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Section 10A/10B claim

B.S.Nagaraj (student) (29 Points)

25 April 2010

My query is whether a 10A unit is required to set off its own brought forward loss or depreciation before claiming deduction under 10A/10B. To illustrate,

Assessee is eligible to claim 10A since AY 2002-03, but is incurring losses. During AY 2006-07 he makes profit.
Whether for AY 2006-07, he should first set off brought forward losses and depreciation from profits of the undertaking, or directly claim 10A benefit on the profit of the undertaking without set off?....

Kindly substantiate.

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1 Replies

vishnupriya (CA Final) (1418 Points)
Replied 25 April 2010

Very good question..

To avail exemption U/s 10A:

1. Carry forward of unabsorbed depreciation, business loss, scientific research expenditure, family planning expenditure arising during the exemption period from AY 2001-02, shall not be allowed In case of 10A they are allowed after exemption period which is in contrast to 10AA.

2.Depreciation will be deemed to have been allowed, no question of unabsorbed depreciation.

3.Deductions U/s 80IA and 80IB shall not be allowed.

Conclusion: So no question of setoff and carry forward upto exemption period. The losses arrived after exemption period are only allowed to set off & carry forward.