TMI Blog2017 (5) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... m time to time and the date of allowability of deduction has been extended. Finance (No. 2) Act, 2009 has made amendment with retrospective effect from 01-04-2009 by substituting the year 2011 with 2012. Although, corresponding amendment has not been made in the circular, however, in view of amendment made to the provisions of section 10A, the circular would apply to the assessment year under appeal, as well. - Decided in favour of assessee. - ITA No. 2287/PUN/2014 - - - Dated:- 12-5-2017 - Shri D. Karunakara Rao, AM And Shri Vikas Awasthy, JM Assessee by : S/Shri Arvind Sondhe Ketan Ved Revenue by : Shri Samrat Rahi ORDER Per Vikas Awasthy, JM This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-II, Pune dated 19-08-2014 for Assessment Year 2010-11. 2. The assessee in appeal has raised six grounds of appeal relating to solitary issue of disallowance of claim of deduction ₹ 2,27,48,053/- u/s. 10A of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 3. The brief facts of the case as emanating from records are: The assessee is a partnership firm and is engaged in Computer Software Test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relocation of STP unit is at page 86 of the paper book. The authorities below have erred in coming to the conclusion that the assessee has established STP unit by splitting up of existing business. In fact, it is the same unit from where the assessee was carrying on its business activities from inception on which the assessee has been granted STPI permission. There is no splitting up or reconstruction of the business. The ld. AR referred to CBDT Circular No. 1/2005 dated 06-01-2005. The ld. AR pointed that although the circular relates to section 10B of the Act, however, the same applies equally to the provisions of section 10A of the Act, as the provisions of both the sections are pari materia. The ld. AR to buttress his submissions that CBDT Circular No. 1/2005 which relates to section 10B, equally applies to section 10A placed reliance on the decision of Hon ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Expert Outsource (P.) Ltd. reported as 358 ITR 518. 4.1 The ld. AR contended that the aforesaid CBDT Circular has clarified that an undertaking set up in Domestic Tariff Area (DTA) and deriving profit from export of articles or things or computer softw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the ld. AR of the assessee has placed reliance. The only issue raised in the appeal by the assessee is disallowance of deduction ₹ 2,27,48,053/- claimed u/s. 10A of the Act in respect of profit earned by the assessee from its STP unit. 8. The assessee is engaged in Computer Software Testing Services. The assessee firm is in existence from 01-04-2006. Undisputedly, the assessee received permission from STPI on 26-03-2009. The assessee started its export business from May, 2009 onwards. The assessee claimed deduction u/s. 10A of the Act in respect of export turnover from STP unit. The authorities below denied the claim of assessee on the ground that the assessee has allegedly formed its STP unit after splitting up/reconstruction of business already in existence and that the assessee has transferred old machinery from existing unit to the STP unit. 9. A perusal of the Circular No. 1/2005 dated 06-01-2005 makes it clear that the unit already setup in Domestic Tariff Area subsequently converted into EOU shall be eligible for deduction u/s. 10B of the Act, after getting approval as 100% export oriented unit. The relevant provisions of the circular reads as under : 3. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was registered on 4th Aug., 2004. The STP authorities could also permit the conversion of an existing unit into a STPI unit. The purpose of the STP scheme is to encourage exports and gain valuable foreign exchange for the country. The STP scheme provides the benefit of converting a DTA unit into a STPI unit and the same should also hold good for tax purposes. CBDT Circular No. 1/2005 dated 6th Jan, 2005 grants certain benefits under section 10B. Though the circular is in the context of section 10B, the ratio of the circular equally applies to section 10A also. In fact, the Commissioner of Appeals has referred to various judgments on the point and had come to the conclusion that the benefit of section 10A would also be available even when an existing unit gets converted into a STPI unit. In fact, the material on record discloses that no export of computer software was made before 4-8-2004. The export commenced only after 4th Aug., 2004. The invoices produced in the case clearly establish the said fact. In these circumstances, the appellate authority as well as the Tribunal were justified in extending the benefit of section 10A to the unit in question [Emphasized by us] S ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
