Ø The
following judgements where it held that losses of STPI Units is required to be
adjusted with profit made by other units,
(a) The ITAT Mumbai
in the case of Capegemini India (P) Limited IT Appeal No. 7729/MUM./2010 held
that “As per provisions of section 10A
in force prior to assessment year 2001-02, the profit and gain from the
eligible undertaking was not to be included in the total income which meant
that the income from the eligible unit was exempt from tax. However, provisions
were amended with effect from assessment year 2001-02 and as per the amended
provisions, the profit and gain derived by and eligible undertaking is required
to be deducted from the total income. Thus, from assessment year 2001-02,
section 10A is no longer an exemption provision and it allows only deduction
from total income. The deduction was to be allowed in respect of each eligible
undertaking separately which had also been clarified by the CBDT. Prior to
assessment year 2001-02 when section 10A was an exemption provision, section
10(6) provided restriction on set off and carried forward of business loss and
unabsorbed depreciation. However, subsequently, section 10(6) was amended by
Finance Act, 2003 with effect from assessment year 2001-02 and such restriction
was withdrawn which was consistent with the new scheme of section 10A which was
a deduction provision and not exemption provision from assessment year 2001-02.
Therefore, the loss from 10A unit had to be adjusted against taxable profits of
other units after deduction under section 10A had been allowed in respect of
each eligible unit. Therefore, the order of the Additional Commissioner could
not be sustained. Accordingly, the order of the Additional Commissioner was to
be set aside and claim of the assessee was to be allowed.
(b) Again, In the case of Yokogawa India Limited , Appeal No. 853, the
Bangalore ITAT held that “Assessee-company was
engaged in industrial automation and information technology - It had three
divisions - One of assessee's division, i.e., software division was registered
with STPI - Said division was making profits - However, other two divisions had
been incurring a loss for a long time - Whether following decision of Special
Bench in case of Scientific Atlanta India Technology (P.) Ltd. v. Asstt. CIT
[2010] 38 SOT 252
(Chennai), it was to be held that
assessee was entitled to deduction under section 10A in respect of software
division without setting off of brought forward loss and unabsorbed
depreciation of other two units - Held, yes
(c) In the very recent judgment of Karnataka High Court , the High Court held the following :
“As the income of 10-A
unit has to be excluded at source itself before arriving at the gross total
income, the loss of non 10-A unit cannot
be set off against the income of 10-A unit under section 72. The loss
incurred by the assessee under the head profits and gains of business &
Profession had 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 10-A is not to be included in the income of the
assessee at all, the question of setting off the loss of the assesseee of any
profits and gains of business against such profits and gains of the undertaking
would noty arise. Similarly, as per section 72(2)_, unabsorbed business loss is
to be first set off and thereafter unabsorbed depreciation treated as current
years depreciation under section 32(2) id to be set off. As deduction under
section 10-A had to be excluded fro the
total income of the assessee, the question of unabsorbed business loss being
set off against such profits and gains of the undertaking would not arise. In
that view of the matter, the approach of the AO was quite contrary to the
aforesaid statutory provisions and the appellate Commissioner as well as
Tribunal were fully justified in setting aside the said assessment order and
granting the benefit of section 10-A to the assessee
No comments:
Post a Comment