M/s. Ambica Agarbathies and Aroma Industries Limited, CHENNAI v. ACIT, CHENNAI

ITA 319/CHNY/2010 | 2005-2006
Pronouncement Date: 23-07-2010 | Result: Allowed

Appeal Details

RSA Number 31921714 RSA 2010
Assessee PAN AAACA7483L
Bench Chennai
Appeal Number ITA 319/CHNY/2010
Duration Of Justice 4 month(s) 5 day(s)
Appellant M/s. Ambica Agarbathies and Aroma Industries Limited, CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 23-07-2010
Date Of Final Hearing 19-07-2010
Next Hearing Date 19-07-2010
Assessment Year 2005-2006
Appeal Filed On 18-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE AM AND SHRI GEORGE MATHAN JM I.T.A. NOS. 314 315 316 317 318 & 319/MDS/2010 ASSESSMENT YEARS : 2000-01 TO 2005-06 M/S AMBICA AGARBATHIES AND AROMA INDUSTRIES LIMITED AMBICA EMPIRE-BEST WESTERN NO.57 100 FT. ROAD VADAPALANI CHENNAI. PAN : AAACA7483L V. THE ASSISTANT/DEPUTY COMMISSIONER OF INCOME TAX COMPANY CIRCLE I(1) CHENNAI. (APPELLANT) (RESPONDENT) I.T.A. NO. 370/MDS/2010 A Y: 2002-03 THE DEPUTY COMMISSIONER OF INCOME TAX COMPANY CIRCLE I(1) CHENNAI. V. M/S AMBICA AGARBATHIES AND AROMA INDUSTRIES LIMITED AMBICA EMPIRE-BEST WESTERN NO.57 100 FT. ROAD VADAPALANI CHENNAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B. RAMAKRISHNAN DEPARTMENT BY : SHRI B. SRINIVAS ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 2 O R D E R PER ABRAHAM P. GEORGE AM APPEALS IN I.T.A. NOS. 314 TO 319/MDS/2010 ARE TH AT OF THE ASSESSEE WHEREAS APPEAL IN I.T.A. NO. 370/MDS/201 0 IS A CROSS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2002-03. 2. ASSESSEES APPEALS FOR ASSESSMENT YEARS 2000-01 TO 2004-05 ARE ON THE SAME ISSUE AND HENCE THESE ARE CONSIDERE D TOGETHER FIRST. 3. GRIEVANCE OF THE ASSESSEE IN THE ABOVE MENTIONED APPEALS IS THAT IT WAS DENIED THE DEDUCTION UNDER SECTION 80IA OF THE INCOME-TAX ACT 1961 (HEREINAFTER CALLED THE ACT) FOR THE RE SPECTIVE ASSESSMENT YEARS. WE NOTE THAT THE CIT(A) PASSED A CONSOLIDAT ED ORDER FOR ASSESSMENT YEARS 2000-01 2001-02 2003-04 AND 2004 -05 WHEREAS FOR ASSESSMENT YEAR 2002-03 A SEPARATE ORD ER HAS BEEN PASSED BY HIM. 4. SHORT FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE AND TRADING OF AGARBATHIES AND RUNNI NG OF A HOTEL AND CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT ON A WINDMILL WHICH WAS COMMISSIONED DURING PREVIOUS YEAR RELEVANT TO A SSESSMENT YEAR ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 3 1997-98. FOR ASSESSMENT YEARS 1997-98 AND 1998-99 SUCH WINDMILLS INCURRED LOSSES. BUT IT HAD PROFITS FOR ASSESSMENT YEAR 1999-2000. NEVERTHELESS ASSESSEE ELECTED TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT ONLY FROM ASSESSMENT YEAR 2000-01. SUCH CLAIM WAS ACCEPTED BY THE ASSESSING OFFICER IN THE REGULAR ASSESSMENT PROCEEDINGS FOR ALL THE IMPUGNED ASSESSM ENT YEARS EXCEPT ASSESSMENT YEAR 2002-03. FOR ASSESSMENT YEA R 2002-03 THE CLAIM UNDER SECTION 80IA WAS NOT ALLOWED IN REGULAR ASSESSMENT