Deduction u/s 10A of Income Tax Act  has to be computed before set off or Carry Forward of Business Loss and Depreciation: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Mumbai bench held that deduction under section 10A of the Income Tax Act, 1961 has to be computed before setoff carry forward business loss and depreciation. Therefore the bench allowed the appeal filed by the assessee.

Assessee, BA Continuum India Private Limited subsidiary of Countrywide Financial Corporation and is engaged in the business of providing information technology services. The assessee company is 100% export oriented unit and is registered under the STP Scheme for development of computer software/IT enabled services.

Assesee company filed return of income by regular provision of the Income Tax Act and book profit under Section 115JB of the Income Tax Act .in the return of income assessee company claimed deduction under Section 10A of the Income Tax Act after claiming set off  brought forward business of last year.

During the course of assessment proceedings the assesse revised its total income and enhanced claim of deduction under Section 10A of the Income Tax Act. However, the AO  denied  the claim.

Aggrieved by the order, assessee filed an appeal  before the Commissioner of Income Tax-Appeals [CIT(A)], who partially allowed the appeal. Thereafter the assesee filed the subsequent appeal before the tribunal.

Before the bench Nishant Thakkar, counsel for the assessee relied upon the decision in CIT v. Yokogawa India Ltd and submitted that the deduction under Section 10A of the Income Tax Act would be eligible on gross total income under Chapter IV of the Act and not at the stage of total income under chapter VI of the Income Tax Act. Thus, deduction under Section 10A Income Tax Act has to be computed before set off or carry forward business loss if any.

Salil Mishra, Counsel for the revenue,  supported  the decision of the Assessing Officer.

After considering  the facts submitted by both parties, the two member bench of Om Prakash Kant (Accountant Member) and  Vikas Awasthy (Judicial Member) directed the Assessing officer to grant deduction under section 10 A of the Income Tax Act as per the findings of supreme court in the case of Yokogawa India Ltd.

Therefore, the bench allowed the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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