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ITA 616/COCH/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4372 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 20-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 30-04-2008
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT; DR BABU JOSEPH DRS
• Assessee Lawyers: V SATHYANARAYANAN; R RAJASEKHARAN CAS
• Keywords: Depreciation; Question of law; Revised return; Unabsorbed depreciation
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL COCHIN BENCH, COC HIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY ARORA , AM I.T.A. NO. 616/COCH./2008 ASSESSMENT YEAR : 2003-04 M/S. F.C.I. TECHNOLOGY SERVICES LTD., XXIX/2087, VYTILLA, THYKOODAM, COCHIN-19 [PAN: AAACF 5044Q] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(2), ERNAKULAM. (ASSESSEE-APPELLANT) (REVENUE-RE SPONDENT) ASSESSEE BY SHRI V.SATHYANARAYANAN & SHRI R.RAJASEKHARAN, CAS REVENUE BY SHRI T.J.VINCENT & DR. BABU JOSEPH, DRS. O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF T HE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOCHI (CI T (A) FOR SHORT) DATED 13.2.2008, AND THE ASSESSMENT YEAR (A.Y.) UNDER REF ERENCE IS 2003-04. 2. THE ASSESSEES GROUND NO. 1 RELATES TO THE DEDUC TION EXIGIBLE UNDER SECTION 10A OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAF TER) AND, CONSEQUENTLY, THE CARRY FORWARD OF UNABSORBED BUSINESS LOSS (AND/OR UNABSOR BED DEPRECIATION ALLOWANCE) TO WHICH IT IS ENTITLED. THE FACTS OF THE CASE IN BRIE F ARE THAT THE ASSESSEE IS ENGAGED IN COMPUTER-AIDED DESIGN AND ENGINEERING SERVICES; SOF TWARE DEVELOPMENT INCLUDING NETWORKING MANAGEMENT; AND MANUFACTURE AND SALE OF TOOLS AND MOULDS, THROUGH ITS THREE UNITS LOCATED AT CHENNAI, BANGALORE AND KOCHI RESPECTIVELY. IT FILED ITS RETURN OF INCOME FOR THE YEAR ON 30.11.2003 AT A LOSS OF RS.8 1,83,600/-, WHICH STOOD LATER REVISED TO RS. 83,04,385/- PER THE REVISED RETURN (30.10.2004), BOTH OF WHICH STOOD PROCESSED UNDER SECTION 143(1) ON 16.3.2004 AND 24. 3.2005 RESPECTIVELY. THE ASSESSEES CASE WAS SELECTED FOR VERIFICATION PROCE DURE UNDER THE ACT BY THE ISSUE OF ITA. NO.616/COCH./2008 2 NOTICE U/S. 143(2) ON 05.10.2004, WHEREAT THE EXEMP TION U/S. 10A, CLAIMED IN RESPECT OF THE BANGALORE UNIT AT RS. 58,67,861/-, I.E., AT THE RATE OF 90% OF THE PROPORTIONATE PROFIT DERIVED FROM THE SAID UNIT (RS. 66,10,020/-) , WAS CALLED INTO QUESTION. THIS IS AS THE ASSESSING OFFICER (A.O.) WAS OF THE VIEW THAT T HE LOSS FROM THE OTHER TWO UNITS HAD TO BE FIRST ADJUSTED (SET-OFF), AND AS THAT LEF T THE