Income Tax Appellate Tribunal - Ahmedabad
Micro Inks Limited, Vapi vs Assessee on 3 March, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D"
BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER
AND SHRI N.S. SAINI, ACCOUNTANT MEMBER
Date of hearing:03/03/2010 Drafted on: 03/03/2010
ITA No.453/AHD/2006
Assessment Year : 2001-2002
M/s. Micro Inks Limited, Vs. Commissioner of Income
Bilakhia House, Tax, Surya Prakash
Muktanand Marg, Chala, Chamber, Dharampur,
Vapi, Gujarat. Road, Valsad.
PAN/GIR No. :
(APPELLANT) .. (RESPONDENT)
Appellant by : Shri M.K.Patel A.R.
Respondent by: Shri B.S.Sandhu CIT
ORDER
PER N.S.SAINI , ACCOUNTANT MEMBER :-
This is an appeal filed by the Assessee against the order of the Learned Commissioner of Income Tax, Valsad, dated 22.12.2005.
2. The grounds of the appeal reads as under:-
"1. The order U/s 263 passed by the Learned Commissioner of Income Tax is contrary to the facts of the case and prejudicial to the assessee.
2. On appreciation of the facts and in the circumstances of the case the learned Commissioner of Income Tax has erred in assuming jurisdiction U/s. 263 of the Act and invoking the powers there under.
3. On appreciation of the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax is contrary to law and based on erroneous understanding of the facts and law.
4. On the facts and in the circumstances of the case the learned Commissioner of Income Tax has erred in holding that the order of the assessing officer U/s 143(3) dated 23.03.2005 is erroneous without any cogent reasons or material evidences on record.
5. On appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner ITA No.453 /Ahd/2007 -2- of Income Tax has erred in holding that exclusion of Excise Duty and Sales Tax from total turnover has resulted in excess allowance of claim U/s. 80HHC of the Income Tax Act. The action of the Learned Commissioner of Income Tax is contrary to the provisions of section 80HHC on a plain reading, literal interpretation of the law and various decisions of Honorable Courts and Jurisdictional Tribunal and hence deserves to be deleted.
6. On appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner of Income Tax has erred in directing the Learned Assessing Officer to complete the assessment de-novo i.e. afresh for exclusion of Excise Duty and Sales Tax from total turnover for the purpose of granting deduction U/s, 80HHC of the Income Tax Act.
7. On appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner of Income Tax has erred in holding that the computation of income by setting off loss of hundred percent Export Oriented Unit against the normal business is not as per the provisions of Income tax Act, 1961. The action of the Learned Commissioner of Income Tax is contrary to the provisions of Income tax Act, literal interpretation of the law and various decisions of Honorable Courts and Jurisdictional tribunal and hence deserves to be deleted.
8. On appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner of Income Tax has erred in directing the Learned Assessing Officer to complete the assessment de-novo i.e. afresh to compute the total income without setting off loss of Export Oriented Unit against normal business income.
9. On appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner of Income Tax has erred in presuming that the order passed by the Learned Assessing Officer is erroneous as well as prejudicial to the interest of Revenue".
3. The CIT has observed as under:-
"The assessee-company filed return of income on 31.10.2002 declaring income of Rs.9,89,31,940/- under normal provisions and a book profit of Rs.50,35,37,462/-. Assessment order u/s. 143(3) of I.T.Act was passed on 23.3.2005 determining total income of Rs.23,05,18,533/-.
2. While completing the assessment, the A.O. has allowed the deduction u/s.80HHC of the IT. Act for ITA No.453 /Ahd/2007 -3- Rs.4,07,81,511/-. The deduction was worked out on the basis of total turnover of Rs.4,54,27,86,148/- . The assessee had excluded the Excise Duty and Sales-tax from the total turnover as reflected in the final accounts. For the year under consideration, the figures for Sales-tax and Excise Duty are as under:-
a) Excise Duty Rs. 80,38,84,982/- b) Sales-tax, Rs. 02,02,93,098/- Total. Rs. 82.41.78.080/-
Exclusion of Excise Duty and Sales-tax from total turnover has resulted in excess allowance of claim u/s.80HHC of I.T.Act.
Further, the loss of Rs.5,04,12,831/- from the 100% Export Oriented Unit was set off against the normal business income which has resulted In under assessment of income to that extent. Accordingly, show-cause notice u/s.263 of the I.T.Act was issued.
