TaxTMI 
TaxTMI 
2013 (9) TMI 375
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sustaining the order of the Commissioner of Income Tax (Appeals) even though the assessee does not satisfy the provisions of Section 10A(2)(iii) of the Income Tax Act, 1961? 3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in granting deduction under Section 10A of the Income Tax Act, even though the assessee is entitled deduction under Section 80HHE of the Income Tax Act, 1961 and the same was granted by the Assessing Officer?" 2. The assessee herein is an industrial undertaking engaged in Medical Transcription Business. It is seen from the facts narrated that one M/s.KGISL got approval as a 100% EOU in the year 1998 from Software Technology Park of India and started its new business of Medical Transcription during financial year 1999-2000. It is stated that it also had another undertaking engaged in the business of development of software exported outside India. To that end it is stated to have imported machinery, during the assessment year 2000-01 and 2001-02. In respect of business income earned from export, the said undertaking claimed for exemption under Section 10A of the Income Tax Act. In July 2001, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see's balance sheet showed transfer of business and for that, there was corresponding deduction in the balance sheet of the vendor company, the approval by STPI was not sufficient for claiming benefit under Section 10B of the Act and that the assessee having failed to show that it was 100% EOU, the claim was rejected. The assessee contested the report, that considering the vendor company being 100% approved EOU undertaking, the benefit that the vendor had would be available to the assessee too. The Commissioner of Income Tax (Appeals) pointed out that as per the deed of transfer, the entire undertaking engaged in the business of medical transcription which was functioning in third and fourth floor of vendor company was transferred with all assets and liabilities to the assessee company. Referring to the Board's circular in F.No.15/5/63-IT(A.1) dated 13.12.1963, the Commissioner of Income Tax (Appeals) held that the benefit that the vendor company had in respect of the individual undertaking engaged in the manufacture of articles could be claimed by successor company for the remaining tax holiday period since the entire undertaking in the business of medical transcription was transf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le business of the undertaking on the medical transcription. Thus, it cannot be said that it was a case of formation of an undertaking by using assets previously used, as contended by the Revenue. In the background of the said factual position, the Tribunal held that the order of the Commissioner of Income Tax (Appeals) merited to be confirmed. Thus, the Tribunal rejected the Revenue's appeal. Aggrieved by this, present appeal before this Court by the Revenue. 6. As far as the first question raised as regards the claim of the assessee originally made under Section 10B of the Income Tax Act is concerned, we do not think, the said question can be answered in favour of the Revenue. A reading of the order of the Assessing Officer as well as the Commissioner of Income Tax (Appeals) shows that even though the assessee originally claimed relief under Section 10B, it was cautious enough to make an alternative plea under Section 10A in view of the fact that the assessee's vendor had the benefit under Section 10A. It is not denied by the Revenue that the assessee had the whole business transferred to its favour and that the factum of transfer was also intimated to the Software Technology ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on or after the 1st day of April, 2001 in any special economic zone; (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 undertakings 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. Explanation : The provisions of Explanation 1 and Explanation 2 to sub Section (2) of Section 80-I shall apply for the purposes of clause (iii) of this sub section as they apply for the purposes of clause (ii) of that sub-section. 10. A cursory reading of the above Section shows that where an undertaking is formed by splitting up or reconstruction of business already in existence then the said undertaking would not be entitled to claim deduction under Section 10A. The other conditions is that the industrial undertaking should not be formed by transfer of plant and machinery alread....