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TMI Blog2012 (12) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the AO is unsustainable in law. There is a contrary view expressed by the Hon’ble High Courts and AO has accepted one view. Therefore order of CIT u/s 263 needs to be set aside. Issue decides in favour of assessee - I.T.A. No. 1180/Mds/2012 - - - Dated:- 23-7-2012 - Dr. O.K. Narayanan Shri Challa Nagendra Prasad, JJ. Appellant by : Shri K.B. Muralidharan, C.A. Respondent by : Dr. S. Moharana, CIT DR ORDER PER Challa Nagendra Prasad, Judicial Member This is an appeal filed by the assessee against the order of the Commissioner of Income Tax, Chennai I, Chennai dated 27.03.2012 passed under section 263 of the Income Tax Act for the assessment year 2007-08. Shri K.B. Muralidharan, C.A. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 10B should be allowed after set off of unabsorbed depreciation or business loss in view of the decision of the Hon ble Karnataka High Court in the case of Himatasingike Seide Ltd. v. ACIT [286 ITR 255] and CIT vs. I.G. Petro Chemicals Ltd. dated 04.01.2011 in ITA No. 771 of 2006. Against this order of the Commissioner of Income Tax, the assessee filed an appeal before us. 4. The counsel for the assessee submitted that the Commissioner of Income Tax is not justified in passing order under section 263 directing the Assessing Officer to examine the claim of deduction under section 10B in view of the decision of the Hon ble Karnataka High Court in the case of CIT Anr. Vs. Yokogawa India Ltd. Ors. [246 CTR (Kar) 226], which support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax and submitted that the deduction under section 10B should be allowed after set off of unabsorbed depreciation for the assessment year 2002-03. He relied on the decision of Hon ble Kerala High Court in the case of CIT v. PATSPIN India Ltd,. [245 CTR (Ker.) 97]. 6. We have heard both sides, perused the orders of lower authorities and decisions relied by the counsels. In the present case, the issue is with regard to adjustment of unabsorbed depreciation of the assessment year 2002-03 within the unit itself. The issue of allowability of deduction under section 10A/10B before set off of carried forward losses/unabsorbed depreciation has been elaborately dealt with by the Hon ble Karnataka High Court in the case of CIT v. Yokagawa India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as well as the Tribunal were fully justified in setting aside the said assessment order and granting the benefit of s. 10A to the assessee. Hence, the main substantial question of law is answered in favour of the assessees and against the Revenue. 7. The Hon ble Bombay High Court after considering the decision of the Chennai Special Bench of ITAT in the case of Scientific Atlanta [129 TTJ 273] decided this issue in the case of CIT vs. Black Veatch Consulting Pvt. Ltd. in Income Tax Appeal Lodging No. 1237 of 2011 dated 09.04.2012, wherein their Lordships held as under: 1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 arises from a decision of the Income Tax Appellate Tribunal dated 20 April 2011. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was effected of the brought forward business loss of AY 2003-04 and AY 2004-05 upon which the Assessing Officer came to the conclusion that there was nil income which would qualify for deduction under Section 10A. The CIT (A) held that the Assessing Officer was justified in adjusting the brought forward losses of earlier years before arriving at the gross total income, for allowing a deduction under Section 10B. In appeal, the Tribunal has relied upon a decision of its Special Bench in the case of Scientific Atlanta Vs. ACIT1 in which it has been emphasised that the provision contained in Section 10A is not an exemption but a deduction under Chapter III. Following that decision, the Tribunal held that the deduction under Section 10A in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before making any deduction under the Chapter. What the Revenue in essence seeks to attain is to telescope the provisions of Chapter VI - A in the context of the deduction which is allowable under Section 10A, which would not be permissible unless a specific statutory provision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. In the circumstances, the decision of the Tribunal would have to be affirmed since it is plain and evident that the deduction under Section 10A has to be given at the stage when the profits and gains of business are computed in the first instance. So construed, the appeal by the Revenue would not give rise to any substantial question of law and shall accordingly stand dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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