ASSESSEE WITH NO POSITIVE INCOME, IT WOULD NOT BE ENTITLED TO ANY EXEMPTION U/S. 10A. FOR THIS PROPOSITION, HE RELIED ON THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF IPCA LABORATORY LTD. VS. DY. CIT , 266 ITR 521 (SC). IT WOULD BE, AT THIS STAGE, IN ORDER TO SET OUT THE COMPUTATION BY THE ASSESSEE, AND AS MODIFIED BY THE AO, FOR THE SAKE OF CLARITY: (AMOUNT IN RS.) PARTICULARS/SOURCE OF INCOME ASSESSEE AO REGIONAL TOOLING CENTRE (RTC), KOCHI (919 4342) (9194342)* (NOT FALLING UNDER U/S. 10A) INFORMATION SERVICE RESOURCE CENTRE, 6610020 BANGALORE (ISR CENTRE) (FALLING UNDER U/S. 10A) CHENNAI ENGINEERING CENTRE (CEC), (2 34126) (234126) CHENNAI (FALLING UNDER U/S. 10A) _________ _ ________ (9428468) (2818448) PRELIMINARY EXPENSES U/S. 35D 47965 47965 _________ _________ (9476433) (2866413) _________ _________ INCOME FROM OTHER SOURCES 429889 429889 _________ _________ (9046544) (2436524) BALANCE PROFIT FROM BANGALORE UNIT (AFTER S. 10A DEDUCTION) 742159 (6610020 5867861) _________ _________ (8304385) (2436524) _________ _________ DEDUCTION U/S. 10A 5867861 NIL (*) FIGURES IN BRACKETS REPRESENT NEGATIVE AMOUNTS. ITA. NO.616/COCH./2008 3 THE ASSESSEE CARRIED THE MATTER IN APPEAL, WHEREAT IT RELIED ON THE DECISION BY THE TRIBUNAL IN THE CASE OF ACIT V. YOKOGAWA INDIA LTD. , 13 SOT 470 (BANGALORE), WHEREIN IT STANDS HELD THAT PROFITS OF A S. 10A UNI T SHOULD NOT BE ADJUSTED AGAINST LOSSES OF OTHER NON-ELIGIBLE (U/S. 10A ) UNITS FOR THE PURPOSE OF DEDUCTION U/S. 10A. THE SAME DID NOT FIND FAVOUR WITH THE LD. CIT(A) AS THE TRIBUNAL HAD IN THE SAID CASE, IN HIS VIEW, NOT CONSIDERED THE DECISION IN THE CAS E OF IPCA LABORATORY LTD. (SUPRA) ON WHICH THE REVENUE, IN THE INSTANT CASE, HAD BASE D ITS CASE. THE ASSESSEE ALSO RAISED AN ADDITIONAL GROUND BEFORE THE LD. CIT(A), CLAIMIN G THAT THE AO HAD ERRED IN NOT ALLOWING THE LEASE RENT OF RS. 24,92,972/-, I.E., I N RESPECT OF ASSETS TAKEN ON LEASE, AND ON WHICH, CONSEQUENTLY, NO DEPRECIATION HAD BEEN CL AIMED. THE LD. CIT(A) FOUND THE ASSESSEES CLAIM AS NOT MAINTAINABLE AS THE CLAIM S TOOD PRESSED BEFORE THE AO NEITHER PER ITS `RETURN OF INCOME NOR PER ITS `REVISED RET URN OF INCOME. FURTHER, THE FINAL ACCOUNTS, I.E., THE PROFIT AND LOSS ACCOUNT AND THE SCHEDULES ATTACHED THERETO, DID NOT BEAR OUT THE FACTS IN RELATION TO THE ASSESSEES CL AIM, FOR IT TO CONTEND THAT THE FACTS IN RELATION TO THE SAID CLAIM WERE ON RECORD. HE, THER EFORE, DISALLOWED THE SAME WITH REFERENCE TO THE DECISION IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT , 284 ITR 323 (SC). AGGRIEVED, THE ASSESSEE IS IN APPEAL ON BOTH COUNTS . 