2016 (6) TMI 120 - AT - Income Tax

Deduction u/s. 10B computation - Held that - The assessee is entitled to the claim of deduction under section 10B of the Act before setting off of brought forward depreciation losses. The Assessing Officer is directed to compute the said deduction under section 10B of the Act, accordingly. - Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment under section 147 of the Income-tax Act, 1961.
2. Claim of deduction under section 10B before setting off unabsorbed depreciation/losses.

Issue 1: Reopening of Assessment under Section 147:
The appeal challenged the order of CIT(A)-6 related to the assessment year 2007-08 under section 143(3) r.w.s. 147 of the Income-tax Act. The main contention was that the notice issued for reopening the assessment under section 147 was unlawful and not in accordance with the Act. The assessee argued that the conditions prescribed for reopening were not satisfied. The Tribunal noted that the issue became academic after deciding the second ground of appeal in favor of the assessee, thus dismissing the challenge against the reopening of assessment.

Issue 2: Claim of Deduction under Section 10B:
The main issue revolved around the deduction under section 10B claimed by the assessee for its Mahad Unit. The Assessing Officer contended that the deduction claimed did not consider the brought forward depreciation of the Mahad unit, resulting in an excess claim of deduction under section 10B. The Tribunal analyzed various judicial pronouncements, including the decision of the Hon’ble Bombay High Court in CIT Vs. Black & Veatch Consulting (P.) Ltd., which supported the assessee's claim. The Tribunal held that the deduction under section 10B should be computed before adjusting brought forward unabsorbed losses/depreciation, allowing the claim of deduction before setting off unabsorbed depreciation/losses. This decision was based on the interpretation of the amended provisions of section 10B post-April 2001 and was in line with the judgments of various High Courts and Tribunals. The Tribunal also emphasized that the decision of the jurisdictional High Court held precedence over non-jurisdictional High Court decisions. Consequently, the Tribunal directed the Assessing Officer to compute the deduction under section 10B accordingly, allowing the second ground of appeal raised by the assessee.

In conclusion, the Appellate Tribunal, in the judgment delivered by Ms. Sushma Chowla and Shri Pradip Kumar Kedia, partially allowed the appeal of the assessee. The Tribunal dismissed the challenge against the reopening of assessment under section 147, as the issue became academic after deciding in favor of the assessee on the claim of deduction under section 10B before setting off unabsorbed depreciation/losses. The detailed analysis of the issues involved in the judgment reflects a comprehensive consideration of legal provisions, judicial precedents, and interpretations under the Income-tax Act, 1961.