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[CIT Vs. Black and Veatch Consulting Pvt. Ltd.; 348 ITR 72 (Bom):]
Dealing with the provisions of section 10A, the Tribunal held that the deduction u/s. 10A in respect of the allowable unit u/s. 10A has to be allowed, before setting off brought forward losses of a nonsection 10A unit.
On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:
“i) Section 10A of the Income-tax Act, 1961, is a provision which is in the nature of a deduction and not an exemption. The deduction u/s. 10A has to be given effect to, at the stage of computing the profits and gains of business. This is anterior to the application of section 72, which deals with the carry forward and set off of business losses.
ii) A distinction has been made by the Legislature while incorporating the provisions of Chapter VI-A. Section 80A(1) stipulates that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of the Chapter, the deductions specified in sections 80C to 80U. Section 80B(5) defines for the purposes of Chapter VIA “gross total income” to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter. Therefore, the deduction u/s. 10A has to be given at the stage, when the profits and gains of business are computed in the first instance.
iii) The Tribunal was right in holding that the deduction u/s. 10A in respect of the allowable unit u/s. 10A has to be allowed before setting off brought forward losses of a non-section 10A unit.”
