ACIT, CHENNAI V. M/s Scientific Publishing Services Pvt. Ltd., CHENNAI

ITA 1520/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1058 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 15-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Business income; Depreciation; Business expenditure; Question of law; Unabsorbed depreciation
• Section: 80C; 143(3); 260A; 10B; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.1520/MDS/2010 ASST. YEARS : 2003-04 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI(I), CHENNAI. (APPELLANT) V. M/S. SCIENTIFIC PUBLISHING SERVICES PVT. LTD., NO.6&7, VII STREET, DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI 600 004. PAN : AAACS6707R. (RESPONDENT) APPELLANT BY : MR. SHAJI P. JACOB, A DDL.CIT RESPONDENT BY : MR. R. VIJAYARAGHAVAN, ADVOCAT E DATE OF HEARING : 05 MAR 2013 DATE OF PRONOUNCEMENT : 08 MAR 20 13 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, CH ENNAI, DATED 24.6.2010 FOR THE ASST. YEAR 2003-04. THE FIRST IS SUE IN THE GROUNDS OF APPEAL OF THE REVENUE IS THAT THE COMMISSIONER O F INCOME TAX ITA 1520/MDS/10 2 (APPEALS) ERRED IN RESTRICTING THE DISALLOWANCE OF EXPENSES OF BANGALORE UNIT TO D.27.12 LAKHS AGAINST D.40.68 LAK HS DISALLOWED BY THE ASSESSING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF EXPORT OF SOFTWA RE. THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSMENT, DISALLOWED EXPENSES OF D.42.54 LAKHS INCURRED BY BANGALORE UNI T ON THE GROUND THAT THE ASSESSEE SHIFTED ITS OPERATIONS TO CHENNAI SINCE 1996-97 AND THE ASSESSEE REPORTED ONLY INTEREST INCOME IN RESPE CT OF BANGALORE UNIT AND, THEREFORE, NO BUSINESS EXPENSES CAN BE AL LOWED FOR BANGALORE UNIT. ON APPEAL, THE COMMISSIONER OF INC OME TAX (APPEALS) AGREED TO SOME EXTENT WITH THE ASSESSING OFFICER THAT THE ENTIRE EXPENDITURE FOR BANGALORE UNIT CANNOT BE ALL OWED AS EXPENDITURE INCURRED FOR BUSINESS. HOWEVER, THE CO MMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE EXPENDITURE TO 1/3 RD OF D.40,68,382/-, BEING D.13,56,127/- AS THE ALLOWABLE EXPENDITURE FOR BANGALORE UNIT. THE DEPARTMENT IS IN APPEAL BEFORE US. ITA 1520/MDS/10 3 3. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN ALLOWING THE SAID EXPENDITURE SINCE THERE IS NO BUSINESS INCOME FROM BANGALORE UNIT AND THE ASSESSEE HAS SHIFTED ITS OPERATIONS TO CHENNAI LONG BACK AND WHAT WAS EARNED BY THE ASSESSEE WAS ONLY I NTEREST INCOME AND SUCH INTEREST WAS ASSESSED UNDER THE HEAD OTHE R SOURCES. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THERE IS N O RATIONALE IN ALLOWING THE EXPENDITURE OF BANGALORE UNIT AT 1/3 RD BY THE COMMISSIONER OF INCOME TAX (APPEALS). 4. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE MANAGING DIRECTOR IS STATIONED IN BANGALORE AND OPERATING TH E BUSINESS. THE COUNSEL SUBMITS THAT SALARIES TO ACCOUNTANT, SECURI TY ETC., WERE INCURRED AT BANGALORE UNIT APART FROM SALARIES, COU RIER CHARGES, TELEPHONE, FAX ETC., WERE ALSO INCURRED TO RUN THE UNIT. RENT WAS PAID FOR BANGALORE OFFICE AND , THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS FROM BANGA LORE UNIT. HE SUBMITS THAT THE EXPENDITURE INCURRED BY THE ASSESS EE IN BANGALORE ITA 1520/MDS/10 4 UNIT IS ONLY FOR THE PURPOSE OF ITS BUSINESS AND SH OULD BE ALLOWED AS DEDUCTION. 5. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIAL S ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. THE COM MISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE FACTS AND CIRCU MSTANCES OF THE ASSESSEE AND HELD THAT 1/3 RD OF EXPENSES CAN BE SAID TO HAVE BEEN INCURRED BY THE ASSESSEE AT BANGALORE UNIT FOR THE PURPOSE OF ITS BUSINESS AND, THEREFORE, ALLOWABLE AS BUSINESS EXPE NDITURE. WHILE HOLDING SO, HE OBSERVED AS UNDER :- 6.11 WHILE ANALYZING THE PURCHASE OF VEHICLES BY THE APPELLANT COMPANY, IT IS NOTED THAT A BENZ CAR BEAR ING NO.KA 03 MB 0342 AND HONDA CITY BEARING NO.KA 03 MB 738 HAVE BEEN PURCHASED ON 30.0.2001 AND 09.07.2002 . FURTHER, ANALYSIS OF OTHER EXPENSES AS PER SCHEDU LE 13, IT IS SEEN THAT EXPENSES WERE INCURRED TO THE TUNE OF D.4,51,243/- AND D.6,45,586/- ON RATES & TAXES AND FINANCE CHARGES RESPECTIVELY. 6.12 CONSIDERING THE ABOVE FACTS I AM INCLINED TO AGREE WITH THE DECISION TAKEN BY THE LEARNED A.O. F OR NOT ALLOWING THE EXPENDITURE OF THE BANGALORE UNIT. ITA 1520/MDS/10 5 HOWEVER, I AM NOT FULLY AGREEING WITH THE TOTAL REJ ECTION OF THE EXPENDITURE. 6.13 ACCORDINGLY, I AM OF THE OPINION THAT THE EX PENSES CLAIMED FOR BANGALORE UNIT DID NOT COMMENSURATE WIT H THE INCOME EARNED B THE APPELLANT COMPANY. IN RESP ECT OF BANGALORE UNIT, THE APPELLANT HAS INCURRED A TOT AL EXPENDITURE OF D.40,68,382/- AGAINST THE INCOME OF D.14,71,023/- AS PER THE P&L A/C. THEREBY INCURRED A LOSS OF D.25,97,359/-. THE INCOME OF D.14,71,023/- INCLUDES INTEREST RECEIVED ON DEPOSITS TO THE TUNE OF D.8,96,929/- AND OTHER INCOME (EXCHANGE FLUCTUATION ) OF D.1,83,706/-. THIS SHOWS THAT THE EXPENDITURE W AS NOT INCURRED WHOLLY FOR THE PURPOSE OF BUSINESS AS PER SECTION 37 OF THE IT ACT AS HELD BY THE LEARNED A.O . IN PARA 4 (PAGE 8) OF THE ASSESSMENT ORDER. WITH THES E FINDINGS, I HOLD THE VIEW THAT OUT OF THE EXPENDITU RE OF D.40,68,382/- PERTAINING TO BANGALORE UNIT, ALLOWAN CE OF 1/3 RD BEING D.13,56,127/- CAN BE MADE. BALANCE EXPENDITURE OF D.27,12,255/- IS DISALLOWED. CONSEQUENTLY, BANGALORE UNIT INCOME TO BE ADOPTED I S D.1,14,896/- (INCOME PERTAINING TO BANGALORE UNIT : D.14,71,023/-) MINUS 1/3 RD OF EXPENDITURE BEING D.13,56,127/-). ACCORDINGLY, THE ASSESSING OFFICER IS ITA 1520/MDS/10 6 DIRECTED TO ADOPT THE INCOME OF D.1,14,896/- FOR BANGALORE UNIT AND RECOMPUTED THE TAXABILITY. 6. ON GOING THROUGH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WE FIND THAT THE ASSESSEE INCU RRED EXPENSES NOT ONLY FOR BUSINESS BUT ALSO OTHER THAN FOR BUSIN ESS PURPOSES. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVER, REST RICTED 1/3 RD OF EXPENSES PERTAINING TO BANGALORE UNIT AS ALLOWABLE BUSINESS EXPENDITURE. IN THE CIRCUMSTANCES, WE SEE NO VALID REASON TO INTERFERE WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE GROUNDS RAISED BY THE DEPARTMENT ON THIS ISSUE ARE REJECTED. 7. THE NEXT ISSUE IN THE GROUNDS OF APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOW ING DEDUCTION UNDER SEC.10B OF THE ACT BEFORE SET OFF OF BROUGHT FORWARD LOSS. 8. THE DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT V. PATSPIN INDIA LTD. (245 CTR 97) AND SUBMITS THAT IN VIEW OF THE S AID DECISION THE ITA 1520/MDS/10 7 COMMISSIONER OF INCOME TAX (APPEALS) IS NOT CORRECT IN LAW IN ALLOWING THE CLAIM OF THE ASSESSEE. 9. THE COUNSEL FOR THE ASSESSEE PLACES RELIANCE O N THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT V. YOKOGAWA INDIA LTD. (341 ITR 384) AND SUBMITS THAT THIS ISSU E IS SQUARELY COVERED BY THIS DECISION. 10. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIA LS ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. THE ASS ESSING OFFICER, WHILE COMPLETING THE ASSESSMENT ALLOWED DEDUCTION U NDER SEC.10B OF THE ACT TO THE ASSESSEE AFTER SETTING OFF OF BROUGH T FORWARD LOSSES. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) , FOLLOWING THE DECISION OF CHENNAI SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF SCIENTIFIC ATLANTIC INDIA TECHNOLOGY PVT. LTD. V. A CIT (129 TTJ 273) DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U NDER SEC.10B OF THE ACT BEFORE SETTING OFF OF BROUGHT FORWARD LOSS AND UNABSORBED DEPRECIATION OF EARLIER YEARS. WE HAVE GONE THROUG H THE ORDER OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. YOKOGAWADA ITA 1520/MDS/10 8 INDIA LTD. (SUPRA) AND FIND THAT THIS ISSUE HAS BEE N DECIDED IN FAVOUR OF THE ASSESSEE HOLDING AS UNDER :- 31. AS THE INCOME OF 10A UNIT HAS TO BE EXCLUDED AT SOU RCE ITSELF BEFORE ARRIVING AT THE GROSS TOTAL INCOME, T HE LOSS OF NON 10A UNIT CANNOT BE SET OFF AGAINST THE INCOME OF 10 A UNIT UNDER S. 72. THE LOSS INCURRED BY THE ASSESSEE UNDE R THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION HAS TO BE SET OFF AGAINST THE PROFITS AND GAINS IF ANY, OF ANY BUSINE SS OR PROFESSION CARRIED ON BY SUCH ASSESSEE. THEREFORE, AS THE PROFITS AND GAINS UNDER S. 10A ARE NOT TO BE INCLUD ED IN THE INCOME OF THE ASSESSEE AT ALL, THE QUESTION OF SETT ING OFF THE LOSS OF THE ASSESSEE OF ANY PROFITS AND GAINS OF BU SINESS AGAINST SUCH PROFITS AND GAINS OF THE UNDERTAKING W OULD NOT ARISE. SIMILARLY, AS PER S. 72(2), UNABSORBED BUSIN ESS LOSS IS TO BE FIRST SET OFF AND THEREAFTER UNABSORBED DEPRE CIATION TREATED AS CURRENT YEAR'S DEPRECIATION UNDER S. 32( 2) IS TO BE SET OFF. AS DEDUCTION UNDER S. 10A HAS TO BE EXCLUD ED FROM THE TOTAL INCOME OF THE ASSESSEE, THE QUESTION OF UNABS ORBED BUSINESS LOSS BEING SET OFF AGAINST SUCH PROFITS AN D GAINS OF THE UNDERTAKING WOULD NOT ARISE. IN THAT VIEW OF TH E MATTER, THE APPROACH OF THE ASSESSING AUTHORITY WAS QUITE C ONTRARY TO THE AFORESAID STATUTORY PROVISIONS AND THE CIT(A) A S WELL AS THE TRIBUNAL WERE FULLY JUSTIFIED IN SETTING ASIDE THE SAID ASSESSMENT ORDER AND GRANTING THE BENEFIT OF S. 10A TO THE ASSESSEE. HENCE, THE MAIN SUBSTANTIAL QUESTION OF L AW IS ANSWERED IN FAVOUR OF THE ASSESSEES AND AGAINST THE REVENUE. 