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2013 (11) TMI 1311 - AT - Income TaxExemption u/s 10A The assessee is engaged in the business of rendering software development services and registered under STPI scheme - It has two units namely Hyderabad Unit and Chennai Unit - Held that:- The assessee invested capital separately and distinctly for creating infrastructure for Chennai unit - It has built up separate infrastructure, such as building, furniture, computers and other infrastructure, like employees etc. - The assessee has separately complied with all the legal as well as administrative requirements for starting a separate business unit at Chennai - Distinct capital was invested in creating a new unit at Chennai, without comprising the employees strength of the Hyderabad Unit - There is no relocation of transfer of plant and machinery in any form from Hyderabad Unit to Chennai Unit - The nature of services rendered by the assessee through both these units are classified into three categories, (1) BPM, (2)ECM and (3) Data warehousing - The services of both the units are distinct and separable - Existence of some old employees in the new undertaking is not a disqualification for granting exemption benefit to the assessee under S.10A as long as larger chunck of HR Department has not moved to the new unit from the old one - If both the units are existing and doing the declared business and are not formed out of the existing business, the assessee must not be denied the benefits of S.10A - The old as well as new unit engaged in the same business with identical product shall not contribute to the denial of the beneficial exemption to the assessee Decided in favour of assessee. Computation of relief u/s 10A Communication charges and insurance charges and reimbursement of expenses to exporter Held that:- Following Patni Telecom (P) Ltd V/s. ITO [2008 (1) TMI 452 - ITAT HYDERABAD-A] - To constitute export turnover the consideration should have a nexus with the sale proceeds from export of goods or computer software and that there should be an element of profit in such consideration Following California Software Co. Ltd. V/s. ACIT [2008 (8) TMI 430 - ITAT MADRAS-A] - The issue was restored for fresh decision. Disallowances u/s. 40A(3), u/s. 40A(7) and u/s. 43B Held that:- Following Zawata India P. Ltd. [2010 (1) TMI 1102 - ITAT HYDERABAD] Decided against Revenue.
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