TaxTMI 
TaxTMI 
2016 (6) TMI 425
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....36(i)(iii) of the IT Act." 2. First issue is regarding that Ld. CIT(A) erred in disallowing of Rs. 74,16,576/- u/s 10A of the Act. Facts in brief are that assessee in the present case is a Private Limited Company and incorporated on 03.08.2007. The assessee is engaged in the business of sale & export of software as well as IT enabled services and trading of hardware and computer accessories. The assessee-company is a registered unit under the Software Technology Park under the Scheme of Government of India and certificate of STP registration was issued on 05.12.2007 and started its commercial manufacturing and production from 23.11.2007. During the year under consideration Assessing Officer observed that assessee has claimed exemption amounting to Rs. 74,16,576/- u/s 10A of the Act. However, AO observed that assessee-company has been formed after splitting off/reconstruction of old business in the name of Vision Comptech Integrators Ltd. (VCIL for short) by observing following facts:- 1. VCIL is also a company doing the same business and lot of software personnel has been transferred from VCIL to the assessee. Further, the assessee company has been incorporated on 03....
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.... were shifted from VCIL to assessee company and accordingly it did not fulfill the conditions laid down in section 10A(2)(ii) of the I.T. Act. Assessee is a registered unit under Software Technology Park Scheme of Govt. of India as per certificate issued on 05.12.2007 and acquired fixed assets to the tune of Rs. 2.57 crores including computer hardware in the 1st year of operation ending on 31.03.2008 and in the financial year under consideration further acquired fixed assets of Rs. 31,08,215/- and total exports from sale of software and IT enabled services in the year were Rs. 11.56 crores and it claimed deduction u/s 10A as per Audit Report in Form No.56. Assessing Officer did not dispute with the fact that no Plant & Machinery was transferred to the assessee company from VCIL and the physical place of business and the Board of Directors in the two companies are different. These two companies were completely separate and distinct. There is no restriction on sec 10A(2)(ii) regarding use of human resources . Such use of human resources by this appellant of the employees who are working earlier with VCIL does not amount to splitting up or reconstruction of a business already in exist....
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....the assessee has set up a new project for manufacturing 4 inch diameter black pipe which is different from 2 inch diameter pipe which was already being manufactured by it-Merely because some of the manufacturing facilities are common, it does not mean that the new project is set up by reconstruction or splitting up of the existing business-Deduction under ss. 80HH and 80J admissible in respect of the new project-Textile Machinery Corporation Ltd. vs. CIT 1977 CTR (SC) 151 : (1977) 107 ITR 195 (SC) applied. In the case of Quality Steel Tube Ltd. (supra), it was held that even if substantial persons have started the unit then it cannot be considered as reconstruction of the company. There is substantial investment in the Plant & Machinery in the company. We also find from the records that VCIL was still functioning and in support of it the ld. AR has submitted the copies of the financial statements and copies of ITR which are placed on record. We are relying on the above judgments of Hon'ble Supreme Court and Hon'ble Allahabad High Court and accordingly conclude that even though employees were transferred from VCIL to assessee were sharing some common liabilities and the s....
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....ng as on 31st March 2009 on account of Sundry Debtors. Accordingly, there was a closing balance of Rs. 58,75,910/- with VCIL as on 31st March 2009.Assessee had submitted that there was credit balance on account of VCIL in the month of April, 2008 and the appellant did not pay any interest to VCIL for this credit balance of Rs. 1,04,81,769/- and assessee had sufficient interest free funds including share capital and reserve & surpluses to cover for loan and advance of Rs. 58,75,910/-. As per schedule 20 of the Profit & Loss a/c, assessee had debited interest of Rs. 33,32,790/- on account of export packing credit and interest on term loan. As per schedule 13 assessee had received interest of Rs. 5,91,434/-. Keeping in view these facts and circumstances, addition of Rs. 17,30,808/- made by Assessing Officer is deleted." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 7. Before us both the parties relied on the orders of Authorities Below as favourable to them. Ld. AR has filed a paper book running from pages 1 to 32 and drew our attention on page no. 31 & 32 of it. There were two ledgers maintained by the assessee naming Vision Computech Integrators L....