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2022 (9) TMI 931 - HC - Income TaxBenefit u/s 80-IC - manadation of having separate and distinct Unit - Denial of deduction as Unit-III was not a new Unit and it was reconstruction of an existing Unit-II - whether ITAT is right in holding that the assessee has right to get deduction u/s 80IC(4)(i) in respect of the new unit though the same was in fact reconstruction/splitting of old unit? - case of the assessee before the Tribunal that earlier the Company was giving services in relation of one product, i.e. voice chat to its clients, like Airtell, Reliance, Idea & Tata - HELD THAT:- Since the business of the company had grown, it found it necessary to start a new Unit with a view to expand its area of service and consequently, a separate Unit was started, giving services to other Non-Telco Companies/Clients in the field of Information, Technology and Software Services. The office building, where Unit-III had been started, was earlier registered office of the company, whereas, Unit-II was being run from another building which was situated at a distance of about 7 kilometers from the registered office. The building where Unit-III was being run had been purchased by the assessee-company on 21.01.2008, but the premises was let-out on rent to some other party. Thereafter, the premises was got vacated and the registered office of the company was shifted to the said premises in assessment year 2009-10. Thereafter, Unit-III was started in the premises after completing necessary formalities. The operation of Unit-III, commenced in the assessment year 2010-11. AO was influenced by the fact that since Unit-III was being run by the assessee in its registered office, therefore, activities done in Unit-III were identical in nature to those done by Unit-II. AO had failed to appreciate that the building, where Unit-III had been started, had in fact been given on rent, whereas, Unit-II was being run in a separate building which was at a distance of about 7 kilometers. The building where the registered office was started in the assessment year 2009-10, was got vacated and thereafter Unit-III was started in the said premises in assessment year 2010-11. It was not a case where plant and machinery of Unit-II had been used for Unit-III. The business of the company had grown and with a view to expand its business, the company started a new Unit by making investment as shown in the Chart reproduced above. New employees were recruited by the assessee for Unit- III. Separate account books were maintained by assessee qua Unit-II & Unit-III. Tribunal rightly came to the conclusion that the assessee was entitled to claim benefit under Section 80-IC of the Act by treating Unit-III of the assessee-company as a separate and distinct Unit. - Decided against revenue.
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