2009 (7) TMI 1271

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....when an existing unit gets converted into STPI unit and the condition laid down in section 10A(2)(i)(b) as well as 10A(2)(iii) are fulfilled and in directing the Assessing Officer to allow deduction u/s 10A. 3) The learned CIT(A) has failed to appreciate the fact that the unit in respect of which STPI approval was granted on 1.3.2005 was for establishment of new existing unit." 3. Facts of the case in brief are as follows: The assessee is a private limited company incorporated under the provisions of the Companies Act 1956. It is engaged in software development and services. For the concerned assessment year, assessee filed return of income declaring income of Rs. 3,25,887/- after claiming deduction of a sum of Rs. 5,81,240/- u/....

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....04, 1363 and 1364/Bang/2005 dated 16.3.2007). The ld. CIT(A) allowed the assessee's appeal. The relevant portion of the CIT(A)'s order is reproduced below: ".....It is evident therefore that the benefits of sec.10A would be available even when an existing unit gets converted into a STPI unit. In a nutshell, this is because there is no formation of a new undertaking but only a change in the status of an existing unit from a non-STP unit to an STP unit. There is no transfer of the assets of an existing unit, but only a transformation in the nature and character of an existing unit. In view of the foregoing analysis, keeping in mind the decision of the Punjab and Haryana High Court in Mahavir Spinning Mill's case (supra....

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....vir Spinning Mills Ltd. (supra), held that deduction u/s 10-B would be available on conversion of existing unit into an export oriented unit (EOU). The contentions of the revenue authorities that provisions of sec.10-B(2) were not fulfilled on conversion of existing unit into EOU were negative by the High Court. The Tribunal, in the case of M/s. Foresee Information Systems (P) Ltd., (supra) had held the benefit of section 10-A would be available even when an existing unit gets converted into a STPI unit. Relevant portion of the order of the Tribunal is reproduced below: "6. We have heard both the sides. It appears that learned CIT(A) has passed a very detailed order in the asst. year 2002-03 and rightly came to the conclusion that ....