DCIT, CHENNAI vs. LISTER TECHNOLOGIES PRIVATE LTD., CHENNAI

All the appeals of the Revenue are directed against the common order passed by the Commissioner of Income Tax (Appeals) – 8, Chennai dated 26.09.2016, for the assessment years 2005-06 to 2008-09 and 2010-11. Since common issues arise for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order.

There was a delay of 3 days in filing each of these appeals by the Revenue. The Revenue has filed petitions for condonation of delay. We have heard the Ld. Departmental Representative and the Ld.counsel for the assessee. We find that there was sufficient cause for not filing the appeals before the stipulated time. Therefore, we condone the delay and admit the appeals.

The first issue arises for consideration is deduction claimed by the assessee under Section 10A of the Income-tax Act, 1961 (in short 'the Act').

Shri Supriyo Pal, the Ld. Departmental Representative, submitted that the CBDT in its circular dated 16.07.2013 instructed its officers to allow deduction under Section 10A of the Act only after setting off losses as per provisions of Section 70 and 71 of the Act. After setting off losses under Section 70 and 71 of the Act, if the resultant figure is loss from the eligible unit, it shall be eligible to carry forward and set off in accordance with the provisions of Section 72 of the Act. In the case before us, according to the Ld. D.R., the A.O. found that the brought forward losses are more than profits of eligible business, therefore, the assessee is not eligible for deduction under Section 10A of the Act. The Ld. D.R. very fairly submitted that the Apex Court recently in CIT & Another v. M/s Yokogawa India Ltd. in Civil Appeal No.8498 of 2013 dated 16th December, 2016, examined an identical issue and found that the deduction under Section 10A of the Act would be prior to the commencement of exercise to be undertaken under Chapter-VI of the Act for arriving at total income of the assessee from gross total income. In view of this judgment of Apex Court, the Ld. D.R. very fairly submitted that the issue raised by the Revenue is covered in favour of assessee.

Shri Supriyo Pal, the Ld. Departmental Representative further submitted that for the assessment year 2007-08, the assessee has also raised one more issue with regard to eligibility of the assessee for deduction under Section 10A of the Act in respect of foreign exchange gain.

We have heard Shri S. Sendamarai Kannan, the Ld.counsel for the assessee also. As rightly submitted by the Ld. Departmental Representative, the Apex Court has held that the deduction under Section 10A of the Act would be prior to the commencement of exercise to be undertaken under Chapter – VI of the Act, therefore, the loss brought forward from the earlier year cannot be set off. In view of this judgment of Apex Court in Yokogawa India Ltd. (supra), this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the loss suffered by the assessee cannot be set off before allowing deduction under Section 10A of the Act.

For the assessment year 2007-08, the assessee claimed deduction under Section 10A of the Act in respect of foreign exchange gain to the extent of `4,28,767/-. Foreign exchange gain admittedly related to the export business of the assessee and its sale consideration was realized by virtue of export made by the assessee. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the assessee is eligible for benefit under Section 10A of the Act in respect of such foreign exchange gain due to fluctuation.

In view of the above discussion, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, all the appeals filed by the Revenue are dismissed.