3. The Authorised Representative on behalf of the assessee submitted that 3.1 The intention of the legislature was evident from the manner in which deduction was to be granted under section 80HHC of I.T.Act, on the basis of proportionate turnover.
3.2 Export turnover did not include Excise Duty and Sales tax and accordingly the denominator in the formula mentioned in section 80HHC should be comparable to and alike the numerator.
Reliance was place on following decisions:-
i. United Phosphorous Ltd - 81ITD 559(ITAT And.) ii. Eagle Flash Ind. - (65 TT 422)(Pune)) iii. Wolkem India Ltd. - 113(JP) of 1996. Iv. Sudarshan Chemicals Ind.Ltd - 245 ITR 769 (Bom.) v. Bharat Earth Movers Ltd - 137 Taxman 421(Kai.) vi, Wheels India Ltd. India Pistons Ltd - 275 ITR 0319 (Mad.) 3.3 The law declared by the highest court in the State is binding on the authorities or Tribunals under its superintendence and they cannot ignore it in either initiating a proceeding or deciding on the rights involved in such a proceeding. The reliance was placed on following decisions:-
Air Conditioning Specialists Ltd. - 221 ITR 739(Guj), Bank of Baroda - 256 ITR 385(Bom).ITA No.453 /Ahd/2007 -4-
3.4 Where two views were possible on a debatable point, the view favourable to the assessee shall be allowed as held by Honourable Supreme Court in the case of Vegetable Products Ltd. - 88 ITR 192.
3.5. The C.I.T would have no Jurisdiction to invoke provisions of section 263 of. the I.T. Act in the cases where two views were possible and A.O. had adopted one particular view or where the view adopted by the A.O. is a possible view. The reliance was placed on the following decisions: -
a. Arvind Jewellers - 259 I.T.R. (Guj.)
b. Max India Ltd. - 268 ITR.0128.(Punj.)
c. Malabar Industrial Co.Ltd.- 243 ITK. (SC) 3.6. The A.O had verified the audited financial accounts and all relevant papers, facts and evidences before completion of the assessment. There Is no record to suggest that the Items mentioned in the show cause notice were not examined by the A.O. before framing the assessment order.
3.7. Considering the past track record of the assessee, being a major contributor to the exchequer from Valsad Charge, the proposed variations in the income u/s.263 of I.T Act were not merited.
4. The CIT have considered the contentions of the assessee. The Deduction U/S.80HHC of I.T.Act has to be allowed on the eligible profits which -ire worked out In accordance with Section 80HHC(3) of I.T Act subject to other sub- sections of Section 80HHC of I.T.Act.
4.1. The Excise Duty is collected as part of sales as and when the goods are sold. The Excise Duty constitutes an integral part of turnover. The Honourable Supreme Court in the following cases has held that the Sales tax and Excise Duty formed part of total turnover.
Chouringhie Sales Bureau - 82 FTR 548
Sinclair Murrarl Co. Pvt. Ltd - 97 ITR 515
McDowell & Co. Ltd - 154 ITR 148
4.2 It would be pertinent to mention that Explanation-
(ba) to Section 80HHC of I.T. Act provides that:-
ITA No.453 /Ahd/2007 -5-"Total turnover shall not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962)"
It is obvious that the legislature did not intend to exclude the Excise Duty and Sales-tax from the total turnover. This is more evident from the fact that the export benefits available u/s.28(iiia), (iiib) & (iiie) of I.T.Act have also been excluded from the Total Turnover in respect of assessment year commencing on or after 1.4.1991. It is well settled that the legislature legislates for specific purpose and no words can be or shall be imported in the I.T.Act.
4.3. The issue regarding inclusion of Excise Duty in the total turnover for the purpose of working out eligible profits for deduction u/s.80HHC of I.T. Act has not attained finality as the Honourable Supreme Court is yet to consider the merits of the issue emanating from the decisions of various High Courts. Respectfully following the decisions of the Honourable Supreme Court referred to in para 4,1 above, the contentions of the assesses that Excise Duty and Sales-tax should no' be considered part of the total turnover cannot be accepted.
4.4. As regards to the argument that Section 263 of the I.T.Act. cannot be invoked in the cases where two views were possible is concerned, it has been clearly held by the Hon'ble Gujarat High Court In the case of CIT Vs M.M. Khambhatwala - 198 UR 144, that the CIT can exercise the power of revision even in a case where the issue is debatable Revisional power U/s.263 of the I.T.Act cannot be compared with the power of rectification of mistake U/s.154 of the I.T.Act. It has been held by the Hon'ble Supreme Court in the case of CIT Vs Shree Manjunatheswara Packing Products & Campher Works - 231 ITR 53, that the revisional power conferred on the Commissioner u/s.263 of the I.T.Act are of wide amplitude, After examining the record if he considers the order to be erroneous then he can pass the order therein as the circumstances of the case justify.
5. The assessee had reflected toss of Rs. 5,50, 70,2 W- which is finally worked out at Rs.5,04,12,831/- from the 100% Export Oriented Unit. While completing the ITA No.453 /Ahd/2007 -6- assessment the assessing officer had set off this loss against the normal business Income. The assessee contended that the action of A.O. was justified in view of section 10B(6)(ii) of I.T.Act which provided as under;-
"(ii) no loss referred to in sub-section (1) of Section 72 of sub-section (1) or sub-section (3) of Section 74, in so far as such loss related to the business of the undertaking, shall be carried forward or set off where such loss related to any of the relevant assessment years (ending before the 1st day of April 2001)"
5.1 The contentions of the assessee are not acceptable in view of the fact that the profits of 100% Export Oriented Units are exempt from taxation u/s.10B(1) of I.T.Act. Therefore, the loss incurred by such Units also deserves to be ignored and cannot be set off against any other head of Income. The provisions of Section 10B(6)(ii) of I.T. Act have partially been cited by the assessee. The Section provides that;-
"Notwithstanding anything contained in any other provision of the act in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year. No toss referred to in sub-section (1) of Section 72 or sub-section (1) or sub-section (3) of Section 74, in so far as such loss relates to the business of the undertaking, shall be carried forward or set-off where such' loss relates to any of the relevant assessment years (ending before the 1st day of April, 2001)"
(Emphasis provided).
It is obvious that the cited Section applies to the assessment year immediately succeeding the last of relevant assessment years and not to any of relevant assessment years during which the assessee is entitled to deduction u/s.10B of I.T.Act.
5.2. The assessee company itself has filed 'he revised return of income on 17.12.2002 well in time to withdraw the set off said losses of Rs.5,50,70,214/- claimed against the normal business income. The revised return of income gross total income is Increase by Rs.5,50,70,214/- being loss from Export Oriented Units. The A.O. has erroneously allowed the set off of Rs.5,04,12,831/- from the normal business income. While finalizing the assessment u/s.143(3) of ITA No.453 /Ahd/2007 -7- the I.T.Act. This has rendered the order of the A.O. erroneous and prejudicial to the interest of Revenue.
6. In view of the above, the contentions of the assessee are not acceptable. The assessment order has resulted In excess allowance of deduction u/s.80HHC of I.T.Act and erroneous set off of losses for 100% Export Oriented Unit against normal business income. This has rendered the assessment order dtd. 23.3.2005 passed u/s.143(3) of the I.T.Act erroneous as well as prejudicial to the interest of Revenue. Therefore, the assessment is set-aside u/s. 263 of I.T.Act with a direction to A.O. in complete the assessments de-novo i.e. afresh, after allowing opportunity to the assessee.
3. The Learned Authorised Representative of the Assessee challenging the order passed by the CIT under section 263 of the Act submitting that order can be passed by the CIT under section 263 of the Act where the order passed by the Learned Assessing Officer was erroneous and prejudicial to the interest of the revenue. By referring to the original assessment order passed under section 143(3) on 23.03.2005, copy of which is placed at page 8 to 38 of the paper-book, the Learned Authorised Representative of the Assessee pointed out that the assessment has been framed by the Learned Assessing Officer under section 115JB at book profit of Rs.58,37,96,562/- as the normal income computed was Rs.23,05,18,533/- which was lower that the book profit. He submitted that the assessment framed under section 143(3) read with section 263 of the Act on 24.02.2006 was also at Rs.22,32,14,426/- which was lower than the assessed book profit of Rs.58,37,96,562/-. Thus, there being no under assessment of tax by the Learned Assessing Officer while framing the assessment under section 143(3), it cannot be held that the order passed by the Learned Assessing Officer was erroneous and prejudicial to the interest of the revenue. Since, both the conditions such as order being erroneous and also prejudicial to the interest of the revenue not being satisfied the order passed under section 263, was bad in law and requires to be cancelled.
