Pr. Commissioner Of Income Tax-1, Pune v. Aesseal India Pvt Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J.INCOME TAX APPEAL NO. 1368 OF 2017 Pr. Commissioner of Income Tax-1, Pune..Appellant Versus Aesseal India Pvt Ltd ..Respondent  ................... Mr. Suresh Kumar for the Appellant ................... CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. DATE : JANUARY 27, 2020. P.C.: 1.Heard Mr. Suresh Kumar, learned standing counsel,revenue for the appellant. 2.This appeal under Section 260A of the Income Tax Act,1961 ("the Act" for short) has been preferred by therevenue against the order dated 5.5.2016 passed by theIncome Tax Appellate Tribunal, Pune Bench "A", Pune("Tribunal"for short) in Income Tax Appeal No.1356/PN/2014 for the assessment year 2007-08. 3. Revenue has projected the following three questions as substantial questions of law:- (i) Whether on the facts and in the circumstances of the case and in thelaw, the Tribunal was justified in holding that the deduction u/S. 10Aof the Act is to be computed before adjusting businessloss/depreciation?law, the Tribunal was justified in holding that the deduction u/S. 10Aof the Act is to be computed before adjusting businessloss/depreciation? (ii) Whether on the facts and in the circumstances of the case and inlaw, the Tribunal was justified in not considering the Circular No.7/DV/2013 dated 16.7.2013 of the CBDT which clarifies the positionof law on the issue?law, the Tribunal was justified in not considering the Circular No.7/DV/2013 dated 16.7.2013 of the CBDT which clarifies the positionof law on the issue? (iii) Whether on the facts and in the circumstances of the case and inlaw, the Tribunal was justified in holding that business loss anddepreciation of the assessee were not liable for set-off against thecurrent years' business profits without appreciating that in case ofGalaxy Sufactants Ltd., ITXA 3465 of 2011, this Court has held thatthere is no bar in Section 10A of the Act to prohibit the operation ofSections 70, 71, 72 etc unlike Section 80IA(5) or Section 80IA(6) andtherefore, by that ratio business losses / depreciation have beenrightly set off by the Assessing Officer prior to computing deductionu/S. 10A of the Act?law, the Tribunal was justified in holding that business loss anddepreciation of the assessee were not liable for set-off against thecurrent years' business profits without appreciating that in case ofGalaxy Sufactants Ltd., ITXA 3465 of 2011, this Court has held thatthere is no bar in Section 10A of the Act to prohibit the operation ofSections 70, 71, 72 etc unlike Section 80IA(5) or Section 80IA(6) andtherefore, by that ratio business losses / depreciation have beenrightly set off by the Assessing Officer prior to computing deductionu/S. 10A of the Act? 4.Mr. Suresh Kumar, learned standing counsel, revenuevery fairly submits that all the three questions are coveredby the decision of the Supreme Court in Commissioner ofvery fairly submits that all the three questions are coveredby the decision of the Supreme Court in Commissioner of Income Tax Vs. Yokogawa India Ltd[1]. wherein SupremeCourt held as under:- 1[2017] 77 taxmann.com 41 (SC) "16.From a reading of the relevant provisions of Section 10A it ismore than clear to us that the deductions contemplated therein isqua the eligible undertaking of an assessee standing on its own andwithout reference to the other eligible or non-eligible units orundertakings of the assessee. The benefit of deduction is given bythe Act to the individual undertaking and resultantly flows to theassessee. This is also more than clear from the contemporaneousCircular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, Income Tax Vs. Yokogawa India Ltd[1]. wherein SupremeCourt held as under:- 1[2017] 77 taxmann.com 41 (SC) "16.From a reading of the relevant provisions of Section 10A it ismore than clear to us that the deductions contemplated therein isqua the eligible undertaking of an assessee standing on its own andwithout reference to the other eligible or non-eligible units orundertakings of the assessee. The benefit of deduction is given bythe Act to the individual undertaking and resultantly flows to theassessee. This is also more than clear from the contemporaneousCircular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, "The export turnover and the total turnover for the purposes ofSections 10A and 10B shall be of the undertaking located inspecified zones or 100% Export Oriented Undertakings, as thecase may be, and this shall not have any material relationshipwith the other business of the assessee outside these zones orunits for the purposes of this provision." 17. If the specific provisions of the Act provide [first proviso toSections 10A(1); 10A (1A) and 10A (4)] that the unit that iscontemplated for grant of benefit of deduction is the eligible undertakingand that is also how the contemporaneous Circular of the department(No.794 dated 09.08.2000) understood the situation, it is only logicaland natural that the stage of deduction of the profits and gains of thebusiness of an eligible undertaking has to be made independently and,therefore, immediately after the stage of determination of its profits andgains. At that stage the aggregate of the incomes under other headsand the provisions for set off and carry forward contained in Sections 70,72 and 74 of the Act would be premature for application. The deductionsunder Section 10A therefore would be prior to the commencement of theexercise to be undertaken under Chapter VI of the Act for arriving at thetotal income of the assessee from the gross total income. Thesomewhat discordant use of the expression "total income of theassessee" in Section 10A has already been dealt with earlier and in theoverall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression "total incomeof the assessee" in Section 10A as 'total income of the undertaking'. 5.In the light of the above, we find no error or infirmity inthe view taken by the Tribunal. No substantial question oflaw arises in the appeal. Appeal is accordingly dismissed.However, there shall be no order as to cost. [ MILIND N. JADHAV, J. ] [ UJJAL BHUYAN, J. ] Digitallysigned byRavindraRavindra M.AmberkarM.Date:Amberkar2020.01.2914:33:09+0530