3. BEFORE US, LIKE SUBMISSIONS STOOD RAISED BY EITHER SIDE. THE MATTER, IT WAS ARGUED BY THE LD. A.R., STANDS SINCE RESOLVED BY THE ORDER BY THE SPECIAL BENCH OF THE TRIBUNAL (CHENNAI) IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD. , PLACING A COPY OF THE SAME ON RECORD. AFTER AN AT L ENGTH DISCUSSION IN THE MATTER, IT STANDS CLARIFIED THEREIN THAT THE PROFITS OF THE EL IGIBLE UNDERTAKING(S) U/S. 10A HAVE TO BE COMPUTED SEPARATELY AND WOULD NOT ENTER THE COMP UTATION (OF GROSS TOTAL INCOME) PROCESS. AS SUCH, THE MATTER SHOULD BE CONSIDERED A S RESOLVED INSOFAR AS THE TRIBUNAL IS CONCERNED. AS REGARDS THE SECOND ISSUE, RELIANC E WAS PLACED BY HIM ON THE DECISION IN THE CASE OF C.W.P.TAYLOR VS. DCIT (I.T.A. NO. 695/COCH/2008 DATED 28.7.2009), WHEREIN IT STANDS HELD THAT THE DECISION IN THE CAS E OF GOETZE (INDIA) LTD. (SUPRA) DOES NOT IN ANY MANNER IMPINGE ON THE POWER OF THE TRIBU NAL U/S. 254 OF THE ACT TO ITA. NO.616/COCH./2008 4 ENTERTAIN FOR THE FIRST TIME A POINT OF LAW WHERE T HE FACTS IN RELATION THERETO ARE NOT IN DISPUTE. THE LD. DR, THOUGH SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW, COULD NOT BRING TO OUR NOTICE ANY DECISION BY ANY HIGHER APPE LLATE FORUM WITH REGARD TO THE TREATMENT OF INCOME FROM SECTION 10A UNIT(S), I.E., VIS--VIS NON-SECTION 10A UNITS. WITH REGARD TO THE SECOND ISSUE, IT WAS SUBMITTED T HAT THE RELEVANT FACTS WERE NOT BEFORE THE AO. THE LD. CIT(A) HAS GIVEN A SPECIFIC FINDING THAT THE MATERIALS ON RECORD DID NOT BEAR OUT THE RELEVANT FACTS IN RELAT ION TO THE ASSESSEES CLAIM OF LEASE RENTAL, WHICH STOOD, EFFECTIVELY SPEAKING, CHALLENG ED BY THE ASSESSEE IN APPEAL. THE LD. AR WAS SPECIFICALLY QUESTIONED BY THE BENCH IN THIS REGARD, AND WHO SUBMITTED THAT A COPY OF THE ASSESSEES FINAL ACCOUNTS SHALL BE PLAC ED ON RECORD FOR ITS PERUSAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE M ATERIAL ON RECORD, INCLUDING THE CASE LAW CITED. 4.1 WITH REGARD TO THE FIRST ISSUE, THE MATTER STANDS SINCE RESOLVED, AT LEAST AT THE LEVEL OF THE TRIBUNAL, BY THE DECISION OF THE SPECI AL BENCH (CHENNAI) IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD. (SUPRA), WHICH STANDS SINCE REPORTED AT 2 ITR (TRB.) 66 (CHENNAI) (SB). THE RELEVANT ISSUES C ONCERNING THE DEDUCTION U/S. 10A, WHICH STAND CLARIFIED BY IT, ARE AS UNDER:- A) THE BUSINESS LOSS OF NON-ELIGIBLE UNIT(S) CANNO T BE SET OFF AGAINST THE PROFITS OF UNDERTAKING(S) ELIGIBLE FOR DEDUCTION U/S. 10A; B) THAT ANY OTHER INCOME, INCLUDING THE LOSSES ARISING TO THE