The Assessee is a 100% Export Oriented Undertaking (EOU). For the Assessment Year 2004-05, the Assessee filed a Return, declaring the taxable income of Rs.Nil after claiming deduction of Rs. 29,26,65,024/- under Section 10B of the Act. Profit of Rs. 1,55,62,609/- was set off against the brought forward unabsorbed depreciation loss of Assessment Year 2001-02.
The total income was first arrived at by the Revenue through the Assessing Officer in the Assessment Order by computing the total income by way of brought forward or carry forward the depreciation allowance of the earlier Assessment Years and set off the unabsorbed depreciation first and making the return Nil, thereby leaving the Assessee in a position where it could not claim any deduction under Section 10B as there was no income after set off of carry forward depreciation and unabsorbed depreciation from earlier years.
This method of computing the income in the presentcasemade by the Revenue is totally against the said law as has been declared by the Hon'ble Apex Court in the aforesaid decision inCommissioner of Income-tax v. Yokogawa India Ltd.,(cited supra).
Therefore, we are of the view that, the Substantial Question of Law raised in this Appeal is covered by the said decision, therefore it can be answered accordingly.
In the result, the Appeal is allowed and the Substantial Question of Law raised in this Appeal is answered in favour of the Assessee and against the Revenue. There shall be however no order as to costs.
Sec. 80HH, 260A of Income Tax Act, 1961—Deduction — For the purpose of determination of the relief under s.80HH of the Act, the gross total income of the assessee has to be worked out after deducting unabsorbed losses and unabsorbed depreciation and the income eligible for deduction under s.80HH will be the net income as computed in terms of the provisions of the Act. - COMSTAR AUTOMATIVE TECHNOLOGIES PRIVATE LTD. V/s DEPUTY CIT -  23 ITCD Online 098 (MAD)