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Income Tax Officer, Ward 11 (1) , Bangalore Versus M/s. Expert Outsource (P) Ltd.

2010 (3) TMI 1182 - ITAT BANGALORE

ITA Nos.896 and 897(BNG)/09 - Dated:- 17-3-2010 - DR. O.K. NARAYANAN, VICE PRESIDENT AND GEORGE GEORGE K, JUDICIAL MEMBER. Appellant By : Smt. V.S. Sreelekha, Addl. CIT. ORDER PER SHRI GEORGE GEORGE K : These appeals by the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-I, Bangalore Dt.24.6.2009 for the Assessment Years 2005-06 & 2006-07. 2. The grounds raised in these appeals are identical. All the grounds relate to the solitary issue whether the CIT(A) is ju .....

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20.10.2003 for providing software development services. The first invoice was raised by the assessee on 29.12.2003. The assessee secured the STPI registration For the A.Y. 2005-06, the assessee claimed deduction under section 10A of the Income Tax Act, 1961. The assessee had enclosed Form 56F along with the return of income in support of the claim of deduction under section 10A. Thereafter scrutiny assessment under section 143(3) was completed on 28.9.2007. In the order, the learned Assessing O .....

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he DTA unit to STP unit, and based on the approval of the STPI authorities to set up a new STP unit, it is to be treated that the assessee has established a new unit. The plant and machinery previously used for the business having been transferred to the STP unit to the extent of ₹ 2,80,154 which is more than 20% of the total plant and machinery, the condition laid down under section 10A(2)(iii) of the IT Act are not satisfied. iii) The deduction under section 10A cannot be granted even if .....

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of tax payable has been determined at ₹ 17,84,963. 3.2 Similarly for A.Y. 2006-07, the assessee's claim for deduction under section 10A was rejected by the A.O. vide his order passed under section 143(3) dt.26.12.2008. The reason stated for rejecting the assessee's claim u/s.10A is identical for both the Assessment Years 2005-06 & 2006-07. 3.3 On appeal, the assessee contended before the CIT(A) that it had complied with all the conditions for being eligible for deduction under .....

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e jurisdictional ITAT in the case of M/s. Foresee Information Systems (P) Ltd. (ITA Nos.3014/Bang/04, 1363 & 1364/Bang/05 dt.16.3.2007) wherein on identical facts it was held that deduction under section 10A would be eligible to an already existing and functional unit, if it secures registration as STP Unit. 3.4 The CIT(A) following the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Mahavir Spinning Mills Ltd. (303 ITR 353) and the order of the Tribunal in .....

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own in section 10(2)(i)(b) and 10(2)((i)(c) were not fulfilled in the assessee's case. The learned CIT(A) has not taken into account the fact that plant and machinery previously used by the Non-STP unit aggregating to ₹ 2,80,154 have been transferred to the STP unit which is more than 20% of the total plant and machinery of STP unit, thereby not fulfilling the conditions laid down in section 10A(2)(iii) of the IT Act. The CIT(A) erred in relying upon Board's Circular No.1 of 2005 d .....

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erial available on record. The Hon'ble Punjab & Haryana High Court, in the case of Mahavir Spinning Mills Ltd (supra), held that deduction under section 10B would be available on conversion of existing unit into an export oriented unit (EOU). The contentions of the revenue authorities that provisions of section 10B(2) were not fulfilled on conversion of existing unit into EOU were negative by the High Court. The Tribunal, in the case of M/s. Foresee Information Systems (P) Ltd. (supra) h .....

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