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TMI Blog2015 (5) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... stem was implemented by each of them and transactions of each unit were separately coded all the transaction were identifiable as in the case of separate books. Therefore, the ld. CIT(A) was fully justified in directing the AO to compute the deduction u/s 10B of the Act in respect of each unit separately. - Decided in favour of assesse. Allowability of deduction u/s 10B - at the source itself and not after the computation of Gross Total Income - CIT(Appeals) allowing that deduction u/s 10B after deducting unabsorbed depreciation from the profit of business - Held that:- In the present case, it appears that the assessee was not having any unabsorbed depreciation relating to the eligible Export Oriented Units (EOU’s). Therefore, adjustment in the eligible profits of the EOU was not to be made on account of brought forward unabsorbed depreciation. The said unabsorbed depreciation was adjusted by the assessee against certain income from other sources and not against the eligible profits of the 100% EOU. - Decided against revenue. Admission of the additional evidence - Held that:- AO vide notice u/s 142(1) of the Act called the details relating to claim u/s 10B of the Act which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation for earlier year as a result of which no unabsorbed depreciation was available for set off in the assessment year under consideration. 4. That the Commissioner of Income Tax(Appeals) erred in law and on facts of the case in admitting the additional evidence furnished by the assessee during the appellate proceedings. 5. That the Commissioner of Income Tax(Appeals) erred in law and on facts of the case in allowing the deduction u/s 10B of the Act to the assessee at ₹ 7,83,34,105/- as claimed by it instead of deduction of ₹ 2,96,15,440/- as allowed by the Assessing Officer. 6. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 3. First issue vide Ground No. 1 relates to the deduction u/s 10B of the Income Tax Act, 1961 (hereinafter referred to as the Act) with reference to business profits relating to 3 units of the assessee namely NIIT-ITES, NIIT-KTWO and NIIT-Mumbai. Facts related to this issue in brief are that the assessee filed a return of income on 29.11.2006 declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible undertaking. It was pointed out that the said report also did not refer to any separate books to be maintained or required to be maintained by the eligible EOU. The reliance was placed on the decision of the ITAT Mumbai Benches in the case of DCIT Vs Arabian Exports Limited reported at 109 TTJ 440. It was contended that the three units of the assessee are separate 100% EOUs for the purposes of claiming deduction u/s 10B of the Act and those could not be treated as one just because they carry out the same nature of business. The reliance was also placed on the following case laws: CIT Vs Mahan Foods Ltd. 216 CTR 148 CIT VS Gedore Tools (India) P. Ltd. 126 ITR 613 5. The ld. CIT(A) after considering the submissions of the assessee observed that it was not the case of the AO that the three eligible units had been formed by splitting up or reconstructing the old or non-eligible units and since there were enough evidence in the assessee s case that the three Export Oriented Units were formed independently of the existing units for the purpose of export of software and those were approved as such by the relevant authorities and they had been functioning independently of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities, copies of which are placed at page nos. 162 to 172 of the assessee s paper book. Those EOU s were situated at separate location having independent buildings on separate addresses, their Plant Machinery and fixed assets were also separate, each of the EOU furnished separate Audit Report in Form No. 56G. Therefore, it cannot be said that the three EOU s of the assessee company were formed after splitting off of the existing unit or reconstructing the old or non-eligible unit. In the present case, although it is an admitted fact that these units were not having separate books of accounts but ERP software accounting system was implemented by each of them and transactions of each unit were separately coded all the transaction were identifiable as in the case of separate books. Therefore, the ld. CIT(A) was fully justified in directing the AO to compute the deduction u/s 10B of the Act in respect of each unit separately. We, do not see any merit in this ground of the departmental appeal. 9. Ground Nos. 2 3 are co-related and relate to the deduction u/s 10B of the Act. The facts related to this issue in brief are that the AO, during the course of assessment proceedings obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stated that the facts of the case relied by the AO were distinguishable from the facts of the assessee s case, on the other hand, the decision of the Special Bench of the Tribunal in the case of Scientific Atlanta India Technology (P) Ltd. reported at 38 SOT 252 was applicable wherein the Tribunal held that deduction u/s 10A of the Act has to be independently computed in relation to the profits of the eligible units without adjusting the same against unabsorbed depreciation relating to the non-eligible units. The reliance was also placed on the following case laws: ACIT Vs Yokogawa India Ltd. 111 TTJ 548 (Trib) Changepond Technologies (P.) Ltd. Vs ACIT 119 TTJ 18 (Chenn.) KPIT Cummins Infosystems (Bangalore) (P) Ltd. Vs ACIT (2008) 26 SOT 529 (Bang.) Reliq Software (P) Limited Vs ITO 125 ITD 101 (Bang.) CIT Vs Mahan Foods Ltd. 216 CTR 148 (Del.) CIT Vs Gedore Tools (India) Pvt. Ltd. 126 ITR 673 (Del.) DCIT Vs Arabian Exports Ltd. 109 TTJ 440 (Mum.) 11. The ld. CIT(A) after considering the submissions of the assessee observed that the facts of the case relied by the AO i.e. CIT Vs Himmatsingike Seide Ltd. were distinguishable from the facts of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that the deduction u/s 10B of the Act is allowable in respect of profit derived by the eligible undertaking, quantified in terms of sub-section (4) of section 10B of the Act i.e. qua the profits of each undertaking as if such undertaking was the only source of income of the assessee. It was further submitted that the deduction u/s 10B of the Act was to be provided from income under the head profits and gains of business or profession immediately after deduction u/s 30 to 43D of the Act and before any adjustment of brought forward losses of earlier years u/s 72 of the Act or set off of inter-head losses u/s 71 of the Act of Chapter VI was made. It was further stated that the unabsorbed depreciation carried forward from the earlier years by the assessee did not relate to the eligible undertakings rather it was related to the non-eligible units, therefore, it was not to be reduced from the profits of the EOU. The reliance was placed on the following case laws: CIT Vs Yokogawa India Ltd. 246 CTR 226 (Kar.) Black Veatch Consulting Pvt. Ltd. 348 ITR 72 (Bom.) CIT Vs Tyco Electronics Tools India (P) Ltd. 205 Taxman 403 (Kar.) CIT Vs Galaxy Surfactants Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeping in view the ratio laid down by the Hon ble Jurisdictional High Court the Karnataka High Court, we do not see any valid ground to interfere with the findings of the ld. CIT(A). Accordingly, we do not see any merit in these two grounds of the departmental appeal. 19. Next issue vide Ground No. 4 relates to the admission of the additional evidence by the ld CIT(A). As regards to this issue the ld. DR submitted that the assessee did not furnish the evidences before the AO in the course of assessment proceedings, therefore, the ld. CIT(A) was not justified in admitting the additional evidences. The ld. Counsel for the assessee in his rival submissions submitted that the ld. CIT(A) forwarded the additional evidences to the AO under the provisions of Rules 46A of the Income Tax Rules and the AO submitted his report dated 08.08.2011. Therefore, it cannot be said that the ld. CIT(A) did not provide the opportunity to the AO who completed the assessment in due haste. 20. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the AO vide notice u/s 142(1) of the Act called the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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