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TMI Blog2020 (12) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... . The decision of the Supreme Court in the case of Chaudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT ] has no application to the fact situation of the case as the Supreme Court has interpreted Section 40(a)(ia) of the Act in the context of Section 194C of the Act. Thus, the second question of law has to be answered in favour of the assessee and against the revenue. Claim of assessee towards set-off of losses of STP/SEZ unit against the other income - Deduction u/s 10A - HELD THAT:- Supreme Court in Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT ] was dealing with the issue whether losses under Section 10A units or non Section 10A units can be set off against the profits of Section 10A units before deductions under Section 10A are effected held that it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for earlier periods which has not reached finality and even when the ingredients of section 32 are not satisfied to claim depreciation relating to software? (3) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the exclusion of interest income, rental income and other income for the purpose of deduction under section 10A of the Act by placing reliance on the orders passed in the case of the assessee for earlier periods which has not reached finality and even when the ingredients of section 10A are not satisfied to include the said income as part of section 10A? (4) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the recomputation of deduction under section 10A made by the assessing authority by following the decision of this Hon'ble High Court in the case of CIT vs. Tata Elxsi even when the said order has not reached finality? (5) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the denial of deduction under section 10A in respect of the amount of export turnover not remitted to India within 6 months by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reliance on the orders passed in the case of the assessee for earlier periods which has not reached finality and even when the assessing authority rightly allocated corporate expenditure to the SEZ while considering the claim for deduction under section 80IAB of the Act? (11) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing the claim for foreign tax credit made by the assessee by following the decision of this Hon'ble High court in assessee's own case (reported in 382 ITR page 179) for assessment year 2003-04 even when the assessee is not at all entitled for such foreign tax credit in respect of units eligible for deduction under section 10A has no such credit facility is stipulated in section 10A nor under the provisions of the DTAA? (12) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the allocation of corporate expenses for the purpose of deduction in respect of 10A and non-10A units by placing reliance on the orders passed in respect of earlier assessment years even though the said decisions have not reached finality? 2. The factual background in which the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee for corporate expenses for the purposes of deduction between 10A units and non 10A units was also held in favour of the assessee in view of the order passed by the tribunal in the case of the assessee for the Assessment Year 2007-08. 4. In respect of claim of the assessee for computation of profit of overseas software development center, the matter was remitted to the Assessing Officer to decide the issue in the light of the order passed in the assessee's own case for the Assessment Year 2004-05 and Assessment Year 2007-08. In respect of exclusion of interest income, rental income and other income for the purpose of deduction under Section 10A of the Act, the tribunal by following the order passed in the case of the assessee in respect of Assessment Year 2004-05 and Assessment Year 2007-08, remitted the matter to the Assessing Officer to decide the issue in the light of its previous orders. The issue whether the interest received under Section 244A of the Act is income liable to tax or not was remitted for limited purpose of computation of the amount. The claim of the assessee for exclusion of deemed export turnover for the purposes of deduction under Section 10A of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result, the appeal preferred by the assessee was partly allowed. Being aggrieved, the revenue is in appeal before us. 6. Learned counsel for the revenue submitted that the tribunal relied on the assessee's case for the Assessment Years 2004-05 and 2007-08 pertaining to depreciation claimed on software, which was treated as royalty. However, it is pointed out that the decision of this court in 383 ITR 179 does not cover the issue as the assessee had made payment towards purchase of software and claimed depreciation under Section 32 of the Act. It is argued that this court in 'COMMISSIONER OF INCOME-TAX VS. SAMSUNG ELECTRONICS LTD.', 345 ITR 49 and 'COMMISSIONER Of INCOME TAX VS. SYNOPSYS INETRNAL LTD.', 212 TAXMAN 454 (KAR) has held that the payment to a non resident for import of software would constitute royalty for imparting any information concerning technical, industrial, commercial or scientific knowledge experience or skill as per clause (iv) of Explanation 2 to Section 9(1)(vi) of the Act and therefore, the assessing authority has rightly held that the assessee was under an obligation to deduct the tax as per Section 195 of the Act. 7. It is also arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the revenue in the case of the assessee rendered in I.T.A.No.507/2002 on the ground that the issue of royalty was not considered is misconceived as in the aforesaid decision though the substantial question of law is worded slightly different but in para 38 of the judgment, the division bench of this court has considered the issue of royalty. Therefore, the claim on depreciation relating to software has rightly been allowed in favour of the assessee. It is further submitted that the issue with regard to set off of losses of units claiming deduction under Section 10A/10AA of the Act is squarely covered by decision of the Supreme Court in COMMISSIONER OF INCOME-TAX VS. YOKOGAWA INDIA LTD. , 391 ITR 274 (SC) and the remaining questions are answered in favour of the assessee by a decisions of this court M/s WIPRO LTD. VS. DCIT, 383 ITR 179 (KAR) and 'COMMISSIONER OF INCOME-TAX ANOTHER VS. TATA ELXSI LTD.' 382 ITR 654 (KAR) as well as para 21 of the Supreme Court in 'COMMISSINOER OF INCOME-TAX VS. HCL TECHNOLOGIES LTD.', 404 ITR 719 (SC). 9. We have considered the submissions made by learned counsel for the parties and have perused the record. The revenue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10A are effected held that it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore 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. It is further held that the somewhat discordant use of the expression 'total income of the assessee' in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression 'total income of the assessee' in Section 10A as 'total income of the undertaking'. Thereafter, in para 18 has answered all the substantial questions of law in favour of the assessee including the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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