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TMI Blog2013 (1) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 29.11.2011 passed by CIT(A)-V, Coimbatore in case ITA No.500/09-10 for Assessment Year 2007-08. The relevant proceedings are under section 143(3) of Income Tax Act, 1961, in short, the 'Act . 2. By drawing our attention to the grounds of appeal raised, the Authorised Representative of assessee before us has assailed the findings of the CIT(A) by submitting that the assessee s claim to set off the business losses of an eligible unit under section 10B of the Act, against the incomes from other sources has been wrongly denied by Assessing Officer and confirmed by the CIT(A). The Revenue on the other hand has chosen to draw support from the CIT(A) s order. Hence, we frame the following issue for our adjudication. Whether the CIT(A) has erred in confirming the decision of the Assessing Officer in not allowing the assessee s set off of business losses from unit under section 10B of the Act against the income from other sources or other heads of income, as asserted by the assessee and denied by the Revenue. 3. Brief facts apropos of the issue are that the assessee is a company engaged in the business of IT Enabled Services. Regarding Assessment Year 2007-08, it f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a business eligible for deduction under section 10B, on the same principle the claim of the Appellant for set off of loss incurred in unit eligible for deduction under section 10B against income from normal computation is not tenable. 3.2. Income-tax is a tax on the total income order during the previous year, as determined under the provisions of Income Tax Act, 1961. The Income or could be from different sources and may be taxable under different heads of income. An assessee may have income under one had for source or might have incurred a loss under another head or a different source. Section 70 of the Act deals with set off of loss from one source against income from another source under the same head of income. Section 71 of the Act, on the other hand, deals with set off of loss from one head against another head. The provisions of Section 70 and 71 relating to set off of loss from one had against income from another contemplate loss from a source, the income from which is liable to tax. If the income from a source is altogether exempt from tax, loss from that source cannot be set off against taxable income from a different source or income under a different head. Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which is all together a separate entity. We are unable to concur with the revenue s stand. Though it is a fact that an EOU is entitled for deduction under section 10B of the Act subject to various conditions enshrined in the provisions itself, but at the same time, Sec 10B(8) of the Act grants an option to assessee to decide whether or not to opt out of the scheme of deduction in the relevant Assessment Year. Further, the settled law is also reiterated here that if an assessee opts out of the deduction scheme under section 10B(8), the normal provisions of the Act thereof would come into operation and the concerned assessee s income has to be computed and taxed accordingly. In the instant case, we find that there is no dispute that the assessee s 10B unit has suffered loss of Rs.2,55,38,201/- under the head business income . Similarly, under other various heads, it has declared receipts as incomes as reproduced(supra). In such a case, in our opinion, Section 70 Section 71, more particularly Sec.71 providing intra head setting off is applicable. We also find that the Hon ble Bombay High Court in M/s.Galaxy Surfactants Ltd.(supra) has also held as under:- 5. At the outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of Section 10B by the Finance Act of 2000, the provision as it now stands provides for a deduction of such profits and gains as are derived by a 100 per cent export oriented undertaking from the export of articles or things or computer software for ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce. Consequently, it is evident that the basis on which the assessment has sought to be reopened is belied by a plain reading of the provision. The Assessing Officer was plainly in error in proceeding on the basis that because the income is exempted, the loss was not allowable. All the four units of the assessee were eligible under Section 10B. Three units had returned a profit during the course of the assessment year, while the Crab Stick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income. In these circumstances, the basis on which the assessment is sought to be reopened is contrary to the plain language of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of this Act, the profits and gains of an eligible business to which the provisions of subsection(1)apply shall, for the purposes of determining the quantum of deduction under that subsection for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. A similar provision corresponding to subsection(5) of Section 80IA is to be found in subsection(6) of Section 80I.Under subsection (5) of Section 80IA which begins with overriding nonobtante provisions, profits and gains of an eligible business to which subsection(1) applies are for the purposes of determining the quantum of deduction to be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year. A provision akin to subsection(5) of Section 80IA or for that matter akin t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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