PROCEEDINGS ITSELF. FOR ALL THE YEARS EXCEPT ASSE SSMENT YEAR 2002- 03 THE ASSESSMENTS WERE REOPENED INVOKING SECTION 1 47 OF THE ACT AND THEREAFTER THE CLAIM UNDER SECTION 80IA WAS DIS ALLOWED. AS PER THE A.O. THOUGH LOSSES MADE BY THE ASSESSEE WERE S ET OFF AGAINST PROFITS OF OTHER BUSINESS IN THE EARLIER YEARS FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 80IA SUCH LO SSES WERE TO BE TREATED AS UNABSORBED AND HAD TO BE ADJUSTED AGAINS T THE PROFITS OF THE YEAR IN WHICH ASSESSEE HAD ELECTED TO CLAIM THE DEDUCTION AND ANY SUBSEQUENT YEAR AND ONLY ON THE BALANCE WOULD THE ASSESSEE BE ELIGIBLE FOR SUCH DEDUCTION. A.O. NOTED THAT AS SESSEE HAD SUBSTANTIAL LOSSES FROM WINDMILL OPERATIONS DURING 1997-98 AND 1998- 99 AND EVEN AFTER THE SETTING-OFF THE PROFIT FOR AS SESSMENT YEAR 1999- ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 4 2000 THE UNABSORBED LOSSES PERTAINING TO WINDMILL OPERATIONS CAME TO RS.96 24 763/-. A.O. RELYING ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PRASAD PRODUCTIONS (P) LTD. V. DCIT (98 ITD 212) HELD THAT SUCH LOSSES OF EARLIER YEARS HAD TO BE FIRST SET OFF AND DEDUCTION UNDER SECTION 80IA COULD BE ALLOWED O NLY THEREAFTER. THE EFFECT WAS THAT FOR ALL THESE YEARS THE ASSESS EES CLAIM OF DEDUCTION UNDER SECTION 80IA WAS DISALLOWED. 5. IN ITS APPEALS BEFORE THE CIT(A) PLEA OF THE AS SESSEE WAS THAT DECISION IN THE CASE OF PRASAD PRODUCTIONS (P) LTD. V. DCIT (SUPRA) RELIED ON BY THE A.O. WAS DISTINGUISHABLE. ACCORDI NG TO THE ASSESSEE THE ISSUE WAS SQUARELY COVERED BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MOHAN BREWERIES AND DISTILLERIES LIMITED V. ACIT (2008) (116 ITD 241). CRUX OF ITS CONTENTION WAS THAT DEPRECIATION AND LOSSES PERTAINING TO A PERIOD PRIO R TO THE FIRST YEAR IN WHICH ASSESSEE HAD ELECTED TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT COULD NOT BE SET OFF AGAINST THE INCOME OR PROFIT FOR SUCH FIRST YEAR OR SUBSEQUENT YEARS OF THE CLAIM. IN OTHER WO RDS THE PROVISIONS OF SUB-SECTION (5) OF SECTION 80IA AS PER ASSESSEE WOULD APPLY ONLY WITHIN THE ELECTED PERIOD OF CLAIM UNDER SECTION 80 IA OF THE ACT. LD. ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 5 CIT(A) THOUGH HE AGREED WITH THE ASSESSEE THAT DECI SION OF CO- ORDINATE BENCH IN THE CASE OF MOHAN BREWERIES AND D ISTILLERIES LIMITED V. ACIT (SUPRA) WAS APPLICABLE ON FACTS HO WEVER HELD AGAINST THE ASSESSEE IN VIEW OF THE SPECIAL BENCH D ECISION IN THE CASE OF ACIT V. GOLDMINE SHARES & FINANCE (P) LTD. (2008) 113 ITD 209. ACCORDING TO THE LD. CIT(A) THE DECISION OF SPECIAL BENCH WAS CLEAR IN THAT PROFIT FROM ELIGIBLE BUSINESS FOR THE PURPOSE OF DETERMINATION OF THE QUANTUM OF DEDUCTION UNDER SEC TION 80IA HAD TO BE COMPUTED AFTER DEDUCTION OF NOTIONALLY BROUGHT F ORWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY WERE SET OFF AGAINST OTHER INCOME IN EARLIER YEARS. ACCORDING T O CIT(A) THE SPECIAL BENCH HAD CONSIDERED THE DECISION OF BOTH M OHAN BREWERIES AND DISTILLERIES LIMITED (SUPRA) AS WELL AS PRASAD PRODUCTION (P) LTD. (SUPRA) BEFORE COMING TO THE ABOVE CONCLUSION. 