Case Law Details
Brief of the Case
ITAT Lucknow held in the case of DCIT vs. M/s E-Soft Technologies Ltd. that as per the CBDT Circular No. 01 of 2013 and as per the Tribunal decision of the Pune Bench in the case of ACIT Vs Symantec Software India P. Ltd in ITA No. 787/PN/09, dated 30th November 2011, it was held that physical demarcation is not a criteria to decide the eligibility of deduction under section 10A so long as the new unit is independent of the old existing unit. Physical independence of the two units is not envisaged in section 10A (2) (ii) and 10A (2) (iii) read with explanation 2 to section 80I. Also as per explanation 2 to section 80I which prohibits transfer of more than 20% of old total plant & machinery to new unit, CIT (A) has given a clear finding that the total assets purchased in new unit is separately shown at Rs.29,20,233/- and therefore, this confusion of the Assessing Officer regarding transfer of more than 20% of the total plant & machinery of old unit to new unit is not correct. Hence deduction u/s 10A cannot be denied.
Facts of the Case
The assessee company is in existence since 1999 and during the year under consideration, it set up a unit for 100% export of computer software. For the said purpose approval was obtained by it from Software Technologies Park of India (STPI) and was allowed such approval with effect from 16.10.2008. The AO examined the claim of deduction under section 10A and found that- On reference to the application submitted to the STPI it was noticed that the assessee was using point to point leased lines and internet leased lines of the existing unit. Separate books of accounts were not maintained in respect of the new unit. The report of the Income Tax Inspectors who carried on spot inquiries reported that there was no demarcation to show that the new unit was separate from the existing unit. On examination of fixed assets schedule, the AO concluded that old assets were more than 20% of the total assets. Based on above observations the AO concluded that the new unit was formed by splitting up and reconstruction of old unit and there was transfer from old unit to new unit. After examination the AO found the assessee in violation of provisions and disallowed deduction of Rs. 59,44,003/- under section 10A.
Contention of the Assessee
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