11. THE HONBLE BOMBAY HIGH COURT AFTER CONSIDERIN G THE DECISION OF THE SPECIAL BENCH OF CHENNAI ITAT IN THE CASE OF SCIENTIFIC ATLANTIC INDIA TECHNOLOGY PVT. LTD. V. ACIT(SUPRA) DECIDED THIS ISSUE IN THE CASE OF CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. IN INCOME TAX ITA 1520/MDS/10 9 APPEAL LODGING NO. 1237 OF 2011 DATED 09.04.2012, W HEREIN THEIR LORDSHIPS HELD AS UNDER:- 1. THIS APPEAL BY THE REVENUE UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ARISES FROM A DECISION OF THE INCOME TAX APPELLATE TRIBUNAL DATED 20 APRIL 2011. THE ASSESSMENT YEAR TO WHICH T HE APPEAL RELATES IS AY 2006-07. THE FOLLOWING QUESTION OF LAW HAS BEEN RAISED BY THE REVENUE: '(A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE ITAT WAS CORRECT IN HOLDING THAT THE BROUG HT FORWARD UNABSORBED DEPRECIATION AND LOSSES OF THE U NIT THE INCOME WHICH IS NOT ELIGIBLE FOR DEDUCTION UNDER SE CTION 10A OF THE ACT CANNOT BE SET OFF AGAINST THE CURREN T PROFIT OF THE ELIGIBLE UNIT FOR COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE IT ACT.' 2. THE ASSESSING OFFICER, DURING THE COURSE OF THE ORDER OF ASSESSMENT UNDER SECTION 143(3) OBSERVED AS FOLLOWS : 'UNDER THE SCHEME OF THE ACT, THE PROFITS OF THE UN IT ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT, WOULD F ORM PART OF THE INCOME COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS AND PROFESSION'. HOWEVER, IN ORDER THE SAM E DOES NOT SUFFER TAX, DEDUCTION WILL HAVE TO BE MADE IN R ESPECT THEREOF WHILE COMPUTING THE INCOME UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS AND PROFESSION'. IN OTHER WOR DS, THE DEDUCTION IN RESPECT OF THE PROFITS ELIGIBLE UNDER SECTION 10A OF THE ACT IS REQUIRED TO BE MADE AT THE STAGE OF COMPUTING THE INCOME UNDER THE HEAD 'PROFITS AND GA INS OF BUSINESS OR PROFESSION' .' NONETHELESS, WHILE COMPUTING THE TOTAL INCOME OF TH E ASSESSEE THE ASSESSING OFFICER TOOK THE NET PROFIT AS PER THE PR OFIT AND LOSS ACCOUNT AND AFTER, INTER ALIA, MAKING CERTAIN DISALLOWANCES AND ALLOWANCES, ARRIVED AT THE TOTAL BUSINESS INCOME AT ` .86.07 LAKHS. A SET OFF WAS EFFECTED OF THE BROUGHT FORWARD BUSINESS LOSS OF AY 2003-04 AND AY 2004-05 UPON WHICH THE ASSESSING OFFICER CAME TO TH E CONCLUSION THAT THERE WAS NIL INCOME WHICH WOULD QUALIFY FOR DEDUCT ION UNDER SECTION ITA 1520/MDS/10 10 10A. THE CIT (A) HELD THAT THE ASSESSING OFFICER WA S JUSTIFIED IN ADJUSTING THE BROUGHT FORWARD LOSSES OF EARLIER YEA RS BEFORE ARRIVING AT THE GROSS TOTAL INCOME, FOR ALLOWING A DEDUCTION UN DER SECTION 10B. IN APPEAL, THE TRIBUNAL HAS RELIED UPON A DECISION OF ITS SPECIAL BENCH IN THE CASE OF SCIENTIFIC ATLANTA VS. ACIT 1 IN WHICH IT HAS BEEN EMPHASISED THAT THE PROVISION CONTAINED IN SECTION 10A IS NOT AN EXEMPTION BUT A DEDUCTION UNDER CHAPTER III. FOLLOWING THAT DECISIO N, THE TRIBUNAL HELD THAT THE DEDUCTION UNDER SECTION 10A IN RESPECT OF THE ALLOWABLE UNIT UNDER SECTION 10A HAS TO BE ALLOWED BEFORE SETTING OFF BROUGHT FORWARDED LOSSES OF A NON 10A UNIT. 3. SECTION 10A IS A PROVISION WHICH IS IN THE NATU RE OF A DEDUCTION AND NOT AN EXEMPTION. THIS WAS EMPHASISED IN A JUDG MENT OF A DIVISION BENCH OF THIS COURT WHILE CONSTRUING THE PROVISIONS OF SECTION 10B IN HINDUSTAN UNILEVER LTD V S. DEPUTY COMMISSIONER OF INCOME TAX 2 THE SUBMISSION OF THE REVENUE PLACED ITS RELIANCE