|DATE:||(Date of pronouncement)|
|DATE:||October 14, 2013 (Date of publication)|
|Click here to download the judgement (Himatasingike_Seide_10A_10B_Unabs_Depr.pdf)|
S. 10A/10B (when an “exemption” provision): Unabsorbed depreciation (and business loss) of same (s. 10A/10B) unit brought forward from earlier years have to be set off against the profits before computing exempt profits
The assessee set up a 100% EOU in AY 1988-89. For want of profits it did not claim benefits u/s 10B in AYs 1988-89 to 1990-91. From AY 1992-93 it claimed the said benefits for a connective period of 5 years. In AY 1994-95, the assessee computed the profits of the EOU without adjusting the brought forward unabsorbed depreciation of AY 1988-89. It claimed that as s. 10B conferred “exemption” for the profits of the EOU, the said brought forward depreciation could not be set-off from the profits of the EOU but was available to be set-off against income from other sources. It was also claimed that the profits had to be computed on a “commercial” basis. The AO accepted the claim though the CIT revised his order u/s 263 and directed that the exemption be computed after set-off. On appeal by the assessee, the Tribunal reversed the CIT. On appeal by the department, the High Court (CIT vs. Himatasingike Seide Ltd 286 ITR 255 (Kar)) reversed the Tribunal and held that the brought forward depreciation had to be adjusted against the profits of the EOU before computing the exemption allowable u/s 10B. On appeal by the assessee to the Supreme Court HELD dismissing the appeal:
Having perused the records and in view of the facts and circumstances of the case, we are of the opinion that the Civil Appeal being devoid of any merit deserves to be dismissed and is dismissed accordingly
notes at the bottom are suggesting that this decision may not impact position of cases that are post 2001 amendment period. May be true or may not be so.
Perhaps looks like may not be so. In the best interest of assessees it may be prudent to withdraw claims and shun litigaton or to at least pay taxes to save on interest burden. now there is a circular of the board also. its better to take a call now at the least in jurisdictions outside of Delhi , Bombay and Karnataka.gopal nathani