TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 318
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....chnology Part (STP) registration from 16.6.2004. Hence, the assessee company started claiming deduction u/s 10A of the Act from assessment year 2005-06 onwards, i.e., from the year in which it obtained registration as STP. The AO held that the assessee is not eligible for deduction u/s 10A of the Act for the following reasons:- (a) The assessee is not a new undertaking, i.e., the assessee is carrying out its activity since AY 2001-02. (b) It has not set up any separate or new unit after getting registration as Software Technology Park. It has continued to use old business set up after getting STP registration also. (c) As per the agreement entered with STP authorities, the unit was supposed to be 100% export oriented unit. But the assessee has not set up any separate NEW unit. (d) Merely registering with Software Technology Park does not entitle the assessee to get deduction u/s 10A. (e) Assessee has not demarcated the eligible undertaking and non-eligible undertaking. (f) Assessee has utilized old plant and machinery, which were used previously, in excess of 20% of the total plant and machinery used in the business. (g) The assessee has not brought into India the total sale....
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....ording to Ld D.R the assessee is not eligible for deduction u/s 10A of the Act. 8. Before us, the Ld A.R placed reliance on the following case law to contend that the deduction u/s 10A is available to the existing unit also from the date of obtaining approval as STP. (a) CIT Vs. EDS Electronics Data Systems (India) (P) Ltd (2013) (89 DTR (Del) 182) (b) Nagesh Chundur Vs. CIT (2013)(358 ITR 521)(Mad) (c) CIT Vs. Maxim India Integrated Circuit Design (P) Ltd (2011)(202 Taxman 365)(Kar) (d) CIT Vs. Expert Outsource (P) Ltd (2011) (59 DTR 86). 9. We have gone through the above said decisions. We notice that the facts prevailing in the instant case are identical with the facts prevailing in the case of Nagesh Chundur (supra) considered by Hon'ble Madras High Court. In the said case, the assessee therein was in business from 1994 onwards. It was approved as STP by Government of India (as 100% Export oriented unit for computer software) on 27.3.2002. The assessee claimed deduction u/s 10A of the Act for AY 2003-04. The ITAT allowed the claim of the assessee by following the decision of Hon'ble Karnataka High Court in the case of Expert Outsource (P) Ltd (supra). The Hon'ble Madras H....
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....to benefit of Section 10A of the Act. Consequently, according to the learned Standing counsel appearing for the Revenue, the Income Tax Appellate Tribunal committed serious error in applying the decision of the Karnataka High Court in the case of Expert Outsource (P) Ltd. (supra). 15. We do not agree with the said line of reasoning of learned Standing counsel appearing for the Revenue. At the outset, we may say that we are in respectful agreement with the Karnataka High Court decision in the case of Expert Outsource (P) Ltd. (supra). Pointing out to the purpose of the STP scheme to encourage exports and gain valuable foreign exchange for the country, the Karnataka High Court held that "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." Referring to Circular No.1 of 2005 dated 06.01.2005, the Karnataka High Court pointed out that the said Circular grants certain benefits under Section 10B of the Act; though this was in the context of Section 10B of the Act, the ratio of the Circular No.1 of 2005 dated 06.01.2005 would apply to Section 10A of the Act too. Thus it held that the mere fact that the assesse....
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.... 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 2-(vii) defines Software Technology Park as follows:- "(vii) "software technology park" means any park set up in accordance with the Software Technology Park Scheme notified by the Government of India in the Ministry of Commerce and Industry." A reading of the provisions referred to above point out that the Section grants 100% deduction to an undertaking, which has begun or begins to manufacture or produce articles or things or computer software as per Sub clause (i) of Sub Section 2 of Section 10A of the Act. The dates mentioned therein show the conditions regarding the year of manufacture for the purpose of reckoning the exemption/ deduction for ten consecutive years with reference to the undertaking set up in different locations viz., for the industries in free trade zone, units in electronic hardware technology park or software technology park, units in special economic zone. The second requirem....
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....mic zone, the period of ten consecutive assessment years referred to in this sub-section shall be reckoned from the assessment year relevant to the previous year in which it had started manufacture or produce such articles or things or computer software in the free trade zone or the export processing zone or otherwise, and clarifies that the benefit would continued to be available to the balance of period available to the free trade zone which has been subsequently got converted into special economic zone. 21. Given the scope of the scheme formulated by the Government of India, Ministry of Commerce and Industry in locating the Software Technology Park, which either may be done by the Government itself or by the individual unit, we do not find any conditions in the Section, throwing the assessee out of benefit of Section 10A of the Act solely by reason of it being in existence already but became STPI subsequently. In the circumstances, we have no hesitation in rejecting the Revenue's appeal, thereby confirming the order of the Income Tax Appellate Tribunal." 10. Since the view taken by the Ld CIT(A) is in accordance with the view expressed by Hon'ble Madras High Court in the c....