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TMI Blog2019 (3) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... for scrutiny and statutory notices were served upon the assessee. In the scrutiny proceedings, the Assessing Officer noted that the assessee is claiming deduction u/s. 10A of the Act amounting to Rs. 6,35,35,675/-. The assessee had two units, viz., non- STPI and STPI. The assessee is declaring loss of Rs. 3,56,99,918 from non-STPI unit and claiming profit of Rs. 9,92,35,593/- from STPI unit. The Assessing Officer noted that while claiming deduction u/s. 10A, the assessee failed to take into consideration the brought forward losses/depreciation. From the perusal of tax audit report, the Assessing Officer noted that the assessee has business loss/depreciation of Rs. 5,90,31,797/- and amount claimed by the assessee as business losses/deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions of the assessee, allowed the appeal of the assessee in respect of issue pertaining to adjustment of brought forward business losses and un-absorbed depreciation loss of Rs. 5,90,31,797/-, gave a relief of Rs. 3,12,793/- with respect to disallowance made u/r 8D(2)(ii) of the IT Rules. Aggrieved, the Revenue is in appeal before the ITAT. 5. The ld. DR relied on the order of the Assessing Officer and submitted that the ld.CIT(A) has wrongly interpreted the provisions of section 10A . The exemption u/s. 10A should be given after calculating total income of the assessee which has not been done. The case law relied by the Assessing Officer is squarely covered in favour of the Revenue. The intention of the legislature has not been correctl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06 wherein similar issue has been decided in favour of the assessee after following the decision of Hon'ble Supreme Court in the case of CIT vs. Yogokawa India Ltd. (supra) and CIT v. JP Morgan Service India Pvt. Ltd. 393 ITR 24 (SC). The relevant findings of the Tribunal read as under : 15. AO while computing the deduction u/s 10A of the Act concluded that the same is required to be computed after setting off brought forward losses of Rs. 34,99,523/- and unabsorbed depreciation of Rs. 2,05,013/-. However, this controversy has already been set at rest by Hon'ble Supreme Court in case cited as CIT vs. Yogokawa India Ltd. - 391 ITR 274 (SC) and CIT vs. JP Morgan Services India Pvt. Ltd. - 393 ITR 24 (SC). Hon'ble Supreme Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be understood as embodying a clear enunciation of the legislative decision to alter the nature of the section from one providing for exemption to one providing for deductions. Though the difference between the two expressions "exemption" and "deduction", broadly may appear to be the same, i.e., immunity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications, would be obvious where loss making eligible units or non-eligible assessees seek the benefit of adjustment of losses against profits made by eligible units. Sub-section (4) of section 10A which provides for pro rata exemption, necessarily involving deduction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the stages for working out the deductions under sections 10A and 80HHC and 80RHE are substantially different. From a reading of the relevant provisions of section 10A, it is more than clear that the deduction contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. Circular No. 794, dated August 9, 2000 states in paragraph 15.6 that the export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100 per cent export orie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Decision of the Karnataka High Court in CIT vs. Yokogawa India Ltd. [2012] 341 ITR 385 (Karn) affirmed on this point." 16. So, following the law laid down by Hon'ble Supreme Court in CIT vs. Yogokawa India Ltd. (supra), deduction u/s 10A is required to be taken before setting off brought forward losses and unabsorbed depreciation. Accordingly, Grounds No.5, 5.1 & 5.2 are determined in favour of the assessee and the AO is directed to compute the deduction u/s 10A accordingly. Respectfully following the above decision, we dismiss the appeal of the Revenue on this score. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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