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2014 (4) TMI 897 - HC - Income TaxEligibility for exemption u/s 10B of the Act – Structures of industry to be included or not - Whether the Tribunal is right in holding that the structure of the industry constitutes building and is not eligible to be included in computing the plant and machinery for the purpose of determining the eligibility u/s 10B of the Act – Held that:- Following Commissioner of Income Tax V. Heartland KG Information Ltd. [2013 (9) TMI 375 - MADRAS HIGH COURT] to attract Section 10B favourably to an undertaking, such undertaking should not be formed by transfer to a new business any machinery or plant previously used for any purpose - even if there be transfer of machinery previously used for any purpose is transferred, the total value of the machinery at plant so transferred should not exceed 20% of the total value of the machinery used in the business. When a DTA unit is converted into 100% EOU unit, there is neither a transfer nor a creation of a new business to attract section 10B(2)(iii) of the Act - there is no specific prohibition to an industrial unit formed by transfer of entire business, there is no transfer at all to a new business and what was already in existence as a DTA unit, by reason of the recognition granted by the statutory authority, it became a 100% EOU unit - Thus the status granted to a DTA unit as a 100% EOU unit does not result in a transfer or splitting up or re-construction of a business already in existence so as to fall u/s 10(2)(iii) of the Act - going by the Circular No.1 of 2005 dated 06.01.2005.17 clarifying the stand that the DTA unit on conversion to 100% EOU unit eligible for exemption under Section 10B of the Income Tax Act also – thus, the order of the Tribunal is set aside – Decided in favour of Assessee.
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