6. NOW BEFORE US THE LD. A.R. STRONGLY ASSAILING TH E ORDER OF THE CIT(A) SUBMITTED THAT THE VIEW TAKEN BY THE CO-ORDI NATE BENCH OF THIS TRIBUNAL IN THE CASE OF MOHAN BREWERIES AND DISTILL ERIES LIMITED V. ACIT (SUPRA) HAS BEEN CONFIRMED BY THE JURISDICTION AL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. V. ACIT (2010) ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 6 (231 CTR 368). ACCORDING TO HIM IN VIEW OF THE DE CISION OF JURISDICTIONAL HIGH COURT ON THE ISSUE THE SPECIAL BENCH DECISION IN THE CASE OF ACIT V. GOLDMINE SHARES & FINANCE (P) L TD. (SUPRA) HAD NO APPLICABILITY. 7. PER CONTRA THE LD. D.R. SUPPORTED THE ORDER OF THE LOWER AUTHORITIES VEHEMENTLY. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE A.O. FOR DENYING THE CL AIM OF THE ASSESSEE UNDER SECTION 80IA OF THE ACT HAD RELIED ON THE DEC ISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PRAS AD PRODUCTION (P) LTD. V. DCIT (98 ITD 212). THOUGH THE ASSESSEE HAD ARGUED THAT ITS CASE WAS SQUARELY COVERED BY THE DECISION OF CO-ORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF MOHAN BREWERIES AND DI STILLERIES LIMITED V. ACIT (116 ITD 241) THE CIT(A) STILL UPHELD THE ORDER OF THE A.O. RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT AH MEDABAD BENCH IN THE CASE OF ACIT V. GOLDMINE SHARES AND FINANCE (P) LTD. (113 ITD 209)(AHD)(SB). ACCORDING TO THE ASSESSEE FIRS T YEAR IN WHICH IT HAD STARTED CLAIMING DEDUCTION UNDER SECTION 80IA O F THE ACT WAS ASSESSMENT YEAR 2000-01 AND THEREFORE LOSSES PRIOR TO THAT YEAR ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 7 COULD NOT BE SET OFF BEFORE COMPUTING ITS ELIGIBLE DEDUCTION UNDER SECTION 80IA OF THE ACT. NO DOUBT THE SPECIAL BEN CH IN THE CASE OF ACIT V. GOLDMINE SHARES AND FINANCE (P) LTD. (SUPRA ) HELD THAT THE DEDUCTION UNDER SECTION 80IA HAD TO BE CALCULATED A FTER CONSIDERING NOTIONALLY BROUGHT FORWARD LOSSES AND DEPRECIATION OF THE ELIGIBLE BUSINESS EVEN IF THEY WERE SET OFF AGAINST ITS OTHE R INCOME IN THE EARLIER YEARS. BUT WE FIND THAT HONBLE JURISDICT IONAL HIGH COURT HAS IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LT D. V. ACIT (SUPRA) HELD THIS ISSUE IN FAVOUR OF ASSESSEE. IT WAS CLEARLY HELD BY THEIR LORDSHIPS THAT WHEN AN ASSESSEE EXERCISED AN OPTION FOR CLAIMING DEDUCTION UNDER SECTION 80IA FROM A PARTIC ULAR YEAR ONLY THE LOSSES OF THE YEARS BEGINNING FROM SUCH INITIAL ASS ESSMENT YEAR SO OPTED COULD BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAINST THE INCOME O F THE ASSESSEE. THEIR LORDSHIPS UNEQUIVOCALLY HELD THAT REVENUE COU LD NOT NOTIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS AND THE FIC TION CREATED UNDER SUB-SECTION (5) OF SECTION 80IA DID NOT CONTEMPLATE SUCH NOTIONAL SET OFF. WE BEING A SUBORDINATE COURT TO THE JURISDICT IONAL HIGH COURT ARE DUTY BOUND TO BOW BEFORE ITS WISDOM. HENCE WE ARE O F THE OPINION THAT LOSSES OF EARLIER YEARS COULD NOT HAVE BEEN SE T OFF BEFORE ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 8 CALCULATING DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF THE ASSESSEE. 