income of the assessee the question of unabsorbed business loss being set off against such profit and gains of the under-taking would not arise. In that view of the matter, the approach of the assessing authority was quite contrary to the aforesaid statutory provisions and the Appellate Commissioner as wel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd our reasoning, we hold that deduction u/s 10A of the Act is to be calculated before reducing the unabsorbed loss and depreciation from the profits of the undertaking. It is ordered accordingly. 13. In the result, the assessee's appeal [in ITA No.1885] for the A.Y. 2005-06 is allowed. ITA No.2034/10 [AY 2007-08]: 14. The two grounds raised by the assessee are as under: (1) That the authorities below were not justified in excluding exchange variation of Rs. 7,85,820/- on share application money received from abroad from profits and gains of business; & (2) That the assessee was entitled to deduction u/s 10A of the Act without adjusting unabsorbed business loss/depreciation. 15. Briefly stated, the facts of the issue are as under: The assessee had shown receipt from exchange valuation amounting to Rs. 22,49,963/-, out of which, Rs. 7,85,820/- was on share application money. During the course of assessment proceedings, the assessee was required to explain as to how the income from exchange gain on share application money has been shown and as to why deduction u/s 10A of the Act should be given on this money. After d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the CIT (A) and, therefore, pleaded that the same deserves to be set aside to the file of the CIT (A) or AO for consideration. In the alternative, it was submitted that the assessee had shown the foreign exchange gain on share application money as 'other income' included in the net exchange variation on import and export of goods and had claimed deduction u/s 10A on such exchange variations. At the time of filing of return, it was submitted, the assessee was not aware of the Delhi High Judgment in the case of CIT v. Jagatjit Industries Ltd reported in 191 Taxman 54 wherein it has been held that such exchange variation as capital receipt. It was, further, submitted that at the time of regular assessment, the AO's attention was drawn to the judgment of the Hon'ble jurisdictional Court and pleaded with him that the income of Rs. 7,85,820/- should be excluded from taxable income and consequently deduction u/s 10A as claimed by the assessee should be withdrawn on this amount. According to the assessee, the AO, however, did not discuss this point in his order. It was, therefore, pleaded that the exchange variation of Rs. 7,85,820/- should be excluded from the assessee....