ASSESSEE FROM OTHER CONCERNS, SHALL BE COMPUTED AS PER THE REGULA R PROVISIONS OF THE ACT AND, CONSEQUENTLY, CARRY FORWARD UNDER AND IN TERMS OF THE REGULAR PROVISIONS OF THE ACT; C) THAT THE UNABSORBED CLAIM U/S. 10A, I.E., THE INCOM E AFTER DEDUCTION, HAVING ARISEN FROM AN ELIGIBLE UNIT, CANNOT BE CARRIED FOR WARD IN THE LIKE MANNER AS A BUSINESS LOSS OR UNABSORBED DEPRECIATION AND WOUL D, THEREFORE, BE SUBJECT TO TAX. THE BASIS OF THE TRIBUNALS CONCLUSION(S) ARE THAT SECTION 10A FALLS UNDER CHAPTER III (TITLED `INCOMES WHICH DO NOT FORM PART OF TOTAL IN COME) OF THE ACT, AND NOT U/CHAPTER ITA. NO.616/COCH./2008 5 IV (`COMPUTATION OF INCOME), SO THAT SECTION 80AB OF CHAPTER VI-A, WHICH CONCERNS DEDUCTIONS FROM THE GROSS TOTAL INCOME (GTI), ARRIV ED AT AFTER AGGREGATION, INCLUDING SET OFF, OF INCOMES FORMING PART OF THE TOTAL INCOM E (AS PER CHAPTER VI), WOULD HAVE NO APPLICATION. ACCORDINGLY, THE INCOME DERIVED FRO M SECTION 10A UNDERTAKING(S) IS TO BE COMPUTED SEPARATELY UNDER THE HEAD `PROFITS AND GAINS OF BUSINESS OR PROFESSION. AND IT IS AT THIS STAGE THAT THE DEDUCTION UNDER TH E SAID SECTION IS TO BE GIVEN EFFECT TO, AT 100% OF THE PROFITS AND GAINS OF THE ELIGIBLE UN DERTAKINGS (UP TO AY 2002-03) AND AT 90% THEREAFTER ( REFER PARA # 23, 40 OF THE ORDER ). THIS FOLLOWS ITS UNDERSTANDING THAT THE INCOME FALLING U/S. 10A, THOUGH NOT AN EXE MPT INCOME INASMUCH AS THE SECTION SPEAKS OF A DEDUCTION AND NOT OF EXEMPTION AND, BESIDES, LIMITS THE SAME TO NINETY PERCENT OF THE QUALIFYING INCOME, YET QUALIF IES TO BE A SEPARATE CLASS OF INCOME BY ITSELF. THE BALANCE TEN PER CENT., I.E., WHICH R EMAINS AFTER GIVING EFFECT TO THE PERMISSIBLE DEDUCTION U/S. 10A, REFERRED TO BY THE TRIBUNAL AS `UNABSORBED CLAIM U/S. 10A, NOT FORMING PART OF THE TOTAL INCOME, CANNOT, THEREFORE, BE AGGREGATED WITH OTHER INCOME(S) OF THE ASSESSEE FALLING UNDER CHAPTER IV, I.E., THAT GO TO COMPRISE THE GROSS TOTAL INCOME (GTI). IT WOULD, THUS, STAND TO BE TAX ED, ALBEIT INDEPENDENTLY. AS SUCH, THERE WOULD BE TWO PARALLEL COMPUTATIONS OF INCOME, I.E., QUA SECTION 10A INCOME(S) AND NON-SECTION 10A INCOMES (ASSESSABLE U/C. IV), W ITH NO INTERFACE OR TRANSFER FROM ONE TO ANOTHER, SO THAT NEITHER THE PROFITS NOR THE LOSSES OF ONE CATEGORY (SAY, FROM S. 10A UNITS, WHICH WE HAVE REFERRED TO AS `S. 10A INC OME) WOULD ENTER THE COMPUTATION OF INCOME OF THE OTHER CATEGORY OR CLAS S. THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF IPCA LABORATORY LTD. (SUPRA) STANDS ALSO CONSIDERED BY THE TRIBUNAL AND REFERRED TO AT PARAS 49, 62 AND 63 OF ITS ORDER. 