IN INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI S.K.YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA No.1178 (Bang) 2014 (Assessment year : 2004 05) M/s MSource (India) Private Limited, Bagmane World Technology Centre, MarathaNhalli, Outer Ring Road, Doddanakhundi Village, Mahadevapura, Bangalore 560048 PAN: AAACM2097G Appellant Vs DCIT, Circle 12(1), Bangalore Respondent Assessee by : Shri P. C. Khincha, C. A. Revenue by : Miss Neera Malhotra, CIT(DR) Date of hearing : 24-08-2016 Date of pronouncement: -10-2016 ORDER PER A. K. GARODIA, A. M.: This is assessee s appeal directed against Order of CIT (A) Mysore dated 17.10.2013 for A. Y. 2004 05. 2. Grounds raised by assessee are as under:- following grounds of appeal are independent of, and without prejudice, to one another. 1. order passed by Commissioner of Income-tax (Appeals) - Mysore ('CIT(A)'), Bangalore is bad in facts and in law. 2 ITA No.1178/B/2014 2. learned CIT(A) erred in upholding order of Deputy Commissioner of Income- tax,8 (2) Mumbai ('DCIT') and thereby confirming in denial of expenditure incurred on account of leasehold improvement of Rs. 6,509,157/- as revenue. appellant prays that expenditure on normal repairs and maintenance classified as leasedhold improvement be allowed as revenue expenditure. 3. learned CIT(A) erred in confirming order of DCIT, ignoring provision of section 72(2) r.w.s. 32(2) of Act and denying set off of un absorbed depreciation of A.Y. 2001- 02 amounting to Rs. 1,985,585/-. appellant prays that Department be directed to allow set off unabsorbed depreciation of A. Y. 2001-02 before setting off unabsorbed depreciation of A.Y. 2002-03 as per section 72(2) r.w. section 32(2) of Act. 4. learned CIT(A) erred in confirming order of DCIT, in denying application for revision of claim of deduction under section 10A. appellant prays that Department be directed to consider revision of claim. 5. learned CIT(A) erred in confirming order of DCIT, in re-computing income u/s. 115JB of Act. appellant prays that Department be directed not to re- compute income u/s. 115JB of Act. 6. learned CIT(A) erred in confirming levying of interest u/s. 234C ignoring fact that taxes payable on retrun income have been paid on time. appellant prays that levy of interest u/s. 234C be deleted. Appellant craves leave to add to or alter, by deletion, substitution or otherwise, any or all of above grounds of appeal, at any time before or during hearing of appeal. 3. Learned AR of assessee submitted that Ground No. 1 is general and Ground Nos. 2 to 4 are of academic interest because deduction was 3 ITA No.1178/B/2014 allowed u/s 10A in respect of enhanced income. Hence, we are required to decide only Ground No. 5. 4. Regarding Ground No. 5, he submitted that it is noted by CIT (A) on page 21 of his order that A.O. has reduced from Book Profit amount of Rs. 20,07,33,204/- being proportionate income relatable to section 10A by taking proportion of Export Turnover/ Total Turnover. Thereafter, he drawn our attention to page 38 of paper book and it was pointed out that export is Rs. 152,17,02,392/- and expenses incurred for these exports is Rs. 126,90,11,567/- and there profit on export is Rs. 25,26,90,825/- and this amount should be deducted from Book Profit being actual Profit from Exports and not proportionate amount as has been done by A.O. Learned DR of revenue supported orders of authorities below. 5. We have considered rival submissions. We find that A.O. has also reduced amount of Rs. 2007.33 Lacs from Book Profit as deduction u/s 10A.This is same amount which is allowed by him as deduction u/s 10A in normal computation. He has also noted these two amounts of Rs. 15217.02 Lacs and Rs. 12690.11 Lacs because he has added back first amount and reduced second amount to nullify adjustments made by assessee in computation of book profit. As per provisions of section 115 JB of I. T. Act, what is required to be reduced from net profit as per P/L account to compute Book Profit is amount of income to which any of provisions of section 10, 11 or 12 etc. apply and not amount allowed as 4 ITA No.1178/B/2014 deduction u/s any of these sections. In this view of matter, we find force in submissions of learned AR of assessee that instead of reducing amount of deduction allowed u/s 10A, reduction from Book Profit should be of amount of income to which any of provisions of section 10, 11 or 12 etc. apply. But on factual aspect, he has to examine claim of assessee as to what is correct amount of income, which is required to be reduced from Book Profit. Hence, we set aside order of CIT (A) on this issue and restore matter back to A.O. for fresh decision with direction that assessee should produce full detail and evidences in support of its claim about income eligible for deduction u/s 10A and A.O. should reduce such income eligible for deduction u/s 10A and is lying credited in P & L Account from Net Profit as per P & L Account instead of reducing amount of actual deduction allowed u/s 10A. Needless to say, he should allow reasonable opportunity of being heard to assessee. Ground No. 5 is allowed for statistical purposes. 6. In result, appeal of assessee is partly allowed for statistical purposes. Order pronounced in open court on date mentioned on caption page. Sd/- Sd/- (SUNIL KUMAR YADAV) (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER Place: Bangalore: Dated: 18.10.2016 Am / AKG/ DS 5 ITA No.1178/B/2014 Copy to : 1 Appellant 2 Respondent 3 CIT(A)-II Bangalore 4 CIT 5 DR, ITAT, Bangalore. 6 Guard file By order AR, ITAT, Bangalore M/s MSource (India) Private Limited v. DCIT, Circle–12(1), Bangalore