Deduction U/s. 10A available on conversion of existing Domestic Tariff Area unit into Software Technology Park unit

The Karnataka High Court, in its recent ruling, in the case of CIT Vs. Expert Outsource Pvt. Ltd. [2011-TI01-236-HC-KAR-IT]  held that deduction under section 10A of the Income-tax Act, 1961 is available to the assessee on conversion of existing Domestic Tariff Area (DTA) unit into a Software Technology Park (STP) unit.

Facts

• The assessee, a private limited company, is engaged in the business rendering software development services. It was incorporated on 17 Deceml 2003. An agreement was entered into with its parent company on October, 2003 for providing software development services.

• The first invoice was raised by the assessee on 29 December, 2003 from DTA unit. The assessee obtained the STPI registration for its unit on 4 Augi 2004 and the export commenced only after 4 August, 2004.

• Accordingly, the assessee claimed deduction under section 10A of the Income-tax Act, 1961 for the assessment year 2005-06.

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