TaxTMI 
TaxTMI 
2017 (5) TMI 967
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....ppeals), Kottayam, 10B in so far as the points stated below are concerned, is opposed to law on the facts 10Band in the circumstances of the case. 2. The Ld. Commissioner of Income Tax (Appeals) has erred in deleting the disallowance of deduction of Rs. 23,21,409/- claimed by the assessee u/s 1OB of the Act. 3. The Assessing Officer had disallowed the deduction u/s 1OB on the ground that the total income of the assessee for the year under consideration was loss. 4. Section 10B of the Act specifically states that deduction can be allowed only from the total income of the assessee. 5. The total income returned by the assessee was 'Nil' and hence, the incorrect claim of deduction u/s 10B resulted in ....
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....turned was reduced by Rs. 4,79,200/-. The Assessing Officer, while completing the assessment u/s 143 had allowed deduction u/s 10B of the Act amounting to Rs. 23,21,409/- as against the claim of the assessee of Rs. 25,61,409/- 2.1 Subsequently, notice u/s 148 was issued, for the reason that allowance u/s 10B of the Act was incorrect resulting in excess carry forward business loss of Rs. 23,21,109/-. The assessee objected to the reopening of the assessment. It was submitted that deduction u/s 10B was allowed after due consideration in the original assessment order and therefore, issuance of notice u/s 148 is bad in law. On merit, the assessee relied on the judgment of the Hon'ble Karnataka High Court in the case of CIT vs Yokogava India L....
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....apter VIA can be made to arrive at the total income. And only from that total income, an assessee can claim deduction under Section 10B b) In the case of assessee, deduction under Section 10B was made to arrive at the income chargeable to tax under the head "Profits and Gains from Business and Profession". This is totally against the scheme of Section 10B which provides for deduction only from the total income. c) Reliance is also placed on the decision of Hon'ble High Court of Kerala in the case of CIT v Patspin India Ltd (2011) as reported in 245 ITR 97. d) The total income is Nil and as such the incorrect allowance of 10B deduction has resulted in excess business "loss to be carried forward to subsequent ye....
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....ther hand submitted that the issue on merit is squarely covered in favour of the assessee by the judgment of the Hon'ble Apex Court reported in 391 ITR 274. 5 We have heard the rival submissions and perused the material on record. The issue for adjudication is whether the brought forward losses/unabsorbed deprecation is to be set off against profit of unit first and thereafter compute deduction u/s 10B of the Act or vise-versa? This issue is no longer res-integra. The Hon'ble Karnataka High Court in the case of M/s Yokogawa India Ltd reported in 341 ITR 385 had categorically held that exemption u/s 10B is to be calculated prior to the setting off brought forward losses and unabsorbed deprecation. It was held by the Hon'ble High Court tha....
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....siness of the assessee outside these zones or units for the purposes of this provision." 17 If the specific provisions of the Act provide (first proviso to Sections 10B(1); 10(1A) and 10B(4) that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (no.794 dated 9.8.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking as to be made independently and, therefore, immediately after the stage of determination of is profits and gains. At that stage the aggregate of the incomes under other heads and the provisions of set off a d....