9. IN THE RESULT APPEALS OF THE ASSESSEE FOR ASSES SMENT YEARS 2000-01 2001-02 2002-03 2003-04 AND 2004-05 ARE ALLOWED. 10. NOW WE TAKE UP THE CROSS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2002-03. GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) DELETED THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE UNDER SECTION 10A OF THE ACT MADE BY THE A.O. FOR A REAS ON THAT THE TAX AUDIT REPORT WAS NOT FILED ALONG WITH THE RETURN. 11. IN ITS APPEAL BEFORE THE CIT(A) SUBMISSION OF THE ASSESSEE WAS THAT ASSESSEE HAD MADE AN APPLICATION FOR EXTEN SION OF TIME FOR REALIZATION OF EXPORT PROCEEDS AS ALLOWED UNDER SUB -SECTION (3) OF SECTION 10A OF THE ACT AND AS SOON AS SUCH REMITTAN CES WERE APPROVED BY RBI IT HAD FILED THE ACCOUNTANTS REPO RT IN FORM 56F. ACCORDING TO THE ASSESSEE FURNISHING OF AUDITORS REPORT WAS ONLY A PROCEDURAL REQUIREMENT. LD. CIT(A) ALLOWED THE CLA IM OF THE ASSESSEE FOR ACCORDING TO HIM ASSESSEE HAD FILED T AX AUDIT REPORT IN FORM 3CB AND 3CD AS WELL AS 10CCB ALONG WITH ITS RETURN OF ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 9 INCOME AND THIS SATISFIED THE PRIMARY CONDITIONS. FURTHER ACCORDING TO HIM FORM 56F WAS FILED BY THE ASSESSEE AS SOON AS IT RECEIVED THE SALE PROCEEDS WITHIN THE EXTENDED TIME ALLOWED BY RBI AND SUCH FILING OF FORM 56F WAS ONLY DIRECTORY IN NATURE. 12. NOW BEFORE US THE LD. D.R. STRONGLY ASSAILED T HE DECISION OF THE CIT(A) TO ALLOW THE ASSESSEES CLAIM UNDER SECTION 10A DESPITE ITS FAILURE TO FILE FORM 56F ALONG WITH RETURN OF INCOM E. HE RELIED ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. JAIDEEP INDUSTRIES (180 ITR 81). 13. PER CONTRA LD. A.R. STRONGLY RELIED ON THE ORD ER OF THE CIT(A). 14. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HAVE HEARD THE RIVAL CONTENTIONS. THE A.O. HAD DISALLOW ED THE CLAIM OF THE ASSESSEE UNDER SECTION 10A FOR A REASON THAT THE AS SESSEE HAD NOT FILED FORM 56F ALONG WITH ITS RETURN OF INCOME. WE FIND THAT ASSESSING OFFICER HIMSELF AT PAGE 6 OF THE ASSESSME NT ORDER HAS CLEARLY STATED THAT THE AUDITORS REPORT IN FORM 56 F WAS FILED ON 21.3.2005. THE ASSESSMENT WAS COMPLETED ONLY ON 28 .11.2008. THEREFORE THERE CAN BE NO DISPUTE THAT ASSESSEE HA D FILED FORM 56F ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 10 IN THE COURSE OF THE REASSESSMENT PROCEEDINGS. THE CASE OF CIT V. JAIDEEP INDUSTRIES (SUPRA) RELIED ON BY THE LD. D.R . HAS BEEN OVERRULED BY THE FULL BENCH OF THAT HIGH COURT IN T HE CASE OF CIT V. PUNJAB FINANCIAL CORPORATION (254 ITR 6). IT HAS B EEN CLEARLY HELD IN THE LATER DECISION THAT CLAIM OF DEDUCTION OF AN AS SESSEE DID NOT DEPEND ON