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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Per GEORGE GEORGE K.,JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the
CIT(A)-I, Kochi dated 22/09/2016. The relevant assessment year is 2004-05.
The solitary effective ground raised reads as follows:
“The learned Commissioner of Income-tax(Appeals) ought to have held that the eligible Deduction U/S. 10B should have been computed and allowed as claimed in the Return of Income amounting to Rs.1,04,78,854/- since the Deduction U/S. 10B is to be allowed from the total income of the undertaking before setting off carried forward business loss U/S. 72 and unabsorbed depreciation U/S. 32(2).”
2 ITA No.491/Coch/2016
The brief facts of the case are as follows:
The assessee is a company. The assessee is having a 100% export oriented
undertaking, engaged in the manufacture and export of oleoresines from spices.
For the assessment year 2004-05, the return of income was filed u/s. 139(1) of
the I.T. Act on 29/10/2004. In the return of income, the assessee had claimed
deduction under section 10B of the I.T. Act amounting to Rs. 1,04,78,854/-. The
assessment u/s. 143 r.w.s. 147 was completed vide order dated 27/12/2007. In
the reassessment completed, deduction claimed by the assessee u/s. 10B of the
Act was reduced to ‘Nil’ . The Assessing Officer recomputed the deduction u/s.
10B of the Act after setting off carry forward business loss u/s. 72 of the I.T. Act
and unabsorbed depreciation u/s. 32(2) of the I.T. Act.
Aggrieved by the reassessment order completed on 27/12/2007, the assessee
preferred an appeal to the first appellate authority. It was contended before the
CIT(A) that profits in respect of eligible units should be calculated on a stand
alone basis. The CIT(A) however rejected the contentions raised by the assessee
and held that Hon’ble Jurisdictional High Court in the case of CIT vs. Patspin
India Ltd. reported in 203 Taxman 47 (Kerala) on identical facts had held that
deduction u/s. 10B of the Act is to be calculated after set off losses of the earlier
assessment years including unabsorbed depreciation. The CIT(A) also noticed
that there were divergent views taken by the Hon’ble Bombay High Court,
Hon’ble Karnataka High Court and the Hon’ble Delhi High Court.
3 ITA No.491/Coch/2016
The assessee being aggrieved, has filed this present appeal before the
Tribunal. The Ld. Counsel for the assessee submitted that the judgment of the
Hon’ble Kerala High Court relied on by the first appellate authority in the case of
Patspin India Ltd. (supra) has been reversed by the judgment dated 11-10-2017
of the Hon’ble Apex Court in Civil Appeal Nos. 8633/2013, 8548/2013, 8546/2013
and 1097/2016. A copy of the judgment of the Hon’ble Apex Court in the case of
Patspin India Ltd. vs. CIT is placed on record. The Hon’ble Apex Court following
its earlier judgment in the case of CIT vs. Yokogawa India Ltd. reported in 391
ITR 274 allowed the appeal filed by the assessee. It was submitted that in view
of the Hon’ble Apex Court judgment cited supra, deduction u/s. 10B of the Act is
to be computed on a stand alone basis, before setting off the carry forward
business losses and unabsorbed depreciation.
The Ld. DR on the other hand supported the orders of the Income Tax
authorities.
We have heard the rival submissions and perused the material on record.
The Hon’ble Apex Court in the case of CIT vs. Yokogawa India Ltd. (supra) had
categorically held that deduction u/s. 10A of the Act for eligible unit is to be
calculated on a stand alone basis, before setting off carry forward business
losses and unabsorbed depreciation. The Hon’ble Apex Court in para two of its
judgment had held that the judgment would have equal application also to units
4 ITA No.491/Coch/2016
covered u/s. 10B of the I.T. Act. In view of the judgments of the Hon’ble Apex
Court in the case of CIT vs. Yokogawa India Ltd. (supra) and Patspin India Ltd.
vs. CIT (supra), we hold that deduction under section 10B of the Act is to be
calculated before setting off unabsorbed depreciation and carry forward business
losses. It is ordered accordingly.
In the result, the appeal filed by the assesseee is allowed as indicated
above. Pronounced in the open court on 5th February, 2018
sd/- sd/- (CHANDRA POOJARI) ( GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER
Place: Kochi Dated: 5th February, 2018 GJ Copy to: 1. M/s. Akay Flavours & Aromatics (P) Ltd., Ambunad, Malaidamthuruthu P.O., Aluva, Ernakulam-683 561. 2. The Assistant Commissioner of Income-tax, Circle-2(1),Kochi. 3. The Commissioner of Income-tax(Appeals)-I, Kochi 4. The Pr.Commissioner of Income-tax, Kochi 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order
(ASSISTANT REGISTRAR) I.T.A.T., Cochin