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Income Tax Appellate Tribunal, BANGALORE BENCH A, BANGALORE
Before: SHRI. N. V. VASUDEVAN & SHRI. ABRAHAM P. GEORGE
Assessee by : Shri. Prashanth G, CA Revenue by : Smt. Nandini Das, JCIT Heard on : 04.08.2015 Pronounced on : 07 .08.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by Revenue, directed against the order of CIT (A)-III, Bengaluru, dated.10.09.2014, for the assessment year, it has taken altogether seven grounds of which, grounds 1, 6 and 7 are general in nature, needing no adjudication.
ITA.1570/Bang/2014 Page - 2
Vide its grounds 2 and 3, grievance raised by the Revenue is that deduction claimed by assessee u/s.10A of the Income-tax Act, 1961 (‘the Act’ in short), was allowed by CIT (A) without setting of losses of other STPI units.
As per the Ld. DR, Section 10A of the Act was a deduction and not exemption from total income. Per contra Ld. AR supported the order of the CIT (A).
We have heard the rival contentions and perused the records. We find that CIT (A) had followed the judgment of Hon’ble jurisdictional High Court in the case of CIT v. Yokogawa India Ltd [341 ITR 385]. CIT (A) had reproduced the relevant part of the above judgment, which read as under :
As the income of the section10A unit has to be excluded at source itself before arriving at the gross total income, the loss of the non-section 10A unit cannot be set off against the income of the section 10A unit under section 72. The loss incurred by the assessee under the head "Profits and gains of business or profession" has to be set off against the profits and gains, if any, of any business or profession carried on by such assessee. Therefore, as the profits and gains under section 10A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such profits and gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current year's depreciation under section 32(2) is to be set off. As deduction under section 10A has to be excluded from the total income of the assessee the question of unabsorbed business loss being set off against such profit and gains of the undertaking would not arise. In that view of the matter, the approach of the assessing authority was quite contrary to the aforesaid statutory provisions and the Appellate Commissioner as well as the Tribunal were fully justified in setting aside the said assessment order and granting the benefit of section 10A to the assessee Hence, the main substantial question of law is answered in favour of the assessees and against the Revenue.
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Just because a SLP has been filed by the Revenue against the judgment of the Hon’ble jurisdictional High Court would not be a reason to follow the said judgment . In our opinion, Ld. CIT (A) was justified in allowing the claim of the assessee. Grounds 2 and 3 of the Revenue stands dismissed.
Vide its grounds 4 and 5, Revenue is aggrieved that CIT (A) directed parity between export turnover and total turnover for working out deduction u/s.10A of the Act, relying on the decision of the Hon’ble jurisdictional High Court in CIT v. Tata Elxsi Ltd, (349 ITR 98).
We find from the grounds raised by the Revenue that they have moved the Hon’ble Apex Court against the judgment of the Hon’ble jurisdictional High Court in CIT v. Tata Elxsi Ltd, (349 ITR 98). CIT (A) had only directed deduction of the expenditure excluded from export turnover also from the total turnover while computing deduction u/s.10A of the Act, following the judgment of the Hon’ble jurisdictional High Court (supra). As already mentioned by us, filing of SLP before the Hon’ble Apex Court would not be a reason not to follow the decision of the Hon’ble jurisdictional High Court. We do not find any reason to interfere with the order of the CIT (A). Grounds 4 and 5 are also dismissed.
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In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 7th day of August, 2015.