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TMI Blog2019 (2) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Appellate Tribunal was right in law in holding that Section 10B(6) was attracted and deduction under Section 10B was to be computed without setting off of any carried forward losses and unabsorbed depreciation of the earlier assessment years?" 4.Tax Case Appeal No.1169 of 2008 has been admitted on 18.08.2008, on the following Substantial Question of Law: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that Section 10B(6) was attracted and deduction under Section 10B was to be computed without setting off of any carried forward losses and unabsorbed depreciation relating to the assessment year 2000-01?" 5.The assessee is a 100% export oriented unit claimed exemption under Section 10B of the Act from the assessment year 2000-01 onwards and upto assessment year 2009-10. For the assessment year 2003-04, the Assessing Officer determined the assessee taxable income at Rs. 2,59,10,962/- and while doing so computed deduction under Section 10B without setting off the carried forward losses of the earlier years and unabsorbed depreciation relating to the assessment years 2000-01 and 2001-02. 6.Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were never advanced either before the Assessing Officer or before the CIT(A) or before the Tribunal, that too, in the particular form as presented before us. We pointed out to the learned counsels that we are required to test the correctness of the order passed by the Tribunal and proceed to decide the substantial question of law, but we are now being called upon to test the correctness of the order passed by the Tribunal based on arguments both factually and legally which were never canvassed before the Tribunal. Nevertheless, this Court exercising the power under Section 260A of the Act is entitled to decide the substantial question of law raised and also entitled to frame additional substantial questions of law for consideration and to be answered. Once the legal position is pointed out, it would be well open to the Court to remand the matter to the Assessing Officer to apply the legal position to the facts on hand and complete the assessment. The Tribunal while allowing the revenue's appeal held that Section 10B(6) of the Act begins with a nonobstante clause and it overrides the other provisions of the Act. It was pointed out that the expression "relevant assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the said decision and the Hon'ble Supreme Court has granted leave against the said judgment. Therefore, the Court proceeded to consider the issue on merits. After referring to Section 10B and the relevant sub-sections, it was held that Section 10B(6) of the Act does not deal with computation of business profit during the period the assessee enjoys exemption under Section 10B(4) of the Act. It was pointed out that this sub-section is only an embargo against the assessee claiming any carried forward benefit under the sections referred to in the assessment for the assessment year following the end of tax holiday enjoyed by the assessee under Section 10B(4) of the Act. It thus held that contrary to the finding of the Tribunal in the said case, sub-section (6) only supports the revenue's case that carried forward depreciation should be set off in the computation of business profit even during the period the assessee enjoys exemption under Section 10B(4) of the Act. Accordingly, the appeal was allowed reversing the order of the Tribunal by restoring the orders of the Commissioner of Income Tax under Section 263 of the Act for the first four years and by upholding the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt on this issue. 11.Learned counsel for the revenue relied on the recent decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax and others vs. Yokogawa India Ltd. in C.A.Nos.8498 of 2013 and batch dated 16.12.2016. The principal issue which came for determination of the Court was the true and correct meaning and effect of the provisions of Section 10A of the Act. The Hon'ble Supreme Court prefaced its judgment by stating that the decision of the Court with regard to the provisions of Section 10A of the Act would equally be applicable to cases governed by provisions of Section 10B of the Act in view of the said later provision being pari materia with Section 10A of the Act though governing a different situation. Two of the questions which were decided by the Hon'ble Supreme Court would be of relevance for us in these appeals which are as follows: "3(iv) Whether losses of other 10A Units or non 10A Units can be set off against the profits of 10A Units before deductions under Section 10A are effected? (v) Whether brought forward business losses and unabsorbed depreciation of 10A Units or non 10A Units can be set off against the profits of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. Thus, it held that the deductions under Section 10A would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. For the above reasons, it was held that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI of the Act. 13.As pointed out by us earlier, the arguments advanced by the learned counsels for the parties was not the arguments which were put forth before the Tribunal. That apart, the decision of the Tribunal was rendered in the year 2007 and the law on the issue has been interpreted by the Appellate Courts and some of the decisions have been referred supra. All the decisions which were referred by us, the latest being the decision of the Apex Court in the case of Yokogawa India Ltd (supra). In our considered view, the issue requires to be decided af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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