Aricent Technologies Holding Ltd Vs DCIT (Delhi High Court)
Summary: In Aricent Technologies Holding Ltd Vs DCIT (Delhi High Court), the Delhi High Court considered whether a loss of ₹1,34,24,747 incurred by the assessee’s Gurgaon Unit V, which was eligible for benefits under Section 10B of the Income Tax Act, 1961, could be set off against profits of other eligible or non-eligible undertakings for Assessment Year 2005-06. The Assessing Officer had denied the set-off, taking the view that income eligible for Section 10B deduction would not enter gross total income and that there was no provision permitting set-off or carry-forward of losses of the eligible undertaking.
The CIT(A) allowed the assessee’s appeal, holding that Section 10B was a deduction provision, while the Tribunal subsequently held that the loss could not be set off. Before the High Court, the assessee relied upon Yokogawa India Ltd. and the treatment of Section 10B as a deduction provision, as well as CBDT Circular No.7/DV/2013 dated 16.07.2013. The Revenue supported the Tribunal’s view.
The High Court held that Section 10B(1) requires profit or gain of each eligible unit to be separately calculated for determining the deduction, but such calculation does not alter the treatment of the unit’s profit or loss when the assessee’s combined profit is computed. The Court held that Section 10B does not prevent application of Sections 70, 71 and 72. It therefore answered the question in favour of the assessee, set aside the Tribunal’s order dated 21.05.2019 and the assessment order dated 31.12.2008, and allowed the appeal.
