Page 142 - DCOM301_INCOME_TAX_LAWS_I

Unit 5: Exemptions and Deductions – II

12. The EXIM Policy, 2002–07 reinforces the importance of Scheme in ……………of the policy. Notes
13. EOUs established anywhere in India and exporting 100% products except certain fixed
percentage of sales in the ……………….as may be permissible under the Policy.

14. ………….of the Income-tax Act provides for 100% deduction of profits derived by a hundred
by a hundred per cent Export Oriented undertaking, form export of articles or things or
computer software manufactured or produced by it.
15. ………………deduction shall be admissible under this section to the amalgamating or the
demerged company for the previous year in which the amalgamation or the demerger
takes place.

Case Study Tata Infotech Limited, Mumbai vs Assistant
Commissioner of Income Tax

T his is an appeal filed by the assessee against the order passed by the Commissioner
of Income Tax under section 263 of the Income Tax Act, 1961, on 31.03.2008.

The appeal relates to the assessment year 2003–04. The assessment of the assessee was
completed by the Assessing Officer on a total income of `8,36,338/-. In the return the
assessee had claimed deduction under section 10A in respect of income arising from the
industrial undertakings located at the Electronic Hardware Technology Park (EHTP) at
Goa and the Software Technology Parks (STP) situated at Pune, Bangalore and Chennai.
Under the section, as it stood at the relevant time, the assessee was entitled to the deduction
of 90% of the profits of the above 2 ITA No: 4324/Mum/2008 undertakings. The assessee
claimed deduction of 90% of the profits in the following manner:
EHTP - Goa `10,78,39,621/- STP - Pune `16,69,51,092/- STP - Bangalore ` 7,76,04,345/- STP -
Chennai ` (-)1,06,428/ and the total coming as `35,22,88,630/-.
In support of the above claim for deduction, detailed computations in respect of each
undertaking were submitted along with the return. In the statement of income from
profits and gains of the business, the assessee started the computation of the income from
the profit figure shown in the Profit and Loss Account and reduced therefrom the figure of
`35,22,88,630/-. The ultimate income shown in the computation was a loss of `2,96, 39,052.
In the assessment order passed under section 143(3), the Assessing Officer also started the
computation from the figure of net profit as per the Profit and Loss Account, as was done
by the assessee and deducted `32,15,58,051/- under section 10A. However, there was one
change. Due to slight changes in the computation of the profits of each of the undertakings,
there was a change also in the figure of 90% of the profits of the undertakings. As per the
computation in the assessment order, the figure of 90% of the profits of the Goa unit came
to `9,97,95,226/- as against the figure of `10,78,39,621/- as per the assessee’s computation.
There were similar changes in respect of the Pune and Bangalore units also. The result was
as against the deduction of `35,22, 88,630/- claimed by the assessee 3 ITA No: 4324/Mum/
2008 under section 10A, the Assessing Officer allowed deduction of `32,15,58,051/-. The
Assessing Officer determined the taxable income of the assessee at `8,36,338/-.
On 18.03.2008 the CIT issued notice to the assessee proposing to revise the assessment
under section 263 of the Act. According to him, the Assessing Officer ought to have assessed
the difference of `3,07,30,529/- between the claim of `35,22,88,630/- made by the assessee
Contd...

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