4.2 IN THE PRESENT CASE, WHILE THE ASSESSEE C LAIMS DEDUCTION QUA ITS ONLY PROFIT- EARNING S. 10A UNIT BY CONSIDERING IT AS ITS ONLY SOURCE OF INCOME, THE REVENUE SEEKS TO ADJUST THE SAID INCOME AGAINST LOSSES FROM THE O THER TWO UNITS, ONE OF WHICH IS AN ELIGIBLE (U/S. 10A) UNIT, FOR COMPUTING THE DEDUCTI ON U/S. 10A. THE ISSUE OF SET OFF OR ADJUSTMENT OF SEC. 10A INCOME AGAINST NON-SECTION 1 0A INCOME STANDS ANSWERED BY THE TRIBUNAL PER ITS SPECIAL BENCH DECISION IN THE CASE OF SCIENTIFIC ATLANTA INDIA ITA. NO.616/COCH./2008 6 TECHNOLOGY PVT. LTD. (SUPRA), WHICH IS EVEN OTHERWISE BINDING ON US, SO THAT THE SAME MUST BE CONSIDERED AS RESOLVED, AT LEAST AS FAR AS THE TRIBUNAL IS CONCERNED; THE REVENUE NOT BRINGING ANY DECISION TO THE CONTRARY B Y AN HIGHER AUTHORITY TO OUR NOTICE. THE SECOND ASPECT OF THE MATTER, I.E., AGGR EGATION OF THE INCOME FROM TWO (OR MORE) ELIGIBLE (U/S. 10A) UNDERTAKINGS AND, CONSEQU ENTLY, THE SET OFF OF THE TWO, WHERE ONE OF THEM IS IN LOSS, AS IN THE PRESENT CASE, REM AINS FOR BEING ANSWERED. AS THIS ISSUE WAS NOT CONSIDERED OR ADDRESSED AT THE TIME OF HEAR ING, THE MATTER WAS POSTED FOR HEARING AGAIN, TO ALLOW THE PARTIES AN OPPORTUNITY OF HEARING ON THIS ASPECT OF THE MATTER. THE LD. AR DREW OUR ATTENTION TO THE DIFFER ENT PARAGRAPHS OF THE SAME DECISION, WHERE, WHILE DISCUSSING THE MATTER WITH REFERENCE T O THE PRECEDENTS IN THE MATTER, IT STANDS EMPHASIZED THAT DEDUCTION U/S. 10A IS QUA AN `UNDERTAKING. NOWHERE THE WORD `UNDERTAKINGS, IS USED. THE SAME, IT WAS ARGUED, T HUS, CANNOT BE CONSIDERED AS PLURAL, AND WHERE MORE THAN ONE UNIT QUALIFIES FOR BENEFIT U/S. 10A, THE SAME HAS TO BE WORKED OUT INDEPENDENTLY FOR EACH SUCH UNIT. THE LD . DR, ON THE OTHER HAND, WOULD SUBMIT THAT THE SAME GOES AGAINST THE GRAIN OF THE DECISION BY THE SPECIAL BENCH; IT, ADJUDICATING THE ISSUE OF SET OFF OF LOSS (FROM A N ON-ELIGIBLE UNIT) AGAINST THE PROFIT FROM AN ELIGIBLE UNDERTAKING, FOR THE PURPOSE OF CO MPUTATION OF DEDUCTION U/S. 10A, CLEARLY HOLDS THE SAME AS NOT PERMISSIBLE; THE TWO INCOMES FALLING UNDER DIFFERENT CHAPTERS OF THE ACT. THAT BEING THE PREMISES OF ITS DECISION, IT FOLLOWS THAT WHERE THE LOSS IS ALSO FROM AN ELIGIBLE UNDERTAKING (SOURCE), IT WOULD WARRANT BEING SET OFF OR ADJUSTED PRIOR TO THE GRANT OF DEDUCTION U/S. 10A. THE TRIBUNAL INDICATES SO IN NO UNCERTAIN TERMS WHEN IT STATES, AT PARA # 27 OF ITS ORDER, OF THE POSITION BEING DIFFERENT WHERE THE LOSS - WHICH IS TO BE SET OFF - IS FROM A N ELIGIBLE UNDERTAKING, AND THAT ITS DECISION (REGARDING THE NON-SET OFF OF LOSS OF AN N ON-ELIGIBLE UNIT) SHALL HAVE NO APPLICATION IN SUCH A CASE; THE RELEVANT PART OF IT S ORDER READING AS: 27. HAVING HELD THAT.. OF COURSE, IF THERE AR E MORE THAN ONE UNDERTAKING WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10A AND IF SOME OF THE UNITS HAVE PROFIT AND OTHER UNITS HAVE LOSS, I T WOULD BE AN ENTIRELY DIFFERENT CASE WHICH IS BEFORE US. HENCE, THE DECISION RENDERED IN THIS APPEAL WOULD NOT BE APPLICABLE TO SUCH CASES WHERE THERE ARE MORE THAN ONE ELIGIBLE UNDERTAKING CLAIMING DEDUCTION UNDER SECTION 10A. IN THIS CAS E THERE IS ONLY ONE ELIGIBLE UNDERTAKING CLAIMING DEDUCTION U/S. 10A A ND HENCE, THE LOSS FROM THE NON- ELIGIBLE UNIT CANNOT BE SET OFF AGAINST T HE PROFITS OF THE ELIGIBLE UNIT WHILE ITA. NO.616/COCH./2008 7 DETERMINING DEDUCTION U/S. 10A. IN RESPECT OF THIS MATTER, THEREFORE, WHILE THE ASSESSEE PLEADS ITS CASE WITH REFERENCE TO THE FACT THAT THE PROVISION NOWHERE CO NTEMPLATES AN AGGREGATION, SO THAT THE WORD ` UNDERTAKING IN THE SECTION CANNOT BE RE AD AS PLURAL, TO IMPLY AN AGGREGATION OF INCOMES FOR THE PURPOSE OF QUANTIFYI NG THE DEDUCTION, THE REVENUE RELIES ON THE DECISION IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD. (SUPRA), URGING FOR ITS HOLISTIC READING; THE TRIBU NAL CLEARLY INDICATING TO THE CONTRARY, WHICH, RATHER, EMANATES FROM THE RATIONALE OF ITS D ECISION, I.E., THE TWO REPRESENTING DIFFERENT CLASSES OF INCOME. 4.3 WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE MATT ER, AND FOR THE REASONS THAT FOLLOW, ARE NOT MOVED IN FAVOUR OF THE REVENUES ST AND. THAT THE DEDUCTION U/SS. 10A AND 10B, AS ALSO AS THOSE U/S. 80HH, 80HHA, 80I, 80 IA, ET. AL. ARE UNIT-SPECIFIC, IN CONTRADISTINCTION TO BEING ASSESSEE-SPECIFIC, IS WE LL-SETTLED, AND NOT IN DISPUTE, AND FOR WHICH REFERENCE MAY BE MADE TO THE DECISION IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD. (SUPRA) ITSELF, WHEREIN THIS ASPECT STANDS EMPHASIZ ED IN SUFFICIENT DETAIL. THAT BEING THE BASIC POSITION IN RESPECT OF THE DEDUCTION, THE NEXT QUESTION IN THE MATTER WOULD BE WITH REGARD TO ITS QUANTIFICATI ON, I.E., THE QUALIFYING AMOUNT OF PROFIT AND GAINS ON WHICH THE SAME IS TO BE ALLOWED OR WORKED AT. AGAIN, THE DEDUCTION BEING UNIT-SPECIFIC AND, FURTHER, NOT FOR MING PART OF GTI, IT IS NOT SUBJECT TO EITHER AGGREGATION OR ADJUSTMENT AND, CONSEQUENTLY, TO THE RESTRICTIVE INFLUENCE OF SS. 80A(2) AND 80AB OF CHAPTER VI-A. ALSO, THERE IS NOT HING IN THE SECTION THAT SUGGESTS AGGREGATION OF PROFITS FROM TWO OR MORE ELIGIBLE UN DERTAKINGS, SO THAT THE PROFIT DERIVED FROM EACH