2015 (6) TMI 446

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....ligible undertaking before allowing exemption u/s 10B of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition of Rs. 1,26,46,787/- representing disallowance of exemption u/s 10B was untenable without appreciating the fact that capital expenditure of AN 2007-08 is not allowable as revenue expenditure for the year under consideration. 3. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal." 2. Ground No.1 is regarding restricting the claim of resolution under section 10B by setting off of the loss of non eligible undertaking against the profits of eligible undertaking. 3.....

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....n of the Hon'ble jurisdictional High Court in the case of CIT vs. Black Veatch Consulting (P) Ltd. (supra), the Tribunal has also decided a similar issue in favour of the ssessee for assessment year 2005-06 vide its order dated 14th Sept., 2012 passed in ITA No. 22/Mum/2009. Respectfully following this judicial pronouncement, we uphold the impugned order of the learned CIT(Appeals) directing the AO to allow deduction u/s 1013 from the income of the assessee before set off of brought forward business losses and dismiss this appeal of the Revenue." 4. We further note that the appeal filed by the Revenue against the order of this Tribunal has been dismissed by the Hon'ble High Court vide order dated 28.02.13 whereby the order of this ....

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....working out the net profit of the eligible undertaking for section 10B deduction and was also added to net profit for the computation of deduction under section 10B. Thus the assessee has contended that to rectify the said mistake in the account the assessee has reduced the stores & spares and repairs & maintenance by the same amount while preparing the accounts for the year ended 31.03.08. Correspondingly, the same amount was reduced from the net profit while computing the income for the A.Y. 2008-09. The AO has not accepted this explanation of the assessee as to how the capital expenditure for A.Y. 2007-08 can become the revenue expenditure in the A.Y. 2008-09. Accordingly, the AO disallowed the said claim of deduction of Rs. 1,26,46,787/....

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.... committed by the assessee in the books of accounts relevant to the A.Y. 2007-08 by debiting the capital expenditure to the profit & loss account. However, the assessee offered correct income to tax for A.Y. 2007-08. For the year under consideration the assessee has carried out the necessary entries to rectify the said mistake occurred in the financial year 2006-07 by crediting the said amount of Rs. 1,26,46,787/- to the respective expenditures' ledger accounts and correspondingly debiting the fixed capital account. Thus, as a result of the said rectification adjustment made in the books of accounts for the year under consideration the profit of the assessee was increased by the said amount in comparison to the real profit of the year. ....