ITO 2(2)(4), MUMBAI V. MOBIAPPS INDIA P.LTD, MUMBAI

ITA 5211/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1384 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARSR DR
• Keywords: Business income; Depreciation; Retrospective amendment; Wholly owned subsidiary; Competent authority; Scheme of amalgamation; Unabsorbed depreciation
• Section: 72(1); 80HHC; 37(1); 10B; 32; 263; 10; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAM IT KOCHAR, ACCOUNTANT MEMBER ITA NO.5211/MUM/2013 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER-2(2)(4), ROOM NO.542, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S MOBIAPPS INDIA PVT. LTD. 7/10, BORAWALA BUILDING, HORNIMAN CIRCLE, FORT, MUMBAI-400001 ( / REVENUE) ( ! ' /ASSESSEE) PAN. NO.AACCM3613L # $ % ' & / DATE OF HEARING : 28/12/2016 % ' & / DATE OF ORDER: 23/01/2017 !' / REVENUE BY SHRI SUMAN KUMAR-SR. DR ! ' !' / ASSESSEE BY NONE ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 23/05/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ALLOWING RELIEF TO THE ASSESSEE BY HOLDING THAT BUS INESS LOSSES OF UNITS, WHICH ARE NOT ELIGIBLE FOR DEDUCTI ON U/S 10A ARE NOT TO SET OFF AGAINST THE PROFIT OF UNDERTAKIN G, WHICH IS ELIGIBLE OF DEDUCTION U/S 10A OF THE INCOME TAX ACT , 1961 (HEREINAFTER THE ACT), BEFORE ALLOWING DEDUCTION U/ S 10A OF THE ACT AND THE DEDUCTION U/S 10A IS NOT TO BE REST RICTED TO THE TOTAL INCOME OF THE ASSESSEE. 2. DURING HEARING OF THIS APPEAL, NONE WAS PRESEN T FOR THE ASSESSEE, IN SPITE OF THE FACT THAT THE REG ISTERED AD NOTICES WERE SENT TO THE ASSESSEE. UNDER THE CIRCUM STANCES, WE HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OFF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. ON THE OTHER HAND, THE LD. DR, SHRI SUMAN KUMAR, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WITHO UT GOING INTO MUCH DELIBERATION AND THE FACTS AVAILABLE ON R ECORD, WE ARE OF THE VIEW THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL DAT ED 28/12/2016 IN THE CASE OF PEOPLE INTERACTIVE INDIA PVT. LTD. (ITA NO.3717/MUM/2016). THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER FOR READY REFERENCE AND ANA LYSIS:- ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 3 2.3. AS PER THE PROVISION OF SECTION 263 BEFORE THE REVISIONAL JURISDICTION U/S 263 IS INVOKED BY T HE LD. COMMISSIONER, IT HAS TO BE SEEN THAT EITHER THE ORD ER IS ERRONEOUS, IN SO FAR AS, PREJUDICIAL TO THE INTERES T OF REVENUE. WE ARE EXPECTED TO EXAMINE WHETHER THE CONDITIONS ENSHRINED IN THIS SECTION HAS BEEN COMPL IED WITH OR NOT. WE ARE ALSO EXPECTED TO ANALYZE THE PROVISION BY KEEPING THE SAME IN JUXTAPOSITION WIT H SECTION 10A OF THE ACT. SECTION 10A IS REPRODUCED HEREUNDER FOR READY REFERENCE AND ANALYSIS:- 10A. (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A D EDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIO D OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MA NUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS TH E CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE: PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UN DERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, T HE UNDERTAKING SHALL BE ENTITLED TO DEDUCTION REFERRED TO IN THIS SUB-SECTI ON ONLY FOR THE UNEXPIRED PERIOD OF THE AFORESAID TEN CONSECUTIVE ASSESSMENT YEARS: PROVIDED FURTHER THAT WHERE AN UNDERTAKING INITIALLY LOCATED IN ANY FREE TRADE ZONE OR EXPORT PROCESSING ZONE IS SUBSEQUENTL Y LOCATED IN A SPECIAL ECONOMIC ZONE BY REASON OF CONVERSION OF SUCH FREE TRADE ZONE OR EXPORT PROCESSING ZONE INTO A SPECIAL ECONOMIC ZONE, THE P ERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS REFERRED TO IN THIS SU B-SECTION SHALL BE RECKONED FROM THE ASSESSMENT YEAR RELEVANT TO THE P REVIOUS YEAR IN WHICH THE UNDERTAKING BEGAN TO MANUFACTURE OR PRODUCE SUC H ARTICLES OR THINGS OR COMPUTER SOFTWARE IN SUCH FREE TRADE ZONE OR EXP ORT PROCESSING ZONE: PROVIDED ALSO THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2003, THE DEDUCTION UNDER THIS SUB-SECTION S HALL BE NINETY PER CENT OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE: PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLO WED TO ANY UNDERTAKING FOR THE ASSESSMENT YEAR BEGINNING O N THE 1ST DAY OF APRIL, 2012 AND SUBSEQUENT YEARS. (1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (1), THE DEDUCTION, IN COMPUTING THE TOTAL INCOME OF AN UNDE RTAKING, WHICH BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DURING THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR COMMENCING ON ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 4 OR AFTER THE 1ST DAY OF APRIL, 2003, IN ANY SPECIAL ECONOMIC ZONE, SHALL BE, ( I ) HUNDRED PER CENT OF PROFITS AND GAINS DERIVED FRO M THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIO D OF FIVE CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MA NUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS TH E CASE MAY BE, AND THEREAFTER, FIFTY PER CENT OF SUCH PROFITS AND GAIN S FOR FURTHER TWO CONSECUTIVE ASSESSMENT YEARS, AND THEREAFTER; ( II ) FOR THE NEXT THREE CONSECUTIVE ASSESSMENT YEARS, SO MUCH OF THE AMOUNT NOT EXCEEDING FIFTY PER CENT OF THE PROFIT AS IS DE BITED TO THE PROFIT AND LOSS ACCOUNT OF THE PREVIOUS YEAR IN RESPECT OF WHI CH THE DEDUCTION IS TO BE ALLOWED AND CREDITED TO A RESERVE ACCOUNT (TO BE CALLED THE 'SPECIAL ECONOMIC ZONE RE-INVESTMENT ALLOWANCE RESERVE ACCOU NT') TO BE CREATED AND UTILISED FOR THE PURPOSES OF THE BUSINE SS OF THE ASSESSEE IN THE MANNER LAID DOWN IN SUB-SECTION (1B): PROVIDED THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLO WED TO AN ASSESSEE WHO DOES NOT FURNISH A RETURN OF HIS INCOM E ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139 . (1B) THE DEDUCTION UNDER CLAUSE ( II ) OF SUB-SECTION (1A) SHALL BE ALLOWED ONLY IF THE FOLLOWING CONDITIONS ARE FULFILLED, NAM ELY: ( A ) THE AMOUNT CREDITED TO THE SPECIAL ECONOMIC ZONE RE-INVESTMENT ALLOWANCE RESERVE ACCOUNT IS TO BE UTILISED ( I ) FOR THE PURPOSES OF ACQUIRING NEW MACHINERY OR PL ANT WHICH IS FIRST PUT TO USE BEFORE THE EXPIRY OF A PERIOD OF THREE YEARS NE XT FOLLOWING THE PREVIOUS YEAR IN WHICH THE RESERVE WAS CREATED; AND ( II ) UNTIL THE ACQUISITION OF NEW MACHINERY OR PLANT A S AFORESAID, FOR THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING OTHER T HAN FOR DISTRIBUTION BY WAY OF DIVIDENDS OR PROFITS OR FOR REMITTANCE OUTSI DE INDIA AS PROFITS OR FOR THE CREATION OF ANY ASSET OUTSIDE INDIA; ( B ) THE PARTICULARS, AS MAY BE PRESCRIBED 91 IN THIS BEHALF, HAVE BEEN FURNISHED BY THE ASSESSEE IN RESPECT OF NEW MACHINERY OR PLAN T ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SUCH PLANT OR MACHINERY WAS FIRST PUT TO USE. (1C) WHERE ANY AMOUNT CREDITED TO THE SPECIAL ECONO MIC ZONE RE- INVESTMENT ALLOWANCE RESERVE ACCOUNT UNDER CLAUSE ( II ) OF SUB-SECTION (1A), ( A ) HAS BEEN UTILISED FOR ANY PURPOSE OTHER THAN THOS E REFERRED TO IN SUB- SECTION (1B), THE AMOUNT SO UTILISED; OR ( B ) HAS NOT BEEN UTILISED BEFORE THE EXPIRY OF THE PE RIOD SPECIFIED IN SUB- CLAUSE ( I ) OF CLAUSE ( A ) OF SUB-SECTION (1B), THE AMOUNT NOT SO UTILISED, SHALL BE DEEMED TO BE THE PROFITS, ( I ) IN A CASE REFERRED TO IN CLAUSE ( A ), IN THE YEAR IN WHICH THE AMOUNT WAS SO UTILISED; OR ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 5 ( II ) IN A CASE REFERRED TO IN CLAUSE ( B ), IN THE YEAR IMMEDIATELY FOLLOWING THE PERIOD OF THREE YEARS SPECIFIED IN SUB-CLAUSE ( I ) OF CLAUSE ( A ) OF SUB- SECTION (1B), AND SHALL BE CHARGED TO TAX ACCORDINGLY. (2) THIS SECTION APPLIES TO ANY UNDERTAKING WHICH F ULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : ( I ) IT HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR ( A ) COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1981 , IN ANY FREE TRADE ZONE; OR ( B ) COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1994 , IN ANY ELECTRONIC HARDWARE TECHNOLOGY PARK, OR, AS THE CASE MAY BE, S OFTWARE TECHNOLOGY PARK; ( C ) COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2001 IN ANY SPECIAL ECONOMIC ZONE; ( II ) IT IS NOT FORMED BY THE SPLITTING UP, OR THE RECO NSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF ANY UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-ESTABLISHMENT , RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKINGS AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AN D WITHIN THE PERIOD SPECIFIED IN THAT SECTION; ( III ) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINES S OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION. THE PROVISIONS OF EXPLANATION 1 AND EXPLANATION 2 TO SUB-SECTION (2) OF SECTION 80-I SHALL APPLY FOR THE PURPOSES OF CLAUSE ( III ) OF THIS SUB-SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUSE ( II ) OF THAT SUB-SECTION. (3) THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDI A ARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE P REVIOUS YEAR OR, WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. EXPLANATION 1. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSI ON 'COMPETENT AUTHORITY' MEANS THE RESERVE BANK OF IND IA OR SUCH OTHER AUTHORITY AS IS AUTHORISED UNDER ANY LAW FOR THE TI ME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREIGN EXCHANG E. EXPLANATION 2. THE SALE PROCEEDS REFERRED TO IN THIS SUB-SECTION SHALL BE DEEMED TO HAVE BEEN RECEIVED IN INDIA WHERE SUCH SA LE PROCEEDS ARE CREDITED TO A SEPARATE ACCOUNT MAINTAINED FOR THE P URPOSE BY THE ASSESSEE WITH ANY BANK OUTSIDE INDIA WITH THE APPROVAL OF TH E RESERVE BANK OF INDIA. (4) FOR THE PURPOSES OF SUB-SECTIONS (1) AND (1A), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTW ARE SHALL BE THE ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 6 AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS O F THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT O F SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURN OVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. (5) THE DEDUCTION UNDER THIS SECTION SHALL NOT BE A DMISSIBLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR AFTER THE 1ST DAY O F APRIL, 2001, UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FORM 92 , ALONG WITH THE RETURN OF INCOME, THE REPORT OF AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288, CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. (6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATELY SUCCEED ING THE LAST OF THE RELEVANT ASSESSMENT YEARS, OR OF ANY PREVIOUS YEAR, RELEVANT TO ANY SUBSEQUENT ASSESSMENT YEAR, ( I ) SECTION 32, SECTION 32A, SECTION 33, SECTION 35 A ND CLAUSE ( IX ) OF SUB- SECTION (1) OF SECTION 36 SHALL APPLY AS IF EVERY A LLOWANCE OR DEDUCTION REFERRED TO THEREIN AND RELATING TO OR ALLOWABLE FO R ANY OF THE RELEVANT ASSESSMENT YEARS ENDING BEFORE THE 1ST DAY OF APRIL , 2001, IN RELATION TO ANY BUILDING, MACHINERY, PLANT OR FURNITURE USED FO R THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING IN THE PREVIOUS YEAR RE LEVANT TO SUCH ASSESSMENT YEAR OR ANY EXPENDITURE INCURRED FOR THE PURPOSES OF SUCH BUSINESS IN SUCH PREVIOUS YEAR HAD BEEN GIVEN FULL EFFECT TO FOR THAT ASSESSMENT YEAR ITSELF AND ACCORDINGLY SUB-SECTION (2) OF SECTION 32, CLAUSE ( II ) OF SUB-SECTION (3) OF SECTION 32A, CLAUSE ( II ) OF SUB-SECTION (2) OF SECTION 33, SUB-SECTION (4) OF SECTION 35 OR THE SECOND PROVISO TO CLAUSE ( IX ) OF SUB-SECTION (1) OF SECTION 36, AS THE CASE MAY BE, SHALL NOT APPLY IN RELATION TO ANY SUCH ALLOWANCE OR DEDUCTIO N; ( II ) NO LOSS REFERRED TO IN SUB-SECTION (1) OF SECTION 72 OR SUB-SECTION (1) OR SUB-SECTION (3) OF SECTION 74, IN SO FAR AS SUCH LO SS RELATES TO THE BUSINESS OF THE UNDERTAKING, SHALL BE CARRIED FORWARD OR SET OFF WHERE SUCH LOSS RELATES TO ANY OF THE RELEVANT ASSESSMENT YEARS END ING BEFORE THE 1ST DAY OF APRIL, 2001; ( III ) NO DEDUCTION SHALL BE ALLOWED UNDER SECTION 80HH OR SECTION 80HHA OR SECTION 80-I OR SECTION 80-IA OR SECTION 8 0-IB IN RELATION TO THE PROFITS AND GAINS OF THE UNDERTAKING; AND ( IV ) IN COMPUTING THE DEPRECIATION ALLOWANCE UNDER SEC TION 32, THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR THE PURPOSES OF TH E BUSINESS OF THE UNDERTAKING SHALL BE COMPUTED AS IF THE ASSESSEE HA D CLAIMED AND BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF DEPREC IATION FOR EACH OF THE RELEVANT ASSESSMENT YEAR. (7) THE PROVISIONS OF SUB-SECTION (8) AND SUB-SECTI ON (10) OF SECTION 80- IA SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO TH E UNDERTAKING REFERRED TO IN THIS SECTION AS THEY APPLY FOR THE PURPOSES OF T HE UNDERTAKING REFERRED TO IN SECTION 80-IA. (7A) WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WHI CH IS ENTITLED TO THE DEDUCTION UNDER THIS SECTION IS TRANSFERRED, BE FORE THE EXPIRY OF THE ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 7 PERIOD SPECIFIED IN THIS SECTION, TO ANOTHER INDIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER, ( A ) NO DEDUCTION SHALL BE ADMISSIBLE UNDER THIS SECTI ON TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIOUS YEAR IN WH ICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND ( B ) THE PROVISIONS OF THIS SECTION SHALL, AS FAR AS M AY BE, APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAM ATION OR DEMERGER HAD NOT TAKEN PLACE. (7B) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY UNDERTAKING, BEING A UNIT REFERRED TO IN CLAUSE ( ZC ) OF SECTION 2 OF THE SPECIAL ECONOMIC ZONES ACT, 2005, WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DUR ING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AF TER THE 1ST DAY OF APRIL, 2006 IN ANY SPECIAL ECONOMIC ZONE. (8) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOREG OING PROVISIONS OF THIS SECTION, WHERE THE ASSESSEE, BEFORE THE DUE DA TE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 1 39, FURNISHES TO THE ASSESSING OFFICER A DECLARATION IN WRITING THAT THE PROVISIONS OF THIS SECTION MAY NOT BE MADE APPLICABLE TO HIM, THE PROV ISIONS OF THIS SECTION SHALL NOT APPLY TO HIM FOR ANY OF THE RELEVANT ASSE SSMENT YEARS. (9) [ OMITTED BY THE FINANCE ACT, 2003, W.E.F. 1-4-2004. ] (9A) [ OMITTED BY THE FINANCE ACT, 2003, W.E.F. 1-4-2004. ] EXPLANATION 1. [ OMITTED BY THE FINANCE ACT, 2003, W.E.F. 1-4-2004. ] EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, ( I ) 'COMPUTER SOFTWARE' MEANS ( A ) ANY COMPUTER PROGRAMME RECORDED ON ANY DISC, TAPE , PERFORATED MEDIA OR OTHER INFORMATION STORAGE DEVICE; OR ( B ) ANY CUSTOMIZED ELECTRONIC DATA OR ANY PRODUCT OR SERVICE OF SIMILAR NATURE, AS MAY BE NOTIFIED BY THE BOARD, WHICH IS TRANSMITTED OR EXPORTED FROM INDIA TO ANY PLACE OUTSIDE INDIA BY ANY MEANS; ( II ) 'CONVERTIBLE FOREIGN EXCHANGE' MEANS FOREIGN EXCH ANGE WHICH IS FOR THE TIME BEING TREATED BY THE RESERVE BANK OF INDIA AS CONVERTIBLE FOREIGN EXCHANGE FOR THE PURPOSES OF THE FOREIGN EXCHANGE M ANAGEMENT ACT, 1999 (42 OF 1999), AND ANY RULES MADE THEREUNDER OR ANY OTHER CORRESPONDING LAW FOR THE TIME BEING IN FORCE; ( III ) 'ELECTRONIC HARDWARE TECHNOLOGY PARK' MEANS ANY P ARK SET UP IN ACCORDANCE WITH THE ELECTRONIC HARDWARE TECHNOLOGY PARK (EHTP) SCHEME NOTIFIED BY THE GOVERNMENT OF INDIA IN THE M INISTRY OF COMMERCE AND INDUSTRY; ( IV ) 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESP ECT OF EXPORT BY THE UNDERTAKING OF ARTICLES OR THINGS OR COMPUTER SOFTW ARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB-SECTION (3), BUT DOES NOT INCLU DE FREIGHT, ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 8 TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE IND IA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHN ICAL SERVICES OUTSIDE INDIA; ( V ) 'FREE TRADE ZONE' MEANS THE KANDLA FREE TRADE ZON E AND THE SANTACRUZ ELECTRONICS EXPORT PROCESSING ZONE AND INCLUDES ANY OTHER FREE TRADE ZONE WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICAT ION IN THE OFFICIAL GAZETTE, SPECIFY FOR THE PURPOSES OF THIS SECTION; ( VI ) 'RELEVANT ASSESSMENT YEAR' MEANS ANY ASSESSMENT Y EAR FALLING WITHIN A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS REFERRED TO IN THIS SECTION; ( VII ) 'SOFTWARE TECHNOLOGY PARK' MEANS ANY PARK SET UP IN ACCORDANCE WITH THE SOFTWARE TECHNOLOGY PARK SCHEME NOTIFIED BY THE GOV ERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; ( VIII ) 'SPECIAL ECONOMIC ZONE' MEANS A ZONE WHICH THE CE NTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECI FY AS A SPECIAL ECONOMIC ZONE FOR THE PURPOSES OF THIS SECTION. EXPLANATION 3. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT THE PROFITS AND GAINS DERIVED FROM ON SITE DEVELOPMENT OF COMPUTER SOFTWARE (INCLUDING SERVICES FOR DEVELOPMENT OF SOFTWARE) OU TSIDE INDIA SHALL BE DEEMED TO BE THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF COMPUTER SOFTWARE OUTSIDE INDIA. EXPLANATION 4. FOR THE PURPOSES OF THIS SECTION, 'MANUFACTURE OR PRODUCE' SHALL INCLUDE THE CUTTING AND POLISHING OF PRECIOUS AND SEMI- PRECIOUS STONES. 2.4. IT IS NOTICED THAT THOUGH SECTION 10A OF THE ACT SPEAKS ABOUT DEDUCTION BUT SECTION 10A/10B OF THE ACT WERE AMENDED BY THE FINANCE ACT, 2000 W.E.F. 01/04/2001 TO CHANGE EXEMPTION TO DEDUCTION. THE DEDUCTION CONTEMPLATED THEREIN IS QUA THE ELIGIBLE UNDERTAKING OF AN ASSESSEE STANDIN G ON ITS OWN AND WITHOUT REFERENCE TO OTHER ELIGIBLE OR NON-ELIGIBLE UNITS OR UNDERTAKING OF THE ASSESSEE. THE BENEFIT OF DEDUCTION IS PROVIDED BY THE ACT TO THE INDIVIDUAL UNDERTAKING AND RESULTANTLY FLOWS TO THE ASSESSEE. THE DEDUCTION OF PROFIT & GAINS OF AN ELIGIBLE UNDERTAKING HAS TO BE MADE INDEPENDENTLY AND BEFORE GIVING EFFECT TO THE PROVISIONS OF SET O FF AND CARRY FORWARD CONTAINED IN SECTION 70, 72 AND 74. THE DEDUCTION U/S 10A AND 10B ARE PRIOR TO ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 9 COMMENCEMENT OF THE EXERCISE TO BE UNDERTAKING UNDER CHAPTER VI OF THE ACT FOR ARRIVING AT TOTAL I NCOME OF THE ASSESSEE FROM THE GROSS TOTAL INCOME. THE DIFFERENCE BETWEEN THE TWO EXPRESSIONS EXEMPTION AND DEDUCTION, THOUGH, BROADLY, MAY APPEAR TO BE SAME I.E. IMMUNITY FROM TAXATION, THE PRACTICAL EFF ECT OF IT IN THE LIGHT OF SPECIFIC PROVISION CONTAINED IN DIFFERENT PARTS OF THE ACT WOULD BE WHOLLY DIFFEREN T. SUB-SECTION 4 OF SECTION 10A WHICH PROVIDES FOR PRO RATA EXEMPTION, NECESSARILY INVOLVING DEDUCTION OF THE PROFITS ARISING OUT OF DOMESTIC SALES, IS ONE INSTA NCE 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. THE PROVISIONS OF SUB-SECTION 6 OF SECTION 10A, AS AMENDED BY THE 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 A S A DEDUCTION WHICH HAS TO BE WORKED OUT AT A FUTURE POINT OF TIME, NAMELY, AFTER THE EXPIRY OF PERIOD O F 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 O F WHAT HAS ALREADY BEEN PROVIDED IN SECTION 10A. THE PROVISIONS OF 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. THE RETENTION O F THE SAID PROVISIONS OF THE ACT I.E. SECTION 80HHC AND 80HHE, DESPITE THE AMENDMENT OF SECTION 10A, IN OUR VIEW, INDICATES THAT SOME ADDITIONAL BENEFITS T O ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 10 ELIGIBLE SECTION 10A UNITS, NOT CONTEMPLATED BY SECTIONS 80HHC 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 UNDER SECTION 10A AND 80HHC AND 80HHE ARE SUBSTANTIALLY DIFFERENT. 2.5. IF THE SPECIFIC PROVISIONS OF THE ACT PROVIDE [FIRST PROVISO TO SECTIONS 10A(1); 10A (1A) AND 10A (4)] THAT THE UNIT THAT IS CONTEMPLATED FOR GRANT OF BEN EFIT OF DEDUCTION IS THE ELIGIBLE UNDERTAKING AND THAT I S ALSO HOW THE CONTEMPORANEOUS CIRCULAR OF THE DEPARTMENT (NO.794 DATED 09/08/2000) 22 UNDERSTOOD THE SITUATION, IT IS ONLY LOGICAL AND NA TURAL THAT THE STAGE OF DEDUCTION OF THE PROFITS AND GAIN S 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 AN D CARRY FORWARD CONTAINED IN SECTIONS 70, 72 AND 74 O F THE ACT WOULD BE PREMATURE FOR APPLICATION. THE DEDUCTIONS UNDER 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 TOT AL INCOME. THE SOMEWHAT DISCORDANT USE OF THE EXPRESSION TOTAL INCOME OF THE ASSESSEE IN SECTIO N 10A HAS ALREADY BEEN DEALT WITH EARLIER AND IN THE OVERALL SCENARIO UNFOLDED BY THE PROVISIONS OF SECT ION 10A THE AFORESAID DISCORD CAN BE RECONCILED BY UNDERSTANDING THE EXPRESSION TOTAL INCOME OF THE ASSESSEE IN SECTION 10A AS TOTAL INCOME OF THE UNDERTAKING. XXXXXXXXXXXXXXXXXXXX ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 11 2.10. IT IS ALSO NOTED THAT THE HON'BLE APEX COURT IN A LATEST DECISION DATED 16/12/2016 IN CIT VS YOKOGAWA INDIA LIMITED (CIVIL APPEAL NO. 8498 OF 2013) SETTLED THE ISSUE AFTER CONSIDERING THE DECIS ION FROM HON'BLE KARNATAKA HIGH COURT IN 343 ITR 385(KARNATAKA) AND HELD AS UNDER:- 2. THE TRUE AND CORRECT MEANING AND EFFECT OF THE PROVISIONS OF SECTION 10A OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) IS THE PRINCIPAL ISSUE ARISING FOR DETER MINATION OF THE COURT. AT THE OUTSET, IT MUST BE MADE CLEAR THAT TH E DECISION OF THIS COURT WITH REGARD TO THE PROVISIONS OF SECTION 10A OF THE ACT WOULD EQUALLY BE APPLICABLE TO CASES GOVERNED BY THE PROV ISIONS OF SECTION 10B IN VIEW OF THE SAID LATER PROVISION BEING PARI MATERIA WITH SECTION 10A OF THE ACT THOUGH GOVERNING A DIFFERENT SITUATION. 3. THE BROAD QUESTION INDICATED ABOVE MAY BE CONVEN IENTLY DISSECTED INTO THE FOLLOWING SPECIFIC QUESTIONS ARISING IN TH E CASES UNDER CONSIDERATION. (I) WHETHER SECTION 10A OF THE ACT IS BEYOND THE PU RVIEW OF THE COMPUTATION MECHANISM OF TOTAL INCOME AS DEFINED UN DER THE ACT. CONSEQUENTLY, IS THE INCOME OF A SECTION 10A UNIT R EQUIRED TO BE EXCLUDED BEFORE ARRIVING AT THE GROSS TOTAL INCOME OF THE ASSESSEE? (II) WHETHER THE PHRASE TOTAL INCOME IN SECTION 1 0A OF THE ACT IS AKIN AND PARI MATERIA WITH THE SAID EXPRESSION AS A PPEARING IN SECTION 2(45) OF THE ACT? (III) WHETHER EVEN AFTER THE AMENDMENT MADE WITH EF FECT FROM 1.04.2001, SECTION 10A OF THE ACT CONTINUES TO REMA IN AN EXEMPTION SECTION AND NOT A DEDUCTION SECTION? (IV) WHETHER LOSSES OF OTHER 10A UNITS OR NON 10A U NITS CAN BE SET OFF AGAINST THE PROFITS OF 10A UNITS BEFORE DEDUCTI ONS UNDER SECTION 10A ARE EFFECTED? (V) WHETHER BROUGHT FORWARD BUSIN ESS LOSSES AND UNABSORBED DEPRECIATION OF 10A UNITS OR NON 10A UNI TS CAN BE SET OFF AGAINST THE PROFITS OF ANOTHER 10A UNITS OF THE ASSESSEE. ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 12 4. AT THE VERY OUTSET, SECTION 10A OF THE ACT AS IT EXISTED PRIOR TO ITS AMENDMENT BY THE FINANCE ACT OF 2000 WITH EFFECT FR OM 1.04.2001; SUBSEQUENT TO THE AFORESAID AMENDMENT AND THE PROVI SIONS OF SECTION 10A OF THE ACT, AS FURTHER AMENDED BY THE FINANCE A CT, 2003 WITH RETROSPECTIVE EFFECT FROM 1.04.2001 MAY BE CONVENIE NTLY SET OUT BELOW. 5. SECTION 10A OF THE ACT, AS IT STOOD PRIOR TO THE AMENDMENT MADE BY THE FINANCE ACT, 2000, (AMENDMENT EFFECTIVE FROM 1. 4.2001) WAS AS FOLLOWS: 10A. (1) SUBJECT TO THE PROVISIONS OF THI S SECTION, ANY PROFITS AND GAINS DERIVED BY AN ASSESSEE FROM AN IN DUSTRIAL UNDERTAKING TO WHICH THIS SECTION APPLIES SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAKIN G WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY: (I) ... (IA) IN RELATION TO AN UNDERTAKING WHICH BEGINS TO MA NUFACTURE OR PRODUCE ANY ARTICLE OR THING ON OR AFTER THE 1ST DAY OF APRIL, 1995, ITS EXPORTS OF SUCH ARTICLES OR THINGS ARE NOT LESS THA N SEVENTY-FIVE PER CENT OF THE TOTAL SALES THEREOF DURING THE PREVIOUS YEAR; (II) PROVIDED (III) (3) THE PROFITS AND GAINS REFERRED TO IN SUB-SECTION (1 ) SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE IN RESP ECT OF ANY TEN CONSECUTIVE ASSESSMENT YEARS, BEGINNING WITH THE ASS ESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE INDUSTRIAL U NDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS. (4) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSE SSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATE LY SUCCEEDING THE LAST OF THE RELEVANT ASSESSMENT YEARS, OR OF ANY PREVIOUS YEAR, RELEVANT TO ANY SUBSEQUENT ASSESSMENT YEAR, ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 13 (I) SECTION 32, SECTION 32A, SECTION 