ITA No.453 /Ahd/2007 -8-4. The Learned Departmental Representative on the other hand argued that it has to be seen by the CIT whether the order framed by the Learned Assessing Officer was with proper application of mind or not. He submitted that inclusion of excise duty and sales tax in the total turnover for the purposes of allowing deduction under section 80HHC was a highly debatable issue and though the same was not settled by the Hon'ble Supreme Court in favour of the assessee by the decisions rendered in the case of Laxmi Machine Works 290 ITR 667, it will be seen that there is no discussion in the assessment order about the same. Further, he also argued that it will be seen that in the case of one of its unit, the assessee has claimed the profit of the same as exempt under section 10B. But the loss suffered from such unit was claimed as deduction against the normal profit computed under the Act which was not allowable as when the profit itself was exempt and did not form part of gross total income as a corollary to that the loss also would not form a part of the gross total income and hence not allowable deduction to the assessee. Thus, the Learned Commissioner of Income Tax observing such mistake in the order has rightly passed order under section 263 of the Act, directing the Learned Assessing Officer to make necessary corrections in the order after allowing opportunity of hearing to the assessee. Therefore, the order passed under section 263 of the Act was a valid order and should be upheld.
5. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, the CIT(A) reversed the order passed under section 143(3) dated 23.3.2005 by the AO on following two grounds:-
1. Excess allowance of deduction under section 80HHC on account of non inclusion of excise duty and sale tax in total turnover the assessee.ITA No.453 /Ahd/2007 -9-
2. Allowance of set off with the other income of the assessee of loss of Rs.5,04,12,831/- arising from 100% EOU unit which income was otherwise exempt under section 10B of the Act.
6. In respect of the first issue, we find that the issue stands covered by the decision of the Supreme Court in the case of CIT Vs. Laxmi Machine Works (2007) 290 ITR 667(SC), in favour of the assessee. The Supreme Court held that for the purposes of calculating deduction allowable under section 80HHC, excise duty and sales-tax are not includible in "total turnover" in the formula contained under section 80HHC(3). In view of the above, we find that order of the CIT, on this issue is not sustainable. We therefore, cancel the order of the Ld. CIT in respect of the above issue.
7. Regarding set off of loss arising from a unit eligible under section 10B from the other income, we find that the assessee cited a number of decisions, which are in favour of the assessee. In the case of Mindtree consulting (P) Ltd. Vs. ACIT (2006) 102 TTJ (Bang) 691, wherein it was held as under:-
"Sec. 10B(1) provides that subject to the provision of this section, a deduction of such profits and gains as are derived by 100 per cent export oriented undertaking from the export of articles or things or computer software, shall be allowed from the total income of the assessee. Thus, though s. 10B falls in Chapter III, which is titled as "Income which do not form part of total income" yet what is granted to the assessee is deduction as per the amended provisions of s. 10B w.e.f. 1st April, 2000. Sec. 10B(6)(ii) restricts carry forward and set off of loss under ss. 72 and 74 but does not provide anything regarding intra-head set off under s. 70 and inter-head set off under s. 71. Admittedly, in this case, there was loss in the unit eligible for deduction under s. 10B. The business income of such unit is computed at Rs. 13,40,575 whereas the loss itself is Rs. 4,26,73,854. Thus, the business income can be computed only after set off of business loss against the business income in the same year as per provisions of s. 70. Similarly, after setting off of the business loss against the business income, there is still a loss and such loss has to be ITA No.453 /Ahd/2007
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set off against income from other sources in the same year as per the provisions of s. 71. Income of unit eligible for deduction under s. 10B is merely a deduction from income and not exemption. Accordingly, the assessee is eligible to set off the loss of such unit under ss. 70 and 71.--Navin Bharat Industries Ltd. vs. Dy. CIT (2005) 92 TTJ (Mumbai)(TM) 166 :
(2004) 90 ITD 1 (Mumbai)(TM) relied on."
