TMI Blog2013 (9) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... think that there exists any justifiable ground for the Revenue to contend that the assessee shall not be entitled to have the benefit of Section 10A. A cursory reading of the above Section shows that where an undertaking is formed by splitting up or reconstruction of business already in existence then the said undertaking would not be entitled to claim deduction under Section 10A. The other conditions is that the industrial undertaking should not be formed by transfer of plant and machinery already used for any purpose. Thus, what is prohibited in Section 10(A)(2)(iii) is that the transfer of used machinery and plant to a new business undertaking and forming of an industrial undertaking by splitting or reconstruction of the existing industrial undertaking. The intention thus under Section 10A being clear and that there is no specific prohibition or even by inference to an industrial unit formed by transfer of entire business, we have no hesitation in rejecting the Revenue's plea that by transfer of machinery, the assessee would be disentitled to the relief under Section 10A. As already pointed out, the fact herein is that the transfer was not that of plant and machinery alone b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid undertaking claimed for exemption under Section 10A of the Income Tax Act. In July 2001, the said company transferred the entire undertaking engaged in the export business of Medical Transcription along with all transcriptions contracts, books, records, all rights, all permits, all warranties, including computer software to the assessee company by letter dated 28.5.2001 and 28.6.2001. The transfer was recognised and allowed by Software Technology Park of India. It is a matter of record and not in dispute that vendor company transferred its export obligation to the assessee company. By reason of transfer of the entire business, the employees of the vendor company engaged in Medical Transcription were also transferred and employed by the assessee company. In the background of the income on export, originally, the assessee claimed deduction under Section 10B of the Act. The Officer however rejected the said claim on the ground that when the assessee had filed approval obtained from the Software Technology Park of India for the purpose of Section 10B, the same would not be sufficient to grant the relief. The Assessing Officer further viewed that the assessee had not satisfied the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holiday period since the entire undertaking in the business of medical transcription was transferred to the assessee. Thus the assessee would be entitled to have the benefit under Section 10A of the Act for the remaining period. The Commissioner further pointed out that for the assessment year 2001-02, M/s. KGISL was granted deduction in respect of medical transcription business commenced during that year. Thus, when the company had the benefit of deduction under Section 10A, on the transfer of entire business to the assessee company, the benefit under Section 10A could not be denied to the assessee. The Commissioner of Income Tax (Appeals) further pointed out that even though the assessee had made the claim originally under Section 10B, yet, the relief being one to be considered under Section 10A, and the said claim being already allowed at the hands of the vendor company, the same would be available to the assessee company too as the alternative claim made before the Officer. Thus, the assessee's appeal was allowed. In the light of the reasoning, the Commissioner of Income Tax (Appeals) held that the relief under Section 80HHE would not be available to the assessee. 4. The Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its favour and that the factum of transfer was also intimated to the Software Technology Park of India. Thus, as a Software Technology Park, the assessee is entitled to place his claim under Section 10A. In any event, even assuming for a moment, the assessee had not referred to the Section correctly, the fact remains that if the claim could be favourably be considered under any of those special deduction provisions and on the conditions specified therein being satisfied, we do not think that there exists any justifiable ground for the Revenue to contend that the assessee shall not be entitled to have the benefit of Section 10A. 7. Given the fact that the findings of the Tribunal is that the entire business of M/s.KGISL stood transferred to the assessee and that the assessee is also recognised to have had its industrial unit, in the Software Technology Park, we have no hesitation in confirming the order of the Tribunal in granting the relief to the assessee under Section 10B. Consequently, the first question of law is answered against the Revenue. 8. As far as the second question of law as to whether the Tribunal was right in sustaining the order of the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial undertaking should not be formed by transfer of plant and machinery already used for any purpose. Thus, what is prohibited in Section 10(A)(2)(iii) is that the transfer of used machinery and plant to a new business undertaking and forming of an industrial undertaking by splitting or reconstruction of the existing industrial undertaking. The intention thus under Section 10A being clear and that there is no specific prohibition or even by inference to an industrial unit formed by transfer of entire business, we have no hesitation in rejecting the Revenue's plea that by transfer of machinery, the assessee would be disentitled to the relief under Section 10A. As already pointed out, the fact herein is that the transfer was not that of plant and machinery alone but of sale of whole business unit to the transferor company which was primarily only of export of articles or things. In the circumstances, going by clear provisions of Act, we reject the Revenue's plea. 11. In this regard, learned counsel for the assessee placed reliance on the decision of the Bombay High Court reported in [2012] 343 ITR 397 CIT v. SONATA SOFTWARE LIMITED, wherein, the Bombay High Court held that the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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