TaxTMI 
TaxTMI 
2021 (10) TMI 780
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....essed u/s 143(1) of the Act. The case was selected for scrutiny and an assessment order under section 143(3) of the Act was passed on 21st March 2014, determining total income under normal provisions of the Act at Rs. (1,50,64,429) and Book profit under section 115JB of the Act at Rs. 1,69,39,360. Since the tax payable under section 115JB of the Act was more than the tax payable under normal provisions, therefore, the income of the assessee was determined at Rs. 1,69,39,360, as per book profit under section 115JB of the Act. Subsequently, it was noticed that against the assessee's claim of deduction under section 10A of the Act at Rs. 2,75,01,777, the assessee was allowed deduction under section 10A of the Act at Rs. 1,85,61,272. Accordingly, the loss at Rs. (1,50,64,429), was determined and allowed to carry forward this loss of Rs. (1,50,64,429), to subsequent years. However, the net taxable income was Rs. 34,96,843, before allowing deduction under section 10A of the Act, therefore, the deduction allowable under section 10A of the Act should have been restricted to Rs. 34,96,843, only and the net taxable income would be Nil. Thus, there would be no current year loss available ....
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....The placement, language and setting of section 10A cannot mean the total income computed in accordance with the provisions of the Act. Instead, such a phrase in the context of section bA, means profits and gains of the STP undertaking as understood in its commercial sense. From the above judgement, it is evident that the computation of deduction u/s. 1OA of the Act should be done at the time of computing the total income of the undertaking under the head income from business and profession and not after computing the overall total income of the assessee. Accordingly, the order passed u/s. 154 of the Act is infructuous in nature and accordingly, deduction u/s. 10A of the Act should not be restricted to Rs. 34,96,843/-. 14) Further, it was held by the Hon'ble High Court that losses of non-eligible 10A unit should not be set-off against the profits of 10A units. The relevant extract of the judgement is reproduced as under: "33. As the income of the section 10A unit has to be excluded at source itself before arriving at the gross total income, the loss of the non-section 10A unit cannot be set off against time income of the section WA unit under section 7....
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....mewhat similar deductions would be wholly irrelevant and redundant if deductions under section 10A were to be made at the stage of operation of Chapter VI. The retention of the said provisions of the Act i.e. sections 80HHC and 80HHE, despite the amendment of section WA, indicates that some additional benefits to eligible section 10A units, not contemplated by sections 80HHC and 80HHE, was intended by the legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions under sections 10A and 80HHC and 80HHE are substantially different. [Para 151] From a reading of the relevant provisions of section 10A it is more than clear that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non- eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clearfroin the contemporaneous Circular No. 794, dated 9-8-2000. [Para 161 If the specific provisions of the Act provide [first provi....
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....our view, has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of Section 72 which deals with the carry forward and set off of business losses. A distinction has been made by the Legislature while incorporating the provisions of Chapter VI-A. Section 80A(1) stipulates that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the Chapter, the deductions specified in Sections 80C to 8011. Section 8013(5) defines for the purposes of Chapter VI-A "gross total income" to mean the total income computed in accordance wit/i the provisions of the Act, before making any deduction under the Chapter. What the Revenue in essence seeks to attain is to telescope the provisions of Chapter VI-A in the context of the deduction which is allowable under Section WA, which would not be permissible unless a specific statutory provision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. In the circumstances, the decision of the Tribunal would have to be affirmed since it is plain an....
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....ctions 10A and 80HHC and 80HHE are substantially different. From a reading of the relevant provisions of section 10A it is more than clear that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794, dated 9-8-2000. If the specific provisions of the Act provide (first proviso to sections 10A(1); 10A(1À) and 10A4)] 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 has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads....