9911796707
TMI Blog2016 (6) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2009-10. Grounds raised by Revenue are reproduced below:- "1. The Ld. CIT(A) has erred and not justified in deleting the addition of Rs. 74,16,576/- as added by the AO on account of disallowance of exemption u/s 10A on account of income from Export of software and It enabled services. 2. The Ld. CIT(A) has erred and not justified in deleting the addition of Rs. 17,30,808 u/s 36(i)(iii) of the IT Act." 2. First issue is regarding that Ld. CIT(A) erred in disallowing of Rs. 74,16,576/- u/s 10A of the Act. Facts in brief are that assessee in the present case is a Private Limited Company and incorporated on 03.08.2007. The assessee is engaged in the business of sale & export of software as well as IT enabled services and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already in existence. Accordingly the AO sought the clarification from the assessee who submitted that the nature of business of the assessee and VCIL is akin but their business is totally distinct from each other as detailed under: 1. The place of business for both companies is different. 2. The assessee company has its own Plant & Machinery, staff etc. amounting to Rs. 2,88,46,000/- 3. The Board of Directors of both the companies are different. 4. The assessee company has its own separate STP license. However the AO was not satisfied with the explanation given by the assessee and disallowed the exemption availed by the assessee u/s 10A of the Act. 3. Aggrieved assessee preferred an appeal before CIT(A) where it was submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year were Rs. 11.56 crores and it claimed deduction u/s 10A as per Audit Report in Form No.56. Assessing Officer did not dispute with the fact that no Plant & Machinery was transferred to the assessee company from VCIL and the physical place of business and the Board of Directors in the two companies are different. These two companies were completely separate and distinct. There is no restriction on sec 10A(2)(ii) regarding use of human resources . Such use of human resources by this appellant of the employees who are working earlier with VCIL does not amount to splitting up or reconstruction of a business already in existence as per section 10A(2)(ii)." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s manufactured by the existing unit. So contention of DR that both the companies having same nature of business and so the assessee company has been formed by reconstruction does not hold good. ii) CIT Vs.Modi Spinning and Manufacturing 125 ITR 361 (All) it was held that every creation in business is some kind of expansion and advancement. If the undertaking is new and identifiable undertaking, separate and distinct, from the existing business then it will not be reconstruction of business already in existence. iii) CIT vs. Quality Steel Tubes (P) LTD. (2006) 280 ITR 254 (All), where head note as under:- Deduction under ss. 80HH and 80J-Reconstruction of old business- Manufacture of new product partly using existing infrastructure-Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant & machinery. Hence, we uphold the order of Ld. CIT(A) and this ground of Revenue is dismissed. 5. The next issue raised by Revenue in this appeal is that ld. CIT(A) erred in deleting the addition made by AO for Rs. 17,30,808/- on account of interest free loan provided to VCIL. The assessee has given an interest free loan amounting to Rs. 1,73,00,808/- to VCIL. Whereas the total own fund of the assessee was Rs. 2,40,48,038/- which was invested in the fixed assets of the company. As such there was no surplus fund available to the assessee out of its owned fund. As per the return filed, the assessee has bought asset worth Rs. 2,88,46,000/-. Assessee was also having loan fund. During the year under consideration AO observed that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was credit balance on account of VCIL in the month of April, 2008 and the appellant did not pay any interest to VCIL for this credit balance of Rs. 1,04,81,769/- and assessee had sufficient interest free funds including share capital and reserve & surpluses to cover for loan and advance of Rs. 58,75,910/-. As per schedule 20 of the Profit & Loss a/c, assessee had debited interest of Rs. 33,32,790/- on account of export packing credit and interest on term loan. As per schedule 13 assessee had received interest of Rs. 5,91,434/-. Keeping in view these facts and circumstances, addition of Rs. 17,30,808/- made by Assessing Officer is deleted." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 7. Before us b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
