SWORD GLOBAL I P LTD FORMERLY KNOWN AS GLOBAL SOFTWARE INDIA PVT LTD Vs. INCOME TAX OFFICER
LAWS(IT)-2008-1-2
INCOME TAX APPELLATE TRIBUNAL
Decided on January 04,2008

Appellant
VERSUS
Respondents

JUDGEMENT

H.S. Sidhu, Judicial Member - (1.) THE appeal of the Assessee is directed against the order of the C.I.T.(Appeals)-III, Chennai dated 12.10.2006. THE assessment year involved in these appeal is 2003-04.
(2.) The facts of the case are that the Assessee company is 100% subsidiary of Global Software Services Ltd. (Global UK), Summer Haze Bath, Woolley Bath, BAI 8 AS, U.K. The Assessee company has filed a return of income for the assessment year 2003-04 on 20.11.2003 admitting a loss of Rs. 28,54,452/- and the same was processed under Section 143(1) of the Act on 27.2.2004 accepting the loss returned. The Assessee has claimed an exemption under Section 10B of the Act of Rs. 2,66,83,098/- in the original return and the case was selected for scrutiny to verify the exemption claimed. Notice under Section 143(2) of the Act was issued to the Assessee. In response to the same, authorized representative of the Assessee appeared before the Assessing Officer from time to time and filed the details called for. While examining the details filed by the Assessee, the Assessing Officer found that for the assessment year 2002-03, there was a loss of Rs. 58,19,240/-. The Assessee has first claimed deduction under Section 10B of the Act and against the balance taxable income has claimed set off of carry forward loss for the assessment year 2002-03. The Assessing Officer was of the opinion that the act of the Assessee company is neither logical nor as per the provisions of the law and this was also against the intention of the legislature. He held that set off of carry forward loss for the assessment year 2002-03 has to be set off firstly against the total income of the Assessee company and out of the balance income only deduction under Section 10B of the Act can be granted and he completed the assessment accordingly vide his order dated 24.2.2006. Aggrieved by the assessment order dated 24.2.2006 passed by the Assessing Officer, the Assessee preferred an appeal before the C.I.T. (Appeals) who vide order dated 12.10.2006 dismissed the appeal of the Assessee upholding the order of the Assessing Officer. Now, the Assessee has filed the present appeal against the order of the C.I.T. (Appeals) dated 12.10.2006. The Assessee has raised the following grounds: 1. The Commissioner of Income-tax (Appeals) III erred in confirming the setting off of the carried forward business loss against the profits and gains derived by the undertaking before allowing the exemption under Section 10B, thereby, allowing the said 10B exemption on the adjusted profits. 2. He should have found that as per the proviso to Section 10B of the Act for the AY 2003-04, the deduction under Section 10B shall be ninety percent of the profits and gains derived by the undertaking and the brought forward loss should be set off against the 10% portion of the profits of the undertaking.
(3.) THE Assessee has filed two grounds of appeal. However, there is only one issue involved in this case which is pertaining to the setting off of carried forward business loss against the profits and gains derived by the undertaking under Section 10B of the Act.;


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