CBDT releases circular on method of computation u/s 10A, 10B

CBDT releases ‘Departmental View’ on the stage of set-off of losses and computation of tax deduction applicable to STP, EOU, SEZ units; Deductions u/s 10A/10B/10AA are available from ‘total income’; Income & loss from eligible & ineligible units to be first adjusted against each other; Deductions u/s 10A/10B/10AA and under Chapter VI-A available on the balance income; Final loss,if any after setting of current year’s as well as brought forward year’s losses only to be carried forward.

The above view of Department is against the Bombay HC ruling in Black & Veatch Consulting Pvt.Ltd., Karnataka HC ruling in Yokogawa India Ltd and Delhi HC ruling in TEI Technologies P. Ltd. However, Kerala HC in Patspin India Ltd [62 DTR (Ker) 364] had taken a contrary view.

While tax holiday under Sec 10A/10B available to STP and EOU units has been discontinued, the Departmental View is relevant for the ongoing tax litigation for past years.

To download complete text of latest circular CBDT_Circular_10A_10B