ITO, BANGALORE vs. M/S INSILICA SEMICONDUCTORS INDIA PVT. LTD., BANGALORE

Grievance raised by Revenue in its appeal is that CIT (A) directed the AO to recompute deduction allowable to the assessee u/s.10A of the Income-tax Act, 1961 (‘the Act’ in short), without setting off brought forward losses pertaining to units which were not eligible for claiming such deduction. As against this, assessee in its cross objection states that the issue regarding set off of loss of other units against the profits of an unit which was eligible for deduction u/s.10A of the Act, was a debatable one and the AO was not justified in invoking Section 154 of the Act while passing the impugned order.

Appeal and the cross objection arise out of an order dt.24.12.2008, u/s.154 of the Act, of the assessing officer. In the said order, AO was of the opinion that deduction u/s.10A could be allowed only after set off of brought forward loss and depreciation. Reliance was placed by the AO for taking this view on the judgment of Hon’ble jurisdictional High Court in the case of CIT v. Himtasingki Seide Ltd [(2006) 286 ITR 255]. As per the AO assessee had claimed such deduction without setting off of such brought forward business loss and depreciation.

Assessee had moved in appeal before the CIT (A) against the above rectification order. CIT (A) relying on the judgment of Hon’ble ITA.1086 & CO.205/Bang/2015 Page - 3 jurisdictional High Court in the case of CIT v. Yokogawa India Ltd [341 ITR 385], held that section 10A deduction was to be computed on a stand alone basis without setting off of loss and depreciation.

Heard the rival counsels. We are of the opinion that CIT (A) had followed the judgment of Hon’ble jurisdictional High Court in the case of Yokogawa India Ltd (supra). Question whether Section 10A deduction could be allowed with or without setting off of brought forward loss of units which had not claimed such deduction is in our opinion, a debatable one. This is apparent from the judgments of Hon’ble jurisdictional High Courts in the case of Himtasingki Seide Ltd (supra) and Yokogawa India Ltd (supra). This being the case, in our opinion, we cannot say that there was a mistake apparent on record in the original order. What was sought to be rectified by the AO was not one which was a mistake apparent from record. Rectificatory powers u/s.154 of the Act, cannot be invoked on debatable issues, that too on points of law. It is only mistakes which are apparent, and glaring on record which are amenable for rectification.

In the result, cross objection filed by the assessee is allowed. Appeal of the Revenue having become infructuous is dismissed.