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TMI Blog2021 (10) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ground raised by the Revenue. - ITA no.6534/Mum./2019 - - - Dated:- 27-9-2021 - Shri Mahavir Singh, Vice President And Shri S. Rifaur Rahman, Accountant Member For the Revenue : Shri Bharat Andhale For the Assessee : Shri Anuj Kisnadwala ORDER PER S. RIFAUR RAHMAN, A.M. The present appeal has been filed by the Revenue challenging the order dated 30th July 2019, passed by the learned Commissioner of Income Tax (Appeals) 16, Mumbai, for the assessment year 2011 12. 2. The only issue raised by the Revenue is, whether or not the learned CIT(A) was justified in directing the Assessing Officer to allow deduction under section 10A of the Income Tax Act, 1961 (for short the Act ) to the extent of income eligible undertaking by ignoring the CBDT s Circular no.7/DV/2013, dated 16th July 2013. 3. Brief facts are, the assessee filed its return of income for the year under consideration on 30th September 2011, declaring total loss at ₹ (2,49,80,244). The return was processed u/s 143(1) of the Act. The case was selected for scrutiny and an assessment order under section 143(3) of the Act was passed on 21st March 2014, determining total income under norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaking from the export of articles or things or computer software for a period often consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: The word total income has been explained by Karnataka High Court in the case of CIT vs. Yokogawa India Ltd. [20121 21 taxmann.com 154/341 ITR 385 (enclosed in paper book from page no. 36-46).The relevant extract of the judgement is reproduced as under: The phrase total income used in section 10A(1) (1) is, therefore, to be understood as the total income of the STP unit. This is clear from the first proviso to section bOA(1) which makes a reference to the total income of the undertaking and not to the total income of the assessee. The definition of any term given in section 2 will apply only when the context does not otherwise require. The placement, language and setting of section 10A cannot mean the total income computed in accordance with the provisions of the Act. Instead, such a phrase in the context of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd[20171 77 taxmann.com 41 (SC)that the stage of deduction u/s. 10A of the Act would be while computing gross total income of eligible undertaking under Chaper IV of Act and not at stage of computation of total income under Chapter VI of the Act. The set-off of intra head losses falls under section 70 of the Act which is covered by Chapter VI of the Act. Since it is specifically stated by the Supreme Court that Deduction u/s. 10A of the Act has to be computed under Chapter IV of the Act and not at the stage of Chapter VI of the Act, no set-off of losses of other non-eligible business unit is to be made against the income of 1OA unit. The relevant extract of the judgement is reproduced as under: .. The absence of any reference to deduction under section 10A in Chapter VI can be understood by acknowledging that any such reference or mention would have been a repetition of that has already been provided in section 10A. The provisions of sections 80HHC and 80HHE providing for somewhat similar deductions would be wholly irrelevant and redundant if deductions under section 10A were to be made at the stage of operation of Chapter VI. The retention of the said provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be while computing the gross total income of the eligible undertaking tinder Chapter IV and not at the stage of computation of the total income under Chapter VI. [Para 181] 16) Further, the jurisdictional Bombay High Court in the case of CIT 10 v/s Black and Veatch Consulting Pvt. Ltd. [2012] 20 taxmann.com 727 (Bom.) enclosed in paper book from page no.47 48)has also held that the deduction under section 10A of the Act in respect of eligible unit has to be allowed before setting off brought forward depreciation and losses of a non-10A unit. The relevant extract is reproduced as under: The submission of the Revenue placed its reliance on the literal reading of Section 10A under which a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of tell Assessment Years is to be allowed from the total income of the assessee. The deduction under Section bA, in our view, has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of Section 72 which deals with the carry forward and set off of business losses. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Yokogawa India Ltd. [2017] 77 taxmann.com 41 (SC), wherein following judgment was given: ..............The absence of any reference to deduction under section 10A 'in Chapter VI can be understood by acknowledging that any such reference or mention would have been a repetition of what has already been provided in section 10A. The provisions of sections 80HHC and 8OHHE providing for somewhat similar deductions would be wholly irrelevant and redundant if deductions under section 10A were to be made at the stage of operation of Chapter VI. The retention of the said provisions of the Act i.e. sections 80HHC and 80HHE, despite the amendment of section bA, indicates that some additional benefits to eligible section 10A units, not contemplated by sections 80HHC and 80HHE, was intended by the legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions under sections 10A and 80HHC and 80HHE are substantially different. From a reading of the relevant provisions of section 10A it is more than clear that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Hon'ble Supreme Court cited supra. 8. The learned Authorised Representative for the assessee substantiated his arguments on the basis of the pleadings made before the authorities below. 9. Considered the rival submissions and perused the material on record. On a careful perusal of the order of the learned CIT(A) we do not find any valid reason much less a cogent reason to reverse the findings of the learned CIT(A). The above direction is, in our view, just and proper hence does not call for any interference. We have also gone through the decision of the Hon'ble Supreme Court in Yokogawa India Ltd. (supra) relied upon by the learned CIT(A) and found that the issue for our adjudication is squarely covered by the aforesaid decision of the Hon'ble Supreme Court. The Revenue has also not brought any material contrary to the stand taken by the learned CIT(A) which force us to take a decision other than the decision taken by the learned CIT(A). Consequently, we uphold the order of the learned CIT(A) by dismissing the ground raised by the Revenue. 10. In the result, Revenue s appeal is dismissed. Order pronounced in the open Court on 27.09.21 - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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