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TMI Blog2015 (2) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, Advocate For the Respondent : Smt. Parminder Kaur, Sr. D.R. ORDER Per: George George K: 1. These are appeals by the assessee against the orders of the CIT (A) dated 19.02.2010 and 30.03.2012 respectively. The relevant assessment years are 2005-06 and 2007-08. 2. Since common issues are involved in these appeals and they pertain to the same assessee, these were heard and disposed off in this consolidated order. 3. In ITA No.1885/10 for the AY 2005-06, the solitary issue that arises for our consideration is: Whether the CIT (A) was justified in confirming the AO's order whereby deduction u/s 10A of the Act was reduced on account of adjustment of unabsorbed business loss and depreciation? 4. The brief fact in relation to this issue is as follows: The assessee for the AY under dispute claimed deduction u/s 10A of the Act amounting to ₹ 93,38,312/-. In the assessment completed u/s 143(3) of the Act, the claim of deduction was reduced to ₹ 81,55,777/-. The claim of deduction u/s 10A of the Act was reduced on account of adjustment of unabsorbed business loss and depreciation of ₹ 16,49,809/- [A.Y. 2004-05]. 5. On further appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, the decision of the Tribunal would have to be affirmed since it is plain and evident that 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 dismissed. (iii) Further, in an identical issue, the Hon'ble High Court of Karnataka in the case of CIT v. Yokogawa India Ltd (supra) has ruled as under: As the income of section 10A unit has to be excluded at source itself before arriving at the gross total income, the loss of the non-section 10A unit cannot be set off against the income of the section 10A unit under section 72. The loss incurred by the assessee under the head 'Profits and Gains of business or profession' has to be set off against the profits and gains, if any, of any business or profession carried on by such assessee. Therefore, as the profits and gains under section 10A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the AO, we find that there is no application to the facts of the assessee's case since the ruling of the Hon'ble Apex Court was with reference to sections 80AA and 80AB of the Act. Further, if there is a difference of opinion or two views are possible on an issue, as laid down by the Hon'ble Supreme Court in the case of Union of India v. Onkar S Kunwar and Others reported in 258 ITR 761 (SC), 'the view which is in favour of the assessee must be adopted.' 12. In the light of the above judicial views and our reasoning, we hold that deduction u/s 10A of the Act is to be calculated before reducing the unabsorbed loss and depreciation from the profits of the undertaking. It is ordered accordingly. 13. In the result, the assessee's appeal [in ITA No.1885] for the A.Y. 2005-06 is allowed. ITA No.2034/10 [AY 2007-08]: 14. The two grounds raised by the assessee are as under: (1) That the authorities below were not justified in excluding exchange variation of ₹ 7,85,820/- on share application money received from abroad from profits and gains of business; (2) That the assessee was entitled to deduction u/s 10A of the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain on exchange fluctuation in respect of share application money will not be eligible for deduction u/s 10A . [Refer: Page 7 of CIT(A)'s order]. 17. Before us, it was submitted that on the legal issue i.e., income of ₹ 7,85,820/- on account of gain due to foreign exchange variation in respect of share application money received from abroad, though the ld. CIT (A) had reproduced the ground of appeal and submission of the assessee in his appellate order, the same has not been adjudicated/ disposed off by the CIT (A) and, therefore, pleaded that the same deserves to be set aside to the file of the CIT (A) or AO for consideration. In the alternative, it was submitted that the assessee had shown the foreign exchange gain on share application money as 'other income' included in the net exchange variation on import and export of goods and had claimed deduction u/s 10A on such exchange variations. At the time of filing of return, it was submitted, the assessee was not aware of the Delhi High Judgment in the case of CIT v. Jagatjit Industries Ltd reported in 191 Taxman 54 wherein it has been held that such exchange variation as capital receipt. It was, further, sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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