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6. The Learned Commissioner of Income Tax (Appeals) erred in not dealing with Ground no. 3 of the appeal in relation to whether adjustment to international transaction of sale to Associated Enterprises could have been made without rejecting TNMM method followed by the appellant while justifying ALP.
As regards set off of Brought Forward losses of Rs.2,14,77,088 of AY 2009-10 before allowing exemption u/s 10AA :
7. The Learned Commissioner of Income Tax (Appeals) erred in setting off brought forward losses amounting to Rs. 2,14,77,088 of A.Y. 2009-10 from the business income, before allowing the exemption u/s 10AA.

6. In so far as, Grounds of appeal No.7 & 8 are concerned, the same arises from the action of the lower authorities in holding that brought forward losses amounting to Rs.2,14,77,088/- pertaining to assessment year 2009-10 are required to be reduced from the business income before allowing the deduction under section 10AA of the Act .

6.1 In this context, relevant facts are that in the computation of income assessee had brought forward business loss from assessment year 2009-10 of Rs.2,14,77,088/-, which was available for set-off. Out of this, assessee (Assessment Year 2010-11) company claimed a set-off of Rs.63,96,770/-, after claiming deduction under section 10AA of the Act. However, the Assessing Officer set-off the brought forward loss of Rs.2,14,77,088/- before allowing deduction under section10AA of the Act. As a consequence the Assessing Officer restricted the claim for deduction under section 10AA to Rs.52,42,006/- as against an amount of Rs.2,06,33,279/- claimed in the return of income. The aforesaid decision of the Assessing Officer has since been affirmed by the CIT(A) also, against which assessee is in further appeal before us.

6.2 Before the lower authorities as well as before us, the pertinent plea of the assessee is that the exemption provided in section 10AA of the Act falls under Chapter III of the Act and, therefore, it takes precedence over the provisions prescribing for set off of losses, which fall under Chapter VI of the Act.

6.3 At the time of hearing, Ld. Representative for the assessee emphasized that the approach of the income tax authorities is misconceived since the exemption under section 10AA of the Act is not a part of Chapter VI of the Act and, therefore, the set-ff of loss would not take precedence. In particular, reliance has been placed on the judgment of the Hon'ble Bombay High Court in the case of CIT VS Black And Veatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom) and also the following decisions of the Mumbai Bench of the Tribunal:-

6.4.4 Apart therefrom, it is also abundantly clear that the decision in the case of Himatasingike Seide Ltd.(supra) related to set-off of brought forward (Assessment Year 2010-11) unabsorbed depreciation, which stands on a different footing. For all the above reasons, and having regard to the judgments of the Hon'ble High Court in the case of Black And Veatch Consulting Pvt. Ltd.(supra) and Techno Trap and Polymers Pvt. Ltd. (supra), it has to be held that income tax authorities erred in setting-off of losses amounting to Rs.2,14,77,088/- of assessment year 2009-10 from the business income of the current year before allowing exemption under section 10AA of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the Assessing Officer to recompute the deduction allowable under section 10AA of the Act, as above. Thus, on this aspect assessee succeeds.