TaxTMI 
TaxTMI 
TaxTMI 
2012 (7) TMI 589
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in holding that the amalgamated company is eligible for the benefit of exemption under Section 10B which was granted to the amalgamating company in respect of an export oriented unit set up by it? (ii) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in holding that development of software is a revenue expenditure and not a capital expenditure?" 2. As far as the second question of law involved in development of software is concerned, in the decision reported in 304 ITR 84- CIT v. SOUTHERN ROADWAYS LIMTED, this Court considered the similar question. In the said decision, following the decision of the Apex Court reported in 177 ITR 377 ALEMBIC CHEMICAL WORKS CO., LTD, this Court held that upgrada....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on for granting of the allowance on the basis of the ownership of the new undertaking. Further, the subsidiary company had opted out the exemption granted under Section 10B of the Act for the assessment year 1993-94. Thus, when once the assessee claimed deduction under Section 80-I, there could be no further claim under Section 10B. Thus the claim of the assessee was rejected. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) pointed out that consequent on the amalgamation, the EOU status has passed on from the amalgamating company to the hands of the amalgamated company. This arrangement was approved by the Government by its order dated 8.4.94. Referring....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e said section reads as under:- "10(B)(2) This section applies to any undertaking which fulfils all the following conditions namely:- (i) it manufactures or produces any articles or things or computer software; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose."  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct from 1.4.2004 and the said provisions of law not being available to the assessee for the assessment year 1994-95, the Tribunal committed serious error in granting the relief to the assessee. 8. Per contra, learned counsel for the assessee referred to the CBDT circular which pointed out that the benefit attaches to the undertaking and not to the owner and the successor will be entitled to the benefit for the unexpired period of five years provided the undertaking is taken over as a running concern. Considering the fact that the amalgamating company is 100% subsidiary of the amalgamated company, in the case merger there being no transfer to new business, the relief is rightly granted to the assessee. Quite apart from that, the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iability and in the subsequent year in which benefit is derived must be the same. In other words, if there is change in the identity of the assessee, Section 41 would not be applicable. As far as the fact therein was concerned, the assessee was a subsidiary of ISGEC, the holding company. On amalgamation, the holding company stood dissolved and ceased to be in existence and the subsidiary company was to meet the liabilities of the holding company. After amalgamation, the assessee company derived benefit of the sum which was claimed as trading liability at the hands of the amalgamated company. But, then it was not liable to tax under Section 41(1) of the Income Tax Act, 1961. The Apex Court pointed out that upon amalgamation, the amalgamating....