ON TH E LITERAL READING OF SECTION 10A UNDER WHICH A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICL ES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE A SSESSMENT YEARS IS TO BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. T HE DEDUCTION UNDER SECTION 10A, IN OUR VIEW, HAS TO BE GIVEN EFFECT TO AT THE STAGE OF COMPUTING THE PROFITS AND GAINS OF BUSINESS. THIS I S ANTERIOR TO THE APPLICATION OF THE PROVISIONS OF SECTION 72 WHICH D EALS WITH THE CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. A DISTINCTI ON HAS BEEN MADE BY THE LEGISLATURE WHILE INCORPORATING THE PROVISIONS OF C HAPTER VI-A. SECTION 80A(1) STIPULATES THAT IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, THERE SHALL BE ALLOWED FROM HIS GROSS TOTAL INCOME, IN AC CORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE CHAPTER, THE DEDUC TIONS SPECIFIED IN SECTIONS 80C TO 80U. SECTION 80B(5) DEFINES FOR THE PURPOSES OF CHAPTER VI-A 'GROSS TOTAL INCOME' TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, BEFORE MAKING ANY DEDUCTION UNDER THE CHAPTER. WHAT THE REVENUE IN ESSENCE SEEKS TO ATTAIN IS TO TELESCOPE THE PROVISIONS OF CHAPTER VI - A IN THE C ONTEXT OF THE DEDUCTION WHICH IS ALLOWABLE UNDER SECTION 10A, WHICH WOULD N OT BE PERMISSIBLE UNLESS A SPECIFIC STATUTORY PROVISION TO THAT EFF ECT WERE TO BE MADE. IN THE ABSENCE THEREOF, SUCH AN APPROACH CANNOT BE ACC EPTED. IN THE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL WOULD H AVE TO BE AFFIRMED SINCE IT IS PLAIN AND EVIDENT THAT THE DEDUCTION UN DER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. SO CONSTRUED, THE APPEAL BY THE REVENUE WOULD NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND SH ALL ACCORDINGLY STAND DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. ITA 1520/MDS/10 11 12. THEREFORE, AS COULD BE SEEN FROM THE ABOVE DEC ISIONS, THE ISSUE IN APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE BY T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. YOKOGAWA INDIA LTD. & ORS. (SUPRA) AND THE HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) . DIVERGENT VIEWS WERE EXPRESSED BY THE HONBLE KERALA HIGH COURT, HO NBLE KARNATAKA HIGH COURT AND HONBLE BOMBAY HIGH COURT. IN VIEW O F HONBLE APEX COURTS DECISION IN THE CASE OF VEGETABLE PRODUCTS LTD. (SUPRA), WE ARE INCLINED TO FOLLOW THE DECISIONS OF HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. YOKOGAWA INDIA LTD. & ORS. (SUPRA), WHICH ARE IN FAVOUR OF THE ASSESSEE AND ACCEPT THE CONTENTION OF THE ASSES SEE THAT THE DEDUCTION UNDER SECTION 10A IS TO BE ALLOWED BEFORE THE SET OFF OF BROUGHT FORWARD LOSSES. THEREFORE, WE CONFIRM THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND REJECT THE GROUNDS OF APPEAL OF THE REVENUE. ITA 1520/MDS/10 12 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. 14. ORDER PRONOUNCED ON FRIDAY, THE 8 TH DAY OF MARCH 2013, AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (CHALLA N AGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 08 TH MARCH 2013. JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-(A), (4) C.I.T., (5) D.R. (6) GUARD FILE