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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 ..... hat the Commissioner of Income Tax(Appeals) erred in law and on facts of the case in allowing that deduction u/s 10B of the Act after deducting unabsorbed depreciation from the profit of business without appreciating that the Assessing Officer has rightly recomputed the unabsorbed 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 Rs. 7,83,34,105/- as claimed by it instead of deduction of Rs. 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, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Report in Form No. 56G which also requires the certificate from a Chartered Accountant who certify the amount claimable as deduction u/s 10B of the Act on the basis of examination of accounts and records of the assessee relating to the business of the eligible 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... newly set up 100% EOU, which is evident from the copies of STPI approval and extension letters thereto which are placed at page nos. 52 to 69 of the assessee's paper book. Those three units were also granted separate licence by the Customs Authorities, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed before setting off of brought forward unabsorbed losses/depreciation, if any, of non-eligible undertakings required to be set off, subsequently at the stage of computing gross total income under Chapter VI of the Act. It was further 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 TT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97. It was submitted that the ld. CIT(A) was not justified in reversing the stand of the AO. 13. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set off against the profits/income of the export processing zone unit. The brought forward losses of the non-export processing zone unit need not be deducted or reduced." 18. Therefore, by keeping 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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