INCOME TAX ACT, 1961

Section 10B

Deduction under section 10B - 100 per cent export-oriented undertakings - Computation of deduction, whether before or after -

Issue under consideration was as to whether Tribunal was justified in holding that deduction under section 10B should first be excluded from profits of the year, before set off 'brought forward unabsorbed depreciation'. Held: It is settled that deductions either under section 10A or 10B would be made while computing the gross total income of the eligible undertaking under Chapter IV of the Act, and not at the stage of computation of the total income under Chapter VI of the Act. In instant case, the total income was first arrived at by Revenue by computing the total income by way of brought forward or carry forward the depreciation allowance of the earlier assessment years and set off the unabsorbed depreciation first and making the return Nil, thereby leaving the assessee in a position where it could not claim any deduction under section 10B as there was no income after set-off of carry forward depreciation and unabsorbed depreciation from earlier years. The said method of computing the income was totally against the law. Therefore, the Tribunal was justified in holding that deduction under section 10B should first be excluded from profits of the year, before set off of “brought forward unabsorbed depreciation”.

Followed:Comstar Automative Technologies Private Ltd., (Formerly known as Visteon Powertrain Control Systems India Private Limited) v. Dy. CIT [T.C.A.No.228 of 2011 dated 18-3-2020] : 2020 TaxPub(DT) 1737 (Mad-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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