IS TO BE CONSIDERED SEPARATELY, I .E., AS IF IT WERE THE ONLY INCOME OF THE ASSESSEE, FOR THE PURPOSE OF COMPUTATION OF DED UCTION THERE-UNDER. IN OTHER WORDS, THE QUALIFYING AMOUNT AND, CONSEQUENTLY, THE DEDUCT ION IN ITS RESPECT IS TO BE WORKED ON A STAND-ALONE BASIS, INDEPENDENTLY FOR EACH ELIG IBLE UNIT. IN THIS RESPECT, SS. 10A AND 10B ARE A SEPARATE CODE IN THEMSELVES. THE TREA TMENT OF THE UNABSORBED LOSS OR DEPRECIATION, AS THE CASE MAY BE, THAT MAY ARISE FO R ANY OF THE YEARS, WHETHER INSIDE OR OUTSIDE THE TAX HOLIDAY PERIOD, STANDS, AGAIN, PROV IDED THERE-UNDER. OF COURSE, ONCE ITA. NO.616/COCH./2008 8 THE TAX HOLIDAY PERIOD EXPIRES, THERE IS NO QUESTIO N OF THE UNDERTAKING BEING AN ELIGIBLE ONE, AND INCOME THERE-FROM, SUBJECT TO ANY LIMITATION PROVIDED IN ITS RESPECT UNDER THE PROVISION ITSELF, WOULD FALL TO BE CONSID ERED AS ONLY FROM A NON-ELIGIBLE SOURCE. THE QUESTION HERE IS NOT OF THE SINGULAR OR PLURAL SENSE IN WHICH THE WORD `UNDERTAKING IS USED IN THE SECTION, OR IS CAPABLE OF BEING READ, BUT WHETHER THERE IS ANY POSITIVE RELATIONSHIP BETWEEN THE INCOMES DERIV ED FROM TWO ELIGIBLE SOURCES. THE PROVISION IS COMPLETELY SILENT IN THE MATTER, SO TH AT THE ONLY CONCLUSION IS AN EMPHATIC NO, AND THE SAME ARE TO BE CONSIDERED DE HORS EACH OTHER. THE ISSUE BEFORE THE SPECIAL BENCH WAS THE ADMISSIBILITY OF THE SET OFF OF LOSS OF AN NON-ELIGIBLE UNIT AGAINST THE PROFIT FROM AN ELIGIBLE ONE , FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S. 10A. IT IS WELL SETTLED THAT A DECISION IS AN AUTHORITY ON WHA T IT ACTUALLY DECIDES. ITS OBSERVATIONS AT PARA 27 OF ITS ORDER, THEREFORE, ARE TO BE READ IN THE CONTEXT OF THE ISSUE THAT WAS BEFORE IT AND, FURTHER, LIMITED TO THAT. WHEN IT ST ATES THAT ITS DECISION WOULD HAVE NO APPLICATION TO A CASE WHERE THE LOSS (TO BE SET OFF ) IS FROM AN ELIGIBLE UNIT, THE SAME HAS TO BE READ AS JUST THAT, I.E., THAT IT HAS NOT EXPRESSED ANY OPINION IN THE MATTER, SO THAT THE ISSUE IS AT LARGE, AND CANNOT BE CONSTRUED AS A POSITIVE STATEMENT BY IT, AS CONTENDED BY THE REVENUE. 4.4 IN VIEW OF THE FOREGOING, WE MAY SUM UP O UR FINDINGS, AS UNDER: (A). THE DEDUCTION U/S. 10A IN RESPECT OF THE ISR C ENTRE, BANGALORE, IS TO BE COMPUTED ONLY QUA ITS PROFITS, I.E., WITHOUT ANY AD JUSTMENT OR SET OFF OF ANY LOSS FROM ANY OTHER SOURCE, EITHER ELIGIBLE OR NON-ELIGI BLE (U/S. 10A). THE ALLOCATION OF PRELIMINARY EXPENSES U/S. 35D FOR THE PURPOSE CO ULD EITHER ON SOME REASONABLE BASIS, AS TURNOVER, OR BETTER STILL, SET OFF AGAINST THE SPECIFIC INCOME(S) OF THE UNIT(S) IN RELATION