Deputy Commissioner of Income-tax, V. Giiava India Pvt. Ltd., Pune

ITA 1642/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1058 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL SHRI KISHORE PHADKE
• Assessee Lawyers: P L KUREEL
• Keywords: Business income; Depreciation; Tax effect; Reason to believe; Unabsorbed depreciation; Reassessment proceedings
• Section: 43B; 10B; 6; 10; 2; 11

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO S . 1 6 4 2 & 1643 /PN/201 5 / ASSESSMENT YEAR S : 20 1 0 - 1 1 & 2011 - 12 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / APPELLANT VS. GIIAVA INDIA PVT. LTD. (FORMERLY KNOWN AS CAROTINO INDIA PVT. LTD.) THE SYNERGY, PLOT NO.70/21, LAW COLLEGE ROAD, PUNE - 411004 . / RESPONDENT PAN: AAACD6413H / APPELLANT BY : SHRI P.L. KUREEL / APPELLANT BY : SHRI P.L. KUREEL / RESPONDENT BY : SHRI KISHORE PHADKE / DATE OF HEARING : 22 . 0 8 .201 6 / DATE OF PRONOUNCE MENT: 26 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, J M : BOTH THE APPEAL S FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT (A) - 1 , PUNE , BOTH DATED 1 6 . 09 .20 1 5 RELATING TO ASSESSMENT YEAR S 20 1 0 - 1 1 AND 2011 - 12 AGAINST RESPECTIVE ORDER S PASSED UNDER SEC TION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 2 2 . BOTH THE APPEALS FILED BY THE REVENUE RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN I TA NO.1642/PN/2015 , RELATING TO ASSESSMENT YEAR 2010 - 11 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE . 2. THE LD. COMMISSIONER O F INCOME - TAX (APPEALS) GROSSLY ERRED ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 10 B OF THE I.T. ACT OF RS.42,99,390/ - INSTEAD OF CONFIRMING THE SAID ADDITION AS THE SAME IS NOT ALLOW ABLE TO THE ASSESSEE. 3. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY NOT CONSIDERING THE DECISION OF HONORABLE SUPREME COUR T, IN THE CASE OF HIMMATSINGHE SEIDE VS CIT, CIVIL APPEAL 1501 OF 2008. 4. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED ON FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF AND THE CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS.10,33,814/ - MADE BY THE ASSESSING OFFICER BY PLACING RELIANCE ON THE DECISION OF HONORABLE HIGH COURT, BOMBAY, IN THE CASE OF CIT VS. GEM PLUS JEWELLERY INDIA LTD, AGAINST WHICH SLP HAS BEEN FILED BY THE DEPARTMENT. 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEAR ING, THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICE BE RESTORED. 4. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE BEING GENERAL IN NATURE, THE SAME IS DISMISSED. 5. THE ISSUE IN GROUNDS OF APPE AL NO.2 AND 3 IS IN RELATION TO DELETION OF ADDITION BY THE CIT(A) MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 10B OF THE ACT AT RS. 42,99,390/ - . 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RA ISED IS SQUARELY COVERED BY THE ORDERS OF PUNE BENCH OF TRIBUNAL IN ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 3 M/S. KPIT CUMMINS INFOSYSTEMS LTD. VS. DCIT IN ITA NOS.1508 & 1509/PN/2011, RELATING TO ASSESSMENT YEARS 2005 - 06 & 2006 - 07, ORDER DATED 30.11.2015, HONBLE BOMBAY HIGH COURT IN CIT VS. BL ACK & VEATCH CONSULTING (P.) LTD. (2012) 20 TAXMANN.COM 727 (BOM) AND HONBLE BOMBAY HIGH COURT IN CIT VS. SCHMETZ INDIA PVT. LTD. (2012) 254 CTR (BOM) 504. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ONE OF THE UNITS OF ASSESS EE I.E. PUNE UNIT WAS SHOWING LOSSES AND FOR OTHER UNIT, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT AND THE ISSUE WAS WHETHER THE LOSSES OF PUNE UNIT HAVE TO BE FIRST ADJUSTED BEFORE AVAILING THE DEDUCTION UNDER SECTION 10B OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT THE ASSESSING OFFICER HAD PLACED RELIANCE ON THE DECISION OF HONORABLE SUPREME COURT, IN THE CASE OF HIMMATSINGHE SEIDE VS CIT, CIVIL APPEAL 1501 OF 2008 . HOWEVER, THE PUNE BEN CH OF TRIBUNAL HAS HELD THAT THE SAID DECISION WAS BEFORE THE AMENDMENT TO SECTION 10B OF THE ACT. 7. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE AND SALE OF SOYA BASED EMULSIFIER PRODUCTS. THE ASSESSEE COMPANY WAS INCORPORATED IN THE YEAR 2006 AND WAS ENGAGED IN PRODUCTION AND MARKETING OF VARIOUS ITEMS. THE ASSESSEE HAD CORPORATE OFFICE AT PUNE AND THE PLANT WAS SITUATED AT WAI, SATARA. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION UNDE R SECTION 10B OF THE ACT IN RESPECT OF WAI UNIT. THE ASSESSING OFFICER NOTED THAT THE SAID DEDUCTION UNDER SECTION 10B OF THE ACT WAS CLAIMED IN RESPECT OF PROFITS AND GAINS OF WAI UNIT WITHOUT ADJUSTING LOSSES OF THE OFFICE AT PUNE. THE ASSESSEE HAD PLA CED RELIANCE ON THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN HINDUSTAN UNILEVER LTD. VS. DCIT & ANR. (2011) 325 ITR 102 (BOM) AND CIT VS. BLACK & VEATCH ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 4 CONSULTING PVT. LTD. (SUPRA), BUT THE ASSESSING OFFICER REJECTING THE SAME, RE - COMPUTED THE DEDU CTION CLAIMED UNDER SECTION 10B OF THE ACT RESULTING IN DISALLOWANCE OF RS.42,99,390/ - . 8. THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE FOLLOWING THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) . 9. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 10. ON PERUSAL OF RECORD, IT IS APPARENT THAT A N IDENTICAL ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT AROSE BEFORE THE TRIBUNAL IN M/S. KPIT CUMMINS INFOSYSTEMS LTD. VS. DCIT (SUPRA ), WHEREIN IT WAS HELD AS UNDER: - 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN EXPORT OF SOFTWARE AND IT ENABLED SERVICES. DURING THE ASSESSEE IS ENGAGED IN EXPORT OF SOFTWARE AND IT ENABLED SERVICES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS RUNNING EIGHT UNITS AT DIFFEREN T PLACES AND FIVE OF WHICH UNITS HAD DECLARED POSITIVE PROFITS AND THE BALANCE THREE UNITS DECLARED LOSSES FOR THE CAPTIONED ASSESSMENT YEAR. THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S. 10A OF THE ACT IN RESPECT OF EXPORT OF SOFTWARE. THE ASSESSEE COMPUTED THE DEDUCTION U/S. 10A OF THE ACT BY TREATING EACH OF THE UNIT AS SEPARATE UNIT/UNDERTAKING AND CLAIMED THE DEDUCTION AT RS.24,55,53,914/ - . THE LOSSES FROM THREE UNITS AGGREGATING RS.4,55,31,667/ - WAS CARRIED FORWARD TO BE ADJUSTED IN THE SUCCEED ING YEARS. ON THE OTHER HAND THE REVENUE AUTHORITIES WERE OF THE VIEW THAT THE LOSSES EARNED BY THE ASSESSEE FROM SEPARATE UNIT HAVE TO BE ADJUSTED AGAINST THE PROFITS EARNED BY THE ASSESSEE IN SEPARATE UNITS AND AFTER MAKING THIS INTRA - HEAD SET OFF, THE DEDUCTION UNDER SECTION 10A OF THE ACT WERE TO BE ALLOWED TO THE ASSESSEE. IN THIS EXERCISE THE DEDUCTION UNDER SECTION 10A OF THE ACT WAS REDUCED TO RS.20,68,49,064/ - AND THERE WERE NIL CARRY FORWARD LOSS IN THE HANDS OF THE ASSESSEE. THE REASON FOR THE SAID ADJUSTMENT BY THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) WAS ON THE SURMISE THAT THE AMENDMENT BROUGHT TO SECTION 10A OF THE ACT W.E.F. 1 ST APRIL, 2001 UNDER WHICH DEDUCTION FROM INCOME WAS TO BE ALLOWED TO THE ASSESSEE AND NOT AN Y EXEMPTION. FURTHER, THE ASSESSING OFFICER REFERRED TO THE PROVISIONS OF SECTION 70(1) AND OBSERVED THAT THE INTRA - HEAD ADJUSTMENT HAD TO BE MADE BEFORE CLAIMING THE DEDUCTION U/S. 10A OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF ASSE SSING OFFICER, WHICH HAS BEEN UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS). 13. UNDOUBTEDLY, AFTER THE AMENDMENT W.E.F. 1 ST APRIL, 2001 UNDER THE PROVISIONS OF SECTION 10A OF THE ACT, THE ASSESSEE IS NOW ENTITLED TO DEDUCTION. PRIOR TO THE AMENDM ENT THE ASSESSEE WAS ENTITLED TO EXEMPTION OF THE SAID INCOME. IN OTHER WORDS THE SAID INCOME DID NOT FORM PART OF THE TOTAL INCOME AND WAS EXCLUDED AT THE ENTITY LEVEL ITSELF. THE QUESTION WHICH ARISES FOR ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 5 ADJUDICATION IS WHETHER IN VIEW OF THE AMENDED PROVISIONS OF SECTION 10A OF THE ACT, UNDER WHICH DEDUCTION CAN BE CLAIMED BY AN ENTERPRISES, WHETHER THE INTRA HEAD ADJUSTMENT OF LOSSES OF CERTAIN UNITS IS TO BE MADE AGAINST THE PROFITS OF OTHER UNITS OF THE SAME ASSESSEE, BEFORE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT. 14. THE HON'BLE BOMBAY HIGH COURT IN HINDUSTAN UNILEVER LTD. VS. DCIT & ANR. (SUPRA) IN AN APPEAL RELATING TO ASSESSMENT YEAR 2004 - 05 WHERE REASSESSMENT PROCEEDINGS WERE INITIATED UNDER SECTION 147/148 OF THE ACT ON SEVERA L ISSUES, CONSIDERED THE REASON TO BELIEVE RECORDED BY THE ASSESSING OFFICER WITH REGARD TO SET OFF OF LOSS INCURRED BY UNIT ELIGIBLE FOR DEDUCTION U/S. 10B OF THE ACT. THE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT ON THE SURMISE THAT SINCE THE INCOME OF THE CRAB STICK UNIT WAS EXEMPTED FROM TAX UNDER SECTION 10B, THE LOSS OF THAT UNIT WAS WRONGLY SET OFF AGAINST THE NORMAL BUSINESS INCOME. THE HON'BLE HIGH COURT NOTED THAT AFTER THE SUBSTITUTION OF SECTION 10B OF THE ACT BY THE FINANCE ACT OF 2000, T HE PROVISIONS PROVIDED FOR DEDUCTION OF SUCH PROFIT OR GAINS AS WERE DERIVED BY 100% EOU FOR THE PERIOD PRESCRIBED UNDER THAT SECTION. THE HON'BLE HIGH COURT THUS HELD THAT THE BASIS ON WHICH THE ASSESSMENT WAS SOUGHT TO BE REOPENED WAS BELIED BY A PLAIN READING OF THE PROVISIONS AND THE ASSESSING OFFICER WAS IN ERROR IN PROCEEDING ON THE BASIS THAT BECAUSE THE INCOME WAS EXEMPTED, THE LOSS WAS NOT ALLOWABLE. THE HON'BLE HIGH COURT FURTHER CONSIDERED THAT ALL THE FOUR UNITS OF THE ASSESSEE WERE ELIGIBLE U NDER SECTION 10B, OUT OF WHICH THREE UNITS HAD RETURNED PROFITS DURING THE COURSE OF THE ASSESSMENT YEAR, WHILE THE CRAB STICK UNIT HAD RETURNED A LOSS. THE HIGH COURT FURTHER HELD THAT THE ASSESSEE WAS ENTITLED TO A DEDUCTION IN RESPECT OF THE PROFITS O F THE THREE ELIGIBLE UNITS WHILE THE LOSS SUSTAINED BY THE FOURTH UNIT COULD BE SET OFF AGAINST THE NORMAL BUSINESS INCOME. IN THESE CIRCUMSTANCES, THE HON'BLE HIGH COURT HELD THAT THE BASIS ON WHICH THE ASSESSMENT WAS SOUGHT TO BE REOPENED WAS CONTRARY TO THE PLAIN LANGUAGE OF SECTION 10B. THE PLAIN LANGUAGE OF SECTION 10B. 15. THE HON'BLE BOMBAY HIGH COURT IN CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) ALSO OBSERVED THAT SECTION 10A WAS A PROVISION WHICH WAS IN THE NATURE OF A DEDUCTION AND NOT AN EXEMPTION. THE HON' BLE HIGH COURT FURTHER HELD THAT THE DEDUCTION UNDER SECTION 10A, IN OUR VIEW, WAS TO BE GIVEN EFFECT TO AT THE STAGE OF COMPUTING THE PROFITS AND GAINS OF BUSINESS. THIS IS ANTERIOR TO THE APPLICATION OF THE PROVISIONS OF SECTION 72 WHICH DEALS WITH THE CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. THE HON'BLE HIGH COURT HELD THAT THE DEDUCTION UNDER SECTION 10A HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. THE ISSUE BEFORE THE HON'BLE HIGH COURT WAS WITH REGARD TO THE ADJUSTMENT OF BROUGHT FORWARD UNABSORBED DEPRECIATION AND LOSS OF THE UNIT, WHICH WERE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT AND IT WAS HELD THAT THE SAME COULD NOT BE SET OFF AGAINST THE CURRENT PROFIT OF THE ELIG IBLE UNITS WHILE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT. 16. THE CASE OF THE REVENUE BEFORE US ON THE OTHER HAND IS THAT RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN SYNCO INDUSTRIES LTD. VS. ASSESSING OFFICER, INCOME TAX, MUMBAI (SUPRA ) IS TO BE APPLIED WHILE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT. IN THE FACTS OF THE CASE BEFORE HON'BLE SUPREME COURT THE ASSESSEE HAD CLAIMED DEDUCTION FROM THE PROFITS AND GAINS OF THE BUSINESS UNDER SECTION 80HH R.W.S. 80 - I AND 80B OF TH E ACT. THE HON'BLE SUPREME COURT HELD THAT WHILE WORKING OUT GROSS TOTAL INCOME OF THE ASSESSEE, LOSSES SUFFERED BY IT IN EARLIER YEARS HAVE TO BE ADJUSTED AND IF GROSS TOTAL INCOME OF ASSESSEE IS NIL THEN THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTION U NDER CHAPTER VI - A. 17. THE AUTHORITIES BELOW HAVE FURTHER PLACED RELIANCE ON THE PROVISIONS OF SECTION 70(1) FOR THE PROPOSITION OF SET OFF OF LOSS FROM ONE SOURCE AGAINST ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 6 INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. THE PROVISIONS OF SECT ION 10A AND 10B OF THE ACT ARE PARA MATERIA. IN SUCH A SITUATION THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN HINDUSTAN UNILEVER LTD. VS. DCIT & ANR. (SUPRA) ARE TO BE APPLIED. THE HON'BLE HIGH COURT HAD HELD THAT WHERE THREE UNITS OF THE ASSE SSEE HAD RETURNED PROFIT DURING THE COURSE OF ASSESSMENT YEAR AND ONE UNIT HAD RETURNED THE LOSS, THE ASSESSEE WAS ENTITLED TO DEDUCTION IN RESPECT OF THE PROFITS OF THREE ELIGIBLE UNITS, WHILE THE LOSS SUSTAINED BY THE FOURTH UNIT COULD BE SET OFF AGAINST NORMAL BUSINESS INCOME. APPLYING THE SAID RATIO TO THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT THE DEDUCTION U/S. 10A AND 10B ARE UNITS SPECIFIC IN CONTRADICTION TO BE ASSESSEE SPECIFIC. THE ASSESSEE WHILE CLAIMING THE DEDUCTION U/S. 10A OF TH E ACT IN RESPECT OF EACH OF ITS UNIT HAS TO SATISFY THE CONDITIONS VIZ - A - VIZ EACH UNIT/UNDERTAKING. EVEN THE QUANTIFICATION OF AMOUNT OF DEDUCTION HAS TO BE WORKED OUT INDEPENDENTLY IN EACH UNIT. THE ASSESSEE BEFORE US HAS FURNISHED ON RECORD THE AUDIT R EPORT IN FORM NO. 56F IN RESPECT OF EACH OF THE UNIT AGAINST WHICH IT HAS CLAIMED THE DEDUCTION UNDER SECTION 10A OF THE ACT. THE QUANTIFICATION OF THE DEDUCTION UNDER SECTION 10A OF THE ACT IS TO BE WORKED OUT INDEPENDENTLY FOR EACH ELIGIBLE UNIT AND IN CASE AFTER THE DEDUCTION SO CLAIMED UNDER SECTION 10A OF THE ACT, THERE ARE PROFITS IN THE HANDS OF THE ASSESSEE FOR SUCH UNIT THEN THE SAME CAN BE SET OFF AGAINST THE LOSSES, IF ANY, INCURRED BY THE ASSESSEE IN ANY OTHER UNIT. THERE IS NO MERIT IN FIRST AGGREGATING THE PROFITS OF EACH OF THE ELIGIBLE UNIT AND SETTING OF THE LOSSES OF OTHER UNITS AND ON THE NET PROFITS, IF ANY, THE DEDUCTION UNDER SECTION 10A OF THE ACT TO BE COMPUTED. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH CO URT IN CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE DEDUCTION UNDER SECTION 10A OF THE ACT HAS TO BE GIVEN AT THE STAGE WHEN THE PROFITS AND GAINS OF THE BUSINESS ARE COMPUTED IN THE FIRST INSTANCE. IN VIEW THEREOF WE REVERSE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD. 18. NOW COMING TO THE RELIANCE PLACED BY THE LD. DR FOR THE REVENUE OF THE HON'BLE SUPREME COURT IN SYNCO INDUSTRIES LTD. VS. ASSESSING OFFICER, INCOME TAX, MUMBAI (SUPRA) WHE REIN THE HON'BLE SUPREME COURT HAD CONSIDERED THE PROVISIONS OF SECTION 80HH R.W.S. 80 - I AND 80B OF THE ACT. IN VIEW OF THE SPECIFIC PROVISIONS OF 80B(5) PROVIDED UNDER CHAPTER VIA THEN THE DEDUCTION UNDER SECTION 80HH HAS TO BE COMPUTED IN LINE THEREOF. HOWEVER IN THE ABSENCE OF ANY SUCH PROVISION BEING PROVIDED IN SECTION 10A OF THE ACT, WE FIND NO MERIT IN THE SAID RELIANCE PLACED UPON BY THE LD. DR FOR THE REVENUE. SECTION 10A OF THE ACT ENTITLED THE UNDERTAKINGS FOR DEDUCTION FROM ITS PROFITS IN CASE THE CONDITIONS ARE FULFILLED. WE REITERATE THAT THE SAID DEDUCTION UNDER SECTION 10A OF THE ACT IS TO BE COMPUTED UNIT/UNDERTAKING WISE AND NOT FOR THE ASSESSEE IN TOTALITY. REVERSING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE ALLOW THE G ROUNDS OF APPEAL NO. 3 RAISED BY THE ASSESSEE IN BOTH THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07. 11. FURTHER, THE HONBLE BOMBAY HIGH COURT IN CIT VS. SCHMETZ INDIA PVT. LTD. (SUPRA) HAS LAID DOWN THE PROPOSITION THAT THE DEDUCTION UNDER SECTION 10A OF THE ACT IS TO BE ALLOWED IN RESPECT OF KANDLA DIVISION AND LOSSES SUFFERED BY MUMBAI DIVISION WHICH WAS TRADING DIVISION WERE NOT TO BE SET OFF AGAINST THE PROFITS OF KANDLA DIVISION BEFORE CLAIMING DEDUCTION UNDER SECTION 10A OF THE ACT. ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 7 12. THE ISSUE ARIS ING IN THE PRESENT APPEAL BY WAY OF GROUNDS OF APPEAL NO.2 AND 3 IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. SCHMETZ INDIA PVT. LTD. (SUPRA) . IN THE FACTS OF THE PRESENT CASE ALSO, THE ASSESSEE HAD TRADING DIVISION AT PUNE WHICH WAS SHOWING LOSSES AND HAD MANUFACTURED UNIT AT WAI, SATARA, WHICH WAS SHOWING PROFITS, AGAINST WHICH THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT. FIRST OF ALL, THE PROVISIONS OF SECTION 10A AND 10B OF THE ACT ARE PARAMETRIA AND IN V IEW THEREOF, APPLYING THE RATIO S LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SCHMETZ INDIA PVT. LTD. (SUPRA), HONBLE BOMBAY HIGH COURT IN CIT VS. BLACK & VEATCH CONSULTING PVT. LTD. (SUPRA) AND ALSO PUNE BENCH OF TRIBUNAL IN KPIT CUMMINS INFOSYS TEMS LTD. VS. DCIT (SUPRA) , THE DEDUCTION UNDER SECTION 10B OF THE ACT IS TO BE ALLOWED IN RESPECT OF MANUFACTURING UNIT AS THE SAID DEDUCTION IS UNIT SPECIFIC AND NOT ASSESSEE SPECIFIC. ACCORDINGLY, THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY THE REVENUE MERITS TO BE DISMISSED. 