2013 (6) TMI 885 - AT - Income Tax

Summary

Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) regarding disallowance u/s 10A for assessment year 2008-2009.

Issue 1: Disallowance u/s 10A
The only issue raised in the appeal is the confirmation of addition on account of disallowance u/s 10A amounting to Rs. 1,60,09,182. The Assessing Officer opined that loss of ineligible units should be reduced from profits of eligible units for working out deduction u/s 10A. Certain expenses were not properly apportioned between eligible and ineligible units. The A.O. apportioned expenses based on turnover and did not allow deduction u/s 10A on other income not derived from the industrial undertaking. The CIT(A) upheld the A.O.'s action, stating that profits or losses of eligible unit cannot be set off against non-eligible unit. The appeal raised concerns about set off of losses from non-eligible units against profits of eligible units and apportionment of expenses.

Issue 2: Apportionment of Expenses
The Tribunal upheld the authorities' decision on apportionment of expenses and treatment of other income as not eligible for deduction u/s 10A. The Hon'ble Bombay High Court held that profits of eligible units cannot be set off against losses of non-eligible units. The Tribunal directed the matter to be restored to the A.O. to decide the issue afresh without setting off loss from non-eligible unit against profits of eligible units.

In conclusion, the appeal was partly allowed for statistical purposes, and the order was pronounced on June 26, 2013.