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2016 (1) TMI 577 - ITAT AHMEDABAD

2016 (1) TMI 577 - ITAT AHMEDABAD - TMI - Eligibility for section 10B deduction - Held that:- The assessee has converted its undertaking to that from DTA to 100% export oriented undertaking. This crucial fact has gone unrebutted. There is further no dispute that the Board Circular No.1/2005 dated 06.01.2005 already treats such an undertaking to be eligible for section 10B deduction on getting approval as 100% export oriented undertaking. We draw support from all of the above stated facts and cas .....

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(A)-VIII, Ahmedabad dated 30.11.2011 passed in case No.CIT(A)- VIII/ITO.Wd.4(3)/671/10-11, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The Revenue s sole substantive ground challenges the lower appellate order allowing section 10B deduction of ₹ 34,87,738/- allegedly without appreciating the fact that the assessing authority had established in its order dated 22.12.2010 that the assessee had reconstructed its business of manufacturing of software .....

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s 10B of the Act through Return of Income, whereas, during the course of assessment proceedings, the Appellant has revised its claim at ₹ 34,87738/- through letter dated 08/12/2010. The assessing officer has rejected claim by invoking provisions of S. 10B (2)(ii) and (iii) of the Act. In this connection, the Authorised Representative of the Appellant submitted that it is an admitted position that during the course of assessment proceedings, the undertaking of the Appellant has been convert .....

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n u/s 10B of the Act which included the provisions of S. 10B (2)(ii) and(iii) invoked by the assessing officer in the present case. Vide para 3, it has been mentioned that various representations were received by it from various quarters, that an undertaking set up in a Domestic Tariff Area (DTA) which is subsequently approved as a 100 per cent export- oriented undertaking (EOU) by the competent authority, would be eligible for deduction under s. 10B of the Act. The Board vide para 4 has clarifi .....

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f ten consecutive assessment years, beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as a DTA unit. 2.6 Further, in the year of approval, the deduction shall be restricted to the profits derived from exports, from and after the date of approval of the DTA unit as 100% EOU. Moreover, the deduction to such units in any case will not be available after assessment year 2009-10. Therefor .....

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ed by the A.R. of the Appellant in the written submission including jurisdictional orders of Hon'ble ITAT in the case of Anita Synthetics (P) Ltd. and E- Infochips (supra), wherein also, following the CBDT Circular No.1/2005, dated 06/01/2005 it has been held that the undertaking of the assessee shall be eligible for deduction u/s 10B of the Act from the year in which it has been converted from DTA to 100% EOU. Hence, I am of the opinion that the undertaking of the Appellant is eligible for .....

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ol of the assets of business continued to vest in the same assessee, both prior to and subsequent to its being converted from DTA to 100% EOU. Further, the CBDT has already clarified the issue that on conversion from DTA to 100% EOU, the undertaking shall be eligible for deduction u/s 10B of the Act. Further I find that even as per the scheme of the Act, the Appellant would be eligible to claim deduction for remaining unexpired period from the assessment year in which it started to export softwa .....

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ed conditions laid down u/s 10B(2)(iii) of the Act in forming of the undertaking by the transfer of old Plant & Machinery to new business in excess of 20% of total Plant & Machinery. It is to be seen that there is no transfer of assets in the present case. It is only conversion from DTA to 100% EOU as well as the ownership, management and control of the assets of business, premises of the undertaking has continued to vest in the same assessee prior to and after conversion from DTA to 100 .....

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plant & machineries. Further it is also not the case of the assessing officer that the Appellant had acquired old plant & machineries in previous assessment years or during the year under appeal. Therefore, I am of the opinion that condition as laid down u/s 10B(2)(iii) is also not violated by the Appellant and as held by me the undertaking of the Appellant is duly eligible for deduction u/s 10B of the Act are held by following authorities: • INCOME TAX OFFICER V. ANITA SYNTHETICS .....

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e Appellant is eligible to claim deduction u/s 10B of the Act. 2.9 Once it is decided that the Appellant is eligible to claim deduction u/s 10B of the Act, the next issue comes is the quantum of the deduction. The Appellant in the Return of Income has claimed deduction of ₹ 41,76,779/-, however, the same was revised at ₹ 34,87,738/- during the course of assessment proceedings through filing revised Audit Report in Form No.56G. by the Appellant during the course of appellate proceedin .....

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t the Appellant has claimed deduction of ₹ 34,87,738/- u/s 10B for the period falling after the date of approval of 100% EOU i.e. 10/07/2007 to 31/03/2008 and that also on proportionate basis of export turnover to total turnover for this period, which is as per the scheme of the Act and CBDT Circular (supra). Therefore, I am of the opinion that the Appellant has rightly claimed deduction to the extent of ₹ 34,87,738/- u/s 10B of the Act and therefore, the same is allowed. However, ba .....

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