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TMI Blog2012 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.10A of the Act against house property income and income from other sources. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in not appreciating the fact that section 14A, specifically introduced w.e.f. 1-4-1962, disallows the expenditure in relation to income which does not from, part of the total income. In this case the income from units is exempted u/s.10A, the income or loss, as the case may be, does not form part of the total income, hence, not allowable for set off against house property income or income from other sources." 3. Assessee filed its return of income on 31-10-2005 showing total income of Rs.5,63,275/-. The case was selected for scrutiny and notice u/s.143 (2) and 142(1) were issued on var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submitted that Sec. 14A is applicable only in respect of "expenditure incurred" and does not deal with losses from other sources etc. CIT (A) after considering the submissions of assessee and relying on the decision of Navin Bharat Ind. Ltd. vs. DCIT (2004) 90 ITD 1 and in the case of Sovika Infoteck Ltd., vs. ITO (2008) 23 SOT 272 (Mum.) allowed the appeal of the assessee by holding as under:- "4.2.4. Thus, it was cumulatively held that (a) what is contemplated u/s. 10A is not exemption from taxation but deduction of the whole of the profits, and that income computed there under would form part of the total income and (b) the provisions of section 71 regarding set-off of loss under one head against income under another head would be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set off the loss. The controversy therefore in the present appeal is whether the brought forward loss from business which is exempt u/s. 10A can be set off against the income from house property and income from other sources in view of provision of Sec. 14A. As per provisions of Sec. 10A, the assessee is allowed deduction in respect of profits derived from the undertaking eligible under the section from the total income of the assessee which means that total income of the assessee could include the profits/losses derived from such unit and if there is any profit, then the eligible amount will be deducted in computing total income. Thus it can be seen that provisions of Sec. 10A are in the nature of deduction and not exemption.Sec.14A is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puting the income of such business. However, provisions of section 70 or 71 have ot been included in the non-obstinate provisions and, therefore, it cannot be said that provisions of section 70 or 71 cannot be applied in computing the income of the assessee. Had the Legislature intended that the provisions of sections 70 and 71 should not be applied in respect of loss incurred in business eligible under section 10B, it could have specifically provided so, as provided in respect of section 72 or section 74. Further, the Mumbai Bench of the Tribunal in the of Navin Bharat Industries Ltd. v. DCIT (2004) 90 ITD 1 (TM) held that provisions of section 70 or 71 are applicable even in respect of loss incurred in the business eligible for exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X
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