COMMISSIONER OF INCOME TAX Vs. PATSPIN INDIA LTD

JUDGEMENT

(1.) The Revenue is in appeal from the order of the Tribunal. The learned Counsel for the respondent-assessee took a preliminary objection insofar as the issue being covered by the decision of the Hon'ble Supreme Court in the assessee's own case. The learned Senior Counsel for Government of India (Taxes), however, submits that the issue herein is quite distinct and different from that decided by the High Court, which decision was overruled by the Hon'ble Supreme Court. We will first look into the preliminary objection raised on the strength of the decision of the Hon'ble Supreme Court in Civil Appeal No.8549/2013 [M/s.Patspin India Ltd. v. Commissioner of Income Tax] , which arose from the decision of a Division Bench of this Court in Commissioner of Income Tax v. Patspin India Ltd. [(2011) 245 CTR 97 (Ker.)] .

(2.) A reading of the aforesaid decision of the Division Bench of this Court indicates that for the assessment years 2001-02 to 2005-06 [five assessment years] the issue arose as to whether deduction of export profit for 100% export oriented industrial unit has to be granted with reference to the profit of the industrial unit computed under the provisions of the Income Tax Act, 1961 [for brevity "the Act"], which includes set off of unabsorbed depreciation carried forward from earlier years as provided under section 32 of the Act. The Division Bench of this Court found that carried forward depreciation should be set off in the computation of business profit before the exemption under Section 10B of the Act is considered. The Hon'ble Supreme Court reversed the aforesaid finding based on a decision of the Apex Court in Commissioner of Income Tax and Another v. Yokogawa India Limited [(2017) 2 SCC 1] . The Hon'ble Supreme Court, in the cited decision, held that the deductions under Section 10A would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. In such circumstances, (2011) 245 CTR 97 (Ker.) is no longer good law. However, as rightly pointed out by the learned Senior Counsel appearing for the Revenue, the issue in the aforesaid appeals are different.

(3.) Suffice it to notice on facts, that the assessee had two units, Unit-A and Unit-B, entitled to deduction under Section 10B by virtue of they being 100% Export Oriented Units [EOU's]. Unit-A commenced availing the benefits under Section 10B, as it stood then, from the year 1994-95 and Unit-B from 1997-98. Section 10B as it stood prior to its amendment with effect from 01.04.2001 provided for a benefit of deduction in any five consecutive assessment years falling within a block period of eight years. Unit-A, hence, though commencing in the year 1994-95 and entitled to the benefit under Section 10B, did not claim the same for the first three years, obviously intending to claim the benefit in the last five consecutive years. Unit-B, likewise, though commencing from 1997-98 and entitled to the benefit under Section 10B from that year, also did not claim the benefit for the said year intending to have it in the later years within the eight year period. By Finance Act, 2000 with effect from 01.04.2001, Section 10B was amended and the period of eligible deduction was specified as ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software. Obviously the assessee then started claiming benefit for all the subsequent years till the 10th year, for both units.