TaxTMI 
TaxTMI 
2017 (11) TMI 109
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....the Assessing Officer during the Assessment Years 2001-02 & 2002-03 as well as the current Assessment Year i.e. 2003-04 calculated the depreciation on assets and allowed the same while computing the income of assessee since allowance of depreciation was mandatory for the Assessment Year 2002-03 onwards according to Assessing Officer. This action of the Assessing Officer was upheld by the Ld.CIT(A) against which the assessee is in appeal before us. 4. At the time of the hearing Learned Counsel for the assessee fairly concedes and submits that this issue has been decided against the assessee in its own case for the Assessment Year 2006-07 by the Coordinate Bench in ITA.No.4180/2005 dated 18.01.2010 copy of the order is placed before us. The Learned Authorized Representative of the assessee invited our attention to Para 18 at Page 13 of the order wherein Coordinate Bench decided this issue against the assessee following the judgment of the Hon'ble Bombay High court in the case of the Indian Rayon Corporation Ltd. v. CIT [261 ITR 98]. He further submits that this decision is followed in the Assessment Years 2002-03 and 2003-04 in ITA.No.590/Mum/2016 and 2642/Mum/2007 dated 18.01.2012 ....
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....y file rectification application under section 154 as in terms of section 155(13), the four year period for rectification will be reckoned from the end of year in which the proceeds are received. 7. Following the above order, we hold that the finding of the Tribunal for Assessment Year 2001-02 & 2002-03 applies for the current Assessment Year also. We direct the Assessing Officer to follow the directions of the ITAT accordingly. These grounds are partly allowed for statistical purposes. 8. The next issue in Ground No.8 is regarding the disallowance of interest on deposits and interest on staff loans for the purpose of computing deductions u/s 10A/10B of the Act. The Assessing Officer while computing the deductions excluded interest on fixed deposits and interest on staff loans holding that these are not incomes derived from business of the undertaking and therefore not eligible for deduction. On appeal the Ld. CIT(A) sustained the action of the Assessing Officer against which the assessee is in appeal before us. 9. The Learned Counsel for the assessee submits that these receipts have direct nexus with the business of the undertaking therefore eligible for deduction u/s 10A of th....
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....e tax. Ld. DR supported the orders of the authorities below. 14. We have heard the rival submissions. It is the contention of the assessee that it is into purchase and sale of software and there is a trading activity. Therefore, the cost of software purchased for sale cannot be treated as capital expenditure, has considerable force. It is the contention of the assessee that the profit and sale of software has been offered to tax and there is a trading activity and in such circumstances such cost of software cannot be treated as capital in nature. For the limited purpose of verification as to whether this cost of software was on account of trade in software or it was used for internal purpose, we restore this matter to the file of the Assessing Officer who shall verify the fact and if it is found that this cost of software was incurred for sale the same shall be allowed as cost of purchase and no disallowance should be made treating it as capital expenditure. The Assessing Officer shall pass orders after verification of this fact and after providing opportunity to the assessee. This ground is allowed for statistical purposes. 15. The next issue in Ground Nos.11 and 12 of the asses....
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....mature for application. The deduction under section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression "total income of the assessee" in section 10A can be reconciled by understanding the expression "total income of the assessee" in section 10A as "total income of the undertaking". Therefore, though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. Decision of the Karnataka High Court in CIT v. YOKOGAWA India Ltd. [2012] 341 ITR 385 (Karn) affirmed on this point". 19. In the light of the decision of the Hon'ble Supreme Court we direct the Assessing Officer to decide this issue following the apex court decision (supra). 20. The next issue is Ground No.13 of the assessee is regarding the carry forward and setoff of losses in subsequent Assessment Years. Since this ground is only consequential i....
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...., we reject ground No.1 raised by the assessee on this issue. 28. Ground No.2 is in respect of confirmation of disallowance of deduction u/s 10A/10B in respect of unrealized export proceeds. This issue has been dealt by us in earlier paragraphs while dealing with the appeal in ITA.No.2563/Mum/2007 for the Assessment Year 2003-04. The finding given therein applies mutatis mutandis to this appeal for the Assessment Year 2005-06 also. Thus this ground of appeal is allowed for statistical purpose. 29. The next issue in Ground No.3 of the assesse appeal is in respect of the disallowance of software expenses treating it as capital expenditure. The Learned Counsel for the assessee submits that the arguments advanced for the Assessment Year 2003-04 equally applies to this year as similar kind of expenditure was incurred on software in this Assessment Year. While disposing of the appeal of the assessee for the Assessment Year 2003-04 in ITA.No.2563/Mum/2007 we have held that if the software was purchased for sale and if there is any trading activity such software cannot be treated as capital expenditure but has to be allowed as cost of purchase especially when profit on sale of such softw....
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....k profits u/s 115JB the Ld. Counsel referring to Page 84 of the paper book submits that the assessee is entitled for deduction u/s 80HHE in respect of all the STP/EOU units and this is not considered by the Ld.CIT while passing the revision order. He submits that in case the assessee in not eligible for deduction u/s 10A of the Act the profits are eligible for deduction u/s 80HHE of the Act. The Learned Counsel for the assessee submits that in any case the disallowance of deduction is the subject matter revision u/s 263 in the order passed on 17.03.2009 which was quashed by ITAT on 04.03.2010 he submits that the Ld.CIT should not have revised the re-assessment order on this ground. 33. The Ld. DR submits that in so far as the deduction u/s 10A is concerned the assessee itself in its reply dated 22.03.2013 to the commissioner at Page 84 of the paper book submitted that denial of deduction u/s 10A can be added back while computing book profits u/s 115JB of the Act. He submits that it was further stated by assessee that this being a mistake apparent from record the same may be rectified u/s 154 of the Act. Therefore, he submits that now the assessee cannot say that the order passed b....