I.T.A. No. 724/Bang/2008, Assessment Year 2003-04. Case: GE India Exports (P) Ltd. Vs DCIT. ITAT (Income Tax Appellate Tribunal)

Case Number:I.T.A. No. 724/Bang/2008, Assessment Year 2003-04
Party Name:GE India Exports (P) Ltd. Vs DCIT
Counsel:For Appellant: S.E. Dastur, Niraj D. Sheth and Koushik Mukherjee and For Respondent: P.P. Chhina
Judges:R.V. Easwar, Vice President and A. Mohan Alankamony, Accountant Member
Issue:Income Tax Act - Sections 2(45), 10(A), 263
Judgement Date:January 30, 2009
Court:ITAT (Income Tax Appellate Tribunal)


A. Mohan Alankamony, Accountant Member, (At Bangalore)

  1. This appeal has been preferred in ITA No:724/Bang/2008 on 26.05.2008 against the order of the Ld.CIT, Bangalore-I, Bangalore u/s 263 of the I.T. Act in F.No:10/263/CIT-I/2007-08 dated: 20-3-2008.

  2. The assessee company engaged in the business of manufacture and sale of electrical distribution and control equipment, erection and commissioning of electrical installations and development and sale of project related computer software, has raised four grounds, out of which, ground No.1 being general does not survive for adjudication. The remaining three effective grounds are listed out as under:

  3. The Ld. CIT has erred in deciding that the brought forward losses/unabsorbed depreciation should be first set off before claiming deduction u/s 10A/10B of the Act.

  4. The Ld. CIT has erred in holding that the deduction u/s 10A/10B of the Act should be restricted to the 'total income' before claiming such deduction.

  5. The Ld CIT has failed to appreciate that the export proceeds not realised in convertible foreign exchange within the specified due date was already reduced by the assessee while calculating the 'export turnover' for the purpose of computing deduction u/s 10A/10B of the Act.

  6. The facts of the case, in brief, are that the assessee company filed its return of income on 31.10.2003, admitting "Nil" income. The assessment was concluded u/s 143(3) of the Act on 31.3.2006. On a perusal of the said order, the Ld. CIT, Bangalore-I, Bangalore, formed an opinion that the relevant assessment order was erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Act for the following reasons:

    (i) Deduction u/s 10A/10B was wrongly allowed without restricting it to the total income computed by the AO at Rs.8,79,33,733/- before allowing deduction u/s 10A/10B.

    (ii) Convertible foreign exchange not received within the stipulated due date was omitted to be excluded while computing the deduction allowable u/s 10A/10B.

    (iii) Deduction u/s 10A/10B has been wrongly allowed without setting off the brought forward business loss/unabsorbed depreciation amounting to Rs.64,12,90,640/- while computing the total income for the purpose of allowing deduction u/s 10A/10B.

  7. The Ld CIT had, therefore, initiated suo moto action u/s 263 of the Act by issuance of a show-cause notice to the assessee. After considering the written submissions of the assessee and setting out a detailed reasons, the Ld. CIT had concluded that the assessment order passed by the Ld AO was held to be erroneous and prejudicial to the interest of revenue and, accordingly, set aside the said order with a direction to the AO to make a fresh assessment in the light of his observations in his order u/s 263 of the Act.

  8. Aggrieved, the assessee company...

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