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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 ..... ection 10A, whereas in the present case, the assessee has claimed deduction u/s. 10B - In our considered view, the arguments of the Revenue is fallacious for the simple reason that provisions of section 10A 10B of the Act both are deduction provisions which operates under same set of terms and conditions and thus, the ratio laid down in the case of CIT vs Yokogawa India Ltd [ 2016 (12) TMI 881 - SUPREME COURT] squarely applies for computation of eligible profit in terms of provisions of section 10B of the Act also - there is no error in the reasons given by the ld. CIT(A) to direct the AO to compute eligible profit of unit claiming deduction u/s. 10B of the Act, without allowing set off of losses of other unit or brought forward losses of earlier years, and thus, we reject ground taken by the revenue on this issue also. Decided against revenue. - ITA Nos. 3381, 3382 & 3383/Chny/2019 - - - Dated:- 11-1-2023 - SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER For the Appellant : Shri. AR V Sreenivasan , Addl. CIT For the Respondent : Shri. P. V. Krishnamani , CA ORDER PER G. MANJUNATHA , ACCOUNTANT MEMBER : These three app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 108 whereas the approval of STPI has not been ratified by the Board of Approval for EOU scheme u/s 10B, as required as explained in the CBTD Instruction No. 2/2009 dated 9/3/2009? 7. The ld CIT(A) erred in applying the Apex Court Decision in the case of Yokogawa India Ltd which is regarding computation stage of deduction u/s 10A whereas the in the present case of the assessee the eligibility of the deduction u/ s 1 OB itself is not tenable? 8. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored. 3. The brief facts of the case are that, the assessee company is engaged in the business of hardware, software and firmware development. The assessee is having two units i.e., one at STPI, which is claiming 100% tax benefit u/s. 10B of the Income-tax Act, 1961 (hereinafter referred to as the Act ), and one unit which is located at non-STPI and not claiming exemption u/s. 10B of the Act. The appellant unit situated at STPI is approved by the Development Commissioner, but said approval has not been ratified by the Board of the Approval for EOU s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming section 10B. Coming to the issue of more of one units, it is reiterated that here this was not an issue at the time of scrutiny. But after being verified with details it is ascertained as evident as the basic criteria for deduction u/s 10B is being not fulfilled in the absence of approval. Hence, consideration of multiple units does not surface from the analysis made on the approval already. In these circumstances the computation of income is made as under in accordance with law as directed with ITAT. 2. SET OFF OF BROUGHT FORWARD LOSSES BEFORE CLAIMING DEDUCTION U/S. 108: During the year, assessee has claimed deduction u/s. 10B for a sum of Rs.1,65,23,354/-. Further as per the return of income, assessee has brought forward loss of total of Rs. 1,13,61,460/. After claiming deduction u/s. 10B, the asssessee in the return of income has arrived at a Nil income and has carried forward loss of Rs.2,23,66,284/- (includes current year business loss from domestic division} to subsequent year: However as per the order U/s. 154 dated 28.11.2013 for AV 2010-11, assessee do not have any brought forward loss to be adjusted against the total income of the current year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 30.12.2011, to prove that Director, STPI has taken up the issue of approval for ratification from the Board in the subsequent IMSC meetings. The assessee had also agitated the findings of the AO, with regard to the computation of deduction u/s. 10B of the Act, without setting up losses of other units, in light of the decision of Hon ble Apex Court in the case of CIT vs Yokogawa India Ltd [2017] 77 Taxmann.com 41 (SC), and argued that deduction u/s. 10B of the Act, to eligible unit should be allowed without setting off of losses of other units. The CIT(A), after considering relevant submissions of the assessee and also by following the decision of Jurisdictional High Court of Madras in the case of Live Connections Software Solutions P. Ltd vs CIT [2014] 51 Taxmann.com 454, deleted addition made by the AO towards disallowance of deduction u/s. 10B of the Act, by holding that once the facility has been approved by the Director, STPI and further, the same has been ratified by the Board as required under the law in subsequent meeting, then merely for the reason that the Board has not issued ratification certificate, deduction cannot be denied. 5. The Ld. DR, referring to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt services was approved by Director, STPI. In fact, the AO is not disputing fact that the unit has been approved by STPI. The only reason for the AO to deny benefit of deduction u/s. 10B of the Act, was ratification of approval given by the Director from the Board of Approval. According to the AO, unless the facility is approved by the Central Government through appropriate authority constituted u/s. 14 of Industries (Development and Regulation) Act, and if the 100% EOU is only approved by Director, STPI, it would not be a valid approval as per the law. Therefore, rejected deduction claimed u/s. 10B of the Act. 8. We find that, there is no dispute with regard to the observations of the AO that unless approval given by Director, STPI is ratified by the Board of Approval, it cannot be said that the unit claiming benefit of deduction is having a valid approval. But, in the present case, there is no dispute with regard to the fact that, the unit has been approved by the Director, STPI and further, Director in their letter dated 30.12.2011 informed the Assessing Officer, i.e., the Assistant Commissioner of Income-tax, Company Circle -1(3), Chennai, that the unit approved as 100% EOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs Regency Creations Ltd [2012] 27 Taxmann.com 322 (Del), we find that the Hon ble Delhi High Court categorically held that eligibility of 100% EOU for deduction u/s. 10B of the Act is that, it should be approved by Central Government, through appropriate authority constituted u/s. 14 of Industries (Development and Regulation) Act, and if the 100% EOU is only approved by Director, STPI it would not be a valid approval. We, once again do not find any merit in the arguments of the ld. DR in light of above judgment, because in the present case, assessee has placed all evidences to prove that steps have been taken by the Director, STPI to get ratification from the Board of Approval. 9. In this view of the matter and by following the decision of Hon ble Madras High Court in the case of Indus Teqsite (P) Ltd vs DCIT (supra), we are of the considered view that, the assessee is entitled for deduction u/s. 10B of the Act, towards profit derived from STPI unit. The Ld. CIT(A) after considering the relevant facts has rightly allowed deduction as claimed by the assessee and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the Revenue. 10. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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