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2013 (9) TMI 1150 - HC - Income TaxDeduction u/s. 10A - whether to be allowed first before setting off unabsorbed loss and depreciation of non-eligible business unit of the assessee ? - Held that - 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 anterior to the application of the provisions of section 72 which deals with the carry forward and set off of business losses. 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 10A, 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 and evident that the deduction under section 10A has to be given at the stage when the profits and gains of business are computed in the first instance See Black & Veatch Consulting (P.) Ltd. 2012 (4) TMI 450 - BOMBAY HIGH COURT
Issues:
Challenge to Tribunal's order on deduction u/s. 10A and set-off of losses in different assessment years. Analysis: 1. The Revenue challenged the Tribunal's order allowing the assessee's appeal regarding deduction u/s. 10A and set-off of losses for AYs 2005-06, 2006-07, and 2007-08. 2. The assessee initially declared NIL income for AY 2005-06, but the case was re-opened due to discrepancies in expenditure claims between Mumbai and Ahmedabad units. 3. The Assessing Officer disallowed set-off of business loss of AY 2001-02, leading to an appeal before CIT(A) which upheld the disallowance. 4. The Tribunal, following Bombay High Court decisions, allowed the assessee's appeal, leading to the Revenue's present appeal. 5. The Revenue argued for admission based on Madras and Karnataka High Court decisions and CBDT Circular clarifying "total income" under the Act. 6. The Tribunal's main issue was whether deduction u/s. 10A should be allowed without adjusting losses of other units or brought forward losses. 7. The Bombay High Court's decisions emphasized that section 10A provides for a deduction, not exemption, to be applied before set-off of losses. 8. The Division Bench affirmed that deduction under section 10A should be given when computing profits and gains, distinct from set-off provisions under Chapter VI-A. 9. Given the binding decisions of the Bombay High Court and the local court, the Tribunal's decision was upheld, and the Revenue's appeal was dismissed. 10. The Court rejected the Revenue's reliance on other High Court decisions due to the clear precedent set by the Bombay High Court and the local court's decision. In conclusion, the Court dismissed the Revenue's appeals, upholding the Tribunal's order allowing the assessee's claim for deduction u/s. 10A without adjusting losses of other units. The decision was based on the clear interpretation of the law provided by the Bombay High Court, emphasizing that section 10A provides for a deduction to be applied before set-off provisions, as outlined in Chapter VI-A of the Income-tax Act.
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