TaxTMI 
TaxTMI 
2015 (4) TMI 589
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....come of Unit-II & III. The assessee claimed that Unit-I is engaged in IT services. Unit-II is engaged in IT enabled business of insurance claim processing, Unit III is engaged in the business of call center and Unit-IV is engaged in domestic call center. As per Audit Report in Form No.56F under Rule 160 relating to Unit-II is stated to be set up at 1st & 2odfloor, HTMT House, 614, Vajpayee' Nagar, Bommanahalli, Housr Road. Bangalore-50 068. The date of initial registration with the Software Technology. Park is stated to be on 22.07.1992 whereas the date of commencement of manufacture or production of computer software is claimed to be in June 2000. Further. as per Audit Report in Form NO.56F relating to Unit-III, Unit-III is stated to be set up at Ground and 3rd Floor, HTMT House, 614, Vajpayee Nagar, Bornmanahatti, Hosur Road, Bangalore-560 068. The date of initial registration with the Software Technology Park is 'stated to be on 22.07.1992 whereas the date of commencement of manufacture or production of computer software is claimed to be on 19.11.2001 4. The facts as reported in the audit report for unit -II are as under: "It is claimed that "unit - II" is set up a....
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....known as Hinduja Ventures Ltd. The assessee has demerged its IT business to HTMT Global solutions Ltd. with effect from 1.10.2006. There was an associated company with the name Ashok Leyland Information Technology Ltd. (hereinafter known as ALIT). That this company was amalgamated with Hinduja Finance Corpn. Ltd w.e.f. 1st July,1999. The AO further stated that claim of assessee is that Unit No. II and Unit No. III have begun the production of computer software in June, 2000 and November, 2001 respectively. The AO stated that letter dt. 25.11.2008 was addressed to the Director, Software Technology Parks of India, Bangalore (hereafter known as STPI). The Director of STPI furnished various details and documents relevant to deduction u/s.10A vide letter dt. 10.12.2008. It was stated that initially STPI accorded permission in the name of AL Information Tech Ltd. vide approval number 15(63)/92SDA dt. 22.7.1992. On the application of ALIT under Software Technology Park Scheme, Inter Ministerial Standing Committee of Department of Electronics had approved the setting up of 'Unit' at a total foreign exchange outflow of US$ 81.76 lakhs over the five years of project. ALIT had execute....
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....ess Income and' adjustments in international transactions but did not succeed in respect of the other two grounds of claiming exemption u/s 10A & disallowance u/s 14A. Against the order of CIT(Appeal), both the assessee Company and the department filed an appeal before Hon'ble ITAT and ITAT has disposed both the appeals under combined order dated 31st January 2012. The Tribunal has dismissed the appeal filed by the department on the grounds of Capital Gain on sale of shares and adjustment in International transactions, and sent the matter back to the files of AO in regard to the appeal filed by the assessee Company, with the direction to re-examine the issues pertaining to exemption u/s 10A and disallowance u/s 14A. The main issue in appeal was rejection of the claim of the assessee u/s.10A of the Income-tax Act on the ground that the two units being Unit II and Unit III were not independent units but were units construed as split up of the existing Unit 1 based on the correspondence raised by the AO from STPI which used the word expansion in the letter submitted to the AO dated 10/12/2008. We found that the Tribunal in its order after observing that there is a substance in....
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.... observed that it is therefore, evident that the appellant has commenced business activity in respect of unit II & III during the previous year relevant to the assessment year commencing on or after the first day of April, 1994. Therefore, the first condition was fulfilled. After obtaining permission from the STPI Authorities vide letter dated 12.09.2001, Unit No.3 was started at Bangalore for carrying on the business of an International Call Centre. The name of the assessee thereafter changed to HTMT Ltd and it is now known as Hinduja Ventures Ltd. on demerger. The company Hinduja TMT Ltd. w.e.f. 01.10.2006 demerged the IT / lTES business undertakings to Hinduja Global Solutions Ltd (Formerly HTMT Global Solutions Ltd). The Company has intimated STPI on 19/03/2007 for transfer of the License and change of name to HTMT Global Solutions Limited, which is confirmed by STPI on 09/04/2007 and the same has been changed on Green card also on 04/09/2007. Vide letter dated 19.07.2000 permission was sought to start Unit No.2 at Bangalore for carrying out the business of processing Insurance claims. Vide letter date 26.07.2000 the STPI Authorities at Bangalore granted the said permission to ....
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....ssment year commencing on or after 1st April, 1994, therefore, the condition was fulfilled. The AO also observed that the Unit No.II & III have not been formed by splitting up or reconstruction of an existing business and are not formed by the transfer to a new business of machinery or plant previously used for any purpose. It is crystal clear from the remand report of AO that the units II and III fulfilled all the conditions prescribed under the relevant provisions of section 10A of the Act. The precise conclusion of the AO in his remand report dated 7-6-2014 was as under :- "4.4 in view of the above, it is noticed that units II and III have been set up with fresh investments in plant and machinery, furniture and fixtures, etc. as can be seen from the tax audit reports for F.Y.rs. 2000-01 and 2001-02. Separate books of account have been maintained by each unit. The activities carried out by all the units of the assessee are different from each other. The customers of each unit are completely different or unrelated and the employees of each unit are also different. 4.5 As per the provisions of section 10A(2) of the Act, in order to claim exemption u/s.10A of the Act, any unde....