ITAT affirms CIT(A)'s decision on SS10A claim for freelancer profits, emphasizing work connection.

The ITAT upheld the CIT(A)'s decision in two appeals, allowing the claim u/s 10A for profits from activities of independent freelancers. The ITAT emphasized the connection between the out-sourced work and the main activities of the assessee as a valid basis for the claim, supported by legal precedents. The Revenue's appeals were dismissed on 29.06.2018, with all issues decided in favor of the assessee.

---

---

Issues Involved:
1. Disallowance of claim u/s 10A of the Act for profits arising from activities of freelancers.
2. Failure to demonstrate eligibility for exemption and nature of critical activities.
3. Justification of allowing deduction u/s 10A for profits from activities by freelancers abroad.

Issue Nos. 1 & 2:
The Revenue appealed against the CIT(A)'s order deleting the disallowance of the claim u/s 10A for profits from activities of independent freelancers. The Revenue contended that the activities were not carried out at the eligible Unit and did not qualify as on-site services for software development. The CIT(A) allowed the claim based on the principle that if the out-sourced work is connected to the main work/object of the assessee, the claim u/s 10A is valid. The CIT(A) relied on the decision in the case of ITO Vs. M/s. Gebbs Infotech Ltd. to support this reasoning. The ITAT upheld the CIT(A)'s decision, stating that the out-source service, when connected to the main work of the assessee, does not warrant denial of the claim u/s 10A. The ITAT found the CIT(A)'s decision judicious and correct, supported by relevant legal precedents, and dismissed the Revenue's appeal.

Issue No. 3:
The Revenue filed an appeal against the CIT(A)'s decision allowing deduction u/s 10A for profits derived from activities performed by freelancers abroad. The ITAT found the matter to be similar to the previous appeal and applied the same reasoning as in ITA No. 219/M/2016. The ITAT dismissed the appeal of the Revenue, affirming the CIT(A)'s decision. The ITAT concluded that the CIT(A) had appropriately adjudicated the matter, and all issues were decided in favor of the assessee against the Revenue.

In conclusion, the ITAT upheld the CIT(A)'s decision in both appeals, emphasizing the connection between out-sourced work and the main activities of the assessee as a valid basis for allowing the claim u/s 10A. The judgments were delivered on 29.06.2018, dismissing the Revenue's appeals in both cases.

---