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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAO
Per Vijay Pal Rao, Judicial Member
This appeal by the Revenue is directed against the order dated 14.08.2015 of the CIT(Appeals)-5, Bengaluru for the assessment year 2006-07.
The Revenue has raised the following effective ground:-
ITA No.1369/Bang/2015 Page 2 of 5
“2. On the facts and circumstances of the case the CIT(A) erred in law in directing the Assessing Officer that deduction u/s. 10A is to be on the basis of profits of the undertaking eligible u/s. 10A and the losses pertaining to non-10A undertaking should not be reduced from such profits prior to the computation of deduction u/s. 10A, while as per the provisions of section 72 of the Income-tax Act, the brought forward losses have to be adjusted against the gross total income of the assessee before arriving at the taxable income for the year, thereafter the deduction u/s. 10A has to be allowed.”
The assessee is engaged in the business of computer software and information systems. The assessee claimed deduction u/s. 10A of the Income-tax Act, 1961 [“the Act”]. The Assessing Officer in the reassessment proceedings u/s. 147 computed the deduction u/s. 10A after reducing the STPI losses of the prior years and therefore reduced the deduction u/s. 10A and computed the same on the net amount.
Aggrieved by the action of the AO, the assessee preferred appeal before the CIT(Appeals). The CIT(A) has allowed the claim of the assessee holding that deduction u/.s 10A has to be excluded from the total income of the assessee, without setting off carried forward losses of earlier years.
We have heard the ld. DR as well as the ld. AR and considered the relevant material on record.
The ld. DR has submitted that the issue is covered by the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. Himatasingike
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Seide, 286 ITR 255 (Kar). He has further submitted that the SLP filed by
the assessee in the case of Himatasingike Seide (supra) has been
dismissed by the Hon’ble Supreme Court, therefore the judgment of
Hon’ble jurisdictional High Court has attained finality.
On the other hand, the ld. AR of the assessee has submitted that the issue is covered by the Hon’ble jurisdictional High Court judgment in CIT v.
Yokogawa India Ltd., 341 ITR 385 (Karn) as well as the judgment of the
Hon’ble jurisdictional High Court in assessee’s own case for the AY 2004-
05 vide order dated 6.4.2015.
Having considered the rival submissions as well as relevant material
on record, we note that the issue prior to the amended provisions of section
10A/10B was decided in favour of the Revenue by the Hon’ble jurisdictional High Court in the case of CIT v. Himatasingike Seide (supra). However,
there is a substantial change in the provisions of section 10A/10B vide
amendment by Finance Act, 2000 w.e.f. 1.4.2001. The Hon’ble jurisdictional High Court in the case of Yokogawa India Ltd. (supra) has
considered the provisions of section 10A/10B as amended by the Finance
Act, 2000 & 2001 and after noting the change in the provisions, the Hon’ble
jurisdictional High Court has decided this issue in favour of assessee.
Thus, prior to the amendment, this provision was considered as exemption;
whereas post-amendment, this provision is only a deduction. We further
note that for the AY 2004-05, the Hon’ble jurisdictional High Court in
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assessee’s own case in ITA No.189/2009 vide order dated 6.4.2015 has decided this issue in favour of the assessee in para 4 as under:-
“4. In such view of the matter, we are of the view that no substantial questions of law remains to be answered by this Court. Sri K.V. Aravind, learned counsel for the appellant states that in the case of COMMISSIONER OF INCOME-TAX vs TATA ELXSI LTD (supra), appeals have been filed before the Apex Court which have been admitted on the questions of law.”
In view of the above facts and circumstances of the case and by following the decision of the Hon’ble jurisdictional High Court in assessee’s own case, we do not find any error or illegality in the impugned order of CIT(Appeals).
In the result, the appeal by the Revenue is dismissed.
Pronounced in the open court on this 5th day of February, 2016.
Sd/- Sd/-
( INTURI RAMA RAO ) (VIJAY PAL RAO ) Accountant Member Judicial Member
Bangalore, Dated, the 5th February, 2016.
/D S/
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Copy to:
Appellant 2. Respondents 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file
By order
Assistant Registrar, ITAT, Bangalore.