BA CONTINUUM INDIA P.LTD ( SINCE MERGED WOTJ BA COTINUUM SOLUTIONS P. LTD ), MUMBAI V. ITO WD 9(1)(2), MUMBAI

ITA 2271/MUM/2011

AI Insights

The case involves BA Continuum India Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals)-19, Mumbai, for the assessment year 2006-07. The primary contention was regarding the computation of deduction under section 10A of the Income-tax Act, 1961, specifically whether the deduction should be computed on the standalone profits of the eligible unit before the adjustment of brought forward business losses and unabsorbed depreciation. The ITAT, referencing the Supreme Court's decision in Yokogawa India Ltd., held that the deduction under section 10A should be computed on the profits of the eligible unit independently, without the adjustment of brought forward losses.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123185 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 20-03-2011
• Other Referred Cases: Changepond Technologies (P) Ltd, Global Vantedge (P) Ltd. Vs. DCIT, KPIT Cummins Infosystems (Bangalore) P Ltd. Vs. ACIT, Eneron Wind Farms (Krishna) Ltd. Vs. ACIT, Techno Tarp and Polymers Pvt. Ltd. Vs. CIT, Yokogawa India Ltd. Vs. CIT, Himata Seide Ltd. Vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Depreciation; Unabsorbed depreciation; Set aside; CHAPTER IV
• Section: 6; 143(3); 80HHC; 115JB; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 2271/MUM/2011 Assessment Year: 2006-07 BA Continuum India Private Limited (Since merged with BA Continuum Solutions Pvt. Ltd.), Building No. 5, K. Raheja Mind Space, Hitech City, Madhapur, Hyderabad-500081. Vs. ITO, Ward 9(1)(2), Room No. 226, Aayakar Bhavan, MK Road, Mumbai-20. PAN No. AACCC 3062 D Appellant Respondent Assessee by : Mr. Nishant Thakkar, Adv. Revenue by : Mr. Salil Mishra, CIT-DR Date of Hearing : 15/06/2023 Date of pronouncement : 17/08/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 16.12.2010 passed by the Ld. Commissioner of Income-tax (Appeals)-19, Mumbai for assessment year 2006-07, raising following grounds: 1. That on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the order of the Assessing Officer ('AO') in not allowing the deduction under section 10A of the Income-tax Act, 1961 ('Act') on the standalone business profits of the year before adjustment of the brought forward business losses and unabsorbed depreciation amounting to Rs. 58,943,598 and 123,408,595 respectively with the income of the current year. 2. That on the facts and circumstances of the Ld. Commissioner of Income Tax (Appeals) erred in upholding the order of the AO of disallowing payments/provisions towards lease line and communication expenses, IT allocation expenses and travel expenses amounting to Rs. 154,302,109 paid/payable section 40(a)i) of the Act. 2. Briefly stated facts of the case are that the assessee company i.e. M/s CFC India Services Pvt. Ltd., wise Financial Corporation Solutions Pvt. Ltd ) information technology services (software development application maintenance, testing and support services) and IT Enabled Services (date entry and transaction processing services ; telephon centre services) to Countrywide Group companies. The assessee company is 100% export oriented unit and is registered under the STP Scheme for development of computer software/IT enabled services. The offices of the assessee company are located i and Hyderabad. For the year under consideration, the assessee company filed return of income on 23.11.2006 declaring total income at Rs.18,48,378/ tax Act, 1961 (in short ‘the Act’) and Act at Rs. Nil. In the return of income filed, the assessee company declared income from VPO operations at Rs.81,79,98,000/ business profits of the year before adjustment of the brought forward business losses and unabsorbed depreciation amounting to Rs. 58,943,598 and 123,408,595 respectively with the income of the current year. That on the facts and circumstances of the Ld. Commissioner of Income Tax (Appeals) erred in upholding the order of the AO of disallowing payments/provisions towards lease line and communication expenses, IT allocation expenses and travel expenses amounting to Rs. 154,302,109 paid/payable to its affiliate companies under section 40(a)i) of the Act. Briefly stated facts of the case are that the assessee company CFC India Services Pvt. Ltd., was a subsidiary of Countr wise Financial Corporation ( now merged with M/s ) and is engaged in the business of providing information technology services (software development application maintenance, testing and support services) and IT Enabled Services (date entry and transaction processing services ; telephon centre services) to Countrywide Group companies. The assessee company is 100% export oriented unit and is registered under the STP Scheme for development of computer software/IT enabled of the assessee company are located i and Hyderabad. For the year under consideration, the