2020 (6) TMI 511 - HC - Income Tax

Revision u/s 263 - AO has not set off the unabsorbed brought forward depreciation from total income for computing deduction u/s.10A - Whether the Tribunal was correct in not taking into consideration that the non-set off of unabsorbed brought forward depreciation against the total income for computing deduction u/s.10A of the Act, was contrary to the provisions of section 10A and hence the order of assessment was erroneous and prejudicial to the interest of the revenue and hence invoking of section 263? - HELD THAT - Both parties jointly submitted that the substantial questions of law involved in these appeals have been answered against the revenue by the Supreme Court in COMMISSIONER OF INCOME-TAX Vs. YOKOGAWA INDIA LTD. 2016 (12) TMI 881 - SUPREME COURT Substantial questions of law are answered against the revenue and in favour of the assessee.

Summary

Issues:
1. Interpretation of Section 260-A of the Income Tax Act, 1961.
2. Correct application of Section 263 of the Act in assessing deduction u/s.10A.
3. Consideration of unabsorbed brought forward depreciation for computing deduction u/s.10A.
4. Assessment of whether the order of assessment was erroneous and prejudicial to the interest of the revenue.

Analysis:
1. The appeals were filed under Section 260-A of the Income Tax Act, 1961, by the revenue. The substantial questions of law raised in the appeals pertained to the correctness of the Tribunal's decision regarding the application of Section 263 of the Act. The primary issue was whether the Assessing Officer had correctly applied his mind while passing the order of assessment, specifically in relation to the non-set off of unabsorbed brought forward depreciation for computing deduction u/s.10A of the Act.

2. The Tribunal's decision was challenged on the grounds that it did not consider the non-set off of unabsorbed brought forward depreciation against the total income for computing deduction u/s.10A. It was argued that this non-set off was contrary to the provisions of Section 10A, rendering the order of assessment erroneous and prejudicial to the revenue's interest. The invocation of Section 263 was contended to be in accordance with the law based on these considerations.

3. However, during the proceedings, both parties jointly submitted that the substantial questions of law raised in the appeals had already been addressed by the Supreme Court in a previous case, 'COMMISSIONER OF INCOME-TAX Vs. YOKOGAWA INDIA LTD.' The Supreme Court's decision in this case had ruled against the revenue, indicating that the Tribunal's decision was in alignment with the legal interpretation provided by the higher court.

4. Consequently, based on the submission and the established legal precedent, the High Court concluded that the substantial questions of law were answered against the revenue and in favor of the assessee. As a result, the appeals were dismissed, affirming the Tribunal's decision and upholding the interpretation of the law as per the Supreme Court's ruling in the referenced case.