2018 (5) TMI 150 - HC - Income Tax

Computing the income for the purpose of deduction provided u/s 10AA - gross total income of the eligible undertaking - Held that - This issue is no more res-integra in view of the judgment of this Court in the case of The Principal Commissioner of Income Tax V/s BTP Infoserve Private Limited 2017 (12) TMI 1125 - KARNATAKA HIGH COURT whereby placing reliance on the judgment of Commissioner of Income Tax and others V/s Yokogowa India Limited 2016 (12) TMI 881 - SUPREME COURT has held that the stage of deduction under Section 10A of the Act would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI of the Act. - Decided in favour of assessee.

Summary

Issues involved:
Challenge to the order passed by the Income Tax Appellate Tribunal regarding assessment year 2010-11. Interpretation of provisions of Chapter IV and Chapter VI of the Income Tax Act in computing income for deduction under Section 10AA of the Act.

Analysis:

1. The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal, Panaji Bench, partly allowing the appeal of the respondent-assessee for the assessment year 2010-11. The Tribunal upheld the order under Section 263 of the Income Tax Act, setting aside the Assessing Officer's order due to lack of inquiries on specific issues. These issues included non-submission of Form No.56F, allowance of deduction under Section 10AA before setting-off of losses, and computation of deduction under Section 10AA after considering disallowance under Section 40(a)(ia) of the Act.

2. The High Court framed the substantial question of law, questioning the applicability of Chapter IV and Chapter VI of the Income Tax Act in computing income for the purpose of deduction under Section 10AA of the Act. The Court referred to a previous judgment in a similar case where it was held that the deduction under Section 10A should be computed while determining the gross total income of the eligible undertaking under Chapter IV, not during the computation of total income under Chapter VI.

3. Relying on the precedent and interpretation of the law, the High Court concluded that the issue was already settled on its merits. The Court held that the provisions of Chapter IV and Chapter VI of the Income Tax Act are relevant in computing income for the deduction under Section 10AA. Therefore, the substantial question of law was answered against the Revenue and in favor of the assessee. Consequently, the appeal was dismissed.