2010 (12) TMI 1321 - AT - Income Tax

Summary

Issues involved: Appeal filed by Revenue against CIT(Appeals) order for assessment year 2004-05.

Grounds raised by Revenue:
1. CIT(A) erred in allowing deduction u/s 10B before setting off carry forward losses.
2. CIT(A) erred in considering scrap sales and provisions written back as incomes eligible for relief u/s 10B.

Regarding Grounds 2.1 and 2.2:
Revenue argued that deduction u/s 10B should be after setting off carry forward losses, citing precedent. Assessee argued that deduction should be set off against unabsorbed depreciation, not carry forward losses. Tribunal held that deduction should be allowed after setting off losses as per Act provisions.

Regarding Grounds 3.1 and 3.2:
Revenue contended that scrap sales and provisions written back should not be considered as income eligible for u/s 10B relief. Assessee argued that these were linked to industrial undertaking and should be eligible. Tribunal upheld CIT(A) decision based on High Court rulings, confirming that scrap sales and provisions written back were eligible for deduction u/s 10B.

Conclusion:
Tribunal reversed CIT(A) decision on deduction timing but confirmed decision on scrap sales and provisions written back eligibility for u/s 10B relief, partly allowing Revenue's appeal.