13. THE REVENUE HAS ALSO RAISED ANOTHER ISSUE OF DELETION OF ADDITION OF RS.10,33,814/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40(A)(IA) AND 43B OF THE ACT . THE CASE OF THE ASSESSEE BEFORE THE ASSES SING OFFICER WAS THAT EVEN IF ANY DISALLOWANCE IS TO BE MADE UNDER SECTION 40A(A)(IA) AND 43B OF THE ACT , THE DEDUCTION UNDER SECTION 10B OF THE ACT WOULD BE COMPUTED ON THE ENHANCED PROFITS DETERMINED AFTER TAKING INTO CONSIDERATION THE AFOR ESAID DISALLOW ANCE AND HENCE, NO ADDITION IS TO BE MADE IN THE HANDS OF ASSESSEE ON THIS COUNT. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF ASSESSEE A ND DISALLOWED SUM OF RS. 10,33,814/ - . ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 8 14. THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE IN TURN, FOLLOWING THE RATI O LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN CIT VS. GEM PLUS JEWELLERY INDIA LTD. (2010) 194 TAXMAN 192 (BOM) . 15. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 16. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SIMIL AR ISSUE ALSO AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN PRECISION CAMSHAFTS LTD. VS. ACIT (2016) 67 TAXMANN.COM 126 (PUNE - TRIB.), WHEREIN ALSO IT WAS HELD THAT THE DEDUCTION UNDER SECTION 10B OF THE ACT IS TO BE ALLOWED ON THE INCOME ENHANCED AFTER STATUT ORY DISALLOWANCE 40(A)(IA) OF THE ACT BEING ELIGIBLE PROFITS OF EXPORT ORIENTED UNIT (EOU) . 17. THE ISSUE BEFORE US IS LIMITED TO THE EXTENT OF DETERMINATION OF NET INCOME IN THE HANDS OF ASSESSEE , I N CASE, DISALLOWANCE IS TO BE MADE UNDER SECTION 40(A)(I A) AND 43B OF THE ACT, INCOME OF EOU UNIT GETS ENHANCED AND WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 10B OF THE ACT ON SUCH ENHANCED PROFITS. THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF PUNE BENCH OF TRIBUNAL IN PRECISION CAMSHAFTS LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD AS UNDER: - 11. AS REFERRED BY THE CIT(A), THERE IS A PROVISION BY WAY OF PROVISO UNDER SECTION 92C(4) OF THE ACT THAT IN CASE ANY ADDITION IS MADE ON ACCOUNT OF TRANSFER PRICIN G ADJUSTMENT, NO DEDUCTION UNDER SECTION 10A/10AA/10B OF THE ACT OR UNDER CHAPTER VIA SHALL BE ALLOWED IN RESPECT OF SUCH AMOUNT OF INCOME BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED. HOWEVER, THERE IS NO SIMILAR PROVISION IN RESPECT OF THE DISA LLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. IN THE ABSENCE OF SPECIFIC PROVISION OF THE ACT, THE INCOME ENHANCED AFTER THE STATUTORY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS TO BE CONSIDERED AS THE ELIGIBLE PROFITS OF THE UNDERTAKING WHILE COMPUTING DEDUCTION UNDER SECTION 10B OF THE ACT. ITA NO S . 1 6 4 2 & 1643 /PN/20 1 5 GIIAVA INDIA PVT. LTD. 9 18. FOLLOWING THE SAME PARITY OF REASONING, THE GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. 19. THE LEARNED DEPARTMENTAL R EPRESENTATIVE FOR THE REVENUE FAIRLY ADMITTED THAT THE TAX EFFECT IN ITA NO.1643/PN/2015 IS BELOW RS.10 LAKHS AND HENCE THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE, IN VIEW OF CBDT CIRCULAR NO. 21/2015, DATED 10.12.2015. THE APPEAL OF THE REVENUE IS DISM ISSED BEING BELOW MONETARY LIMIT PRESCRIBED BY CBDT. 2 0 . IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 26 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESP ONDENT; 3. ( ) / THE CIT(A) - 1 , PUNE ; 4. / THE PR. CIT III , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE C OPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE