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TMI Blog2014 (11) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... s and unabsorbed depreciation or not. (b) Whether the provisions of section 115JB shall apply to the unit located at special economic zone. 3. The assessee is engaged in the business of manufacture of studded and plain gold jewellery. It has set up one unit in SEEPZ, a special economic zone. The assessee claimed deduction under section 10A of the Act against the income generated out of the unit located in SEEPZ. The Assessing Officer noticed that the assessee is having brought forward losses and brought forward depreciation aggregating to Rs. 36,27,271 and the assessee had claimed deduction against the income computed before setting off of the brought forward items. The Assessing Officer, however, took the view that the deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consulting P. Ltd. [2012] 348 ITR 72 (Bom) and submitted that the jurisdictional High Court has held that the brought forward unabsorbed depreciation and losses of the unit, the income of which is not eligible for deduction under section 10A, cannot be set off against the current profits of the eligible unit for computing deduction under section 10A of the Act. 5. However, we notice that the hon'ble Supreme Court has rendered a decision in the case of Himatsingka Seide Ltd. v. CIT (Civil Appeal No. 1501 of 2008 dated September 19, 2013) [2014] 2 ITR-OL 467 (SC), wherein the hon'ble apex court has dismissed the appeal filed by the assessee challenging the order passed by the hon'ble Karnataka High Court in the case of CIT v. Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness loss has to be deducted only from the profit available after allowing deduction under section 10A of the Act. Accordingly, we modify the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to compute the total income in terms of the abovesaid discussion. 7. The next issue relates to the question of applicability of provisions of section 115JB to the units located in the special economic zone and claiming deduction under section 10A of the Act. We notice that the learned Commissioner of Income-tax (Appeals) did not address this issue. However, the learned authorised representative submitted that this is a legal issue and further submitted that this issue is covered by the decision rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the learned representa tives of parties and orders of authorities below. We have also carefully considered the relevant provisions of the Act. There is no dispute to the fact that the assessee's unit in Mumbai is located in special economic zone. Section 10A provides deduction of profits derived by the undertaking in respect of units which are located not only in special economic zone but also in the following areas : '* Free Trade Zone (FTZ) * Electronic Hardware Technology Park (EHTP) Software Technology Park (STP) * Export Orien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome accrued or arisen on or after April 1, 2005 from any business carried on, or services rendered, by an entrepreneur or a developer, in a unit or special economic zone, as the case may be. Hence, income of units located special economic zone will not be included while computing book profit for the purpose of minimum alternate tax as per section 115JB(6) of the Act. In view of above, we are of the considered view that there is merit in the contention of the learned authorised representative that irrespective of the fact that amendment has been made in clause (f) of Explanation 1 to section 115JB(2) of the Act to apply the provisions of minimum alternate tax (MAT) in respect of units which are entitled to deduction under section 10A or 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow were not justified to include the book profit in respect of special economic zone unit at Mumbai of the assessee while computing book profit under section 115JB of the Act for the assessment year 2008-09. Therefore, we reverse the orders of the authorities below by holding that income relating to special economic zone unit at Mumbai is to be excluded while computing book profit under section 115JB of the Act for the assessment year 2008-09. Hence, ground No. 4 of appeal taken by the assessee for assessment year 200809 is allowed." 10. Consistent with the view taken by the co-ordinate Bench of the Tribunal, we hold that the profits of the special economic zone unit are not required to be included in computing the book profit under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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