Chettinad Quartz Products Ltd., ... vs Department Of Income Tax

The Assistant Commissioner of M/s. Chettinad Quartz Products Income Tax, Vs Limited Company Circle I(3), (now merged with M/s.Chettinad Chennai 600 034. Morimura Semi Conductor Material P. Ltd) No.37, Old Mahabalipuram Road, Khazhipattur Village, Padur Post, Kancheepuram (Dist) 603 103.

[PAN: AAACC 2461Q] (अपीलाथ&/Appellant) ('(यथ&/Respondent)

अपीलाथ क ओर से / Appellant by : Shri. A.V. Sreekanth, IRS, JCIT. यथ क ओर से / Respondent by : None

सन ु वाई क तार ख/Date of hearing : 19.05.2015 घोषणा क तार ख /Date of Pronouncement : 29.05.2015

आदे श / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

This appeal by Revenue is directed against the order of the

Commissioner of Income Tax (Appeals)-I, Chennai, dated 25.10.2013

for the assessment year 2009-2010.

:- 2 -: I.T.A.No.51/Mds/2014.

2. The Revenue has raised the following grounds:-

"2.1 The CIT(A) erred in holding that unabsorbed depreciation must not be set off against income of the undertaking before giving deduction u/s.10B.

2.2 The learned CIT(A) ought to have considered the recent decision of the Hon'ble Apex Court in the case of Himatasinka Seide Ltd vs. CIT dated 19.09.2013 reported in 2013-TIOL-53-Supreme Court-IT-LB wherein it has held that unabsorbed depreciation carried forward from earlier years is to be set off before allowing deduction u/s.10A/10B.

2.3 The learned CIT(A) failed to note that in the following decisions, it was held that brought forward business losses and unabsorbed depreciation should be set off against the income of the 10B unit before computing deduction u/s.10B.

(i) CIT vs. Patspin India Ltd (Ker) 62 DTR 364.

(ii) Siemens Information systems Ltd vs. DCIT (ITAT, Mum) 135 ITD 196.

(iii) ACIT vs. Jewellery solutions international pvt.

Ltd. (ITAT., Mum) 28 SOT 405."

3. None appeared for assessee. We proceed to dispose off this

appeal after hearing the ld. Departmental Representative. In our

opinion, identical issue was considered by this Tribunal in assessee's

own case in ITA No.430/Mds/2014 for the assessment year 2008-09,

vide order dated 16.10.2014, wherein it was observed as under:-

"5. Heard both sides. Perused orders of lower authorities and the decisions relied on. We find that the issue in appeal has been decided by the co-ordinate Bench of this Tribunal in the case of S.R.A.Systems Ltd.(supra) following the decision of the Hon'ble Supreme Court in :- 3 -: I.T.A.No.51/Mds/2014.

the case of M/s. Himatsingka Seide Ltd. (supra) . The co- ordinate Bench while deciding the issue held that unabsorbed depreciation has to be set off before computing exemption allowable under section 10A of the Act observing as under:

"7. The third issue in appeal relates to the method of computation of deduction u/s.10A of the Act. The assessee has claimed deduction u/s.10A before setting off of unabsorbed depreciation and brought forward losses. The ld.AR of the assessee in order to fortify the stand of assessee has placed reliance on the decision of the Tribunal in assessee's appeal for the AY.2005-06 and AY.2007-08 (supra). The ld.AR has also drawn support from the judgment of the Hon'ble Karnataka High Court in the case of CIT Vs. Yokogawa India Ltd.(supra). On the other hand, the ld. DR has relied on the latest decision of the Hon'ble Apex Court in the case of M/s.Himatsingka Seide Ltd., Vs.CIT (supra). The Hon'ble Supreme Court of India dismissed the appeal of the assessee and has upheld the judgment of the Hon'ble Karnataka High Court. The Hon'ble High Court has held that the brought forward depreciation has to be adjusted against the profits of the EOU before computing the exemption allowable u/s.10B. The provisions of section 10A are pari materia with the provisions of section 10B of the Act.We find that as far as unabsorbed depreciation is concerned, the Hon'ble Supreme Court of India in the case of M/s.Himatsingka Seide Ltd., Vs. CIT (supra), has up-held the findings of the Hon'ble Karnataka High Court and as such, un-absorbed depreciation has to be set-off before computing the exemption allowable u/s.10A. In respect of setting-off of the brought forward losses, the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Yokogawa India Ltd.(supra) still holds good. Accordingly, the assessee can claim deduction u/s.10A before :- 4 -: I.T.A.No.51/Mds/2014.

setting off of brought forward losses. In view of the above, this ground of appeal of the assessee is partly allowed."

4. In view of the above, we are inclined to allow the appeal of the

Revenue in similar line.

5. In the result, the appeal of the Revenue in ITA No.51/Mds/2014

is allowed.

Order pronounced on Friday, the 29th day of May, 2015, at Chennai.

Sd/- Sd/- (वी. दग ु ा! राव) (चं पज ू ार ) V. DURGA RAO (CHANDRA POOJARI) या"यक सद य / JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER

चे"नई/Chennai. #दनांक/Dated:29.05.2015. KV

आदे श क त&ल'प अ(े'षत/Copy to: 1. अपीलाथ /Appellant 2. यथ / Respondent 3. आयकर आयु*त (अपील)/CIT(A) 4. आयकर आयु*त/CIT 5. 'वभागीय त न-ध/DR

6. गाड फाईल/GF.