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TMI Blog2016 (10) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has not claimed any deduction for earlier assessment years and selected the assessment year 2006-07, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee. For the assessment year 2005-06, XIUS India Ltd. suffered a loss. The loss suffered in the assessment year 2005-06 was carried over to set off against the income of the assessment year 2006-07. When the assessee selected the initial assessment year 2006-07, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. MAT applicability on bad debt - Held that:- It is not in dispute that what was claimed as bad debt is the amount receivable by the assessee and not payable by the assessee. Therefore, Explanation 1 to Section 115JB of the Act may not be applicable. The debt payable by the assessee was reflected in the asset side in the balance sheet which is not in dispute before the authorities below. Therefore, this Tribunal do not find any reason to interfere with the order of the lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of eligible unit independently and the losses of non-eligible unit needs to be carried forward and set off against the income in the subsequent years. A similar view was taken by this Tribunal in Amnet Systems (supra). The CIT(Appeals) has followed the order of this Tribunal. The Assessing Officer, after taking note of the decision of this Tribunal, decided the matter against the assessee only with an intention to keep the matter alive. According to the Ld. counsel, the Assessing Officer is bound to follow the order of this Tribunal. 4. We have considered the rival submissions on either side and perused the relevant material available on record. The issue arises for consideration is set off of business loss / depreciation of the other units for computing deduction under Section 10A of the Act. This Tribunal in Amnet Systems (supra) examined the issue and found that the eligibility of exemption under Section 10A of the Act has to be considered independently and the losses of other units cannot be set off. In fact, the order of this Tribunal in Amnet Systems was brought to the notice of the Assessing Officer. The Assessing Officer found that the Department had preferred appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01, the assessee had chosen to avail exemption under Section 10A of the Act from the assessment year 2006-07. 7. Referring to Section 10A(1) of the Act, the Ld. Departmental Representative submitted that deduction under Section 10A(1) of the Act is available in respect of profits and gains derived by an undertaking for a period of ten consecutive assessment years beginning with assessment year in which the undertaking began to manufacture or produce the computer software. The Ld. D.R. further submitted that sub-section (8) of Section 10A provides an option to the assessee for opting out of the scheme by furnishing return of income under Section 139(1) of the Act. The XIUS India Ltd. had not furnished any declaration upto assessment year 2005- 06 for opting out the scheme. However, it expressed its negative option by returning the book profits for taxation under Section 115JB of the Act for assessment years 2003-04 and 2004-05. In the assessment year 2005-06, XIUS India Ltd. was classified as non- STPI unit. Therefore, according to the Ld. D.R., the assessee is not eligible for deduction under Section 10A of the Act. However, on appeal by the assessee, the CIT(Appeals) found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary that the assessee has to opt out of the scheme in the earlier years. Once the assessee chosen the first year, the same benefit would continue for next ten consecutive years without any interruption. The assessee, in fact, opted the assessment year 2006-07 as first year and therefore, it will continue to have the benefit for the next consecutive ten years. 9. Dr. C.P. Ramaswami, the Ld.counsel for the assessee, further submitted that the declaration is required to be filed in the case the assessee intends to opt out of the scheme. The scheme is spread over for a period of fifteen years. The assessee was given the option of selecting the initial year. Even assuming for argument sake, according to the Ld. counsel, the assessee has opted out of the scheme, such option would be confined only to that particular year and the assessee s opting out of the scheme may deny itself the benefit of Section 10A of the Act for that particular year. In the subsequent year, if it does not opt out again, by virtue of default clause in Section 10A of the Act, should again be applicable to the assessee. In case there was no profit, the provisions of Section 10A of the Act should not be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2006-07, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 13. The Revenue has raised one more ground for the assessment year 2006-07 towards bad debt. 14. Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that it is only a provision, therefore, it cannot be allowed. 15. On the contrary, Dr. C.P. Ramaswamy, the Ld.counsel for the assessee, submitted that while computing book profit under Section 115JB of the Act, the Assessing Officer disallowed a provision for doubtful debt to the extent of ₹ 1.30 Crores. According to the Ld. counsel, the Assessing Officer failed to consider Explanation 1 to Section 115JB of the Act. Referring to the judgment of Supreme Court in CIT v. HCL Comnet Systems Services Ltd. (305 ITR 409), the Ld.counsel submitted that the debt payable by the assessee is different from the debt receivable by the assessee. In this case, the debt is not payable by the assessee but, receivable by the assessee. Therefore, the provision for bad a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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