TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1542
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....of deduction u/s. 10A on the ground that the assessee started manufacturing/production from the assessment year 1991-92. The period of 10 years of tax holiday benefit u/s. 10A expired in assessment year 2000-01, therefore, the assessee is not eligible for claiming deduction u/s. 10A in the impugned assessment year. The Assessing Officer further observed that the STPI unit was formed by assessee by splitting up/reconstruction of existing business. Apart from holding assessee ineligible for claiming deduction u/s. 10A of the Act, the Assessing Officer further rejected assessee's computation of deduction u/s. 10A by inter alia disallowing provisions for bad and doubtful debts, allocation of expenditure between STPI and non-STPI unit and claim of deduction u/s. 10A before setting off of loss of non-STPI unit. Aggrieved by the assessment order dated 20-12-2007, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) upheld the findings of Assessing Officer in holding assessee ineligible for claiming deduction u/s. 10A. The Commissioner of Income Tax (Appeals) further upheld disallowance of provision for bad deb....
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....assessment year 2006-07 and 2007-08 again the claim of deduction u/s. 10A was accepted by the Department in proceedings u/s. 143(1) of the Act. The ld. AR submitted that it is in impugned assessment year alone that the Assessing Officer has disturbed the claim of assessee u/s. 10A. The ld. AR placed reliance on the decision of Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Paul Brothers reported as 216 ITR 548 to contend that the Assessing Officer cannot question validity of deduction u/s. 10A if the same has not been questioned in the initial/first year of claim. The ld. AR submitted that both the authorities below have erred in coming to the conclusion that the first year of claim of deduction was assessment year 1991-92. The documents on record clearly establish that the STPI approval was granted to the assessee in the year 2000. Prior to the grant of approval there is no question of assessee claiming deduction u/s. 10A of the Act. 4.1 The ld. AR in respect of disallowance of provision for bad debts submitted that admittedly the assessee has created provisions for bad and doubtful debts on the premise that some of the receivables will not be realized du....
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....efended the findings of Commissioner of Income Tax (Appeals). The ld. DR submitted that once the assessee has created provisions for bad and doubtful debts and has debited the amount to Profit and Loss account, the assessee at a later stage cannot add back the said amount. The ld. DR further submitted that the assessee has failed to show that the provisions for bad and doubtful debts were in respect of STPI unit. The ld. DR contended that nature of business carried out by assessee in STPI and non-STPI units is same. However, the assessee has suffered loss under non-STPI unit and has earned profits under STPI unit. This clearly indicates that the assessee has transferred expenditure of STPI unit to non-STPI unit. The ld. DR prayed for sustaining the additions confirmed by Commissioner of Income Tax (Appeals). As far as eligibility of assessee's claim of deduction u/s. 10A, the ld. DR fairly admitted that the Assessing Officer in immediately preceding assessment year i.e. assessment year 2004-05 has accepted the claim of assessee. 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The first ground raised ....
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....created in respect of either of the units. The ld. AR referring to separate Profit and Loss accounts for STPI and non-STPI units has pointed that provision for bad debts has been separately created for STPI and non-STPI units. The ld. AR has further brought to our notice that while computing total income in the computation of income, the assessee has added back provisions for bad debts in respect of both STPI and non-STPI units. A separate calculation has been given for STPI unit wherein provision for bad debts in respect of STPI unit Rs. 22,56,208/- has been added back. We do not find any reason to disallow the claim of assessee. The assessee has added back the provision in the computation of income which was created earlier. Thus, the assessee has not claimed the same while computing total taxable income. Accordingly, ground No. 2 raised in appeal by the assessee is allowed. 8. The ground No. 3 raised in the appeal by the assessee is with regard to allocation of expenditure amongst STPI and non-STPI units. The Revenue has raised suspicion over the manner of allocation of expenditure between eligible and non-eligible units. The assessee has drawn our attention to the Profit and L....