TO THE SETTING UP OR EXPANSION OF WHICH THE SAME STOOD INCURRED IN THE FIRST PLACE. (B) THE INCOME THAT OBTAINS AFTER THE DEDUCTION U/ S. 10A, OR THE `UNABSORBED CLAIM U/S. 10A, AS THE TRIBUNAL DESCRIBES IT IN TH E CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY PVT. LTD. (SUPRA), WOULD STAND TO BE TAXED AS SUCH, I.E., SHA LL NOT BE SET OFF AGAINST ANY OTHER LOSS OR BE CARRIED FORWARD. 5. COMING TO THE SECOND ISSUE, AS WOULD BE APP ARENT FROM THE NARRATION OF THE FACTS AND THE ARGUMENTS BEFORE US; THE TRIBUNALS ORDER I N THE CASE OF C.W.P. TAYLOR ITA. NO.616/COCH./2008 9 (SUPRA) AND THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA), AS ALSO IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VS. CIT, 229 ITR 383 (SC), THE MATTER BEFORE US IS PRINCIPALLY ONE O F FACT. THIS, AS IT IS ONLY WHERE THE RELEVANT FACTS ARE ON RECORD AND, FURTHER, NOT DISP UTED, THAT A QUESTION OF LAW COULD BE RAISED FOR THE FIRST TIME BEFORE THE APPELLATE TRIB UNAL OR ANY APPELLATE AUTHORITY FOR THAT MATTER. THIS POSITION OF LAW IS WELL-SETTLED, AND STANDS CLARIFIED PER BOTH THE DECISIONS BY THE APEX COURT REFERRED TO ABOVE. HERE WE MAY CLARIFY THAT IT IS ONE THING TO RAISE A LEGAL ARGUMENT FOR THE FIRST TIME QUA A CLAIM WHICH STANDS PREFERRED BEFORE THE ASSESSING AUTHORITY, AND QUITE ANOTHER TO RAISE THE CLAIM ITSELF FOR THE FIRST TIME BEFORE AN APPELLATE AUTHORITY, SO THAT THERE IS NO OCCASION FOR THE AO TO CONSIDER THE SAME, AND IT IS IN RESPECT OF THE LATTER THAT THE D ECISION IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) WOULD FIND APPLICATION. IT IS ONLY THE RET URN OF INCOME COUPLED WITH THE MATERIALS ON RECORD THAT WOULD DECIDE IF THE CLAIM UNDER REFERENCE WAS IN FACT PRESSED BEFORE THE ASSESSING AUTHORITY. IN VIEW OF THE SPEC IFIC FINDINGS BY THE LD. CIT(A) VIDE PARA # 8 OF HIS ORDER, WHICH STOOD ADVERTED TO EAR LIER, AND WHICH STAND NOT REBUTTED BY THE ASSESSEE BEFORE US IN ANY MANNER, WE DO NOT CONSIDER THE ASSESSEES CLAIM AS MAINTAINABLE AND, CORRESPONDINGLY, NO INFIRMITY IN HIS ORDER ON THAT GROUND, WHICH STANDS UPHELD AS A RESULT. WE DECIDE ACCORDINGLY; N EEDLESS TO ADD, THE FINAL ACCOUNTS FOR THE YEAR STAND NOT PLACED ON RECORD. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 4TH JUNE 2010 GJ COPY TO: 1. M/S. F.C.I. TECHNOLOGY SERVICES LTD., XXIX/2087, VYTILLA, THYKOODAM, COCHIN-19. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1(2), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. ITA. NO.616/COCH./2008 10 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSIST ANT REGISTRAR)