33, SECTION 35 AND CLAUSE (IX) OF SUB-SECTION (1) OF SECTION 36 SHALL APPLY AS IF EVE RY ALLOWANCE OR DEDUCTION REFERRED TO THEREIN AND RELATING TO OR ALLOWABL E FOR ANY OF THE RELEVANT ASSESSMENT YEARS, IN RELATION TO ANY B UILDING, MACHINERY, PLANT OR FURNITURE USED FOR THE PURPOSES OF THE BUSINESS OF THE INDUSTRIAL UNDERTAKING IN THE PREVIOUS YEAR RELEV ANT TO SUCH ASSESSMENT YEAR OR ANY EXPENDITURE INCURRED FOR THE PURPO SES OF SUCH BUSINESS IN SUCH PREVIOUS YEAR HAD BEEN GIVEN FU LL EFFECT TO FOR THAT ASSESSMENT YEAR ITSELF AND ACCORDINGLY SUB-SECTI ON (2) OF SECTION 32, CLAUSE (II) OF SUB-SECTION (3) OF SECTI ON 32A, CLAUSE (II) OF SUB-SECTION (2) OF SECTION 33, SUB-SECTION (4) OF S ECTION 35 OR THE SECOND PROVISO TO CLAUSE (IX) OF SUB-SECTION (1) OF SECTION 36, AS THE CASE MAY BE, SHALL NOT APPLY IN RELATION TO ANY SUCH ALLOWANCE OR DEDUCTION; (II) NO LOSS REFERRED TO IN SUB-SECTION (1) OF SECTION 72 OR SUB-SECTION (1) OR SUB-SECTION (3) OF SECTION 74 AND NO DEFICIEN CY REFERRED TO IN SUB-SECTION (3) OF SECTION 80J, IN SO FAR AS SUCH LO SS OR DEFICIENCY RELATES TO THE BUSINESS OF THE INDUSTRIAL UNDERTAKING, SHALL BE CARRIED FORWARD OR SET OFF WHERE SUCH LOSS, OR, AS THE CA SE MAY BE, DEFICIENCY RELATES TO ANY OF THE RELEVANT ASSESSMENT YEARS; (III) NO DEDUCTION SHALL BE ALLOWED UNDER SECTION 80 HH OR SECTION 80HHA OR SECTION 80-I OR SECTION 80-IA OR SECTION 80-I B OR SECTION 80J IN RELATION TO THE PROFITS AND GAINS OF THE INDUS TRIAL UNDERTAKING; AND (IV) IN COMPUTING THE DEPRECIATION ALLOWANCE UNDER SE CTION 32, THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR THE PURPOSES OF THE BUSINESS OF THE INDUSTRIAL UNDERTAKING SHALL BE COMPU TED AS IF THE ASSESSEE HAD CLAIMED AND BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF DEPRECIATION FOR EACH OF THE RELEVANT ASSES SMENT YEARS. (5) (6) THE PROVISIONS OF SUB-SECTION (8) AND SUB-SECTIO N (9) OF SECTION 80-I SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO TH E INDUSTRIAL UNDERTAKING REFERRED TO IN THIS SECTION AS THEY APPLY F OR THE PURPOSES OF THE INDUSTRIAL UNDERTAKING REFERRED TO IN SE CTION 80-I. (7) (8) ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 14 6. SECTION 10A WAS SUBSTITUTED BY THE FINANCE ACT, 2000 WITH EFFECT FROM 1.4.2001 IN THE FOLLOWING TERMS: 10A. (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PE RIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTE R SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM T HE TOTAL INCOME OF THE ASSESSEE: PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UNDERTAKING FOR ANY ASSESSMENT 8 YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS O F THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITLED TO DEDUCTION REFERRED TO IN THIS SUB-SECTION ONLY FOR THE UNEXPIRED PERIOD OF THE AFORESAID TEN CONSECUTIVE ASSESSMENT YEARS: PROVIDED FURTHER THAT WHERE AN UNDERTAKING INITIALLY LOC ATED IN ANY FREE TRADE ZONE OR EXPORT PROCESSING ZONE IS SUBSEQUENTL Y LOCATED IN A SPECIAL ECONOMIC ZONE BY REASON OF CONVERSION OF SUCH FREE TRADE ZONE OR EXPORT PROCESSING ZONE INTO A SPECIAL ECO NOMIC ZONE, THE PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION SHALL BE RECKONED FROM THE ASSESSMENT YEA R RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING WAS FIRST SE T UP IN SUCH FREE TRADE ZONE OR EXPORT PROCESSING ZONE: PROVIDED ALSO THAT THE PROFITS AND GAINS DERIVED FROM S UCH DOMESTIC SALES OF ARTICLES OR THINGS OR COMPUTER SOFTWA RE AS DO NOT EXCEED TWENTY-FIVE PER CENT OF TOTAL SALES SHALL BE DEEMED TO BE THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE. PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION S HALL BE ALLOWED TO ANY UNDERTAKING FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2010 AND SUBSEQUENT YEARS. (2) THIS SECTION APPLIES TO ANY UNDERTAKING WHICH FU LFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (I) (A) ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 15 9 (B) (C) (II) (3) (4) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL B E THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS, TH E SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTIC LES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER O F THE BUSINESS CARRIED ON BY THE ASSESSEE. (5) (6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSE SSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATE LY SUCCEEDING THE LAST OF THE RELEVANT ASSESSMENT YEARS, OR OF ANY PREVIOUS YEAR, RELEVANT TO ANY SUBSEQUENT ASSESSMENT YEAR, (I) SECTION 32, SECTION 32A, SECTION 33, SECTION 35 AND CLAUSE (IX) OF SUB-SECTION (1) OF SECTION 36 SHALL APPLY AS IF EVE RY ALLOWANCE OR DEDUCTION REFERRED TO THEREIN AND RELATING TO OR ALLOWABL E FOR ANY OF THE RELEVANT ASSESSMENT YEARS, IN RELATION TO ANY B UILDING, MACHINERY, PLANT OR FURNITURE USED FOR THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING IN THE PREVIOUS YEAR RELEVANT TO SUC H ASSESSMENT YEAR OR ANY EXPENDITURE INCURRED FOR THE PURPO SES OF SUCH BUSINESS IN SUCH PREVIOUS YEAR HAD BEEN 10 GIVEN FULL EFFECT TO FOR THAT ASSESSMENT YEAR ITSELF AND ACCORDINGLY SUB-SE CTION (2) OF SECTION 32, CLAUSE (II) OF SUB-SECTION (3) OF SECTI ON 32A, CLAUSE (II) OF SUB-SECTION (2) OF SECTION 33, SUB-SECTION (4) OF S ECTION 35 OR THE SECOND PROVISO TO CLAUSE (IX) OF SUB-SECTION (1) OF SECTION 36, AS THE CASE MAY BE, SHALL NOT APPLY IN RELATION TO ANY SUCH ALLOWANCE OR DEDUCTION; (II) NO LOSS REFERRED TO IN SUB-SECTION (1) OF SECTION 72 OR SUB-SECTION (1) OR SUB-SECTION (3) OF SECTION 74 IN SO FAR AS SUC H LOSS RELATES TO THE BUSINESS OF THE UNDERTAKING, SHALL BE CARRIED FORW ARD OR SET OFF WHERE SUCH LOSS RELATES TO ANY OF THE RELEVANT ASSESSM ENT YEARS; ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 16 (III) NO DEDUCTION SHALL BE ALLOWED UNDER SECTION 80 HH OR SECTION 80HHA OR SECTION 80-I OR SECTION 80-IA OR SECTION 80- IB IN RELATION TO THE PROFITS AND GAINS OF THE UNDERTAKING; AND (IV) IN COMPUTING THE DEPRECIATION ALLOWANCE UNDER