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2016 (6) TMI 425 - AT - Income TaxDisallowance of exemption u/s 10A on account of income from Export of software and It enabled services - whether the Axsys Technologies Pvt. Ltd has been formed by reconstruction or not? - employees transferred from VCIL to the assessee along with some liability which was shared by the assessee company together - Held that:- Even though employees were transferred from VCIL to assessee were sharing some common liabilities and the shareholders of both the companies are same, it cannot be taken as a ground for denying the benefit u/s 10A of the Act by holding the assessee as reconstruction company. The assessee i.e. Asxys Tecnologies Pvt. Ltd. is a separate legal entity which is newly formed and having its own plant & machinery. Hence, we uphold the order of Ld. CIT(A) and this ground of Revenue is dismissed. - Decided in favour of assessee Addition on account of interest free loan provided to VCIL - Held that:- The fund of the assessee was sufficient enough to cover the money advanced to VCIL. So the money advanced to VCIL was not out of the borrowed fund. Besides the above the assessee debited the account of the VCIL for the services rendered for ₹ 1,14,24898.42 as evidenced from the ledger placed on page 32 of the Paper book. These bills were raised with the service tax to VCIL by the assessee and VCIL has deducted the TDS from the bills. Accordingly the debit balance appearing in the ledger of the VCIL in the books of the assessee cannot be regarded as money advanced out of the borrowed fund. From the facts we also find that the debit balance was not there in the accounts of VCIL throughout the year. As per the submission of the assessee there was own interest free fund for ₹ 1,53,56,168.00 and the ld. DR failed to bring anything contrary to the findings of the ld. CIT(A) in deleting the addition - Decided in favour of assessee
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