COMMISSIONER OF INCOME TAX Vs. YOKOGAWA INDIA LTD

JUDGEMENT

(1.) AS common question of law is involved in all these appeals, they are taken up for consideration together and disposed of by this common order.

(2.) FOR the purpose of convenience the facts in IT Appeal No. 248 of 2007 are set out. The assessee M/s Yokogawa India Ltd. is in the business of manufacture and trading of process control instruments, The assessee filed return of income on 31st Oct., 2002 declaring a total loss of Rs. 5,07,03,098. The return was processed and a refund of Rs. 23,10,536 was issued.

(3.) THE CIT(A) held that S. 10A is placed in Chapter III which deals with incomes which do not form part of the total income. The main object of S. 10A is not to tax export profits from STP unit. The income of s. 10A unit has to be excluded before arriving at the gross total income, otherwise the provisions of S. 10A would have been shifted to Chapter VI-A which deals with the deductions to be made from gross total income. The income has to be exempted at the source itself and not after computing the gross total income. That total income used in the provisions of S. 10A in this context means global income of the assessee. Hence, the income eligible for exemption under S. 10A would not enter into gross total income. It has to be exempted at source level. The said income has to be excluded at the source itself before arriving at the gross total income. The loss of non 10A unit cannot be set off against the income of 10A unit. Therefore, the AO was directed to allow exemption under S. 10A without setting off the losses of non 10A unit and consequently allow the carry forward losses and depreciation of non 10A unit. Aggrieved by the said order the Revenue preferred an appeal before the Tribunal.