Ita/212/2015 Of Commissioner Of Income Tax-V v. Qualcomm India Pvt.ltd

$~34&36 amorphous division of the assessee against the profit of the other Units?2. Brief facts are that the assessee claimed set off of ?2,46,93,358/-relatable to its unit entitled to exemption under Section lOA of the IncomeTax Act, against the profits of the other units for the relevant year i.e.Assessment Year (AY) 2003-04. 3. This Court notices that the previous judgements of two DivisionBenches in CIT V5. Tei Tecnologies Pvt. Ltd. (2014) 361 ITR 36 and CIT v.?.Kei Industries Ltd. (ITA No. 386/2013) decided on 13.03.2015 haveaccepted the revenue's decision that such set off is impermissible. 4. Leraned counsel for the assessee relied upon a circularNo.7/(DV)/2013 dated 16.07.2013 issued by the CBDT. The said circular,inter alia, after noting the previous legislative history of Section 1 OA/1 OBand the definition of 'total income' (Section 2(45) of the Income Tax Act)stated as follows :- "5.1 All income for the purposes of computation of total incomeis to be classified under the following heads of income andcomputed in accordance with the provisions of Chapter IV of theAct- Salaries Income from house propertyProfits and gains of business and professionCapital gains Income from other sources 5.2 The income computed under various heads of income inaccordance with the provisions of Chapter IV of the Income-taxAct shall be aggregated in accordance with the provision ofChapter VI of the Income-tax Act, 1961. This means that firstthe income/loss from various sources, i.e. eligible and ineligibleunits, under the same head are aggregated in accordance withthe provisions of section 70 of the Act. Thereafter, the income from one head is aggregated with the income or loss of the otherhead in accordance with the provisions of section 71 of the Act.If after giving effect to the provisions of sections 70 and 71 ofthe Act there is any income (where there is no brought forwardloss to be set off in accordance with the provisions of section 72of the Act) and the same is eligible for deduction in accordancewith the provisions of Chapter VI^A or section IDA, lOB etc. ofthe Act, the same shall be allowed in computing the total incomeof the assessee. 5.3 If after aggregation of income in accordance with theprovisions of section 70 and 71 of the Act, the resultant amountis a loss (pertaining to the assessment year 2001-02 and anysubsequent year) from eligible unit it shall be eligible for carryforward and set off in accordance with the provisions of section72 of the Act. Similarly, if there is a loss from an ineligible unit,it shall be carried forward and may be set off against the profitsof eligible unit or ineligible unit as the case may be, inaccordance with the provisions of section 72 of the Act. 6. The provisions of Chapter IV and Chapter VI shall also applyin computing the income for the purpose of deduction undersection lOAA and lOBA of the Act subject to the conditionsspecified in the said sections. " 5. The decision in Kei Industries (supra) noted the divergence of judicialopinion - one favouring the Revenue taken by the Kamataka and Delhi HighCourt (in Tei Technologies (supra)) and the other, favouring the assessee,taken by Bombay High Court and the Gujrat High Court. The Court afteranalyzing all these decisions was of the opinion that previous ruling in TeiTechnologies (supra) that set off is impermissible was justified. In thesecircumstances, the reliance placed by the assessee, upon the aforesaidcircular is unpersuasive. The question of law framed is answered in favourof the Revenue and against the assessee in the above terms. ITA 212/2015 1. The question of law framed in this case is as follows; "Did the ITAT fall into error in allowing the set off of the loss claimed bythe Bangalore Unit from the profit of the Mumbai Unit, overlooking that theloss making unit claimed benefit under Section lOA whereas the MumbaiUnit was not an eligible unit. " ITA 212/2015 1. The question of law framed in this case is as follows; "Did the ITAT fall into error in allowing the set off of the loss claimed bythe Bangalore Unit from the profit of the Mumbai Unit, overlooking that theloss making unit claimed benefit under Section lOA whereas the MumbaiUnit was not an eligible unit. " 2. The above question is answered by this Court in its judgment in CITvs. Kei Industries Ltd. (ITA No. 386/2013) decided on 13.03.2015.3. Following the decision, the question is answered in favour of theRevenue and against the assessee. 4. The appeal is allowed in the above terms. . S. RAVINDRA BHAT, J MAY 20, 2015 mr / R.K.G^AUBA, J