TMI Blog2015 (6) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstand how the Assessing Officer has held that the assessee has used the secondhand laptops which are in the nature of plant and machinery. On perusal of the assessment order we find that all these facts were put on record by the assessee in his explanation dated 13-12-2012. Admittedly the laptops and printer are newly purchased may be on account of partner which are used for the business of the assessee firm. Nothing is there on record to support the case of the Assessing Officer that those laptops and printer were used earlier for some other business by the partner. In our opinion, the conclusion of the Assessing Officer in respect of the alleged violation of clause (iii) to Sec. 10A(2) is also erroneous. Accordingly Assessing Officer is directed to allow the deduction claimed by the assessee u/s. 10A - Decided in favour of assessee. - ITA No. 321/PN/2014 - - - Dated:- 19-12-2014 - SHRI R.S. PADVEKAR AND SHRI R.K. PANDA, JJ. For The Appellant : Shri Bharat Shah For The Respondent : Shri B.C. Malakar ORDER PER R.S. PADVEKAR, JM:- This appeal is filed by the assessee challenging the impugned order of the Ld. CIT(A)-II, Pune dated 25-10-2013 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assumed that the partner transferred the laptops and printer to the assessee firm, the same could not be treated as new asset but a secondhand used asset thereby violating the essential condition for availing deduction u/s. 10A as laid out in clause (iii) of section 10A(2). 2.1 The Assessing Officer has further noted that as per clause (ii) of Sec. 10A(2), an STP unit which is formed by splitting up and reconstruction of an existing business is not eligible to claim deduction u/s. 10A and in the instant case it is claimed by the assessee firm that the two laptops and one printer were purchased by the partner, Shri Arvind Patel on behalf of the assessee firm and the payments made by the partner and not the firm. The Assessing Officer also observed that the said items were not shown as assets in the financial statements of the firm for the relevant year and also the possibility of having used any new assets by taking them on hire is also ruled out as no hire charges have been claimed by the assessee firm as is evident from the financial statement. The Assessing Officer thus inferred that the business of the assessee firm was already in existence when the aforesaid assets were us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said assets to the firm. The said assets were claimed to have been purchased by the partner of the appellant-firm on 03.04.2009 however, the firm received the registration on 7.9.2009 and hence the said assets remained with the partner and the subsequent transfer of the assets cannot be treated as a new asset as per the provisions of section 10A(2)(iii). Further, the absence of the assets in the financial statements and the subsequent explanation of the appellant in this regard do not appear to be an acceptable explanation. On an analysis of the entire fact and circumstances of the case, I tend to agree with the contention of the Assessing Officer that the business of software development was already in existence wherein the said assets wore being used and which is stated to have been subsequently transferred. 3.5. Section 10A confers total tax liability in respect of any profits gains derived by an assessee from a new established industrial undertaking, established in any free trade zone or in any electronic hardware technology park or in any software technology park. An industrial undertaking can enjoy the benefits of the section only if the conditions as prescribed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) of sub-section (2) of section 10A and hence the Assessing Officer has rightly held that the appellant is not entitled to claim deduction u/s. 10A and disallowed the claim. Now, the assessee is in appeal before us. 4. We have heard the rival submissions of the parties and perused the record. The Ld. Counsel submits that the assessee is in the business of ERP Consulting. The assessee accounted the software development fees to the extent of ₹ 1,26,02,998/- and declared the net profit on the same at ₹ 1,11,47,522/-. He submits that the interpretation made by the Assessing Officer of Sec. 10A(2)(ii) (iii) of the Income-tax Act is totally erroneous. He submits that A.Y. 2010-11 was the first year of operation as STP unit. He argues that the main reason of the Assessing Officer for rejecting the claim of the assessee is that the assessee has not shown any asset in the balance sheet. He argues that he explained to the Assessing Officer that the assessee firm has purchased two laptops and a printer from M/s. Knowasys Technologies P. Ltd. and the evidence in support of the same was also furnished. The payment was made by the partner through his bank account. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the conditions of Sec.10A(2)(iii) of the Act. Sec. 10A is a restrictive clause which put the conditions for claiming the deduction u/s. 10A of the Act. The relevant part of Sec. 10A(2) reads as under: Sec.10A (2) This section applies to any undertaking which fulfills all the following conditions, namely:- (i) it has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year- (a) commencing on or after the 1st day of April, 1981, in any free trade zone; or (b) commencing on or after the 1st day of April, 1994, in any electronic hardware technology park, or, as the case may be, software technology park; (c) commencing on or after the 1st day of April, 2001 in any special economic zone; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertakings as is referred to in section 33B, in the circumstances and within the period specified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee firm and payment was also made by the said partner from his Bank A/c. The assessee has produced the copy of the HDFC Bank Account of the assessee firm and as per the said statement it is seen that the said bank account was opened on 20-04-2009 whereas the laptops and printer were purchased by the assessee on 03-04-2009. We have asked the assessee to file the copies of the partner s return of income for A.Y. 2010-11 and as per the directions of the Bench the assessee has filed the copies which are placed on record. On perusal of the copies of the partner s returns it is seen that except the share of profits from the assessee firm and the remuneration, there is no income which can be said to have earned by using two laptops. We fail to understand how the Assessing Officer has held that the assessee has used the secondhand laptops which are in the nature of plant and machinery. On perusal of the assessment order we find that all these facts were put on record by the assessee in his explanation dated 13-12-2012. Admittedly the laptops and printer are newly purchased may be on account of partner which are used for the business of the assessee firm. Nothing is there on record to su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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