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2013 (11) TMI 1311 - ITAT HYDERABADExemption 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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