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TMI Blog2010 (6) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... 5D for the purpose could either on some reasonable basis, as turnover, or better still, set off against the specific income(s) of the Unit(s) in relation to the setting up or expansion of which the same stood incurred in the first place. - The income that obtains after the deduction under section 10A, or the ‘unabsorbed claim under section 10A’ as the Tribunal describes it in the case of Scientific Atlanta India Technology (P.) Ltd. (supra), would stand to be taxed as such, i.e., shall not be set off against any other loss or be carried forward. New issue before appellate authority - t is one thing to raise a legal argument for the first time qua a claim which stands preferred before the assessing authority, and quite another to raise the claim itself for the first time before an appellate authority, so that there is no occasion for the Assessing Officer to consider the same, and it is in respect of the latter that the decision in the case of Goetze (India) Ltd. (2006 -TMI - 5171 - SUPREME Court) would find application. - it is only the return of income coupled with the materials on record that would decide if the claim under reference was in fact pressed before the assessing autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer, for the sake of clarity : (Amount in Rs.) Particulars/Source of Income Assessee AO Regional Tooling Centre (RTC),Kochi(not falling under u/s. 10A) (9194342) (9194342)* Information Service Resource Centre,Bangalore(ISR Centre) (falling under u/s. 10A) 6610020 Chennai Engineering Centre (CEC), Chennai (falling under u/s. 10A) (234126) (234126) (9428468) (2818448) Preliminary expenses u/s. 35D 47965 47965 (9476433) (2866413) Income from other sources 429889 429889 (9046544) (2436524) Balance profit from Bangalore Unit (after s. 10A deduction) (6610020-5867861) 742159 (8304385) (2436524) Deduction u/s. 10A 5867861 NIL (*) figures in brackets represent negative amounts. The assessee carried the matter in appeal, whereas it relied on the decision by the Tribunal in the case of Asstt. CIT v. Yokogawa India Ltd. [2007] 13 SOT 470 (Bang.), wherein it stands held that profits of a section 10A Unit should not be adjusted against losses of other non-eligible (under section 10A) Units for the purpose of deduction under section 10A. The same did not find favour with the ld. CIT(A) as the Tribunal had in the said case, in his view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the relevant facts were not before the Assessing Officer. The ld. CIT(A) has given a specific finding that the materials on record did not bear out the relevant facts in relation to the assessee' s claim of lease rental, which stood, effectively speaking, challenged by the assessee in appeal. The ld. AR was specifically questioned by the Bench in this regard, and who submitted that a copy of the assessee's final accounts shall be placed on record for its perusal. 4. We have heard the parties, and perused the material on record, including the case law cited. 4.1 With regard to the first issue, the matter stands since resolved, at least at the level of the Tribunal, by the decision of the Special Bench (Chennai) in the case of Scientific Atlanta India Technology (P.) Ltd. (supra), which stands since reported at 2 ITR (Trib.) 66 (Chennai) (SB). The relevant issues concerning the deduction under section 10A, which stand clarified by it, are as under :-- (a) the business loss of non-eligible unit(s) cannot be set off against the profits of undertaking(s) eligible for deduction under section 10A; (b) that any other income, including the losses arising to the assessee fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er category or class. The decision by the Hon'ble Apex Court in the case of IPCA Laboratory Ltd. (supra) stands also considered by the Tribunal and referred to at paras 49, 62 and 63 of its order. 4.2 In the present case, while the assessee claims deduction qua its only profit earning section 10A unit by considering it as its only source of income, the revenue seeks to adjust the said income against losses from the other two units, one of which is an eligible (under section 10A) unit, for computing the deduction under section 10A. The issue of set off or adjustment of section 10A income against non-section 10A income stands answered by the Tribunal per its Special Bench decision in the case of Scientific Atlanta India Technology (P.) Ltd. (supra) which is even otherwise binding on us, so that the same must be considered as resolved, at least as far as the Tribunal is concerned; the revenue not bringing any decision to the contrary by an higher authority to our notice. The second aspect of the matter, i.e., aggregation of the income from two (or more) eligible (under section 10A), undertakings and, consequently, the set off of the two, where one of them is in loss, as in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee pleads its case with reference to the fact that the provision nowhere contemplates an aggregation, so that the word 'undertaking' in the section cannot be read as plural, to imply an aggregation of incomes for the purpose of quantifying the deduction, the revenue relies on the decision in the case of Scientific Atlanta India Technology (P.) Ltd. (supra), urging for its holistic reading; the Tribunal clearly indicating to the contrary, which, rather, emanates from the rationale of its decision, i.e., the two representing different classes of income. 4.3 We have given our anxious consideration to the matter, and for the reasons that follow, are not moved in favour of the revenue's stand. That the deduction under sections 10A and 10B, as also as those under sections 80HH, 80HHA, 80-I, 80-IA, et. al. are unit-specific, in contradistinction to being assessee-specific, is well-settled, and not in dispute, and for which reference may be made to the decision in the case of Scientific Atlanta India Technology (P.) Ltd. (supra) itself, wherein this aspect stands emphasized in sufficient detail. That being the basic position in respect of the deduction, the next question in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressed any opinion in the matter, so that the issue is at large, and cannot be construed as a positive statement by it, as contended by the revenue. 4.4 In view of the foregoing, we may sum up our findings, as under : (a) the deduction under section 10A in respect of the ISR Centre, Bangalore, is to be computed only qua its profits, i.e., without any adjustment or set off of any loss from another source, either eligible or non-eligible (under section 10A). The allocation of preliminary expenses under section 35D for the purpose could either on some reasonable basis, as turnover, or better still, set off against the specific income(s) of the Unit(s) in relation to the setting up or expansion of which the same stood incurred in the first place. (b) The income that obtains after the deduction under section 10A, or the 'unabsorbed claim under section 10A' as the Tribunal describes it in the case of Scientific Atlanta India Technology (P.) Ltd. (supra), would stand to be taxed as such, i.e., shall not be set off against any other loss or be carried forward. 5. Coming to the second issue, as would be apparent from the narration of the facts and the arguments before us; the Tribunal's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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