TaxTMI 
TaxTMI 
2026 (8) TMI 1047
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.... Tax Appellate Tribunal, Delhi Bench: "I-1", New Delhi (hereinafter referred to as 'Tribunal') in ITA/42/Del/2013, the present appeal relates to Assessment Year 2005-06. 2. A short but important question of law involved in this case is, that the appellant-assessee has 10 units in business of export of software, out of which 6 units are export oriented units. 3. During the assessment year 2005-06, one of its unit (i.e. unit V at Gurgaon) incurred business loss amounting to Rs. 1,34,24,747/-. There is no dispute about the fact that said unit was eligible for benefits under Section 10B of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961'). 4. The appellant-assessee while preparing its computation of income had cla....
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....dealt with the judgment of this Court in the case of Commissioner of Income Tax. v. KEI Industries Ltd. reported in [2015] 373 ITR 574 (Delhi) and Commissioner of Income Tax and Anr. v. Yokogawa India Ltd. [2012] 341 ITR 385 (Karn.) of the Karnataka High Court which was affirmed by Hon'ble the Supreme Court in [2017] 391 ITR 274 (SC), held as under: "9. In light of above settled position, which is equally applicable to cases governed by the provisions of section 10B, in view of the later provisions being pari materia with section 10A, the deduction contemplated u/s 10B is qua the eligible undertaking and without reference to the other eligible or non-eligible units or undertakings of the assessee. It has further been held in the sa....
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...., as stood prior to 2000, which provided for exemption. He argued that this Court's observation in the case of KEI Industries (supra), that set off was impermissible, was in the context of the principle that Section 10B of the Act 1961 provided for an exemption, whereas such view of this Court has been reversed by Hon'ble the Supreme Court in the judgment rendered in the case of Yokogawa India Ltd. (SC) (supra). 10. He submitted that the Tribunal's impugned order which is premised on the reasoning of Delhi High Court's judgment in the case of KEI Industries (supra) is not correct in the eye of law and if the principles enunciated by Hon'ble the Supreme Court in the case of Yokogawa India Ltd. (SC) (supra) read with judgment of Karnataka ....
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....gs from computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. Therefore, it is clear that though the assessee may be having more than one undertaking for the purpose of section 10A it is the profit derived from export of articles or things or computer software from the business of the undertaking alone that has to be taken into consideration and such profit is not to be included in the total income of the assessee. It is only after the deduction of the said profits and gains, the income of the assessee has to be computed....
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....apter VI. All the appeals shall stand disposed of accordingly." 13. Learned Senior Counsel further submitted that apart from the aforesaid judgments, the CBDT itself had issued a Circular bearing no.7/DV/2013 dated 16.07.2013 to clarify the confusion in this regard. 14. He invited Court's attention towards Paragraph Nos. 5 & 5.2 of the aforesaid Circular and submitted that hardly anything remains to be argued by the Revenue, as the Circular is binding upon all authorities under the Act of 1961. 15. Mr. Siddharth Sinha, learned Senior Standing Counsel, on the other hand argued that the Tribunal has taken a correct view of the matter and correctly held that the assessee cannot claim set off of the loss of one unit against the profits....
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....n of export profit under Section 10B of the Act of 1961 is confined to Section 10B alone and it does not have any bearing on Section 70/71 or 72 of the Act of 1961. Hence, there cannot be denial of set off of loss or carry forward of the loss of eligible undertaking. 20. Moving on to the judgment passed by Hon'ble the Supreme Court in the case of Yokogawa India Ltd. (SC) (supra). We find that Hon'ble the Supreme Court has affirmed the view of Karnataka High Court in the case of Yokogawa India Ltd. (Karn) (supra). A simple look at the reproduced part of Karnataka High Court in para no. 11 above shows that if in a year, the assessee has suffered losses, such losses would be subject to inter-source and inter-head set off. The balance, if an....