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TMI Blog2014 (2) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 10A of the Act. The Assessing Officer verified the records of the assessee-company and found that the assessee-Company was originally a partnership firm formed on 29-11-1993. Subsequently, it was reconstituted in the year 1995 as well as in the year 1997. The name of the firm was changed from M/s.Foresee Software Consultant to M/s.Foresee Information Systems on 22-08-1995. From the year 1995-96, the firm is exporting software to the US based company M/s.Effone Software Inc., and it has claimed deduction under Section 80HHE from the assessment year 2000-01 and continued up to 2002-03. On 24-07-2001, the Partnership Firm was converted into a Company and the same business was continued after conversion of the Firm into company. The assessee-Company made an application before the Software Technology Park of India (hereinafter referred to as ' STPI ' for short) for approval of setting up Software Technology Park Unit (hereinafter referred to as 'STP' for short). The STPI by its letter dated 3-1-2002 accorded approval for the same. The assessee-Company communicated its acceptance to the terms and conditions vide letter dated 7-1-2002. Thereafter, a legal agreement was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial interest in the undertaking consequent upon the conversion of the firm into a company and it is only a transformation of the erstwhile firm into company. Relying upon the judgment in COMMISSIONER OF INCOME TAX v/s TEXSPIN ENGINEERING AND MANUFACTURING WORKS reported in 263 ITR 345 (Bombay), the Appellate Authority held that the assessee is entitled for benefit of exemption under Section 10A of the Act and partly allowed the appeal by its order dated 23-07-2004. Being aggrieved by the order passed by the Appellate Authority, the Revenue preferred appeals in ITA Nos.3014/Bang/04, 1363 & 1364/Bang/2005 before the Appellate Tribunal on various grounds. The Appellate Tribunal after re-examining the matter afresh and taking into consideration the extract of Import and Export Policy, Board Circular No.1/2005 and also taking into consideration Sections 10A and 10B of the Act held that the assessee-Company is entitled for exemption for a period of 10 years from the date of approval from the STPI and dismissed the appeals filed by the Revenue. Being aggrieved by the same, the assessee has preferred these appeals. 4. These appeals were admitted for considering the following substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled for deduction under Section 10A of the Act. There is no transfer of ownership or the beneficial interest in the undertaking consequent upon the conversion of Firm into Company. All the partners of the Firm have become the shareholders of the company and all the assets and liabilities were transferred to the Company. None of the outsiders were inducted as shareholders of the company and they have not violated the conditions of Section 10A(2)(ii) and 10A(2)(iii) of the Act. He also relied upon a judgment reported in 2011-TIOL-236-HC-KAR-IT (THE COMMISSIONER OF INCOME TAX v/s M/S. EXPERT OUTSOURCE (P) LIMITED); (2011) 202 Taxman 365 (COMMISSIONER OF INCOME TAX, BANGALORE v/s M/s MAXIM INDIA INTEGRATED CIRCUIT DESIGNS (P) LIMITED); (2003) 263 ITR 345 (Bombay) (COMMISSIONER OF INCOME TAX v/s TEXSPIN ENGINEERING AND MANUFACTURING WORKS) and sought for dismissal of the appeal. 7. We have carefully considered the arguments addressed by the learned counsel for the parties and perused the orders impugned in the appeals. 8. The records clearly disclose that the respondent-assessee is a partnership Firm engaged in the business of exporting software. It was subsequently conver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure laid down in the Appendix. 6.36.2: Existing EHTP/STP/BTP units may also apply for conversion/merger to EOU unit and vice-versa. In such cases, units will continue to avail permissible exemption in duties and taxes as applicable under relevant scheme. EHTP/STP/BTP units desiring conversion as an EOU may apply to DC concerned through Officer designated by DoIT/DoBT in same manner as applicable to new units. Likewise, EOU desiring conversion into EHTP/STP/BTP may apply to officer designated by DoIT/DoBT through DC concerned." 10. Reading of the above clauses makes it very clear that benefit under Section 10A can be extended even to the existing units, if they have fulfilled the condition under Sections 10A(2)(a)(ii) and 10A(2)(a)(iii) of the Act and as contended by the assessee, the requirement of setting up of a new STP unit does not arise. The Bombay High Court in TEXSPIN ENGINEERING AND MANUFACTURING WORKS (supra) has clearly held that the conversion of a Firm into a Company is not a case of distribution of assets or dissolution of the Firm. In the present case also there is no transfer of business as contemplated under Section 45(1) of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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