AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 577
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....allowing section 10B deduction of Rs. 34,87,738/- allegedly without appreciating the fact that the assessing authority had established in its order dated 22.12.2010 that the assessee had reconstructed its business of manufacturing of software already in existence since financial year 2003-04; formed by transfer of 39% of plant & machinery previously used for the purpose of new business. The case file reveals that the CIT(A) has accepted assessee's above stated deduction claim by stating as under :- "2.4 I have considered the assessment order, written submission; various case laws and CBDT circular relied upon by the Authorized Representative of the Appellant. The Appellant has originally claimed deduction of Rs. 41,76,779/- u/s 10B of the....
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....dertaking set up in Domestic Tariff Area (DTA) and deriving profit from export of articles or things or computer software manufactured or produced by it, which is subsequently converted into a EOU, shall be eligible for deduction under section 10B of the IT Act, on getting approval as 100% export oriented undertaking. In such a case, the deduction shall be available only from the year in which it has got the approval as 100% EOU and shall be available only for the remaining period of ten consecutive assessment years, beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as a DTA unit. 2.6 Further, in the year of approval, the ded....
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..../s 10B(2)(ii) of the Act apparently is only to prevent claims where an undertaking is formed through a division, reconstruction, and the like, of the resources already in existence, while in the present case the ownership, management and control of the assets of business continued to vest in the same assessee, both prior to and subsequent to its being converted from DTA to 100% EOU. Further, the CBDT has already clarified the issue that on conversion from DTA to 100% EOU, the undertaking shall be eligible for deduction u/s 10B of the Act. Further I find that even as per the scheme of the Act, the Appellant would be eligible to claim deduction for remaining unexpired period from the assessment year in which it started to export software, whi....
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....ries. Further it is also not the case of the assessing officer that the Appellant had acquired old plant & machineries in previous assessment years or during the year under appeal. Therefore, I am of the opinion that condition as laid down u/s 10B(2)(iii) is also not violated by the Appellant and as held by me the undertaking of the Appellant is duly eligible for deduction u/s 10B of the Act are held by following authorities: * INCOME TAX OFFICER V. ANITA SYNTHETICS (P) LTD. 100 TTJ 277 (AMD) * ITO vs. E-lnfochips Ltd. 124 TTJ 176 (Ahd.) * CIT vs. Mahavir Spinning Mills Ltd. [303 ITR 353 (P&H)] * SRA SYSTEMS LTD. v. DEPUTY COMMISSIONER OF INCOME TAX. 2009-(024)-DTR -0633 -TMAD Having regard to the CBDT Circular No.1/2005, dat....
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....DT Circular (supra). Therefore, I am of the opinion that the Appellant has rightly claimed deduction to the extent of Rs. 34,87,738/- u/s 10B of the Act and therefore, the same is allowed. However, balance amount of deduction of Rs. 6,89,041/-(Rs.41,76,779/- Minus Rs. 34,87,738/-) claimed u/s 10B of the Act in the return of income is not available to the Appellant and therefore, disallowance to that extent made by the assessing officer is confirmed. Therefore, these grounds of appeal are partly allowed." 3. Heard both the parties. Relevant records perused. We have already narrated factual backdrop of the case in preceding paragraphs. The same is not repeated for the sake of brevity. It has come on record that the assessee has converted it....