THE SUBMISSION OF AUDIT REPORT ALONG WITH THE RETURN AND REQUIREMENT OF FILING AUDIT REPORT COULD NOT BE TRE ATED AS MANDATORY. HONBLE JURISDICTIONAL HIGH COURT ALSO IN THE CASE OF CIT V. A.N. ARUNACHALAM (208 ITR 481) HELD THOUGH IN RELATION TO SECTION 80J OF THE ACT THAT REQUIREMENT OF SUBMISSION OF AUDIT RE PORT ALONG WITH RETURN WAS NOT MANDATORY AND ASSESSEE WAS ENTITLED TO RELIEF IF IT HAD FILED SUCH REPORT BEFORE ASSESSMENT THOUGH NOT ALON G WITH THE RETURN OF INCOME. IN VIEW OF THIS WE ARE OF THE OPINION THAT THE CIT(A) WAS WELL JUSTIFIED IN DELETING THE DISALLOWANCE OF CLAI M MADE BY THE ASSESSEE UNDER SECTION 10A OF THE ACT. NO INTERFER ENCE IS CALLED FOR. 15. IN THE RESULT THE APPEAL OF THE REVENUE FOR AS SESSMENT YEAR 2002-03 IS DISMISSED. 16. NOW WE ARE LEFT WITH APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06. IN THIS APPEAL GRIEVANCE OF THE ASS ESSEE IS THAT IT WAS ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 11 NOT ALLOWED DEDUCTION UNDER SECTION 10A OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF SPECIAL BENCH OF THIS TRI BUNAL IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY P. LTD. V. ACIT [2 ITR(TRIB) 66 (CHENNAI) (SB)]. 17. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD WORKE D OUT ITS INCOME IN THE IMPUGNED ASSESSMENT YEAR AFTER CLAIMI NG DEDUCTION OF RS.51 05 560/- UNDER SECTION 10A OF THE ACT. THE C OMPUTATION MADE BY THE ASSESSEE WAS AS UNDER:- RS. RS. PROFITS FROM AGARBATHI DIVISION 1 11 80 510 LOSS FROM HOTEL DIVISION (-) 1 34 75 950 PROFITS FROM SOFTWARE DIVISION 53 51 513 LESS: EXEMPTION U/S 10A 51 05 560 2 45 953 LOSS FROM WIND MILL DIVISION (-) 1 19 89 250 INCOME FROM BUSINESS (-) 1 40 38 737 ADD: INCOME FROM OTHER HEADS ______NIL TOTAL INCOME (-) 1 40 38 737 HOWEVER THE A.O. WAS OF THE OPINION THAT DEDUCTION UNDER SECTION 10A COULD BE GIVEN ONLY FROM THE TOTAL INCOME OF TH E ASSESSEE AS DEFINED UNDER SECTION 2(45) OF THE ACT. ACCORDING TO A.O. AFTER AMENDMENT TO SECTION 10A CARRIED OUT BY FINANCE ACT 2000 WITH EFFECT FROM 1 ST APRIL 2001 DEDUCTION UNDER SECTION 10A WAS TO BE GIVEN ONLY FROM THE TOTAL INCOME AS COMPUTED AFTER CONSIDERING THE ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 12 INCOME FROM VARIOUS HEADS. HE THEREFORE REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A OF THE ACT . 18. IN ITS APPEAL BEFORE THE CIT(A) ASSESSEE ARGUE D THAT THE DEDUCTION UNDER SECTION 10A COULD NOT BE COMPARED W ITH DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT AND ACCORDING TO IT GROSS TOTAL INCOME HAD TO BE ARRIVED AFTER CONSIDERING DEDUCTION UNDER SECTION 10A. RELIANCE WAS PLACED BY THE ASSESSEE ON THE DECISION OF DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF HONEYWELL INTERNATI ONAL (INDIA) (P) LTD. V. DCIT (108 TTJ 924) BANGALORE BENCH OF THIS TRIB UNAL IN ACIT V. YOKOGAWA INDIA LTD. (111 TTJ 548). HOWEVER CIT(A) WAS OF THE OPINION THAT CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SWORD GLOBAL (I) PVT. LTD. (122 ITD 103) DECIDED THE ISSU E IN FAVOUR OF REVENUE AND HENCE BASED ON THIS DECISION HE CONFIR MED THE ORDER OF THE A.O. 19. NOW BEFORE US THE LD. A.R. STRONGLY ASSAILING THE ORDERS OF THE AUTHORITIES BELOW SUBMITTED THAT THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY P. LTD. V. ACIT (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 13 20. