TaxTMI 
TaxTMI 
2015 (11) TMI 924
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.... the Act and the case was subsequently taken up for scrutiny. The assessment was completed under Section 143(3) of the Act vide order dt.28.12.2006 determining the loss under normal provisions of the Act at Rs. 1,11,08,860 in view of the following additions / disallowances :- (i) Addition towards PF and ESI : Rs.1,48,634. (ii) Towards excess depreciation : Rs.3,37,292. (iii) Excess deduction under Section 10A : Rs.11,92,860 The 'book profits' under Section 115JB were computed as under :- Profits before tax as per P&L Account : Rs.2,05,86,685. Add 1)Income tax paid Rs.24,19,800. 2)Expenses related to exempt income : Rs.86,29,205 Rs.1,10,49,005. Less i)Income on which deduction u/s.10A claimed : Rs.1,48,49,273. (ii) Amount of loss or unabsorbed depreciation : Rs.64,34,368 Rs.2,12,83,641. 'Book Profits' : Rs.1,03,52,049. 2.2 Aggrieved by the order of assessment for Assessment Year 2004-05 dt.28.12.2006, the assessee preferred an appeal before the CIT (Appeals) - III, Bangalore. The learned CIT (Appeals) di....
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....e said decision has not been accepted by the Department and the SLP in the matter is pending before the Hon'ble Apex Court. 4.1 In the meanwhile, the Assessing Officer initiated proceedings under Section 147 of the Act and reopened the assessment for Assessment Year 2004-05 by issue of notice under Section 148 of the Act. The reassessment proceedings were completed exparte under Section 144 rws 147 of the Act vide order dt.29.12.2009, wherein the loss under normal provisions was computed at Rs. 34,65,112. The 'book profits' under Section 115JB of the Act was determined at Rs. 1,66,60,438 as under :- Profits before tax as per P&L Account : Rs.2,05,86,685. Add 1)Income tax paid Rs.24,19,800. 2)Expenses related to exempt income : Rs.86,29,205 Rs.1,10,49,005. Rs. 3,14,35,690. Less i)Income on which deduction u/s.10A claimed : Rs.1,48,49,273. (ii) Amount of loss or unabsorbed depreciation, whichever is less : Rs.1,25,979 Rs.1,49,75,252. 'Book Profits' u/s. 115JB : Rs.1,66,60,438. 4.2 Aggrieved by the order of assessment under Section 144 rws 147 of the Act dt.2....
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....the decision of the CIT (Appeals) in directing the Assessing Officer to compute the deduction under Section 10A of the Act without setting off the losses pertaining to non-10A units against the profits of 10A units and in following the decision of the Hon'ble Karnataka High Court in the case of Yokogawa India Ltd., in 341 ITR 345 (Kar) while doing so, since the said decision of the Hon'ble High Court has not been accepted by the Department and the SLP in the matter is pending before the Hon'ble Apex Court. 4.5 Grounds in Assessee's appeal in ITA No.1016/Bang/2014. " 1. Reopening of assessment 1.1 The learned CIT (Appeals) erred in upholding the action of the learned Assessing Officer in reopening the assessment by issue of notice under Section 148 and passing order under Section 147 read with section 143(3) even though all the material facts relating to the above mentioned assessment were available at the time of assessment proceedings under Section 143(3) of the Income Tax Act, 1961. 1.2 The learned CIT (Appeals) erred in not appreciating that there is no failure on the part of the appellant in fully and truly disclosing all the material fac....
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....export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover in the denominator also. The reason being that the total turnover includes export turnover. The components of the export turnover in the numerator and denominator cannot be different. Therefore, though there is no definition of the term 'total turnover' in section 10-A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. Though when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to the same, the said ordinary meaning to be attributed to such word is to be in conformity with the context in which it is used. When the statute prescribes a formula and in the said formula, 'export turnover' is defined, and when the 'total turnover' includes 'export turnover', the very same meaning given to the 'export turnover' by the legislature is to be adopted while understanding the meaning of the 'total turnover', when the 'total turnover', inc....
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....sment for Assessment Year 2004- 05 by issue of notice under Section 148 of the Act for the reason that the assessee had claimed the deduction under Section 10A of the Act in the year, even though there was a business loss and unabsorbed depreciation from the earlier year which the assessee had not set off before computing the deduction under Section 10A of the Act. The Assessing Officer observed that if these losses were set off against the income of the current year, there was no positive income and in that view of the matter, the Assessing Officer disallowed the entire deduction claimed under Section 10A of the Act. 9.2.2 On appeal, the learned CIT (Appeals) following the decision of the Hon'ble jurisdictional High Court in the case of Yokogawa India Ltd. (supra) directed the Assessing Officer to compute the deduction under Section 10A of the Act without setting off the losses carried out forward from earlier years pertaining to non-10A units against the profits of the 10A units for the current year. 9.3.1 We have heard the rival contentions of both parties and perused and carefully considered the material on record. We find that the issue of setting off losses against ....
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.... which he is carrying on. The said benefit is available even to undertakings u/s 10B of the Act. The expression "deduction of such profits and gains as derived by an undertaking shall be allowed from the total income of the assessee", has to be understood in the context with which the said provision is inserted in Chapter III of the Act. Sub-section (4) of section 10A clarifies this position. It provides that the profits derived from export of articles or things from computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. Therefore, it is clear that though the assessee may be having more than one undertaking for the purpose of section 10A it is the profit derived from export of articles or things or computer software from the business of the undertaking alone that has to be taken into consideration and such profit is not to be included in the total income of the assessee. It is only after the deduction of the said profits and gains, the income of the assessee has ....
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....n the aforesaid case of Yokogawa India Ltd. (supra), we uphold the decision of the learned CIT (Appeals) in directing the Assessing Officer to compute the deduction under Section 10A of the Act without setting off the losses of the non-10A units both current and carried forward from earlier years against 10A units. Consequently Grounds 2 and 3 of Revenue's appeal are dismissed. 10. In the result, Revenue's appeal in ITA No.936/Bang/2014 is dismissed. Assessee's appeal for Assessment Year 2004-05 in ITA No.1016/Bang/2014. 11. Ground No.1 (1.1to 1.3) - Reopening of Assessments 11.1 In the Grounds at 1 (1.1 to 1.3), the assessee had challenged the reopening of the assessment for Assessment Year 2004-05 by initiating proceedings under Section 147 of the Act and by issue of notice under Section 148 of the Act. However, in the course of proceedings before us, the learned Authorised Representative for the assessee submitted that the assessee is not pressing these grounds at 1 (1.1 to 1.3) pertaining to the reopening of assessment. We, therefore, dismiss the Grounds raised at S.Nos.1 (1.1 to 1.3) as not pressed. 12. Ground No.2 - Computation of 'Book Profits' u/s.115JB. ....
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....nit, viz. Makino Asia Pte Ltd., is claimed to be Rs. 1,01,19,732. ii) These facts and figures have not been brought on record in the assessment proceedings of the amalgamated entity, viz. Makino India Pvt Ltd. for Assessment Year 2003-04. iii) In the revised return of income filed by the assessee for Assessment Year 2003-04 on 31.10.2004, the total loss claimed is Rs. 5,26,18,845, comprising of business loss of R.63,08,389 and depreciation of Rs. 4,63,10,456. iv) The figure of loss as per the books of account of Makino Asia Ltd. i.e. business loss of Rs. 1,18,20,816 and depreciation of Rs. 1,30,97,205 are not reflected; v) During the proceedings for Assessment Year 2003-04, the assessee claimed that the Indian Branch of Makino does not have any accumulated losses (business loss and unabsorbed depreciation). In view of the above reasons, the learned CIT (Appeals) held that the assessee's claim is not in order and rejected the contentions of the assessee and upheld the Assessing Officer's finding in the matter. 12.3 In the course of appellate proceedings before us, on 24.9.2015, the learned Authorised Representative for the assessee submitted that there was erro....