| The Tax Publishers2020 TaxPub(DT) 3831 (Karn-HC) : (2021) 430 ITR 0074 : (2020) 274 TAXMAN 0461 INCOME TAX ACT, 1961
Section 70 Section 10B
Where assessee's two units were export-oriented units and were eligible for exemption under section 10B but no exemption was claimed, then loss sustained in respect of a unit could be claimed set off, as permissible under section 70 because section 10B does not contain any prohibition to prevent an assessee from setting off losses from one source against income from another source under the same head of income as prescribed under section 70.
|
Loss - Set-off - Assessee sought set-off of losses pertaining to an export oriented unit (section 10B unit) against income earned in Domestic Tariff Area Unit -
Assessee was a private limited company engaged in business of manufacture and export of readymade garments. It had three units and it set off losses of the units against the profits of the unit making profits and offered the balance as income tax payable under the head 'Income from business'. AO held that losses of export oriented units cannot be allowed to set off against the profit making unit. Assessee contended that since it did not claim deduction under section 10B, thus, it was eligible to set off losses incurred in the eligible (EOU) against the profits earned by ineligible (DTA) units in accordance with section 70.Held: Section 10B does not contain any prohibition to prevent an assessee from setting off losses from one source against income from another source under the same head of income as prescribed under section 70. Business income can be computed only after set off of business loss against the business income in the year as per provisions of section 70. Where assessee does not want the benefit of deduction from the taxable income, the same cannot be thrust upon it. There is no provision which makes compulsory on part of ITO to make deduction in all cases. Admittedly, in instant case, assessee did not file any audit report in Form-56G which is a mandatory requirement for claiming deduction under section 10B. Therefore, deduction under section 10B could not be thrust upon the assessee. Admittedly, two units of assessee were export oriented units and were eligible for exemption. Assessee sustained loss in respect of a unit and therefore, it claimed set-off of loss, as permissible under section 70 and offered the balance as income taxable under the head Income from business which was offered in return, thus, provisions of section 70 were to be given effect to.
Followed:CIT & Anr. v. Yokogawa India Ltd. (2017) 391 ITR 274 (SC) : 2016 TaxPub(DT) 5139 (SC), CIT v. Yokogawa India Ltd. (2012) 341 ITR 385 (Karn) : 2011 TaxPub(DT) 1778 (Karn-HC) and Mindtree Consulting (P) Ltd. v. Asstt. CIT (2006) 102 TTJ 691 (Bang-Trib) : 2006 TaxPub(DT) 0999 (Bang-Trib).
REFERRED : CIT v. Calcutta Knitwears (2014) 43 Taxmann.com 446 (SC) : 2014 TaxPub(DT) 1547 (SC), CIT v. Arun Textile 'C', Mahendra Mills & Anr. (2000) 243 ITR 56 (SC) : 2000 TaxPub(DT) 1304 (SC), K. Nagesh v. Asstt. CIT (2015) 57 Taxmann.com 439 (Karnataka) : 2015 TaxPub(DT) 2464 (Karn-HC), CIT v. Shantivijay Jewels Ltd. (2015) 374 ITR 520 (Bom) : 2015 TaxPub(DT) 2331 (Bom-HC), CIT v. Cheslind Textiles Ltd. (2013) 354 ITR 29 (Karn) : 2013 TaxPub(DT) 1601 (Karn-HC), CIT v. Black & Veatch Consulting (P) Ltd. (2012) 348 ITR 72 (Bom) : 2012 TaxPub(DT) 2503 (Bom-HC), CIT v. Galaxy Surfactants Ltd. (2012) 343 ITR 108 (Bombay) : 2012 TaxPub(DT) 1713 (Bom-HC), Hindustan Unilever Ltd. v. Dy. CIT (2010) 325 ITR 102 (Bom) : 2010 TaxPub(DT) 1767 (Bom-HC) and Karle International (P.) Ltd. v. Asstt. CIT 2013 TaxPub(DT) 426 (Bang-Trib).
FAVOUR : In assedssee's favour.
A.Y. : 2008-09
IN THE KARNATAKA HIGH COURT
 SUBSCRIBE FOR FULL CONTENT
|