Gujarat High Court
Commissioner Of Income Tax vs Ace Software Exports on 18 February, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
COMMISSIONER OF INCOME TAX....Appellant(s)V/SACE SOFTWARE EXPORTS LTD....Opponent(s) O/TAXAP/687/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 687 of 2012 ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus ACE SOFTWARE EXPORTS LTD....Opponent(s) ================================================================ Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 18/02/2013 ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI) Revenue has challenged the jdugement of the Tribunal dated 22.05.2012 raising following questions for our consideration:
1. Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal is right in holding that deduction claimed by the assessee u/s. 10A of the IT Act in respect of STP Rajkot unit should be allowed without adjustment of losses of other units and without adjustment of brought forward losses/unabsorbed depreciation of earlier years?
2. Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal is right in upholding the CIT(A) s order whereby direction is given to revise the reduction of brought forward unabsorbed depreciation and business loss of earlier years and reduce the long term capital gain after giving appeal effect to the order of the assessment year in which the appellant s claim has been allowed?
Short issue is whether deduction claimed by the assessee under Section 10A of the Income Tax Act, 1961 should be allowed without adjustment of losses of other units and without adjustment of brought forward losses and/or its depreciation of earlier years.
The Tribunal considered such question in light of a decision of Bombay High Court in case of Commissioner of Income Tax Vs. Black and Veatch Consulting Pvt. Ltd. reported in [2012] 348 ITR 72 (Bom) and decided the issue in favour of the assessee.
We have perused the said decision of the Bombay High Court. In the case of Income Tax Vs. Black and Veatch Consulting Pvt. Ltd. (supra) same issue came-up for consideration before the High Court which it was decided in the following manner:
4. Section 10A is a provision which is in the nature of a deduction and not an exemption. This was emphasised in a judgement of a Division Bench of this court, while construing the provisions of section 10B, in Hindustran Unilever Ltd. vs. Deputy CIT [2010] 325 ITR 102 (Bom) at paragraph 24. The submission of the Revenue placed its reliance on the literal reading of section 10A under which a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years is to be allowed from the total income of the assessee. The deduction under section 10A, in our view, has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of section 72 which deals with the carry forward and set off of business losses. A distinction has been made by the Legislature while incorporating the provisions of Chapter VI-A. Section 80A(1) stipulates that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the Chapter, the deductions specified in sections 80C to 80U. Section 80B(5) defines for the purposes of Chapter VI-A gross total income to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter. What the Revenue in essence seeks to attain is to telescope the provisions of Chapter VI-A in the context of the deduction which is allowable under section 10A, which would not be permissible unless a specific statutory provision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. In the circumstances, the decision of the Tribunal would have to be affirmed since it is plain and evident that the deduction under section 10A has to be given at the stage when the profits and gains of business are computed in the first instance. So construed, the appeal by the Revenue would not give rise to any substantial question of law and shall accordingly stand dismissed. There shall be no order as to costs.
We notice that this judgement is followed by the same High Court in case of Commissioner of Income Tax-7 vs. Schmetz India (P.) Ltd., [2012] 211 Taxman 59=[2012] 26 taxman.com 336 (Bom).
Having perused the statutory provision contained in Section 10A of the Act as well as Section 80A, we see no reason to take a view different from the Bombay High Court as in the present case. Resultantly, tax appeal is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) Jyoti Page 4 of 4