SE CTION 32, THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR THE PURPOSES OF THE BUSINESS OF THE UNDERTAKING SHALL BE COMPUTED AS IF THE ASSESSEE HAD CLAIMED AND BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF DEPRECIATION FOR EACH OF THE RELEVANT ASSESSMENT YEAR. (7) THE PROVISIONS OF SUB-SECTION (8) AND SUB-SECTIO N (10) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO T HE UNDERTAKING REFERRED TO IN THIS SECTION AS THEY APPLY FOR THE PURPO SES OF THE UNDERTAKING REFERRED TO IN SECTION 80-IA. 7. SECTION 10A WAS FURTHER AMENDED BY THE FINANCE A CT OF 2003 WITH RETROSPECTIVE EFFECT FROM 1.04.2001. FOR THE PURPOS ES OF THE PRESENT CASE, THE AMENDMENTS INTRODUCING SECTION (1A); MAKI NG THE PROVISIONS OF SUB-SECTION (4) SUBJECT TO THE PROVISIONS OF SEC TIONS (1) AND (1A) AND MAKING THE BENEFIT OF THE PROVISIONS OF SECTIONS 32 , 32A, 33, 35 AND CLAUSE (IX) OF SECTION 36(1) AND ALSO SECTIONS 72(1 ) AND 74(1) AND (3) OPERATIVE FROM THE ASSESSMENT YEAR 2001-2002 ALONE WOULD BE SIGNIFICANT. 8. THE CARDINAL PRINCIPLES OF INTERPRETATION OF TAX ING STATUTES CENTERS AROUND THE OPINION OF ROWLATT, J. IN CAPE BRANDY SY NDICATE VS. INLAND REVENUE COMMISSIONER1 WHICH HAS VIRTUALLY BECOME TH E LOCUS CLASSICUS2 . THE ABOVE WOULD DISPENSE WITH THE NECE SSITY OF ANY FURTHER ELABORATION OF THE SUBJECT NOTWITHSTANDING THE NUME ROUS PRECEDENTS AVAILABLE INASMUCH AS THE EVOLUTION OF ALL SUCH PRI NCIPLES ARE WITHIN THE FOUR CORNERS OF THE FOLLOWING OPINION OF ROWLATT, J . IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUIT Y ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING I S TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED. 9. THE AMENDMENT OF SECTION 10A OF THE ACT, BY THE FINANCE ACT, 2000 WITH EFFECT FROM 1.4.2001, SPECIFICALLY USES THE WO RDS DEDUCTION OF PROFITS AND GAINS DERIVED BY AN ELIGIBLE UNIT FR OM THE TOTAL INCOME OF THE ASSESSEE. THERE ARE OTHER PROVISIONS OF SECTION 10A, AS AMENDED, WHICH COULD BE SUGGESTIVE OF THE FACT THAT BY THE AMENDMENT ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 17 MADE BY FINANCE ACT, 2000, SECTION 10A HAD CHANGED ITS COLOUR FROM BEING AN EXEMPTION SECTION TO A PROVISION PROVIDING FOR DEDUCTION. YET, SECTION 10A CONTINUED TO REMAIN IN CHAPTER III OF THE ACT WHICH CHAPTER DEALS WITH INCOMES WHICH DO NOT FORM PART O F THE TOTAL INCOME. THERE ARE SEVERAL CIRCULARS THAT HAVE BEEN PLACED BEFORE US BY THE CONTESTING PARTIES TO EXPLAIN THE PURPOSE AN D OBJECT OF THE AMENDMENT. HAVING LOOKED AT THE AFORESAID CIRCULAR S, ISSUED FROM TIME TO TIME, WHAT WE FIND IS A FAIR AMOUNT OF AMBI GUITY THEREIN AS TO THE TRUE NATURE AND EFFECT OF THE AMENDMENT. SPECIF ICALLY, WE MAY REFER TO CIRCULAR NO. 7 DATED 16.07.2013 AS WELL AS CIRCULAR NO. 01/2013 DATED 17.01.2013 WHICH APPEAR TO BE CONFLIC TING AND CONTRADICTORY TO EACH OTHER; IN THE FORMER CIRCULAR THE PROVISION, I.E., SECTION 10A IS REFERRED TO AS PROVIDING FOR DEDUCTI ONS WHEREAS THE LATER CIRCULAR USES THE EXPRESSION EXEMPTION WHIL E REFERRING TO THE PROVISIONS OF SECTIONS 10A AND 10B OF THE ACT. EVEN THE INCOME TAX RETURN FORMS I.E. FORM NO. 1 DATED 17.08.2001 AND F ORM NO. 6 FOR THE ASSESSMENT YEAR 2012-13 ARE EQUALLY CONTRADICTO RY. THE APPELLANT REVENUE WOULD, HOWEVER CONTEND THAT, EX FACIE, FROM THE LANGUAGE APPEARING IN SECTION 10A IT IS CRYSTAL CLEAR THAT T HE AFORESAID PROVISION OF THE ACT, AS AMENDED BY FINANCE ACT, 20 00 PROVIDES FOR DEDUCTIONS FROM THE GROSS TOTAL INCOME, NOTWITHSTAN DING THE USE OF THE WORDS TOTAL INCOME IN SECTION 10A. EXEMPTIONS PRO VIDED FOR UNDER THE OLD SECTION 10A HAVE BEEN DISCONTINUED BY THE L EGISLATURE. ACCORDING TO THE REVENUE, WHERE THE PURPORT AND EFF ECT OF THE STATUTE IS CLEAR FROM THE LANGUAGE USED THERE IS NO SCOPE T O TURN TO CHAPTER NOTES OR THE MARGINAL NOTES SO AS TO UNDERSTAND SEC TION 10A TO BE AN EXEMPTION SECTION ON THE BASIS THAT THE SAID PROVIS ION IS STILL INCLUDED IN CHAPTER III OF THE ACT. RELIANCE IN THIS REGARD HAS BEEN PLACED ON THE DECISION OF THIS COURT IN TATA POWER CO. LTD. V S. RELIANCE ENERGY LTD. 3 WHEREIN AT PAGE 687, IT IS HELD THAT: 89. CHAPTER HEADINGS AND THE MARGINAL NOTES ARE PARTS OF THE STATUTE. THEY HAVE ALSO BEEN ENACTED BY PARLIAME NT. THERE CANNOT, THUS, BE ANY DOUBT THAT IT CAN BE USED IN AID OF THE CONSTRUCTION. IT IS, HOWEVER, WELL SETTLED THAT IF THE WORDINGS OF THE STATUTORY PROVISION ARE CLEAR AND UNAMBIGUOUS, CONSTRUCTION OF THE STATUTE WITH THE AI D OF CHAPTER HEADING AND MARGINAL NOTE MAY NOT ARISE. I T MAY BE THAT HEADING AND MARGINAL NOTE, HOWEVER, ARE OF A VERY LIMITED USE IN INTERPRETATION BECAUSE OF ITS NECESSA RILY BRIEF ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 18 AND INACCURATE NATURE. THEY ARE, HOWEVER, NOT IRRELEVAN T. THEY CERTAINLY CANNOT BE TAKEN INTO CONSIDERATION IF THEY DIFFER FROM THE MATERIAL THEY DESCRIBE. 10. THE REVENUE FURTHER CONTENDS THAT BY VIRTUE OF THE AMENDMENT MADE BY FINANCE ACT, 2000, DEDUCTIONS UNDER SECTION 10A ARE REQUIRED TO BE MADE AND ALLOWED AT THE STAGE OF COM PUTATION OF TOTAL INCOME UNDER CHAPTER VI OF THE ACT NOTWITHSTANDIN G THE ABSENCE OF ANY SPECIFIC PROVISION IN CHAPTER VI TO THE SAID EF FECT. IN FACT, THE REVENUE CONTENDS THAT IN VIEW OF THE CLEAR LANGUAGE OF SECTION 10A, AS BROUGHT ABOUT BY THE AMENDMENT, A PARALLEL OR CO NSEQUENTIAL AMENDMENT IN CHAPTER VI OF THE ACT WAS WHOLLY UNNEC ESSARY. 