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2010 (11) TMI 614 - AT - Income TaxDeduction u/s 10A - The assessee was engaged on site development of software programme - The programmes are delivered at the clients premises at work site in South Korea -There is no doubt that the activities carried out by the assessee are falling under the purview of the sec. 10A as specified by the explanation provided under the said sec. 10A and further clarified by the Circular No.694 dated 22.11.94 - The CIT(A) has examined the question of splitting up of an existing business as alleged by the Revenue - As rightly pointed out by him, as the activities were finally culminated at the work site of the clients in Sourth Korea, there was no need for full fledged infrastructural facilities in India - Such facility is not called for in the line of business carried on by the assessee- Decided in favour of assessee. Deduction u/s 10A - Negative income for assessment the year - Assessee has maintained separate set of account for its new STPI unit - if the assessee has earned a positive income in the STP business as an independent unit, the assessee must be entitled for the exemption - But as the details of such loss or profit is not available , remit back this issue to the Assessing Officer for the limited purpose of examining whether STPI set up by the assessee has earned positive income for the impugned assessment year as an independent unit - If such independent profit is available in the hands of the assessee, the assessee is entitled for deduction u/s 10A. Bad debts written off - it clear that wherever the assessee has credited gross amounts of the bills issued to the customers and the assessee has not realized a part of that amount, the said unrealized part should be allowed as a deduction in the hands of the assessee as business loss - This needs verification - Therefore, this issue is set aside and sent back to the Assessing Officer for quantifying such unrealized bill amounts caused because of the non acceptance of the clients of the assessee - Once they are quantified, the officer has to verify whether the said amount has already been offered by the assessee as income in its Profit and loss account - If these two conditions are satisfied, then the Assessing Officer may allow the deduction as business loss and pass orders in accordance with law.
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