TaxTMI 
TaxTMI 
2022 (9) TMI 766
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....nder section 115JB of the Act. Subsequently, the assessee filed revised return of income on 19/08/2003 declaring book profit of Rs. 17,11,423, under section 115JB of the Act. The assessment was completed under section 143(3) of the Act on 29/12/2004, computing normal income at Rs. NIL and book profit under section 115JB of the Act at Rs. 2,38,97,632. Since, the tax on book profit was greater than normal income, book profit was considered as the total taxable income. 3. Subsequently, notice under section 263 of the Act was issued and thereafter revision order was passed on 30/03/2007, by the Commissioner of Income Tax-2, Mumbai ("learned CIT") under section 263 of the Act, inter-alia, on the following basis: (a) While computing the total income the Assessing Officer has allowed deduction under section 80HHE of the Act amounting to Rs. 2,05,57,787 on the income under the head "Income from Other Sources" ignoring the fact that after setting off brought forward losses from the earlier years, there was no eligible income for deduction under section 80HHE of the Act. (b) The assessee"s STP units at SEEPZ, Noida and Mohali eligible for deduction under section 10A of the Act suffered ....
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....licable as facts and circumstances of present case are completely different as the A.O. had set-off losses of STP units against profit of STP units; (ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee's appeal by relying on the judgment of Hon'ble Bombay High in the case of Hindustan Unilever Ltd v/s. DCIT 1(1), Mumbai and in process overlooked the crucial fact that the judgment related to set-off of losses of Export Oriented undertaking against normal business income and in the present case, there is profit/ available from STP unit for set-off against the losses pertaining to other STP units. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee's appeal by relying on the decision of Hon'ble ITAT Pune Bench in the case of Patni Computer System Ltd. v/s. DCIT, Circle-4 when the department has not accepted the decision and appeal to High Court has been filed u/s.260A; 3.For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored." 7. The only grievance of the Revenue is agai....
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....he contemporaneous Circular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, "The export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business 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 10A(1); 10A (1A) and 10A (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 09.08.2000) 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 and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for applic....
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....er passed under section 263 of the Act set aside the assessment order on this issue treating the same to be erroneous and prejudicial to the interest of the Revenue. Accordingly, vide order passed under 143(3) r.w.s. 263 of the Act, the Assessing Officer reduced the deduction under section 80HHE of the Act to Rs. NIL. The learned CIT(A) vide impugned order dismissed the appeal filed by the assessee on this issue. Being aggrieved, the assessee is in appeal before us. 15. During the course of hearing, learned Authorised Representative submitted that this issue has been adjudicated in favour of the assessee by the Co-ordinate Bench of the Tribunal in appeal against the order passed under section 263 of the Act. 16. On the other hand, learned Departmental Representative vehemently relied upon the orders passed by the lower authorities. 17. We have considered the rival submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee"s own case in M/s Zensar Technologies Ltd. v/s DCIT, in ITA No. 4137/Mum./2007, vide order dated 17/05/2022, has dealt with this issue in-detail on merits and decided the same in favour of the assess....
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.... and also on the decision of the Hon'ble Supreme Court in the case of Ipca Laboratories vs. DCIT reported in 266 ITR 521, in support of the contentions of the ld. CIT. We find there are two stages of computation of deduction u/s.80HHE of the Act. The first stage is the profits eligible for deduction u/s.80HHE has to be computed in the following formula:- Profits of the business x export turnover Total Turnover 6.3. As stated supra, profits of the business is to be computed as per Section 29 of the Act which in turn stipulates that business income shall be computed in accordance with the provisions contained in Section 30-43D of the Act. The second phase is the said deduction so computed above is to be restricted to the extent of gross total income as the same is to be allowed from gross total income. In the facts before the Hon'ble Madhya Pradesh High Court, in the second stage of computation, the gross total income was nil and therefore, no deduction u/s.80HHE of the Act was allowed. In the facts before the Hon'ble Supreme Court in Ipca Laboratories referred to supra, the loss from export of trading goods was higher than the profits of self-manufactured goods resulting into ne....
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....he ld. CIT. 6.6. We further find that the ld. DR vehemently placed reliance on the decision of Hon'ble Jurisdictional High Court in the case of Rohan Dyes and Intermediates Ltd., vs. CIT reported in 142 Taxman 503. In this case, the first issue which arose before the Hon'ble Court was similar to that as arose in the case of Ipca Laboratories Ltd., referred to supra coupled with further issue that if the combined net profit from the self-manufactured export and the trading export was the loss, then the deduction in respect of export incentives was to be allowed without setting off such net loss. We find that in this case also, the issue as arising in the present case of the assessee before us i.e. the computation of profit eligible for deduction by setting off brought forward business loss, did not arise for consideration and therefore, the decision rendered in Rohan Dyes and Intermediates Ltd., also becomes factually distinguishable with that of the assessee case. Accordingly, we hold that the ld. CIT grossly held in holding with the profits of the business for the year under consideration has to be reduced by the brought forward losses from earlier year for the purpose of comput....