TaxTMI 
TaxTMI 
2019 (9) TMI 1546
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.... this case is this that the assessee-company has filed its retune of income on 27.09.2009, which was finalized by and under an order dated 27.05.2013 u/s 143(3) allowing the claim of deduction u/s 10A of the Act upon allowing setting off of brought forward losses. Further, the book profit was computed under MAT on the income of Rs. 4,77,79,483/- and the tax was paid u/s 115JB of the Act. The question before us is as to whether the claim of deduction u/s 10A of the Act before setting off brought forward losses - irregular excess allowance of carried forward business losses to the extent of Rs. 3,96,60,132/- for set off in subsequent years is permissible or not. The case of the assessee is this that the deduction u/s 10A of the Act is to be allowed before set off of brought forward losses / loss from ineligible units. The facts of the case is this that the assessee declared his income as Nil after claiming deduction of Rs. 3,96,60,132/- u/s 10A and thereafter set off of business losses of Rs. 2,91,07,555/- pertaining to assessment year 2008-09 against the income of current year. Further that, the claim of carry forward of business losses to the tune of Rs. 3,70,52,213/- (brought forw....
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....s expenditure there to claim higher exempt income from the Ahmedabad Unit. Accordingly, a show cause notice dated 16th December 2009 was issued to the assessee. In the said show cause notice, it was pointed out that there is no business activity from Mumbai unit of the company since financial year 2001-02, therefore, claim of expenditure in respect of Mumbai unit is only adjustment entry and diversion of expenditure of the company to enhance the profit of STPI unit at Ahmedabad to claim more deduction under section 10A of the Act, and therefore, the assessee was requested to explain as to why the amount of brought-forward losses may not against the income before granting deduction under section 10A of the Act. The assessee was therefore requested to justify its claim under section 10A of the Act. 3.3 In response to the above, the assessee submitted its explanation on 19th December 2009, and that thereafter, the Assessing Officer passed an order of assessment on 24th December 2009 disallowing the set-off of the business loss of A.Y 2001-02 and added it back to the total income of the assessee-company. 4. Feeling aggrieved and dissatisfied with the order of assessment dated 24th De....
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....tax Act, 1961 and the Circular No. 7/DV/2013 dated 16/07/2013 issued by the CBDT, the issue/question raised in the present Tax Appeals may be admitted. It is submitted that while issuing the Circular, the Board has clarified what can be said to be the "total income" as per Section 2(45) of the Act. It is further submitted that by the aforesaid Circular, the Board has tried to clarify the amendment and/or provision of Sections 10A & 10B of the Income-tax Act. 9. Heard Ms. Mauna Bhatt, learned advocate appearing for the Revenue and perused the impugned common judgment and order passed by the Tribunal. At the outset, it is required to be noted that the only issue/question before the Tribunal was, "Whether deduction claimed by the assessee under Section 10A of the Income-tax Act, 1961 should be allowed without adjustment of losses of other units and without adjustment of brought forward losses and/or its depreciation of earlier years." Considering the decision of the Bombay High Court in case of Black & Veatch Consulting (P.) Ltd. (supra), which subsequently again came to be considered by the Bombay High Court in case of Schmetz India (P.) Ltd. (supra), the Tribunal has held the afore....
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.... the fourth unit could be set off against the normal business income. In these circumstances, the basis on which the assessment is sought to be reopened is contrary to the plain language of section 10B.' 10.2 Following the aforesaid decision in the case of Hindustan Unilever Limited (supra), in the case of Black & Veatch Consulting (P.) Ltd. (supra), in paragraph 4, it is observed and held as under :- "Section 10A is a provision which is in the nature of a deduction and not an exemption. This was emphasized in a judgment of a Division Bench of this Court, while construing the provisions of section 10B, in case of Hindustan Unilever Ltd. v. Dy. CIT [2010] 325 ITR 102/191 Taxman 119 (Bom.) at paragraph 24. The submission of the Revenue placed its reliance on the literal reading of section 10A under which a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years is to be allowed from the total income of the assessee. The deduction under section 10A, in our view, has to be given effect to at the stage of computing the profits and gains of business. This is ante....