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TMI Blog2013 (12) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... dia is an approved institution for maintaining gratuity funds – The issue was restored for fresh examination. Employee’s contribution to ESI and PF – Held that:- Following CIT v. Alom Extrusion Ltd. [2009 (11) TMI 27 - SUPREME COURT] - Amendment to Section 43B made by Finance Act, 2003, would act retrospectively with effect from 1st April, 1988 – Amount should be paid during the year irrespective of the fact that the contribution was deposited after due date - Decided against Revenue. - I.T.A. No. 1513/Mds/2011, I.T.A. No. 2149/Mds/2010 - - - Dated:- 7-2-2013 - SHRI ABRAHAM P. GEORGE AND SHRI S.S. GODARA, JJ. For the Appellant : Shri N. Devanathan, Advocate For the Respondent : Smt. Vidisha Kalra, CIT-DR ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : First one is an appeal of the assessee against an order dated 7.3.2011 of Commissioner of Income Tax, Chennai-III, Chennai, and second appeal is that of Revenue, directed against an order dated 22.9.2010 of Commissioner of Income Tax (Appeals)-V, Chennai. 2. Appeal of the assessee is delayed by 120 days. Assessee has filed a condonation petition. We are satisfied that reasonable cause has been shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by him vide his original assessment order dated 27.2.2006. 7. Thereafter, CIT on 20.1.2011 issued a show cause notice to the assessee under Section 263 of the Act. According to him, Assessing Officer had disallowed the claim of the assessee under Section 10A for two reasons. One was that it had not satisfied the conditions specified under Section 10A(2) and second was that it had negative profits. In other words, the total income computed was a loss. According to ld. CIT, in assessee s appeal before CIT(Appeals), it had only challenged the disallowance of claim under Section 10A only on the ground that it was not a unit formed by re-construction or splitting up of an old unit. As per CIT, assessee had not assailed the finding of the A.O. that it was not eligible for such deduction under Section 10A of the Act due to negative total income. Since Assessing Officer had in the giving effect order dated 26.8.2008, given assessee deduction under Section 10A, without considering the negative gross total income of the assessee, such order of the Assessing Officer was erroneous and prejudicial to the interests of Revenue. 8. Reply of the assessee was that Section 10A was, by very n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT v. Yokogawa India Ltd. (2012) 341 ITR 385. Hon ble Karnataka High Court had held that deduction under Section 10A was excluded from total income of the assessee and therefore, the question of unabsorbed business loss of other units being set off did not arise. There was no error in the order of A.O. which could be termed as prejudicial to the interests of Revenue, since he had followed the law in letter and spirit. 11. Per contra, learned D.R., strongly supporting the order of CIT, submitted that assessee had itself in its computation claimed a loss by setting off STPI profit with loss of non-STPI units. Profits of STPI unit, on which deduction under Section 10A, was available was less than the loss of non-STPI units. Assessee itself had returned loss of Rs. 85,47,851/-. Resultantly, assessee could not say that it could claim exemption under Section 10A of the Act. Assessing Officer had specifically mentioned that claim under Section 10A was not available not only for a reason that STPI unit was formed by splitting of old unit, but also for a reason that total income of the assessee was negative. It is clearly mentioned in the assessment order that assessee had returne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . . . 3.2.1 Even otherwise, the assessee is not eligible to claim deduction u/s 10A for the Assessment Year 2003-04 because the assessee has returned loss of Rs. 85,33,958. The provisions of Sec. 10A(1) says that subject to the provisions of this section, a deduction of such profit and gains as are derived by an undertaking [STPI unit] from the export of computer software shall be allowed from the total income of the assessee. In this case, the total income of the assessee is a loss figure of Rs. 85,33,958. As per section 10A the deduction should be given from the total income. Hence, the assessee is not eligible for any deduction u/s 10A because of the loss returned by the assessee. 13. We are at a loss to understand how the Assessing Officer considered a claim of the assessee under Section 10A of the Act, if his opinion was that assessee had itself returned a loss of Rs. 85,33,958/-. If the assessee indeed had returned a loss of Rs. 85,47,851/- in its return of income, it could only mean that there was no claim at all for exemption under Section 10A of the Act. However, Assessing Officer, at the beginning of para 3 itself has specifically mentions that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdships observed that when Section 10A was recast by Finance Act, 2001, giving it a colour of deduction, but still it continued in Chapter III of the Act. Examining the implication of the above, Hon ble court held that computation of total income began only with Chapter-IV, and as section 10A was covered under Chapter-III, the phrase total income used in Section 10A cannot be understood in the same sense as in Section 2(45). The court further observed that total income used in Section 10A was to be understood as the total income of the STPI unit, which was clear from the first proviso to Section 10A(1) which made a reference to the total income of the undertaking and not to the total income of the assessee. Thus, on merits also assessee was entitled for claiming deduction considering its STPI unit separately. If at all there was an error in the order of A.O., it was in the original order dated 27.2.2006 in which he held the assessee to be not eligible for deduction under Section 10A of the Act, since assessee had returned a loss. In any case, there was no error in the order of Assessing Officer, in which he gave effect to CIT(Appeals) s direction granting the assessee deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(Appeals), argument of the assessee was that the payment was effected to LIC towards gratuity and therefore, had to be allowed. According to it, for earlier years, similar claim was allowed by the CIT(Appeals). CIT(Appeals), after hearing the assessee, held that the claim of the assessee was to be allowed. 24. Now before us, learned D.R. submitted that for assessment year 2002-03, this Tribunal had only remitted the issue back to the file of the Assessing Officer for consideration afresh and CIT(Appeals) had not followed the order of the Tribunal. 25. Per contra, learned A.R. supported the order of CIT(Appeals). 26. We have perused the orders and heard the rival submissions. It is not disputed by the learned A.R. that the issue regarding allowability of remittance to LIC towards gratuity, was remitted back to the file of the Assessing Officer by this Tribunal, for assessment year 2002-03, for consideration afresh. The Tribunal had in its order dated 3.10.2007 in I.T.A. No. 369/Mds/2006, held as under:- On this issue, we find that the learned CIT(A) has held that the assessee company has a scheme with the LIC of India and the payment is made to LIC of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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