2010 (3) TMI 1178 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 10A of the IT Act.
2. Set off of brought forward loss.
3. Recompute losses claimed by the assessee.

Summary:

1. Deduction u/s 10A of the IT Act:
The assessee claimed exemption u/s 10A for development and export of computer software, which the AO denied based on the assessee's alleged declaration u/s 10A(8) for A.Y. 2000-01. The CIT(A) concluded that the assessee is free to exercise the option of availing or not availing the benefits of section 10A as per convenience. The Tribunal in the case of Legato Systems India (P) Ltd. vs. ITO held that the declaration required u/s 10A(8) is for that year only. The Tribunal remitted the issue to the AO to allow exemption u/s 10A if the assessee satisfies all requisites, or alternatively, allow deduction u/s 80HHE.

2. Set off of brought forward loss:
The assessee claimed set off for brought forward loss, which the AO did not discuss in detail. The CIT(A) directed the AO to verify and allow the set off as per law. The Tribunal remitted this issue to the AO for examination and a finding as per law.

3. Recompute losses claimed by the assessee:
The AO computed the loss for A.Y. 2001-02 at Rs. 6,81,857/- based on the Madras High Court decision in CIT vs. S.S. Thiagarajan. The CIT(A) referred to section 10A(6) and the ITAT Bangalore decision in Mindtree Consulting (P) Ltd. vs. ACIT, directing the AO to set off the losses and compute income accordingly. The Tribunal found that section 10A permits carry forward of loss within the tax holiday period and remitted this issue to the AO for examination and a finding as per law.

Conclusion:
The appeals filed by the revenue are allowed for statistical purposes, and the issues are remitted to the AO for further examination and findings as per law. The order was pronounced in the open court on 31/03/2010.