DCIT, BANGALORE vs. M/S SPA COMPUTERS PVT. LTD.,, BANGALORE

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

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.