2014 (12) TMI 1398 - AT - Income Tax

Computation of deduction u/s 10A - setting off carried forward unabsorbed loss and depreciation from earlier assessment years or current assessment year - HELD THAT - As provisions of section 10A are in the nature of deductions and not exemptions and the deduction under section 10A has to be given at the stage when the profit or gains or business are computed in the first instance. As per the judgement of the Coordinate Bench in the case of Value Process Technologies (I) P. Ltd. 2013 (1) TMI 802 - ITAT MUMBAI which is relevant for the proposition exemption under section 10A has to be allowed with setting off carried forward unabsorbed loss and depreciation from earlier assessment years or current assessment year either in the case of Non-STPI Unit or in the case of very same undertaking. Considering the above said proposition of law we are of the opinion that the assessee should succeed on the ground raised before us. Assessee s grounds are allowed. Allowability of employees contribution to PF - payments made before filing of return of income - HELD THAT - Issue stands covered in favour of the assessee in view of the judgment of the Hon ble Supreme Court in the case of Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT which is relevant for the proposition that after omission of the second proviso to section 43B the payments made before filing of return of income is an allowable deduction. Accordingly considering the fact that the payment is made within the grace period the conclusion drawn by the CIT(A) in this regard is fair and reasonable and it does not call for any interference. Therefore ground No. 1 is rejected.

Summary

Issues:
Cross appeals for AY 2007-08 regarding computation of deduction under section 10A, allowability of employees' contribution to PF, and judgment on the issues raised.

Analysis:
1. Computation of Deduction under Section 10A:
The only issue raised by the assessee pertains to the computation of deduction under section 10A. The Tribunal referred to a judgment emphasizing that section 10A provides for deductions, not exemptions. It was highlighted that the deduction under section 10A should be considered when computing the profits and gains of the business initially. The Tribunal also cited a relevant case law stating that exemption under section 10A must be allowed with the setting off of carried forward unabsorbed losses and depreciation. Based on these precedents, the Tribunal ruled in favor of the assessee, allowing their grounds.

2. Allowability of Employees' Contribution to PF:
The Revenue raised issues regarding the allowability of employees' contribution to PF made during the grace period. The Tribunal relied on a Supreme Court judgment, which stated that payments made before filing the income tax return are deductible after the omission of the second proviso to section 43B. As the payment was made within the grace period, the Tribunal upheld the CIT(A)'s decision as fair and reasonable, rejecting the Revenue's ground on this issue.

3. Judgment on the Issues Raised:
The Tribunal concluded that the grounds raised by the assessee in their appeal were allowed, while the grounds raised by the Revenue were rejected. The appeal filed by the assessee was allowed, and the appeal filed by the Revenue was rejected. The Tribunal pronounced the order in open court on 2nd December 2014.

In summary, the Tribunal's judgment favored the assessee regarding the computation of deduction under section 10A and the allowability of employees' contribution to PF. The decision was based on legal precedents and interpretations of relevant provisions, leading to a clear outcome in favor of the assessee.