Deduction available u/s 10B towards profits of eligible units without setting off of b/f unabsorbed depreciation/ business loss

International Agricultural- Processing (P) Ltd. Vs ACIT (ITAT Chennai)

Facts- The assessee is engaged in the business of export of processed agricultural produce like gherkins, onions and other vegetables. The assessee company is a 100% Export Oriented Unit and has claimed deduction u/s.10B of the Income Tax Act, 1961 (The Act) from the AY 2000-01. A survey u/s.133A of the Act, was conducted in the business premises of the assessee on 17.11.2009. Consequent to the survey, the assessment has been re-opened u/s.147 of the Act. The assessments have been completed u/s.143(3) r.w.s.147 of the Act, and determined profits & gains eligible for deduction u/s.10B of the Act, at Rs. Nil after setting off of brought forward business loss and unabsorbed depreciation against profit derived from eligible unit and denied deduction u/s.10B of the Act. The assessee carried the matter in appeal before the Ld. CIT(A), but could not succeed. The ld CIT(A) rejected the arguments of the assessee and sustained the additions made by the AO towards denial of deduction u/s.10B of the Act.

Conclusion- Held that in light of decision of the Hon’ble Supreme Court in the case of CIT & Anr. v. Yokogawa India Ltd. & Ors. (supra) that the stage of computation of deduction u/s.10B of the Act, is while computing the gross total income of the eligible undertaking and Chapter-IV and not at the stage of computation of the total income under Chapter-VI. That means, the assessee can claim deduction towards profits of eligible units without setting off of brought forward unabsorbed depreciation or business loss. The claim of the assessee is that if the AO allows deduction u/s.10B of the Act, without set off of brought forward unabsorbed depreciation or business loss, then, the assessee is having sufficient amount of brought forward unabsorbed depreciation or business loss, which can be set off against income from other sources. The matter needs to be re-examined by the AO. Therefore, we set aside the issue to the file of the AO and direct the AO to re-compute the income of the assessee in light of our discussion.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

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