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HAVE HEARD THE RIVAL CONTENTIONS. THE SHORT QUESTION IS WHETHER DEDUCTION UNDER SECTION 10A IS TO BE COMPUTED AFTER AGGREGATI NG INCOME FALLING UNDER VARIOUS HEADS OR WHETHER SUCH DEDUCTION HAS T O BE ALLOWED WITHIN THE HEAD ITSELF. WE FIND THAT THE SPECIAL B ENCH OF THIS TRIBUNAL IN THE CASE OF SCIENTIFIC ATLANTA INDIA TECHNOLOGY P. LTD. V. ACIT SUPRA HAD DEALT WITH THIS ISSUE ELABORATELY. IT WAS HELD BY THE SPECIAL BENCH AT PARA 60 OF ITS ORDER AS UNDER:- 60. UNDER THE SCHEME OF THE ACT THE PROFITS OF THE UNIT ELIGIBLE FOR DEDUCTION UNDER S. 10A OF THE ACT WOU LD FORM PART OF THE INCOME COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION. HOWEVER IN ORDER THE SA ME WILL NOT SUFFER TAX DEDUCTION WILL HAVE TO BE MADE IN RESPE CT OF SUCH PROFITS WHILE COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION. IN OTHER WORDS A DEDUCTION IN RESPECT OF PROFITS ELIGIBLE UNDER S. 10A IS REQU IRED TO BE MADE AT THE STAGE OF COMPUTING THE INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THU S WE FIND THAT WHAT IS CONTEMPLATED BY THE LEGISLATURE IS THAT PROFITS AND GAINS OF THE UNDERTAKINGS FROM THE EXPORT OF ARTICL ES OR THINGS OR COMPUTER SOFTWARE ARE TO BE DEDUCTED WHILE COMPU TING THE PROFITS AND GAINS OF BUSINESS OR PROFESSION (AT HUN DRED PER CENT UPTO THE ASST. YR. 2002-03 AND NINETY PER CENT THEREAFTER). EVEN THOUGH IT IS A DEDUCTION TO BE G IVEN IT IS TO BE DEDUCTED WHILE ARRIVING AT THE PROFITS OF BUSINE SS AND PROFESSION AND NOT FROM THE GROSS TOTAL INCOME AS E NVISAGED UNDER CHAPTER VI-A. THUS WE HOLD THAT DEDUCTION U NDER S. 10A UNDER CHAPTER III OF THE IT ACT IS TO BE GRANTED WH ILE ITA NOS. 314 TO 319/MDS/2010 ITA NO. 370/MDS/2010 14 COMPUTING THE PROFITS AND GAINS OF BUSINESS AND PRO FESSION ITSELF AND NOT FROM THE GROSS TOTAL INCOME. IN LINE WITH THIS DECISION WE ARE OF THE OPINION T HAT THE ASSESSEE COULD NOT HAVE BEEN DENIED THE BENEFIT OF CLAIM UND ER SECTION 10A OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR. 21. IN THE RESULT THE APPEAL OF THE ASSESSEE STAND S ALLOWED. 22. TO SUMMARISE RESULTS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2002-03 IS DISMISSED WHEREAS THE A PPEALS OF THE ASSESSEE FOR ALL THE ASSESSMENT YEARS ARE ALLOWED. ORDER WAS PRONOUNCED IN THE COURT ON 23 RD JULY 2010. SD/- SD/- ( GEORGE MATHAN) ( ABRAHAM P.GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 23 RD JULY 2010. KRI. COPY TO: ASSESSEE/AO/CIT(A)-III/CIT CHENNAI-I CHENN AI/ D.R./GUARD FILE