8. To the same effect is the decision in the case of Navin Bharat Industries Ltd. Vs. DCIT (2004) 90 ITD 1(Mum)(TM), wherein it was held as under:-
"Sec. 10A is a code by itself. It contains the scheme of taxation formulated by the Government for taxability of units set up in the export processing zone. As such, it cannot be compared with s. 10. Coming to the applicability of s. 10A(4)(ii), it puts interdict qua ss. 72 and 74. It does not preclude the operation of ss. 70 and 71. Sec. 14A is applicable in respect of ' expenditure ' . Loss is different from expenditure. As such, the assessee is entitled to setting off the loss incurred by the SEEPZ unit. In view of this finding, the question whether s. 14A is prospective or retrospective in operation has become academic.--CIT vs. Harprasad & Co. (P) Ltd. 1975 CTR (SC) 65 : (1975) 99 ITR 118 (SC) and CIT vs. S.S. Thiagarajan (1981) 129 ITR 115 (Mad) distinguished."
9. To the same effect, is the decision in the case of Sovika Infomtek Ltd. Vs. ITO (2008) 23 SOT 271(Mumbai), wherein it was held as under:-
"Now the question arises that whether the loss incurred in the business eligible under s. 10B can be set off against the other incomes of the assessee under s. 70 or 71. As the income from the eligible business under s. 10B is to be taken into consideration in computing the total income of the assessee, all the provisions of the Act would be applicable for the purpose of computing the total income of the ' assessee unless expressly excluded by the legislature. The perusal of s. 10B reveals that sub-s. (6) is the non obstante clause which provides that the loss referred to in sub-s. (1) of s. 72 or sub- s. (1) or sub-s. (3) of s. 74, insofar as such loss relates to business of undertaking under s. 10B shall not be carried forward or set off where such loss relates to any of the relevant assessment years ending before 1st April, 2001. Similarly, it also excludes the application of certain other sections partially or totally in computing the income of such ITA No.453 /Ahd/2007
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business. However, it is pertinent to note that provisions of s. 70 or 71 have not been included in the non obstante provisions and, therefore, it cannot be said that provisions of s. 70 or 71 cannot be applied in computing the income of the assessee. Had the legislature intended that the provisions of ss. 70 and 71 should not be applied in respect of loss incurred in business eligible under s. 10B, it could have specifically provided so as provided in respect of s. 72 or s. 74. The assessee is entitled to set off the loss incurred in the industrial unit which is eligible under s. 10B against the other incomes earned by him. The order of the CIT(A) is, therefore, set aside on this issue and consequently, the AO is directed to allow the set off of the business loss incurred by the assessee in the aforesaid unit against the other incomes.--Navin Bharat Industries Ltd. vs. Dy. CIT (2005) 92 TTJ (Mumbai)(TM) 1166 : (2004) 90 ITD 1 (Mumbai)(TM) relied on."
10. To the same effect is the decision in the case of Enercon Wind Farms (Krishna) Ltd. Vs. ACIT (2008) 21 SOT 29 (Mumbai), wherein it was held that :-
"A close reading of s. 10B(1) makes it clear that this section provides for deduction of such profits and gains as are derived by a 100 per cent export-oriented undertaking from the total income of the assessee for a period of ten consecutive assessment years, starting from the previous year in which such undertaking begins manufacture of production for export of articles or things or a computer software. Though this section falls in Chapter III, which consists of incomes which do not form part of total income, in its wisdom, the legislature provided that as far as s. 10B is concerned, the assessee shall get only a deduction from the total income. A perusal of the definition of ' total income ' given in s. 2(45) makes it clear that it means income referred to in section 5 and computed in the manner laid down in this Act. A perusal of s. 5 gives the scope of total income and it includes all incomes from whatever source derived, which is received or deemed to be received, accrues or arises or deemed to accrue or arise to, a person both inside India and outside India. From the above it is clear that the findings of the first appellate authority that the term ' total income ' appearing in s. 10B(1) cannot be said to be profits and gains of business or profession computed in terms of s. 28, is an error. The term ' total income ' appearing in s. 10B(1), is total income as computed under the Act. Now to s. 10B(6)(ii) invoked by the AO for the purpose of denying carry forward losses to the assessee. The first appellate authority negatived this finding of the AO. The Revenue has ITA No.453 /Ahd/2007
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not filed a cross-objection nor a cross appeal and thus accepted this finding of the CIT(A) that the AO wrongly invoked provisions of s. 10B(6)(ii). The starting words of s. 10B(6) refers to term ' relevant assessment years ' . This term is defined in sub-cl. (v) of Expln. 2 to mean ' any assessment years falling within the period of 10 consecutive assessment years referred to in s. 10B ' . Sec. 10B(6) refers to computation of total income of the assessee for the previous years and assessment years which immediately succeed the relevant assessment years as also the subsequent previous years and assessment years. A plain reading of sub-cl. (v) of Expln. 2 with s. 10B(6) clearly shows that this section is not relevant while computing deduction under s. 10B. The entire s. 10B(6) refers to computation of total income after the tax holiday period of 10 years. The legislature in s. 10B(6)(i) provided that deductions of depreciation under s. 32, investment allowance under s. 32A, development rebate under s. 33, expenditure on scientific research under s. 35, bona fide expenditure incurred for the purpose of family planning amongst his employees under s. 36(1)(ix), shall not be claimed after the expiry of the tax holiday period, when they pertained to the assessment years and previous years within the tax holiday period. Thus, this sub-s. (1) provides that these deductions should be taken as given full effect to. Similarly, sub-s. (iii) of s. 10B(6) provides that the assessee shall not claim once again deduction for the same profits of the tax holiday period either under s. 80HH or under s. 80HHA or under s. 80-I, etc. In sub-s. (iv) of s. 10B(6) it is clearly provided that the assessee has no option but to claim depreciation even during the tax holiday period, so that after the relevant assessment years, the assessee ' s written down value for assets would be taken as if depreciation has actually been allowed as a deduction in each of the relevant assessment years during the tax holiday period of 10 years. Thus, the entire scheme of the section provides for a situation where the assessee is not allowed to postpone some of his claims of deduction under various sections during the tax holiday period, so that the profits in the tax holiday period are inflated and the profits of business after the tax holiday period are reduced by claiming these deductions at that particular point of time. Thus, the AO was wrong in invoking the provisions of s. 10B(6) during the current assessment year. Be it as it may, the first appellate authority was wrong in his conclusions that total income does not refer to income computed under ss. 28 to 44DB but has to be separately computed under s. 10B (1). There is no such scheme envisaged in the Act. Profits and gains from business has to be necessarily computed by applying ss. 28 to 44DB as well as ITA No.453 /Ahd/2007
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other relevant sections of the Act. In any event, the term ' total income ' is used in s. 10B(1). A conjoined reading of s. 2(45) and s. 5 brings one to a conclusion that the total income of any previous year shall be computed as per the provisions of this Act. Total income has to be computed under the provisions of the Act and thereafter a deduction has to be quantified under s. 10B as provided in s. 10B(4). This figure should be deducted from the total income as computed under the rest of the provisions of the Act. This is exactly what the assessee has done. If there is certain income still left with the assessee, after granting deduction, then the same shall be total income of the assessee and all other provisions of the Act will apply. Under this scenario, s. 72 comes into play and the carry forward losses can definitely be set off against the total income computed after providing for deduction under s. 10B. It is very important to note that the deduction under s. 10B is not controlled by s. 80AB as deduction under s. 10B is not a deduction under Chapter VI-A. When the export turnover and total turnover pertained to a particular year, the profits and gains from the business of an undertaking should obviously be for that particular year and which are not adjusted against the previous losses or allowances. Any other interpretation would not yield logical conclusions while applying the formula. The amount of deduction under s. 10B arrived in this particular manner would become an income which would form part of the total income of the assessee, under the Act."
11. In view of the above decisions, it cannot be held that the view taken by AO in the order of Assessment of allowing set off of loss of unit eligible under section 10B from the other income of the assessee was not a possible view.
12. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs. CIT (2008) 243 ITR 83 (SC), has held that provisions of section 263 cannot be invoked to take a different view when the view taken by the AO in the order of assessment was a possible view. To the same effect is also the decision of the Hon'ble Supreme Court in the case of CIT Vs. Max India Ltd. (2007) 295 ITR 282 (SC). Thus, in our considered view the action of the CIT under section 263 of the Act, in respect of the above issue is also ITA No.453 /Ahd/2007
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unsustainable. We therefore, set aside the order of the CIT on this issue also.
13. Therefore, the order of the CIT passed under section 263 is set aside and the appeal of the assessee is allowed.
Order, signed dated and pronounced in the court on 19/03/2010.
Sd/- Sd/-
(BHAVNESH SAINI) ( N.S. SAINI )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 19/03/2010
Paras
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. The CIT Concerned
4. The ld. CIT(Appeals).
5. The DR, Ahmedabad Bench
6. The Guard File.
BY ORDER,
स᭜यािपत ᮧित //True Copy//
(Dy./Asstt.Registrar), ITAT, Ahmedabad