Law: Income Tax Act, 1961

Section: 10A

Section 10A of the Income-tax Act, 1961 - Free trade zone (Computation of deduction) - Assessment year 2005-06 - Assessee engaged in business of manufacturing and export of gems jewellery, filed its return for assessment year 2005-06 and claimed deduction under section 10A - Subsequently, assessee filed a revised return withdrawing its claim under section 10A and claimed set off of unabsorbed business loss brought forward from assessment year 2002-03 against profits of erstwhile 10A unit - Assessing Officer disallowed claim of set off - Whether as per CBDT Circular No. 7 of 2003, dated 5-9-2003, losses arising in assessment year 2001-02 and subsequent years were to be allowed while computing income under section 10A - Held, yes - Whether further by virtue of non obstante clause in section 10A(6) and by virtue of words 'ending before 1st day of April, 2001' inserted in clause (ii) to section 10A with effect from 1-4-2004, revenue could not have disallowed claim of set off - Held, yes [Paras 6 & 8][In favour of assessee] Circulars and Notifications : CBDT Circular No. 7 of 2003, dated 5-9-2003 FACTS â–  The assessee, 'S' was engaged in the business of manufacturing and export of gems jewellery. It filed its return for assessment year 2005-06 and claimed deduction under section 10A. â–  Subsequently, assessee filed a revised return withdrawing its claim under section 10A and claimed set off of unabsorbed business loss brought forward from assessment year 2002-03 against the profits of the erstwhile 10A unit. â–  However, the Assessing Officer rejected assessee's contention and held that set-off of business loss could not be allowed against the profits of the erstwhile 10A unit as relevant assessment year was first assessment year after the expiry of the tax holiday period. Assessing Officer also observed that unabsorbed loss of assessment year 2002-03 had already been set-off against the business profit of the 10A unit in assessment years 2003-04 and 2004-05 and, thus, there was no loss for set off in assessment year 2005-06. â–  On appeal, the Commissioner(Appeals) affirmed Assessing Officer's order. â–  On second appeal, the Tribunal…

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