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TMI Blog2021 (2) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - subsequently the decision of this Court in YOKOGAWA INDIA LTD insofar as it pertains to nature of provision of Section 10B of the Act is concerned, was reversed by the Supreme Court in CIT VS. YOKOGAWA[ 2016 (12) TMI 881 - SUPREME COURT] and it was held that Section 10B of the Act is in the nature of deduction provision. It is also pertinent to mention here that Section 10B is a provision which deals with deduction of income whereas Section 35(2AB) deals with deduction on expenditure. The restriction contained in sub-Section (6) of Section 10B of the Act operate only upto 1st day of April 2001. Therefore, the restrictions contained in sub-Section (6) of Section 10B of the Act have no application to the obtaining factual matrix of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CATE JUDGMENT This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the Act , for short) has been filed by the assessee. The subject matter of the appeal pertains to the Assessment Year 2004-05.The appeal was admitted by a Bench of this Court vide order dated 01.12.2014 on the following substantialquestions of law: 1. The Tribunal was right in holding that the appellant was not entitled to deduction under Section 35(2AB) of the Act to the extent the expenses eligible for deduction under the said provisions pertained to unit entitled for deduction under Section 10B of the Act? 2. The Tribunal was right in holding that Section 14A of the Act was applicable to the appellant although it had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in 'CIT Vs. YOKOGAWA INDIA LIMITED' (2012) 21 TAXMANN.COM 154 (KAR). However, the aforesaid decision was reversed on the issue of thenature of provision namely Section 10A and Section 10B of the Act, by the Supreme Court in 'CIT Vs. YOKOGAWA INDIA LIMITED (2017) 77 TAXMANN.COM 41 (SC) and it was held that Section 10A and Section 10B of the Act are the provisions with regard to deduction. In this connection, our attention was invited to paragraph 18 of the judgment. It is also submitted that deduction under Section 10B of the Act is qua the undertaking and is given in respect of the profits of business of the undertaking whereas deduction under Section 35(2AB) of the Act is given effect to a later stage while computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd deduction under the said provision will have to be computed in accordance with the formula prescribed in sub-Section (4) on commercial profits and therefore, reducing profits on a notional basis, attributing some profits to the expenses eligible for weighted reduction under Section 35(2AB), amounts to tinkering with the formula. It is also urged that the Tribunal grossly erred in relying on Section 14A of the Act to uphold the disallowance. It is further submitted that Section 14A applies only to exempt incomes and since Section 10B of the Act is not an exemption provision as has been held by the Supreme Court in CIT Vs. YOKOGAWA LIMITED, supra, the aforesaid provision does not apply to the fact situation of the case. In support of afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture and all deductions are deemed to have been claimed in view of Section 10A(6) of the Act. It is also urged that profits of a unit have to be computed on stand alone basis without reference to other eligible or non-eligible units or undertaking of the assessee. In this connection, our attention has been invited to paragraph 16 of the decision of the Supreme Court in YOKOGAWA INDIA LTD., supra. 6. We have considered the submissions made on both sides and have perused the record. Before proceeding further, it is apposite to take note of the relevant extract of Section 10B and Section 35(2AB) of the Act, which reads as under: 10B. Special provisions in respect of newly established hundred per cent export-oriented undertakings (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provision and therefore, the Assessing Officer was right in reducing the profits of the units eligible for deduction under Section 10B to the extent of additional 50% deduction available under Section 35(2AB) of the Act. However, it is pertinent to mention here that subsequently the decision of this Court in YOKOGAWA INDIA LTD., supra insofar as it pertains to nature of provision of Section 10B of the Act is concerned, was reversed by the Supreme Court in CIT VS. YOKOGAWA, supra and it was held that Section 10B of the Act is in the nature of deduction provision. It is also pertinent to mention here that Section 10B is a provision which deals with deduction of income whereas Section 35(2AB) deals with deduction on expenditure. 8. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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