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TMI Blog2023 (2) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case. 2. The ld CIT(A) erred in deleting the disallowance made u/s 10B by holding directors of STPI as competent authority for granting approval u/s . 10B? 3. The ld CIT(A) erred in holding the directors of STPI as competent authority for granting approval u/s 10B by relying on the Hon'ble Jurisdictional High Court Decision in the case of M/s live Connections software Solutions Pvt Ltd [2014] 51 Taxxmann.com 454, whereas, the relied upon case, the assessee for claiming deduction /s 10B, was not having registration with STPI for the assessment year involved and Jurisdictional High Court held that having registration with STPI is a pre-condition for claiming deduction u / s 1 OB, hence, the Jurisdictional High Court in the relied upon case has not decided anything regarding - whether, without any delegation of power from the Board of Approval for EOU scheme for sec 10B, Directors of STPI is a competent authority for granting approval u/s 1OB or not, as the question was never before the Jurisdictional High Court? 4. The ld. CIT(A) failed to appreciate for claiming exemption u/s 10B approval under STP Scheme may be necessary but not sufficient precondition witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961. Approval for 100% EOU is issued for setting up the unit, run the unit, adhering to stipulation laid down in the concerned approval. This approval cannot play any role in computation of income and assessment under the Income tax Act. Case law applicable in this case is REGENCY CREATIONS LTD (2012) Delhi High Court it was held that "in the present case there is no modification or official document suggesting that either the Inter Ministerial Committee, or any other officer or agency was nominated to perform the duties of the Board (constituted u/s 14 of the IDR Act), for purposes of approvals u/s 10B ". Further, the CBDT in Instruction No.2/2009 dated 9/3/2009 as stated inter alia, that, "the matter regarding validity of approvals given by Development Commissioners has been examined in the Board it has been decided that an approval granted by the Development Commissioner in the case of hundred per cent export oriented unit will be considered valid once such an approval is ratified by the Board of Approval for EOU scheme". However, assessee could not produce any proof even now, as to whether; the approval by Director STPI has been further ratified by the Board of Appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'losses of the domestic undertaking have to be compulsorily set off against the profits of the export undertaking. In the scheme of the Act, the profits of the unit eligible for deduction u/s. 10B of the Act would form part of the income computed under the head 'profits and gains of business or profession'. However, the same does not suffer tax for which deduction will have to be made in respect thereof while computing the income under the head 'profits and gains of business or profession'. In other words, deduction in respect of profits eligible u/s. 10B of the Act is required to be made at the stage of computing the income under the head 'profits and gains of business or profession'. In this regard, reliance is placed on the decision of Kerala High Court in the case of Patspin India Ltd. v. CIT Cochin wherein, it is held that the deduction u/s. 10B on export profit of EOU has to be computed after setting off carried forward unabsorbed depreciation as provided u/s. 32(2). Further, in the case of 2Himatasingike Seide Ltd vs CIT [2006], the Hon'ble Karnataka High Court has held that, unabsorbed depreciation brought forward should be set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of Live Connections Software Solutions P. Ltd vs CIT (supra), allowed the relief without appreciating fact that the question of law in the said judgment is on approval with STPI, however, it does not deal with delegation of power from the Board of Approval for EOU scheme as per section 10B of the Act. As regards manner and method of computation, he fairly agreed that the issue is settled by Hon'ble Supreme Court in the case of CIT vs Yokogawa India Ltd (supra), and therefore, he fairly conceded the issue. 6. The ld. Counsel for the assessee, referring to the decision of the Hon'ble Madras High Court in the case of Indus Teqsite (P) Ltd vs DCIT (supra), submitted that deduction u/s. 10B of the Act, could not be denied to 100% EOU, where approval was granted by Development Commissioner, but on such approval ratification certificate was not yet given by Board of Approval. He further referring to a letter from Director, STPI dated 30.12.2011, submitted that as per said letter, the Development Commissioner has placed necessary papers before the Board of Approval in the subsequent meeting, and it is sufficient proof that approval has been ratified by the Board. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has furnished necessary evidence to prove that it has all necessary approvals for claiming deduction u/s. 10B of the Act. Therefore, the AO ought to have allowed deduction u/s. 10B of the Act as claimed by the assessee. In this regard, it is relevant to refer the decision of Hon'ble Jurisdictional High Court of Madras in Indus Teqsite (P) Ltd vs DCIT (supra), where it has been clearly held that deduction u/s. 10B of the Act could not be denied to 100% EOU, where approval was granted by Development Commissioner, but on said approval ratification certificate was not yet given by Board of Approval. Therefore, we are of the considered view that, the assessee is entitled for deduction u/s. 10B of the Act and the Ld. CIT(A) has rightly allowed the claim. As regards, the arguments of the Ld. DR, in light of the decision of Hon'ble Supreme Court in the case of PCIT vs M/s. Wipro Limited (Supra), we find that the ratio laid down by the Hon'ble Supreme Court in the said judgment is on rule of interruption of law. However, it does not render any ratio of deduction u/s. 10B of the Act. As we already noted in earlier part of this judgment, there is no dispute with regard to the strict i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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