assessee company filed return of income on 23.11.2006 declaring total income at Rs.18,48,378/- under regular provisions of the Income tax Act, 1961 (in short ‘the Act’) and book profit u/s 115JB Act at Rs. Nil. In the return of income filed, the assessee company declared income from VPO operations at Rs.81,79,98,000/ BA Continuum India Pvt. Ltd. 2 ITA No. 2271/Mum/2011 business profits of the year before adjustment of the brought forward business losses and unabsorbed depreciation amounting to Rs. 58,943,598 and 123,408,595 respectively with the income of the That on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the order of the AO of disallowing payments/provisions towards lease line and communication expenses, IT allocation expenses and travel expenses amounting to Rs. 154,302,109 to its affiliate companies under Briefly stated facts of the case are that the assessee company s a subsidiary of Country ( now merged with M/s BA Continuum and is engaged in the business of providing information technology services (software development application maintenance, testing and support services) and IT Enabled Services (date entry and transaction processing services ; telephony and call centre services) to Countrywide Group companies. The assessee company is 100% export oriented unit and is registered under the STP Scheme for development of computer software/IT enabled of the assessee company are located in Mumbai and Hyderabad. For the year under consideration, the assessee company filed return of income on 23.11.2006 declaring total under regular provisions of the Income- u/s 115JB of the Act at Rs. Nil. In the return of income filed, the assessee company declared income from VPO operations at Rs.81,79,98,000/- ; income from software services net profit at Rs.29,92,28,000/ deduction u/s 10A of the Act at Rs.6,05,74,580/ off of brought forward business loss During the course of assessment proceedings, the assessee revised its computation of the total income deduction u/s 10A original claim of Rs.6,05,74,380/ the ground that the assessee is before set off of brought forward business loss and deprec The said claim was denied by the Assessing Officer in the assessment order passed u/s 143(3) of the Act dated 30.12.2009 and assessed total income at Rs.5,55,73,544/ provisions of the Act and book profit u/s 115JB at Rs.3,36,82,375/-. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved tax Appellate Tribunal (ITAT), above. 4. Before us, the assessee has filed a Paper Book containing pages 1 to 226. 4.1 Before us, the Ld. Counsel of the assessee submitted that assessee is not interested in pursuing the ground No. 2 of the appeal and accordingly same is dismissed as not pressed. income from software services at Rs.36,02,54,000/ net profit at Rs.29,92,28,000/-. The assessee company cla of the Act at Rs.6,05,74,580/-, after claiming set brought forward business loss of last year i.e. AY 2005 During the course of assessment proceedings, the assessee revised its computation of the total income and enhance deduction u/s 10A amounting to Rs.23,75,27,069/ original claim of Rs.6,05,74,380/-. The said revision was done on the ground that the assessee is eligible for deduction u/s 10A brought forward business loss and deprec The said claim was denied by the Assessing Officer in the assessment order passed u/s 143(3) of the Act dated 30.12.2009 assessed total income at Rs.5,55,73,544/- provisions of the Act and book profit u/s 115JB at . On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved, the assessee is before the Income tax Appellate Tribunal (ITAT), raising the grounds Before us, the assessee has filed a Paper Book containing Before us, the Ld. Counsel of the assessee submitted that assessee is not interested in pursuing the ground No. 2 of the appeal and accordingly same is dismissed as not pressed. BA Continuum India Pvt. Ltd. 3 ITA No. 2271/Mum/2011 Rs.36,02,54,000/- and declared . The assessee company claimed fter claiming set last year i.e. AY 2005-06. During the course of assessment proceedings, the assessee revised enhanced claim of to Rs.23,75,27,069/- as against . The said revision was done on eligible for deduction u/s 10A brought forward business loss and depreciation. The said claim was denied by the Assessing Officer in the assessment order passed u/s 143(3) of the Act dated 30.12.2009 under regular provisions of the Act and book profit u/s 115JB at . On further appeal, the Ld. CIT(A) allowed part before the Income- raising the grounds as reproduced Before us, the assessee has filed a Paper Book containing Before us, the Ld. Counsel of the assessee submitted that assessee is not interested in pursuing the ground No. 2 of the appeal and accordingly same is dismissed as not pressed. 5. As far as Ground No. 1 of the appeal of the assessee concerned the Ld. CIT(A) declined the claim of the assessee for not setting off of the business loss of the depreciation from the profit eligible unit, while computing deduction u/s 10A relevant finding of the Ld. CIT(A) is reproduce “13. I have very carefully considered the matter. In the return of income as filed, the appellant itself claimed deduction unders. 10A from its total income, after set forward business loss and unabsorbed depreciation. Thereafter, while the assessment proceedings were in progress the appellant income, through a revised statement of Computation, claiming deduction on the standalone profit before adjustment of any brought forward loss o There is no dispute that the brought forward loss pertain to its software unit under the STPI Scheme. Hence we are concerned, with unabsorbed depreciation and business loss of the eligible unit. The decision in Changepond Technologies (P) Ltd as relied on by the appellant is distinguishable in that in the said case the Bench was concerned with set non-s. 10A unit. In fact, an identical issue had come up for consideration before the Vantedge (P) Ltd. Vs. DCIT (2010) 37 SOT 01, wherein the Hon'ble Bench, has distinguished the decision as rendered in Changepond Technologies (P) Ltd. Tho said decision can be of no help to the appellant since the disput unabsorbed depreciation and business loss of same eligible unit ie.of 10A unit, brought forward from earlier years can be set off from the profits of the same eligible unit for the purpose of determining allowable deduction under s. 10A. Drawing attention to sub Delhi Bench in Global Vantedge (P) Ltd. Vs. DCIT SOT 01 has observed that this section is of an over nature, specifically providing that during each of the assessment year in the be applied as if undertaking is an independent unit and is the one and only source of income. The Hon'ble Delhi Tribunal, relying on the decision of Hon'ble High Court of As far as Ground No. 1 of the appeal of the assessee concerned the Ld. CIT(A) declined the claim of the assessee for not setting off of the business loss of the depreciation from the profit computing deduction u/s 10A relevant finding of the Ld. CIT(A) is reproduced as under: 13. I have very carefully considered the matter. In the return of income as filed, the appellant itself claimed deduction unders. 10A from its total income, after set-off of carried forward business loss and unabsorbed depreciation. Thereafter, while the assessment proceedings were in progress the appellant revised its computation of its total income, through a revised statement of Computation, claiming deduction on the standalone profit before adjustment of any brought forward loss of earlier years. There is no dispute that the unabsorbed depreciation and brought forward loss pertain to its software unit under the STPI Scheme. Hence we are concerned, with unabsorbed depreciation and business loss of the eligible unit. The Changepond Technologies (P) Ltd as relied on by the appellant is distinguishable in that in the said case the Bench was concerned with set-off of brought forward loss of 10A unit. In fact, an identical issue had come up for consideration before the Hon'ble ITAT, Delhi Bench in Global Vantedge (P) Ltd. Vs. DCIT (2010) 37 SOT 01, wherein the Hon'ble Bench, has distinguished the decision as rendered in Changepond Technologies (P) Ltd. Tho said decision can be of no help to the appellant since the dispute here is whether unabsorbed depreciation and business loss of same eligible unit ie.of 10A unit, brought forward from earlier years can be set off from the profits of the same eligible unit for the purpose of determining allowable deduction under s. 10A. Drawing attention to sub-section (6) of s. 10A, the Hon'ble Delhi Bench in Global Vantedge (P) Ltd. Vs. DCIT SOT 01 has observed that this section is of an over nature, specifically providing that during each of the assessment year in the tax holiday period, this provision will be applied as if undertaking is an independent unit and is the one and only source of income. The Hon'ble Delhi Tribunal, relying on the decision of Hon'ble High Court of BA Continuum India Pvt. Ltd. 4 ITA No. 2271/Mum/2011 As far as Ground No. 1 of the appeal of the assessee is concerned the Ld. CIT(A) declined the claim of the assessee for not setting off of the business loss of the depreciation from the profit of of the Act. The d as under: 13. I have very carefully considered the matter. In the return of income as filed, the appellant itself claimed deduction off of carried forward business loss and unabsorbed depreciation. Thereafter, while the assessment proceedings were in revised its computation of its total income, through a revised statement of Computation, claiming deduction on the standalone profit before f earlier years. unabsorbed depreciation and brought forward loss pertain to its software unit under the STPI Scheme. Hence we are concerned, with unabsorbed depreciation and business loss of the eligible unit. The Changepond Technologies (P) Ltd as relied on by the appellant is distinguishable in that in the said case the off of brought forward loss of 10A unit. In fact, an identical issue had come up for Hon'ble ITAT, Delhi Bench in Global Vantedge (P) Ltd. Vs. DCIT (2010) 37 SOT 01, wherein the Hon'ble Bench, has distinguished the decision as rendered in Changepond Technologies (P) Ltd. Tho said decision can be e here is whether unabsorbed depreciation and business loss of same eligible unit ie.of 10A unit, brought forward from earlier years can be set off from the profits of the same eligible unit for the purpose of determining allowable deduction under s. 10A. (6) of s. 10A, the Hon'ble Delhi Bench in Global Vantedge (P) Ltd. Vs. DCIT (2010) 37 SOT 01 has observed that this section is of an over-riding nature, specifically providing that during each of the tax holiday period, this provision will be applied as if undertaking is an independent unit and is the one and only source of income. The Hon'ble Delhi Tribunal, relying on the decision of Hon'ble High Court of Karnataka in Himata has held that the unabsorbed depreciation or unabsorbed loss in respect of eligible 10A unit or division or undertaking is to be set-off against the profit of the same eligible 10A unit or undertaking for the purpose of determining the amount deduction available under s. 10A of the Act. It is pertinent to point out here that the Hon'ble Delhi Bench has observed that the decision of the ITAT, Bangalore Bench, in the case of KPIT Cummins Infosystems (Bangalore) P (2009) 120 TT the assessee without applying the ratio of decision of the Hon'ble Karnataka High Court in the case of Himata Seide Ltd (2006) 286 ITR 255. The Hon'ble Delhi Tribunal has also further observed that the d ITAT, Mumbai Bench, in the case of Eneron Wind Farms (Krishna) Ltd. Vs. ACIT respect of setting off the business loss brought forward from A.Y. 1999-2000, and hence stands on a different footing, in the light of insertion of words "ending before 1.4.2001" in sub-section (b) of s. 10A by the Finance Act 2000. After the amendment w.e.f. 1.4.2001, on ward, the brought forward loss pertaining to the specific undertaking for deduction under s. 10A are against the income of such undertaking assessment year and set off within the block period itself. 13.1 In the light of the above stated position, the action of the A.O. in setting depreciation of the eligible unit, against the profit of the same eligible unit for the purpose of computing available deduction under s. 10A, is accordingly upheld. 5.1 Before us, the Ld. Counsel of the assessee has relied on the decision of the Hon’ble Bombay High Court in the case of Techno Tarp and Polymers Pvt. Ltd. Income Tax Appeal No. 2134 of 2013 and decision of Hon’ble Supreme Court CIT v. Yokogawa India Ltd. [2017] 77 taxmann.com 41 (SC) wherein it is held that deduction u/s 10A would be eligible total income under Chapter Karnataka in Himata-Singike-Seide Ltd. (2006) 286 IT 255, has held that the unabsorbed depreciation or unabsorbed loss in respect of eligible 10A unit or division or undertaking off against the profit of the same eligible 10A unit or undertaking for the purpose of determining the amount deduction available under s. 10A of the Act. It is pertinent to point out here that the Hon'ble Delhi Bench has observed that the decision of the ITAT, Bangalore Bench, in the case of KPIT Cummins Infosystems (Bangalore) Pvt. Ltd. Vs. ACIT (2009) 120 TTJ (Bangalore) 956, was rendered in favour of the assessee without applying the ratio of decision of the Hon'ble Karnataka High Court in the case of Himata Seide Ltd (2006) 286 ITR 255. The Hon'ble Delhi Tribunal has also further observed that the decision of the Hon'ble ITAT, Mumbai Bench, in the case of Eneron Wind Farms (Krishna) Ltd. Vs. ACIT (2008) 21 SOT 29, was rendered in respect of setting off the business loss brought forward from 2000, and hence stands on a different footing, in the light of insertion of words "ending before 1.4.2001" in section (b) of s. 10A by the Finance Act 2000. After the amendment w.e.f. 1.4.2001, on ward, the brought forward loss pertaining to the specific undertaking for deduction under s. 10A are allowed to be carried forward and set against the income of such undertaking Fie in the future assessment year and set off within the block period itself. 13.1 In the light of the above stated position, the action of the A.O. in setting-off the brought forward loss and unabsorbed depreciation of the eligible unit, against the profit of the same eligible unit for the purpose of computing available deduction under s. 10A, is accordingly upheld.” Before us, the Ld. Counsel of the assessee has relied on the decision of the Hon’ble Bombay High Court in the case of Techno Tarp and Polymers Pvt. Ltd. Income Tax Appeal No. decision of Hon’ble Supreme Court CIT v. Yokogawa India Ltd. [2017] 77 taxmann.com 41 (SC) is held that deduction u/s 10A would be eligible total income under Chapter IV of the Act and not BA Continuum India Pvt. Ltd. 5 ITA No. 2271/Mum/2011 286 IT 255, has held that the unabsorbed depreciation or unabsorbed loss in respect of eligible 10A unit or division or undertaking off against the profit of the same eligible 10A unit or undertaking for the purpose of determining the amount of deduction available under s. 10A of the Act. It is pertinent to point out here that the Hon'ble Delhi Bench has observed that the decision of the ITAT, Bangalore Bench, in the case of Ltd. Vs. ACIT J (Bangalore) 956, was rendered in favour of the assessee without applying the ratio of decision of the Hon'ble Karnataka High Court in the case of Himata-Singike- Seide Ltd (2006) 286 ITR 255. The Hon'ble Delhi Tribunal ecision of the Hon'ble ITAT, Mumbai Bench, in the case of Eneron Wind Farms (2008) 21 SOT 29, was rendered in respect of setting off the business loss brought forward from 2000, and hence stands on a different footing, in the light of insertion of words "ending before 1.4.2001" in section (b) of s. 10A by the Finance Act 2000. After the amendment w.e.f. 1.4.2001, on ward, the brought forward loss pertaining to the specific undertaking for deduction wed to be carried forward and set-off Fie in the future assessment year and set off within the block period itself. 13.1 In the light of the above stated position, the action of the ward loss and unabsorbed depreciation of the eligible unit, against the profit of the same eligible unit for the purpose of computing available deduction Before us, the Ld. Counsel of the assessee has relied on the decision of the Hon’ble Bombay High Court in the case of CIT v. Techno Tarp and Polymers Pvt. Ltd. Income Tax Appeal No. decision of Hon’ble Supreme Court in the case of CIT v. Yokogawa India Ltd. [2017] 77 taxmann.com 41 (SC), is held that deduction u/s 10A would be eligible on gross of the Act and not at the stage of total income under chapter has to be computed before set off of carry forward business loss if any. The relevant finding of the Hon’ble Supreme Court reproduced as under: “13. The retention of after the amendment made by the be merely suggestive and not determinative of what is provided by the Section as amended, in contrast to what was provided by the un purport and construed from the language used and not merely from the fact that it has been retained in Chapter III. The introduction of the word ‘deduction’ in in the absence of any contrary material, and in view of the scope of the deductions contemplated by already discussed, it has to be understood that the Section embodies a alter its nature from one providing for exemption to one providing for deductions. 14. The difference between the two expressions ‘exemption’ and ‘deduction’, though broadly may appear to be the same i.e. immunity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications cannot be more obvious than from the case of Civil Appeal Nos. 8563/2013, 856 SLP(C) No. 18157/2015, which have been filed by loss making eligible units and/or by non seeking the benefit of adjustment of losses against profits made by eligible units. 15. Sub-section 4 of Sect exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to ente computation under the head “profits and gains from business” in Chapter IV and denied the benefit of deduction. The provisions of Sub total income under chapter VI of the Act. Thus deduction u/s 10A has to be computed before set off of carry forward business loss if The relevant finding of the Hon’ble Supreme Court reproduced as under: 13. The retention of Section 10A in Chapter III of the Act after the amendment made by the Finance Act, 2000 would be merely suggestive and not determinative of what is provided by the Section as amended, in contrast to what was provided by the un-amended Section. The true and correct purport and effect of the amended Section will have to be construed from the language used and not merely from the fact that it has been retained in Chapter III. The introduction of the word ‘deduction’ in Section 10A by the amendment, in the absence of any contrary material, and in view of the scope of the deductions contemplated by Section 10A already discussed, it has to be understood that the Section embodies a clear enunciation of the legislative decision to alter its nature from one providing for exemption to one providing for deductions. 14. The difference between the two expressions ‘exemption’ and ‘deduction’, though broadly may appear to be the same munity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications cannot be more obvious than from the case of Civil Appeal Nos. 8563/2013, 8564/2013 and civil appeal arising out of SLP(C) No. 18157/2015, which have been filed by loss making eligible units and/or by non-eligible assessees seeking the benefit of adjustment of losses against profits made by eligible units. section 4 of Section 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to ente computation under the head “profits and gains from business” in Chapter IV and denied the benefit of deduction. The provisions of Sub-section 6 of Section 10A, as amended BA Continuum India Pvt. Ltd. 6 ITA No. 2271/Mum/2011 Thus deduction u/s 10A has to be computed before set off of carry forward business loss if The relevant finding of the Hon’ble Supreme Court (supra) is in Chapter III of the Act , 2000 would be merely suggestive and not determinative of what is provided by the Section as amended, in contrast to what was amended Section. The true and correct effect of the amended Section will have to be construed from the language used and not merely from the fact that it has been retained in Chapter III. The introduction by the amendment, in the absence of any contrary material, and in view of the Section 10A as already discussed, it has to be understood that the Section clear enunciation of the legislative decision to alter its nature from one providing for exemption to one 14. The difference between the two expressions ‘exemption’ and ‘deduction’, though broadly may appear to be the same munity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications cannot be more obvious than from the case of Civil Appeal 4/2013 and civil appeal arising out of SLP(C) No. 18157/2015, which have been filed by loss eligible assessees seeking the benefit of adjustment of losses against profits ion 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to enter into the computation under the head “profits and gains from business” in Chapter IV and denied the benefit of deduction. section 6 of Section 10A, as amended by the Finance Act adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001 period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any reference to deduction under the Act can be understand by acknowledging that any such reference or mention would has already been provided in of Sections 80HHC somewhat similar deductions would be wholly irrelevant and redundant if deductions under made at the stage of operation of Chapter VI of the Act retention of the said provisions of the Act i.e. 80HHC and 10A, in our view, indicates that some additional benefits to eligible Section 10A 80HHC and a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions under Section 10A substantially different. This is the next aspect of the case which we would now like to turn to. 16. From a reading of 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 d states in paragraph 15.6 that, “The export turnover and the total turnover for the purposes of 10A and 10B specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision.” Finance Act of 2003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001-02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any reference to deduction under Section 10A in Chapter VI of the Act can be understand by acknowledging that any such reference or mention would have been a repetition of what has already been provided in Section 10A. The provisions Sections 80HHC and 80HHE of the Act providing for somewhat similar deductions would be wholly irrelevant and redundant if deductions under Section 10A were to be made at the stage of operation of Chapter VI of the Act retention of the said provisions of the Act i.e. and 80HHE, despite the amendment of , in our view, indicates that some additional benefits to Section 10A units, not contemplated by and 80HHE, was intended by the legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions Section 10A and 80HHC and 80HHE substantially different. This is the next aspect of the case which we would now like to turn to. 16. From a reading of the relevant provisions of it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, “The export turnover and the total turnover for the purposes of 10B shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision.” BA Continuum India Pvt. Ltd. 7 ITA No. 2271/Mum/2011 003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. 02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any in Chapter VI of the Act can be understand by acknowledging that any such have been a repetition of what . The provisions of the Act providing for somewhat similar deductions would be wholly irrelevant and were to be made at the stage of operation of Chapter VI of the Act. The retention of the said provisions of the Act i.e. Section , despite the amendment of Section , in our view, indicates that some additional benefits to units, not contemplated by Sections , was intended by the legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions 80HHE are substantially different. This is the next aspect of the case the relevant provisions of Section it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the ated 9.8.2000 which states in paragraph 15.6 that, “The export turnover and the total turnover for the purposes of sections dertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision.” 17. If the specific provisions of the Act provide [first proviso to Sections 10A(1) contemplated for grant of benefit of deduction is the eligible undertaking and th Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70 for application. The deductions under would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total the assessee” in earlier and in the overall scenario unfolded by the provisions of Section 10A understanding the expression “total income of the assessee” in Section 10A 18. For the aforesaid reasons we answer the appeals and the questions arising therein, as formulated at the outset of this order, by holding that though is a provision for deduction, the stage of deduction would be while computing the gro undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. All the appeals shall stand disposed of accordingly. 5.2 Since, the issue in dispute involved in the present before us, is identical (supra), therefore respectfully following the Hon’ble Supreme Court (supra), we set aside the finding of the Ld. CIT(A) on the issue in dispute and direct the Assessing Officer to g of the Act as per the finding of the Hon’ble Supreme Court in the f the specific provisions of the Act provide [first proviso Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total the assessee” in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions Section 10A the aforesaid discord can be reconciled by understanding the expression “total income of the assessee” Section 10A as ‘total income of the undertaking’. 18. For the aforesaid reasons we answer the appeals and e questions arising therein, as formulated at the outset of this order, by holding that though Section 10A, as amended, is a provision for deduction, the stage of deduction would be 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. All the appeals shall stand disposed of accordingly.” Since, the issue in dispute involved in the present identical to the facts of case of Yokogawa India Ltd. therefore respectfully following the Hon’ble Supreme Court , we set aside the finding of the Ld. CIT(A) on the issue in dispute and direct the Assessing Officer to grant deduction u/s 10A s per the finding of the Hon’ble Supreme Court in the BA Continuum India Pvt. Ltd. 8 ITA No. 2271/Mum/2011 f the specific provisions of the Act provide [first proviso ; 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible at is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained of the Act would be premature Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total income of has already been dealt with earlier and in the overall scenario unfolded by the provisions said discord can be reconciled by understanding the expression “total income of the assessee” as ‘total income of the undertaking’. 18. For the aforesaid reasons we answer the appeals and e questions arising therein, as formulated at the outset of , as amended, is a provision for deduction, the stage of deduction would be ss 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. All the Since, the issue in dispute involved in the present appeal facts of case of Yokogawa India Ltd. therefore respectfully following the Hon’ble Supreme Court , we set aside the finding of the Ld. CIT(A) on the issue in t deduction u/s 10A s per the finding of the Hon’ble Supreme Court in the case of Yokogawa India Ltd. (supra). T is allowed. 6. In the result, the appeal of the assessee is partly allowed. Order pronounced in Sd/ (VIKAS AWASTHY JUDICIAL MEMBER Mumbai; Dated:17/08/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// wa India Ltd. (supra). The ground No. 1 of the In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 17/08/2023. Sd/- Sd/ VIKAS AWASTHY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai BA Continuum India Pvt. Ltd. 9 ITA No. 2271/Mum/2011 he ground No. 1 of the appeal In the result, the appeal of the assessee is partly allowed. /08/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Original dictation pad is enclosed at the end of file 1. Draft dictated on: 2. Draft placed before author: 3. Draft proposed & placed before the second member: 4. Draft discussed/approved by Second Member: 5. Approved Draft comes to the Sr. PS/PS: 6. Order pronounced on: 7. File sent to the Bench Clerk: 8. Date on which file goes to the Head Clerk: 9. Date on which file goes to AR 10. Date of Dispatch of order Date Initials Original dictation pad is enclosed at Draft dictated on: 11.08.2023 Draft placed before author: 16.08.2023 Draft proposed & placed before the Draft discussed/approved by Second Approved Draft comes to the Sr. Order pronounced on: File sent to the Bench Clerk: Date on which file goes to the Head Date on which file goes to AR Date of Dispatch of order BA Continuum India Pvt. Ltd. 10 ITA No. 2271/Mum/2011 Sr. PS/PS Sr. PS/PS JM/AM JM/AM Sr. PS/PS Sr. PS/PS Sr. PS/PS