11. ON THE OTHER HAND, ON BEHALF OF THE ASSESSEES, IT IS CONTENDED THAT THOUGH THERE MAY BE SOME FEATURES OF DEDUCTION BROU GHT IN BY THE AMENDMENT TO SECTION 10A, AS FOR EXAMPLE, DISALLOWA NCE OF PROFITS IN REGARD TO DOMESTIC SALES, THE LEGISLATIVE INTENT IN RETAINING SECTION 10A IN CHAPTER III OF THE ACT WOULD CLEARLY DEMONST RATE THE TRUE NATURE OF THE SAID PROVISION OF THE ACT EVEN AFTER AMENDMENT THEREOF BY THE FINANCE ACT OF 2000. DEDUCTIONS FROM THE TOT AL INCOME WHICH IS NOWHERE ENVISAGED UNDER THE ACT AND THE REFERENC E TO THE TOTAL INCOME OF THE UNDERTAKING, REFERRED TO IN SEVERAL S UBSECTIONS OF SECTION 10A, WOULD INDICATE THAT THE TOTAL INCOME R EFERRED TO IN SECTION 2(45) HAS NO APPLICATION TO THE COMPUTATION UNDER SECTION 10A AND THE REFERENCE THEREIN IS ONLY TO THE TOTAL INCOME OF THE ELIGIBLE UNIT/UNDERTAKING. THE PROVISIONS OF SECTIO N 10A(6), AS AMENDED BY FINANCE ACT OF 2003 RETROSPECTIVELY WITH EFFECT FROM 1.4.2001, HAS ALSO BEEN STRESSED UPON TO CONTEND TH AT WITH EFFECT FROM THE ASSESSMENT YEAR 2001-02 LOSSES AND UNABSOR BED DEPRECIATION OF ELIGIBLE UNITS WOULD BE ALLOWABLE F OR SET OFF IMMEDIATELY ON THE EXPIRY OF THE PERIOD OF TAX HOLI DAY I.E. 10 YEARS. THE PROVISIONS OF SECTIONS 32, 32A, 33, 35 AND PART OF 36 DO NOT SEPARATELY APPLY TO AN ELIGIBLE UNIT DURING THE PER IOD OF TAX HOLIDAY. DURING THE SAID PERIOD THE DEDUCTION UNDER THE AFOR ESAID SECTIONS OF THE ACT ARE DEEMED TO HAVE BEEN MADE. SIMILARLY, UN DER SECTION 10A(6)(II) LOSSES REFERRED TO IN SECTION 72(1) OR 7 4(1) AND 74(3) ARE ALSO ELIGIBLE TO BE CARRIED FORWARD TO THE ASSESSME NT YEAR FOLLOWING THE END OF THE HOLIDAY PERIOD COMMENCING FROM THE A SSESSMENT YEAR 2001-02. ALL THESE, ACCORDING TO THE LEARNED COUNSE LS FOR THE ASSESSEES, SUGGEST THAT, THOUGH HETEROGENEOUS ELEME NTS EXIST IN ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 19 SECTION 10A, THE PROVISION IS REALLY AN EXEMPTION P ROVISION. ALTERNATIVELY, ACCORDING TO THE LEARNED COUNSELS, E VEN IF SECTION 10A IS UNDERSTOOD TO BE PROVIDING FOR DEDUCTIONS, THE STAGE OF SUCH DEDUCTIONS WOULD BE IMMEDIATELY AFTER COMPUTATION O F PROFITS AND GAINS OF BUSINESS AND BEFORE THE AGGREGATE OF INCOM ES UNDER DIFFERENT HEADS OF OTHER LOSS MAKING ELIGIBLE UNITS OR NON-ELIGIBLE UNITS OF THE ASSESSEE ARE TAKEN INTO ACCOUNT. IN OT HER WORDS, IT IS IMMEDIATELY AFTER THE COMPUTATION OF PROFITS AND GA INS OF BUSINESS OF THE UNDERTAKING THAT THE DEDUCTION UNDER SECTION 10 A IS REQUIRED TO BE MADE. THERE IS NO QUESTION OF SUCH DEDUCTIONS BE ING COMPUTED AT THE STAGE OF APPLICATION OF PROVISIONS OF CHAPTER V I OF THE ACT. 12. WE HAVE CONSIDERED THE SUBMISSIONS ADVANCED AND THE PROVISIONS OF SECTION 10A AS IT STOOD PRIOR TO THE AMENDMENT MADE BY FINANCE ACT, 2000 WITH EFFECT FROM 1.4.2001; THE AMENDED SECTION 10A THEREAFTER AND ALSO THE AMENDMENT MADE BY FINAN CE ACT, 2003 WITH RETROSPECTIVE EFFECT FROM 1.4.2001. 13. THE RETENTION OF SECTION 10A IN CHAPTER III OF THE ACT AFTER THE AMENDMENT MADE BY THE FINANCE ACT, 2000 WOULD BE M ERELY SUGGESTIVE AND NOT DETERMINATIVE OF WHAT IS PROVIDE D 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 C HAPTER 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 AS ALREADY DISCUSSED, IT HAS TO BE UNDERSTOOD THAT THE SECTION EMBODIES A CLEAR ENUNCIATION OF THE LEGISLATIVE DECISION TO ALTER IT S NATURE FROM ONE PROVIDING FOR EXEMPTION TO ONE PROVIDING FOR DEDUCT IONS. 14. THE DIFFERENCE BETWEEN THE TWO EXPRESSIONS EXE MPTION AND DEDUCTION, THOUGH BROADLY MAY APPEAR TO BE THE SA ME I.E. IMMUNITY FROM TAXATION, THE PRACTICAL EFFECT OF IT IN THE LI GHT OF THE SPECIFIC PROVISIONS CONTAINED IN DIFFERENT PARTS OF THE ACT WOULD BE WHOLLY DIFFERENT. THE ABOVE IMPLICATIONS CANNOT BE MORE OB VIOUS 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 BE EN FILED BY LOSS ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 20 MAKING ELIGIBLE UNITS AND/OR BY NON-ELIGIBLE ASSESS EES SEEKING THE BENEFIT OF ADJUSTMENT OF LOSSES AGAINST PROFITS MAD E BY ELIGIBLE UNITS. 15. SUB-SECTION 4 OF SECTION 10A WHICH PROVIDES FOR PRO RATA EXEMPTION, NECESSARILY INVOLVING DEDUCTION OF THE P ROFITS ARISING OUT OF DOMESTIC SALES, IS ONE INSTANCE OF DEDUCTION PRO VIDED BY THE AMENDMENT. PROFITS OF AN ELIGIBLE UNIT PERTAINING T O DOMESTIC SALES WOULD HAVE TO ENTER INTO THE COMPUTATION UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS IN CHAPTER IV AND DENIED T HE BENEFIT OF DEDUCTION. THE PROVISIONS OF SUB-SECTION 6 OF SECTI ON 10A, AS AMENDED BY THE FINANCE ACT OF 2003, GRANTING THE BE NEFIT OF ADJUSTMENT OF LOSSES AND UNABSORBED DEPRECIATION ET C. COMMENCING FROM THE YEAR 2001-02 ON COMPLETION OF THE PERIOD O F 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 P ERIOD OF TAX HOLIDAY. THE ABSENCE OF ANY REFERENCE TO DEDUCTION UNDER SECTION 10A IN CHAPTER VI OF THE ACT CAN BE UNDERSTAND BY A CKNOWLEDGING THAT ANY SUCH REFERENCE OR MENTION WOULD HAVE BEEN A REPETITION OF WHAT HAS ALREADY BEEN PROVIDED IN SECTION 10A. THE PROVISIONS OF SECTIONS 80HHC AND 80HHE OF THE ACT PROVIDING FOR S OMEWHAT SIMILAR DEDUCTIONS WOULD BE WHOLLY IRRELEVANT AND R EDUNDANT IF DEDUCTIONS UNDER SECTION 10A WERE TO BE MADE AT THE STAGE OF OPERATION OF CHAPTER VI OF THE ACT. THE RETENTION O F THE SAID PROVISIONS OF THE ACT I.E. SECTION 80HHC AND 80HHE, DESPITE THE AMENDMENT OF SECTION 10A, IN OUR VIEW, INDICATES TH AT SOME ADDITIONAL BENEFITS TO ELIGIBLE SECTION 10A UNITS, NOT CONTEMPLATED BY SECTIONS 80HHC AND 80HHE, WAS INTENDED BY THE LE GISLATURE. SUCH A BENEFIT CAN ONLY BE UNDERSTOOD BY A LEGISLAT IVE MANDATE TO UNDERSTAND THAT THE STAGES FOR WORKING OUT THE DEDU CTIONS UNDER SECTION 10A AND 80HHC AND 80HHE ARE SUBSTANTIALLY D IFFERENT. 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 SE CTION 10A IT IS MORE THAN CLEAR TO US THAT THE DEDUCTIONS CONTEMPLA TED THEREIN IS QUA THE ELIGIBLE UNDERTAKING OF AN ASSESSEE STANDING ON ITS OWN AND WITHOUT REFERENCE TO THE OTHER ELIGIBLE OR NON-ELIG IBLE UNITS OR UNDERTAKINGS OF THE ASSESSEE. THE BENEFIT OF DEDUCT ION IS GIVEN BY THE ACT TO THE INDIVIDUAL UNDERTAKING AND RESULTANTLY F LOWS TO THE ASSESSEE. ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 21 THIS IS ALSO MORE THAN CLEAR FROM THE CONTEMPORANEO US CIRCULAR NO. 794 DATED 9.8.2000 WHICH STATES IN PARAGRAPH 15.6 T HAT, THE EXPORT TURNOVER AND THE TOTAL TURNOVER FOR THE PURPOSES OF SECTIONS 10A AND 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 WIT H 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); 10A (1A) AND 10A (4)] THAT THE UNI T THAT IS CONTEMPLATED FOR GRANT OF BENEFIT OF DEDUCTION IS T HE ELIGIBLE UNDERTAKING AND THAT IS ALSO HOW THE CONTEMPORANEOU S CIRCULAR OF THE DEPARTMENT (NO.794 DATED 09.08.2000) 22 UNDERST OOD THE SITUATION, IT IS ONLY LOGICAL AND NATURAL THAT THE STAGE OF DEDUCTION OF THE PROFITS AND GAINS OF THE BUSINESS OF AN ELIGIBL E UNDERTAKING HAS TO BE MADE INDEPENDENTLY AND, THEREFORE, IMMEDIATELY A FTER THE STAGE OF DETERMINATION OF ITS PROFITS AND GAINS. AT THAT STA GE THE AGGREGATE OF THE INCOMES UNDER OTHER HEADS AND THE PROVISIONS FO R SET OFF AND CARRY FORWARD CONTAINED IN SECTIONS 70, 72 AND 74 O F THE ACT WOULD BE PREMATURE FOR APPLICATION. THE DEDUCTIONS UNDER 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 T HE ASSESSEE IN SECTION 10A HAS ALREADY BEEN DEALT WITH EARLIER AND IN THE OVERALL SCENARIO UNFOLDED BY THE PROVISIONS OF SECTION 10A THE AFORESAID DISCORD CAN BE RECONCILED BY UNDERSTANDING THE EXPR ESSION TOTAL INCOME OF THE ASSESSEE IN SECTION 10A AS TOTAL IN COME OF THE UNDERTAKING. 18. FOR THE AFORESAID REASONS WE ANSWER THE APPEALS AND THE QUESTIONS ARISING THEREIN, AS FORMULATED AT THE OUT SET OF THIS ORDER, BY HOLDING THAT THOUGH SECTION 10A, AS AMENDED, IS A P ROVISION FOR DEDUCTION, THE STAGE OF DEDUCTION WOULD BE WHILE CO MPUTING THE GROSS TOTAL INCOME OF THE ELIGIBLE UNDERTAKING UNDE R 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. ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 22 2.11. SO FAR AS, LOSS ON THE INVESTMENT OF RS.22,36,163/- BEING WRITING OFF TO THE PROFIT & LO SS ACCOUNT OF THE ASSESSEE AND CLAIMED AS DEDUCTION FO RM THE PROFITS OF THE ELIGIBLE UNIT. THE STAND OF THE ASSESSEE IS THAT IN ORDER TO ATTRACT THE INDIAN DIASPORA TO ITS WEBSITE, THE ASSESSEE/STPI UNIT HAS TO SPEND AGGRESSIVELY ON BRAND BUILDING AND ADVERTISING OUTS IDE INDIA AND FOR THIS PURPOSE THE ASSESSEE/STPI UNIT H AS 300% SUBSIDY IN THREE MARKETS U.K., U.S.A. & U.A.E AND DURING IMPUGNED ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS CLOSED 100% SUBSIDIARY IN UAE AND INCURRED LOSS ON INVESTMENT OF RS.22,36,163/- IS CHARGED TO P & L ACCOUNT OF STPI. THUS, IT WAS EXPLAINED THAT THE PROFIT OF STPI UNIT OF RS.16,88,45,731/- IS AFTER SUCH LOSS REDUCED FROM T HE PROFIT OF THE COMPANY WHICH WAS DULY EXAMINED BY TH E ASSESSING OFFICER FROM THE SUBMISSIONS OF THE ASSES SEE, DURING THE COURSE OF HEARING, BY LETTER DATED 27/02/2014, WHICH IS PLACED ON PAPER BOOK AT PAGE NO.39 AND CONSCIOUS DECISION WAS TAKEN BY THE ASSESSING OFFICER BEFORE ALLOWING THE SAID LOSS, WH ICH WAS INCURRED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE AND IS TO BE ALLOWED U/S 37(1) OF THE ACT AS THE SAME WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THUS, WE ARE O F THE VIEW THAT EVEN FOR THE SAKE OF ARGUMENT, THE SA ID LOSS IS DISALLOWED, THE SAME WILL ENHANCE PROFITS O F ELIGIBLE UNDERTAKING BY RS.22,36,163/-, WHICH IN AN Y CASE IS EXEMPT U/S 10A OF THE ACT, KEEPING IN VIEW DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F BLACK & VEATCH CONSULTING PVT. LTD. 348 ITR 72 (BOM .), CIT VS SCHMETZ INDIA PVT. LTD. (2012) 211 TAXMAN 59 (BOM.) AND DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS TECHNO TARP AND POLYMERS PVT. LTD (INCOME TAX APPEAL NO. 2134 OF 2013 VIDE ORDER ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 23 DATED 5/12/2015 ). THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO TARP & POLYMERS PVT. LTD. (SUPRA ) HAS DULY CONSIDERED THE DECISION OF HON'BLE SUPREME COURT DATED 19/09/2013 AND HELD THAT DEDUCTION U/S 10A SHALL BE ALLOWED WITHOUT ADJUSTING BROUGHT FORWARD LOSSES OF THE ELIGIBLE UNIT. XXXXXXXXXXXXXXXXXXX THUS, THE ISSUE UNDER THE INSTANT APPEAL IS NO MORE RES- INTEGRA AS IN NUTSHELL HON'BLE SUPREME COURT HAS HE LD THAT 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 A ND, THEREFORE, IMMEDIATELY AFTER THE STAGE OF DETERMINA TION OF ITS PROFITS AND GAINS. AT THAT STAGE THE AGGREGA TE OF THE INCOMES UNDER OTHER HEADS AND THE PROVISIONS FO R SET OFF AND CARRY FORWARD CONTAINED IN SECTIONS 70, 72 AND 74 OF THE ACT WOULD BE PREMATURE FOR APPLICATIO N. THE DEDUCTIONS UNDER 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 TOT AL INCOME. THE SOMEWHAT DISCORDANT USE OF THE EXPRESSI ON TOTAL INCOME OF THE ASSESSEE IN SECTION 10A HAS ALREADY BEEN DEALT WITH EARLIER AND IN THE OVERALL SCENARIO UNFOLDED BY THE PROVISIONS OF SECTION 10A THE AFORESAID DISCORD CAN BE RECONCILED BY UNDERSTANDIN G THE EXPRESSION TOTAL INCOME OF THE ASSESSEE IN SE CTION 10A AS TOTAL INCOME OF THE UNDERTAKING. FOR THE AFORESAID REASONS WE ANSWER THE APPEALS AND THE QUESTIONS ARISING THEREIN, AS FORMULATED AT THE OUT SET 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 ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 24 THE ACT AND NOT AT THE STAGE OF COMPUTATION OF THE TOTAL INCOME UNDER CHAPTER VI. XXXXXXXXXXX THUS, THE HON'BLE SUPREME COURT HELD THAT NO ADJUSTMENT OF BROUGHT FORWARD LOSSES/UNABSORBED DEPRECIATION OF THE ELIGIBLE UNIT SHALL BE MADE BEF ORE ALLOWING DEDUCTION OF PROFITS OF THE ELIGIBLE UNIT, WHICH IS TO BE ALLOWED UNDER CHAPTER-IV OF THE ACT WITHOU T RESORTING TO THE ADJUSTMENTS AS CONTEMPLATED UNDER CHAPTER VI OF THE ACT. 2.2. IN THE LIGHT OF THE LATEST DECISION FROM HON' BLE APEX COURT IN CIT VS YOKOGAWA INDIA LIMITED (CIVIL APPEAL NO. 8498 OF 2013) DATED 16/12/2016, WE FIND NO INFI RMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). WE AFFIRMED THE SAME. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 28/12/2016. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) #'$ / ACCOUNTANT MEMBER %'$ /JUDICIAL MEMBER # $ MUMBAI; ' DATED : 23/01/2017 F{X~{T? P.S / /. . . &%'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT (RESPECTIVE ASSESSEE) 2. -.+, / THE RESPONDENT. 3. / / # 0' ( )* ) / THE CIT, MUMBAI. 4. / / # 0' / CIT(A)- , MUMBAI, 5. 23 -' , / )*& ) 4 , # $ / DR, ITA NO. 5211/MUM/2013 MOBIAPPS INDIA PVT. LTD. 25 ITAT, MUMBAI 6. 5 6$ / GUARD FILE. ' / BY ORDER, .2*' -' //TRUE COPY// /' (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI