TaxTMI 
TaxTMI 
2020 (10) TMI 653
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.... of the IT Act. However, the assessee has paid tax u/s 115JB on book profit of Rs. 205,06,58,504/-. Since the assessee had entered into certain international transaction, the AO referred the matter to the TPO for determination of the ALP of the international transaction. However, the TPO did not draw any adverse inference in respect of such international transaction undertaken by the assessee. So far as the other issues are concerned, the AO, after considering the various replies given by the assessee, rejected the claim of deduction u/s 10AA of the Act made by the assessee in respect of income from six SEZ units and made addition of Rs. 226,98,41,758/-. Similarly, the AO made addition of Rs. 82,88,099/- on account of other income from four SEZ units. The AO further made addition of Rs. 8,40,46,029/- by rejecting the claim of depreciation on goodwill. Thus, the AO determined the total income of the assessee at Rs. 212,44,62,496/-. 4. In appeal, the ld.CIT(A) deleted the additions made by the AO. 5. Aggrieved with such order of the CIT(A), the Revenue is in appeal before the Tribunal. 6. Ground of appeal No.1 by the Revenue reads as under:- "1. Ld. Commission....
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....operations. Further, there has been no transfer of employees by the Assessee from any other business units to these two business units during the subject year under assessment. During the subject year under assessment, these two units were continuing business operations carried forward from the previous year, and there has been no splitting or reconstruction of these business units during the previous year under assessment.......... " "........Both, Coimbatore and Hyderabad SEZ units were initially set-up by Planet in the F. Y. 2010-11 and F.Y. 2011-12 respectively and commenced business operations in respective years of set-up. Assessee acquired business Operations from Planet on a going concern business in F.Y. 2012- 13, and has accordingly claimed deduction ids I0AA in respect of two units in its tax return for the subject year assessment. These two business units are engaged in export of services i.e. provision of IT (software development support) to Ebix group outside India, which is permitted business activity under SEZ and fur claim of tax holiday u/s 10AA of the Act. " 9. However, the AO was not satisfied with the arguments advanced by the assessee. He ....
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....ndertakings. He further noted that the report in the Form 56F are also faulty to this extent. 12. The AO further noted that during assessment year, the assessee company has purchased one undertaking from M/s Planet Online Ltd. On being asked by the AO to submit assessment history of M/s Planet Online Ltd. for the last three years in respect of the allowability of deduction claimed by such purchase unit, the assessee failed to demonstrate as to how the new SEZ unit so acquired is not formed by splitting up or reconstruction of a business already in existence and the SEZ unit has not been formed by the transfer of previously used plant and machinery. He noted from the letter of transfer dated 29th October, 2012 that the Development Commissioner has also mentioned that tax liability may arise out of the changes that had to be fulfilled by the respective companies. He further noted that in the consolidated computation, the section 10AA exemption is Rs. 226,98,41,758/- whereas in the unitwise computation, the deduction u/s 10AA has been claimed at Rs. 227,02,14,376/-. Further, in the form No.3CD of audit report u/s 44AB of the Act for A.Y. 2013-14, the admissible deduction u/s 10AA h....
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....e Employee Benefit Expenses of SEZ Unit's range from 8.25% to 46.4% as against the 660.79% and Infinite % in the case of Hyderabad and Chennai Non-SEZ Units. This unusually high Employee Benefit Expense according to him indicates that these expenses were incurred for the earning of revenue in 10AA claiming SEZ Units. Since, the Employees have earned revenue for SEZ Units, they have also utilized other resources of Non-SEZ Units in doing so. This will tantamount to use of resources of non-eligible already existing unit for earning revenue for SEZ units. Such arrangement according to the AO is colorable and are merely to avail benefits of deduction u/s 10AA. 17. The AO analysed the provisions of Section 10AA according to which the undertaking which is formed by splitting up or the reconstruction of business already in existence shall not be eligible for deduction under 10AA. He noted that there were expenses of Non-SEZ units which were used for earning income of SEZ units is admitted by the assessee itself in the form of Computation of Income submitted by it. Further, the assessee failed to submit satisfactory details and justification in respect of each unit that has claimed ....
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....nnai (referred to as non-eligible unit namely 'Chennai non-SEZ') was also amalgamated with the appellant company. Moreover, under the scheme of composite arrangement, there was a de-merger of the undertaking eligible for deduction u/s 10B of the Act of the company at Noida engaged in providing BPO and support services to M/s. Premier Ebix Exchange Software Pvt. Ltd. However, as a result, certain specified assets were retained by the company, on which depreciation has been claimed in the instant year and, referred to as 'Noida DTA'. 3.4 That accordingly, during the assessment year 2012-13, company had three undertakings namely Noida SEZ, Nagpur SEZ and Chennai non-SEZ. It is stated that the company had claimed deduction under section 10AA of the Act for both the undertakings, namely Noida SEZ for an amount of Rs. 144,89,55,520/- and Nagpur SEZ for an amount of Rs. 6,23,98,396/- . Infact, in assessment year 2012-13, in respect of the assets retained by the company and classified under the head 'Noida DTA;, depreciation of Rs. 1,20,87,945/- was claimed by the company which was allowed as such in assessment framed under section 143(3) of the Act. The details of....
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.... Act in respect of the four units eligible for the deduction and details of the set up of the units and the status thereof is tabulated as under: I Noida SEZ AY Deduction claimed (in Rs.) (page of PB) Entity in which, deduction claimed Disallowance if any Date of order u/s 143(3) of the Act (Pages of PB) 2010-11 65,27,64,881 (384-386) Ebix SEZ Nil 20.2.2014 (393-397) 2011-12 142,07,41,308 (462-464) Ebix SEZ Nil 17.2.2015 (481-483) 2012-13 144,89,55,520 (231) Appellant company Nil 29.1.2016 (224-229) II Nagpur SEZ AY Deduction claimed (in Rs.) (page of PB) Entity in which, deduction claimed Disallowance if any Date of order u/s 143(3) of the Act (Pages of PB) 2011-12 31,23,74,139 (462,465-466) Ebix SEZ Nil 17.2.2015 (481-483) 2012-13 6,29,98,996 (232) Appellant company Nil 29,1.2016 (224-229) III Coimbatore SEZ AY Deduction claimed (Rs.) Entity in which, deduction claimed Disallowance, if any 2011-12 61,644 (532-533) Planet Online (P) Ltd. Nil 2012-13 49,62,722 (586,588) Planet Online (P) Ltd. Nil IV Uppal SE....
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....eding assessment years wherein deduction claimed stood duly allowed and, therefore, there could have been no valid reason or justification to deny claim of deduction in respect of these undertakings in the instant assessment year. Relying on various decisions, it was argued that the amalgamation of the undertaking could neither in law nor on facts be made a basis to deny the legitimate claim of deduction and does not amount to splitting up or reconstruction of business already in existence. The provisions of section 10AA(5) were brought to the notice of the CIT(A) and it was argued that the above provision of the Act is an enabling provision to enable the claim of deduction so as to transfer all the eligible unit to another unit in a scheme of amalgamation or demerger. Relying on various decisions, it was argued that acquisition of an undertaking on slump sale could neither in law nor on the facts be made a basis to deny the legitimate claim of deduction. It was argued that the change in ownership either by way of slump sale, merger or otherwise cannot be made the basis to disallow the claim of deduction. It was argued that fulfillment of the conditions as provided in sub-sectio....
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....o the notice of the CIT(A). It was submitted that the assessee while computing the consolidated income has not only reduced the depreciation of SEZ units, but also reduced the depreciation of non-SEZ units and while computing the aggregate income the assessee reduced the entire claim of depreciation the break-up of which is as under:- Sr No. Unit Eligible Unit {Rs.) Non-eligible unit (Rs.) Total (Rs.) 1. Noida 2,41,23,252 ---- 2,41,23,252 2.. Nagpur 7,50,756 ---- 7,50,756 3. Coimbatore 2,92,84,982 ---- 2,92,84,982 4. Uppal 2,37,11,606 ------- 2,37,11,606 5. Chennai 9,01,810 9,01,810 6. Hyderabad 4,73,47,487 4,73,47,487j 7. Noida DTA 52,74,157 ) 52,74,157 Total 7,78,70,596 5,35,23,454 13,13,94,050 24. It was argued that while computing the aggregate income, the assessee reduced the entire claim of depreciation both in respect of non-SEZ units and SEZ units and computed the income at Rs. 226,98,41,758/- and as such, restricted its claim of deduction to Rs. 226,98,41,758/- as against eligible claim of Rs. 227,02,14,376/- ....
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....nished before him, it was submitted that in the unitwise computation of income the depreciation claimed for the Noida SEZ is for Rs. 2,41,23,252/- which has been separately claimed as part of the consolidated computation in addition to the depreciation of Rs. 52,74,157/- in respect of Noida unit. Thus, no expenditure has been claimed either in respect of Noida DTA or in respect of registered office while computing profits of Noida SEZ. Referring to various other inconsistencies and observations in the assessment order and relying on various decisions, it was argued that the company has correctly made the claim of deduction u/s 10AA. 26. Based on the arguments advanced by the assessee, the ld.CIT(A) allowed the deduction of Rs. 226,98,41,758 u/s 10AA of the Act in respect of profit of eligible business undertaking. While doing so, he noted that once separate books of account are accepted as such, no disallowance can be validly made. According to him, the disallowance is contrary to the principle of consistency and deduction granted in initial year cannot be withdrawn. According to him, mere amalgamation of the undertaking could neither in law nor on facts be made a basis to deny ....
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....eport u/s 44AB of the Act for A.Y. 2013-14, the inadmissible deduction u/s 10AA of the Act has not been specified by the auditor. He submitted that the AO has correctly held that the A.Y. 2013-14 was the first year in respect of these units and as such, the claim of the assessee was required to be examined and the specific queries raised by the AO during the assessment proceedings were not answered by the CIT(A), who simply accepted the submissions made by the assessee. He accordingly submitted that the order of the CIT(A) being not in accordance with law, should be reversed and that of the AO be restored on this issue. 29. The ld. Counsel for the assessee, on the other hand, heavily relied on the order of the CIT(A). He submitted that in the grounds raised by the Revenue, they have not challenged the deletion of addition u/s 10AA of the Act and there is no reference to deduction under the said provision. On the contrary, the ground raised by the Revenue is restricted to deletion of addition on account of business income from six units. He submitted that the income from six units has been assessed by the AO as business income which is evident from the computation portion of the ....
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....d independently and thereafter taxable business income of the assessee company has been computed. Referring to the following decisions, the ld. Counsel for the assessee submitted that once separate books of account are accepted as such, no disallowance can be validly made:- i) CIT vs. Quest Informatics (P) Ltd., 372 ITR 526 (Kar); ii) Larsen & Toubro Infotech Ltd. vs. DCIT, 19 ITR (T) 361 (Mumbai); iii) CIT vs. Translam Ltd., 231 Taxman 901 (All); iv) Cadila Healthcare Ltd. vs. Addl. CIT, 67 SOT 110 (Ahd); v) Shiva Exports vs. ITO, 28 SOT 512 (Chd.) and vi) DCIT vs. Delhi Press Samachar Patra (P) Ltd., 101 ITD 283 (Del). 32. Referring to the decision of the Hyderabad Bench of the Tribunal in the case of DCIT vs. A.P. Industrial Infrastructure Corporation Ltd., 156 ITD 410, he submitted that the Tribunal has held that even if the assessee failed to maintain separate books of account for eligible units, the AO shall compute deduction on reasonable basis. 33. The ld. Counsel for the assessee, referring to the following decisions, submitted that the disallowance is contrary to the principle of consistency since the eligible un....
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..../s Last Peak Data Pvt. Ltd., ITA No.154 & 155/Kol/2013, he submitted that under somewhat identical circumstances the deduction claimed u/s 10AA was allowed. 36. Referring to the following decisions, the ld. Counsel for the assessee submitted that mere acquisition of an undertaking on slump sale could neither in law and nor on facts be made a basis to deny legitimate claim of deduction u/s 10AA to the assessee company:- i) CIT v. Hearland Delhi Transcription, ITA No.300/2011 (Del) dated 18.07.2014; ii) NDS Services Pay-TV Technology (P) Ltd., 33 taxmann.com 414 (Bang); iii)DCIT v. LG Soft India (P) Ltd., ITA Nos.623 & 847/B/2010, dated 19.5.2020; iv) M/s Samsung India Software Operations (P) Ltd. vs. Addl. CIT, ITA No.399/Bang/2012 37. Referring to the following decisions, the ld. Counsel for the assessee submitted that mere change in ownership either by way of slump sale, merger or otherwise cannot be made a basis to disallow the claim of deduction and also assume that there is splitting up or reconstruction of business:- i) 106 TTJ 484 (Chennai) Kumaran Systems (P) Ltd. ACIT ii) ITA Nos 623 & 847/B/2010 dated 19.5.2010 DC....
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....allenged the same. So far as the observation that it is the first year that claim of deduction in respect of Noida SEZ and Nagpur SEZ is concerned, the ld. Counsel drew the attention of the Bench to the following table and submitted that the observation of the AO is factually incorrect:- Sr. No. Unit reference Year of commencement of business Eligibility of unit for claiming deduction u/s 10AA of the IT Act as claimed by the assessee during the AY 2013-14 No. of years completed in A.Y. 2013-14 since commencement of business Correct Position 1 NOIDA SEZ (Ebix SEZ) 2009-10 Yes 4* (first year with assessee) Second year with Assesse (please refer table at point no. 3.3 herein above) 2 NAGPUR SEZ (Ebix SEZ) 2010-11 Yes 3* (first year with assessee) Second year with Assesse (please refer table at point no. 3.3 herein above) 3. COIMBATORE SEZ (Planet Online) 2012-13 Yes 3* (first year with assessee) 4. Uppal SEZ (Planet Online) 2012-13 Yes 2* (first year with assessee) 5. Chennai Non SEZ n.a. No NA 6. Hyderabad Non SEZ (Planet Online) n.a. No (Acq....
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.... DTA, but the resources and infrastructure of Noida DTA has been used for earning revenue in Noida SEZ is concerned, he submitted that there is no basis or evidence to support the above assumption made by the AO on the basis of surmises and presumptions. He submitted that the computation of income of the assessee company for the instant assessment year, copy of which is placed at page 30 and 31 of the paper book, shows that separate Profit & Loss Account of Noida SEZ was duly furnished during the assessment proceedings. He submitted that a perusal of page 31 r.w. page No.105 of the paper book show that the assessee had claimed deduction of depreciation under the Companies Act for the Noida SEZ of Rs. 2,41,23,252/- the working of which is at page 153 of the paper book and as a result thereof the deduction claimed was of Rs. 2,09,44,51,574/- u/s 10AA of the Act. He submitted that while computing the consolidated income of the assessee company, the assessee has not only reduced the depreciation of SEZ unit, but, also has reduced the depreciation of non-SEZ units while computing the income of the assessee company. He submitted that the assessee has restricted its claim of deduction to ....
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....e assessee. He submitted that out of the four eligible units, only in respect of Noida SEZ and Coimbatore SEZ, the assessee has added back expenses of Rs. 19,14,995/- and Rs. 3 lakhs, respectively which represents expenses incurred on guest house and, therefore, it had added back to avoid possible dispute while computing unitwise computation for determining profit eligible for deduction u/s 10AA of the Act. He submitted that in the consolidated computation of income, the assessee has added back expenses of Chennai unit and Hyderabad unit of Rs. 21,85,82,287/- and Rs. 3,01,30,343/-, respectively. He submitted that had this expenditure been claimed, then, gross income of the assessee would have been Rs. 2,02,11,29,128/- and not Rs. 226,98,41,758/- and consequently, the deduction u/s 10A would have been restricted to Rs. 202,11,29,128/-. Therefore, the observation of the AO of adding back has no basis to determine the claim of deduction u/s 10AA of the Act. In any case, he submitted that the above figure of Rs. 22,14,995/- pertains to the expenditure incurred by the eligible units and guest house whereas the figure of Rs. 24,87,12,630/- pertains to non-eligible units and also incurred....
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....ed, he submitted that the same is also factually incorrect. Referring to para 13 on page 8 and 9 of the assessment order, he submitted that it was computation of results of non-SEZ units and has noted that during the instant year the assessee has declared losses of Rs. 3,16,90,329/- and Rs. 19,58,92,585/- in respect of Chennai and Hyderabad non-eligible undertakings of the assessee company. He has noted that there are no revenue declared of the Chennai unit and likewise there is only revenue of Rs. 2,27,74,588/- in respect of Hyderabad unit and, accordingly alleged that disproportionate expenses against revenue show fictitious arrangement in which the entire resources of Chennai unit or Hyderabad units have been utilized for earning tax free income of SEZ units. The ld. Counsel, drew the attention of the Bench to the following table and submitted that the assessee has not even claimed the losses of Hyderabad and Chennai units while computing the income of the assessee:- Sr. No. Particulars Chennai- Non SEZ (Rs.) Hyderabad- Non SEZ (Rs.) Total (Rs.) I Revenue from operations 2,27,74,589 2,27,74,589 II Other income - - - III T....
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....of deduction of Rs. 226,98,41,758/- on account of business income from six units which was claimed by the assessee as exempt u/s 10AA of the Act. Although the Revenue has challenged the order of the CIT(A) in deleting the same, a perusal of the same shows that the Revenue has not made any reference to the deduction u/s 10AA of the Act. Be that as it may, the reason for denial of deduction u/s 10AA of the Act by the AO may be summarized as under:- i) That it is the first year of claim of deduction in respect of Noida SEZ and Nagpur SEZ; ii) The assessee was only having business undertaking at Noida and it is also only after composite scheme of arrangement and business transfer agreement during the assessment year, the assessee company owns six undertakings/units; iii) The assessee has not shown any domestic revenue from Noida DTA and the resources and infrastructure of Noida DTA has been used for earning revenue in Noida SEZ; iv) There is variation in the profits of SEZ undertakings. v) There are differential figures of inadmissible expenses of non-SEZ units in consolidated computation of income and individual computation of income; ....
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....rious details furnished by the assessee in the paper book as well as in the written synopsis, it is an undisputed fact that the assessee has six undertakings out of which four undertakings have been claimed to be eligible u/s 10AA of the Act. The amount of deduction claimed in respect of four undertakings u/s 10AA are as under:- Sr. Name of undertaking Amount 1 Noida SEZ 209,44,51,574 2 Nagpur SEZ 4,88,88,288 3 Coimbatore SEZ 4,42,95,190 4 Hyderabad SEZ 8,25,79,324 Total 227,02,14,376 55. From the various details furnished by the assessee, we find the historical position in respect of the deduction in respect of the aforesaid four undertakings are as under:- AY Entity in which, deduction claimed Deduction claimed (in Rs.) (page of PB) Disallowance if any Date of order u/ s 143(3 of the Act (Pages of PB) 2010-11 Ebix SEZ (236-293) 65,27,64,881 (285-287) Nil 20 7 Ni l 4 (289-293) 2011-12 Ebix SEZ (294-339) 142,07,41,308 (332-334) Nil 17.2.2015 (337-339) 2012-13 Assessee company (224-235) 144,89,55,520 (231, 235) Nil 29.1.2016 (224-229) II Nagpur SEZ AY ....
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.... of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken." 30. Reference was also made to Parashuram Pottery Works Ltd. v. Income Tax Officer, [1977] 106 ITR 1 (SC) and then it was held: "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. "On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter - and if there was no change it was in support of the assessee -we do not think....
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....rinciple that there should be finality in all legal proceedings. The Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO: [1977] 106 ITR 1 had held as under:- "that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity." 75. In the facts of the present case, where although the Assessing officer has allowed the assessee deduction under section 80-I of the Act in the preceding years, one may still have certain reservations as to whether the issue of eligibility of Unit nos. 2 and 3 fulfilling the conditions has been finally settled, since the question has not been a subject matter of any appellate proceedings in the years preceding the assessment year 1991-92. However, there is yet another aspect which needs to be considered. By virtue of section 80-I(5) of the Act, deduction under section 80-I of the Act is available to an assessee in respect of the assessment year (referred to as the initial....
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....n was granted to the assessee in the initial assessment year. This in our view would not be permissible unless the past assessments are also disturbed. 60. Similarly, the Hon'ble Bombay High Court in the case of CIT vs. Western Outdoor Interactive (P) Ltd., 349 ITR 309 (Bom) has observed as under:- "5. On the other hand, Mr. Percy Pardiwalla, Senior Counsel appearing on behalf of the respondent-assessee submitted that in view of the decision of this court in the matter of Commissioner of Income Tax v. Paul Brothers reported in 216 ITR 548 and M/s.Direct Information Private Ltd. v. ITO dated 29/9/2011 in Writ Petition No.1479/2011 (Reported in 2011 (12) LJSOFT 320), the issue is no longer open to debate. In the above case, it is held that once a benefit of deduction was extended in respect of a provision for a particular number of years then unless the benefit is withdrawn for the first year it cannot be withdrawn for subsequent years, particularly, when there is no change in the facts. Therefore, he states that once a benefit of Section 10A was extended to the respondent-assessee for the assessment year 2000-01 and 2001-02 in respect of its claim for exemption under Sec....
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....re, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years i. e. assessment years 2002-03 and 2003-04 and 2004-05. Besides that, on consideration of the facts involved both the Commissioner of Income Tax (Appeals) and the Tribunal have recorded a finding of fact that the SEEPZ unit is not formed by splitting up of the first unit." 61. So far as the question as to whether amalgamation of the Noida SEZ and Nagpur SEZ with the assessee company can be a ground to suggest that the same amounts to splitting up or reconstruction of business already in existence is concerned, we find the provisions of section 10AA(5) read as under:- "(5) Where any undertaking being the Unit which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit in a scheme of amalgamation or demerger,- (a) no deduction shall be admissible under this section to the amalgamating or the demerged Unit, being the company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, a....
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....ng STP unit status as it was in ITES. Therefore there was no question of the Assessee having been formed by splitting up or reconstruction of a unit already in existence. The Assessee is already an existing unit. The deduction u/s. 10AA of the Act is claimed for the period within 10 years contemplated by Sec. 10AA of the Act even after considering the exemption already availed by the Assessee. Even M/S. Last Peak BPO Pvt. Ltd. had not availed Sec. 10A deduction for period beyond 10 years before amalgamation with the Assessee. In such circumstances, the very basis of application of Sec. 10AA(4)(ii) & (iii) of the Act is flawed. We are of the view that the objection of the AO in this regard is without any merit." 63. Similarly the Bangalore Bench of the Tribunal in the case of M/s Samsung India Software Operations (P) Ltd. vs. Addl. CIT (supra) has observed as under:- "5. The facts of the case in brief are that the assessee filed return of income electronically declaring Nil income on 29.10.2007. The return was processed u/s. 143(1) of the Income-tax Act, 1961 [hereinafter referred to as "the Act" in short"] on 27.08.2008, later on the case was selected for scrutiny. The ....
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....acts of the case reflected in the orders passed by the lower authorities. As rightly pointed out by the CIT(A), the assessee's undertaking existed in the same place, form and substance and did carry on the same business before and after the change in the legal character of the form of organization. Formerly, it was a branch establishment of non-resident company/foreign company but later on, it was converted into a subsidiary company. But for the above change of the organizational status, the same unit continued to function throughout the time. Therefore, it is quite fruitless to argue that the organizational change has caused conversion of the existing unit to a new unit. There is no such splitting up or reconstruction of an existing business in the case of a branch establishment becoming a subsidiary establishment. The assessee's unit satisfied all the conditions stipulated in the Act and was entitled for the benefit. Therefore, as rightly held by the CIT(A), a mere organizational change is not a ground to hold that the assessee has violated the conditions stated in 10A(2)(ii). It is a case of only change in the name and style. It is clearly possible to state that there w....
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....ertaking run by a firm which had been allowed deduction u/s 80-J for a period of 5 years, it would be entitled to benefit of residuary period. He also placed reliance upon the decision of the Delhi Bench of the Tribunal in the case of Tech Books Electronics Services (P) Ltd. vs. Addl. CIT wherein it was held that merely because of change in ownership the exemption cannot be denied. Another decision relied upon by him is in the case of Kumaran Systems (P) Ltd. vs. ACIT wherein it was held that where a firm is converted into a company and there was change only in the composition of ownership and not the undertaking and business, the exemption allowed to the firm u/s 10A of the Act could not be denied to the company merely because it had been separately granted recognition. 5. Having heard both the sides and having considered the rival submissions, we find that the issue is squarely covered by the decisions relied upon by the learned counsel for assessee. The distinctions sought to be brought out by the learned Departmental Representative, in our opinion, are not relevant to the facts of the case before us. In view of the same, the appeal of the revenue is dismissed." ....
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....al by the assessee of the business of any such undertaking 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.-The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. 66. We find, the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT (supra) has observed as under:- "The restriction or denial of benefit arises not by transfer of building or material to the new company but that it should not be farmed by such transfer. This is the key to interpretation. The formation should not be by such transfer, The emphasis is on formation not on use. 'Therefore it is not transfer of building or material but the one which can be held to have resulted in formation of the undertaking. In Textile Machinery Corporation Ltd. v. CIT this Court while interpreting section 15-C observed: "The true test is not w....
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.... the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression "total income of the assessee' in Section 10A as 'total income of the undertaking'. 68. We find, the CBDT in respect of similar relief u/s 84 of the Act has taken the view that the relief would be available for successors in F. No.15/5/63-IT(A-I), dated 13th December, 1963. Following the above instruction, the courts have allowed the deduction u/s 80J in the following cases:- 69. In view of the above and in view of the detailed reasoning given by the ld.CIT(A), we do not find any infirmity in his order allowing the claim of deduction u/s 10AA. 70. So far as the argument of the ld. CIT, DR that the order of the Hon'ble Delhi High Court in approving the composite scheme of arrangement for merger and demerger is dated 30th April, 2012 and, therefore, it is applicable for A.Y. 2013-14 (onwards and not for A.Y. 2012-13 is concerned) which the ld.CIT(A) has not answered is concerned, the same, in our opinion, is devoid of any merit and contrary to settled position of law and even facts on record. The Hon'ble Supreme Court in the case of Marshal Sons & Co.(India) Ltd. vs. IT....
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....cer (impugned in the writ petition) were not warranted in law. The business carried on by the Transferor Company (Subsidiary Company) should be deemed to have been carried on for and on behalf of the Transferee Company. This is the necessary and the logical consequence of the court sanctioning the scheme of amalgamation as presented to it. The order of the Court sanctioning the scheme, the filing of the certified copies of the orders of the court before the Registrar of Companies, the allotment or shares etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982. This is also the ratio of the decision of the Privy Council in Raghubar Dayal v. The Bank of Upper India Ltd. [A.I.R.1919 P.C.9]. Counsel for the Revenue contended that if the aforesaid view is adopted when several complications will ensue in case the Court refuses to sanction the scheme of amalgamation. We do not see any basis for this apprehension. Firstly, an assessment can always be made and is supposed to be made on the Transferee Company taking into account the income of both the Transferor an....
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....cannot be examined in the instant year. In any case, we have otherwise held that the eligibility of units has to be seen in the year of formation of unit and once eligibility in the year of formation has not been denied or disputed, the claim is valid claim particularly when such claim has also been allowed in preceding/succeeding years. 73. So far as the argument relating to quantum of deduction on the ground that there is variation in the ratio of employee expenses to revenue under each of the unit is concerned, we are of the considered opinion that once the AO has accepted separate audited books of account maintained by the assessee company for each of the unit which are also supported by audit report, the quantum of deduction can never be separately disputed. We find the assessee itself has computed the business income for each of the unit independently the details of which are already given in the preceding para. Once separate books of accounts maintained have been accepted, the quantum of the claim cannot be tinkered on surmises and conjectures by alleging in a vague manner that expenditure or revenue has been diverted to another unit. 74. We find, the Hon'ble Karnataka....
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.... as well as before us, unit 1 was its publishing house whereas units 3 and 4 were its printing houses. The nature of business of unit 1 and unit 4 of the assessee, thus, was entirely different and there was no justifiable reason to compare the profit margin of the said units. Moreover, separate books of account were maintained by the assessee-company in respect of unit 4 and no material or specific defects were pointed out by the AO in the said books, which were duly produced before him for verification during the course of assessment proceedings. As noted in the order of the AO as well as in the order of the learned CIT(A), the printing work was being done by unit 4 of the assessee-company for unit 1 at fixed rates and the claim of the assessee that the said rates were even lower than the market rates was not rebutted/refuted by the AO by bringing any material on record. As rightly contended by the learned Counsel for the assessee before us, the expenditure on marketing and distribution of the publications was entirely required to be done for the business of publishing house i.e. unit No. 1 and the same was not connected with the printing business of unit 4, It appears th....
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....ible units, only in respect of Noida SEZ and Coimbatore SEZ, the assessee has added back expenses of Rs. 19,14,995/- and Rs. 3 lakhs respectively. The above figure represents expenses which were added back while computing the unit-wise computation for determining the profit eligible for deduction under section 10AA of the Act. Therefore, once the expenditure has been added back which claim has also been accepted by the AO in the order of assessment, then, this, in our opinion, becomes a non-issue. In our opinion, the allegation of the AO that the entire expenses have not been added back and it is a clear admission on the part of the assessee that resources of non-SEZ units have been used for earning of revenue in SEZ units is concerned, this also, in our opinion, is a vague finding without any basis. Mere add back of certain expenses from eligible profits of eligible unit which is accepted in the order of assessment cannot be a basis to assume that the resources of non-SEZ units have been used for earning the revenue in SEZ units. So far as the allegation of the ld. CIT, DR that the assessee has failed to submit specific details to specific queries during the course of assessmen....
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.... from Note No.23 of the P&L account that the 'other income' includes interest on bank deposit and 'other income.' According to the AO this income of Rs. 82,88,099/- cannot be considered as profits and gains derived from export of article/things from services as necessitated in section 10AA. He, therefore, excluded this income from the profits of undertakings for computation of eligible profits of the eligible undertakings and made addition of the same to the total income of the assessee. 82. Before the CIT(A) it was submitted that identical deduction under section 10AA of the Act was claimed on the interest of Rs. 1,40,67,685/- in the assessment year 2012-13 and the same was allowed by the AO in the assessment order framed under section 143(3) of the Act. Therefore, following the rule of consistency itself, no disallowance is called for. The decision of the Hon'ble Supreme Court in the case of CIT vs Excel industries Ltd., 358 ITR 295 was brought to the notice of the CIT(A). Various decisions were also brought to the notice of the CIT(A) to the proposition that the assessee is entitled to deduction under section 10AA of the Act to the extent of Rs. 82,88,099/-. 83. Based on t....
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....alcutta High Court in the case of CIT vs Tirupati Woolen Mills Ltd., 193 ITR 252, he submitted that the Hon'ble High Court has held that interest earned on deposits made with banks is taxable as business income and not under the head 'other sources' as investments are made by utilisation of commercial assets of the assesseee. For the proposition that interest income from FD for obtaining credit facility falls under the head 'profits and gains of business and profession' and is eligible for deduction under section 10AA of the Act, the ld. counsel relied on the following judicial precedents:- i) Livingstones Jewellery Pvt. Ltd. vs. DCIT, 31 SOT 323 (Mum); ii) M/s Rajesh Exports Ltd. vs. ACIT, 2008-TIOL-457, ITAT Bangalore; iii) Discover India Tours (P) Ltd. vs. AO, 9 SOT 665. 88. He also relied on the following decisions:- i) 48 taxmann.com 153 (Ahd) Zaveri & Co. (P) Ltd. v. CCIT ii) ITA No. 1650/Mum/2015 M/s Ossian Exports Ltd. iii) 23 SOT 143 (Kol) Hindustan Gum and Chemicals Ltd. v. ITO iv) ITA No.651/Bang/94 (AY 1990-91) Wipro Information Technology Ltd. v. DCIT. v) ITA No. 51/Bang/2008, A.Y. 2004-05 dated....
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....As the legislature wanted to specifically exclude receipts by way of brokerage, commission, rent, charges or any other receipt of similar nature, from "the profits of the business, in s. 80HHC, it has specifically inserted Expln. (baa). If the legislature intended to exclude interest from the term 'profit of business of undertakings' under s. 10A/10B, a similar provision as in the case of Expln, (baa) would have been inserted. No such Explanation has been introduced in s. 10A/10B." 91. We find, following the above decision the ld. CIT (A) has held that in the absence of the use of the term 'derived from' in section 10AA (7) of the Act, no nexus is required for the computation of deduction between the profits in question and the undertaking. It is sufficient if the profits relate to the business of the undertaking. We find the Bangalore Bench of the Tribunal in the case of Wipro Information Technology vs DCIT, ITA No.651/Bang/94 for assessment year 1990- 91 after discussing the difference between the provisions of 10A and 80HHC distinguished the decision of the Hon'ble Supreme Court in the case of Sterling foods and has observed as under:- "The word 'derived' is ....
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....ll be an activity incidental and connected with export business of assessee. Any income there from, including interest income will constitute profits of the business of the undertaking." 92. We find Ahmedabad Bench of the Tribunal in the case of Zaveri & Co. (P) Ltd. vs. CCIT, 48 taxmann.com 153 (Ahd) has observed as under:- "41. The other connected issue is that as per the view of the Commissioner of Income Tax, the interest income in question being derived by the assessee from Indian Bank, the same is to be excluded while computing profits derived from the export of articles or things or services for the purpose of section 10AA of the Act. Sub-section (7) of section 10AA provides the manner in which the profits derived from "export of articles or things or services" is to be computed for the purposes of section 10AA of the Act. Therefore, in view of the above specific provision in the section itself, "profits derived from the export of articles or things or services" cannot be computed in any other manner. Sub-section (7) of Section 1GAA reads as under: "For the purposes of sub-section (1), the profits derived from the export of articles or things or....
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....f Planet Soft India Pvt. Limited for a consideration of Rs. 385 Millions (USD 7 Million). TRC Corporate Consulting Pvt. Ltd. has conducted the Fair Value of the business of Planet Soft at Rs. 409 Millions. It will provide Ebix entry into fast growing Insurance Industry in India. Along with the business, it took over essential tangible assets and liablities which were essential and related to the ongoing concern business. The net fair value of these assets is determined by TRC Corporate Consulting Pvt. Ltd. at Rs. 11.29 Millions. The Company had recognized in its books Goodwill on this acquisition at Rs. 374,052,401 Millions being the excess of purchase consideration over the tangible assets of the business. Besides, the tangible block it also took over the entire workforce (key drive of the business) of the business which comprise of over 400 qualified personnel's. The company has reinstated the acquired specified fixed assets of above name company on the original value as stated in financial statements as on 31.05.2012. The resultant effect due to this reinstatement amounted to Rs. 1,97,31,672/- has been adjusted in goodwill account. The goodwill sha....
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....he payment of non- compete fee as there was no goodwill with the seller and the creation of goodwill in the books is misleading was factually incorrect and based on incorrect facts on record. The decision of the Hon'ble Supreme Court in the case of CIT vs Smifs Securities Ltd., 348 ITR 302 was brought to the notice of the CIT(A) wherein the Hon'ble Supreme Court has held that excess consideration paid by the assessee over the value of the net assets acquired of amalgamating company and considered as goodwill arising on amalgamation was in fact paid towards reputation which the amalgamating company was enjoying in order to retain its existing clientele. It was, thus, held that such goodwill is an eligible intangible asset for depreciation. Various other decisions were also brought to the notice of the CIT(A). 101. Based on the arguments advanced by the assessee, the ld CIT(A) directed the AO to allow depreciation of Rs. 8,40,46,029/-. The relevant observation of the CIT(A) read as under:- "The Assessing Officer has held that the cost of the purchase consideration over the tangible assets is to be treated as payment for the non-compete fees as there was no goodwill with t....
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....ring benefit and therefore, such expenditure has been held to be capital expenditure. It is submitted that in the said case, the appellant thereafter, made an alternative contention that the expenditure be held to be intangible assets, eligible for depreciation under section 32 of the Act. The Hon'ble Apex Court after considering the judgment in the case of Techno Shares and Stock Brokers (P) Ltd. (supra) and the judgment in the case of Hindustan Cola Beverages (supra) held that there is no acquisition of non competition agreement, it is restricted one and 'therefore, such a sum is not eligible for the capital assets under section 32(1) of the Act. It was held that expression 'similar business of commercial rights' has to be necessarily result in an intangible asset against the entire world to be eligible for the deprecation. The said judgment has no application on the facts of the instant case more particularly when there is no independent agreement and there is no specified consideration for noncompete fee having been paid by the company. It is well settled law that an agreement is to be read as such. Reliance is placed on the following judgments: a) 288 ....
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....ied by the Assessing Officer to deny the eligible deduction of depreciation on the goodwill has been given in the different context and has no connection with the facts of the given case In view of the above, the Assessing Officer is directed to allow the depreciation of Rs. 8,40,26,029/- and modify the order of assessment accordingly" 102. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 103. The Ld. DR strongly supported the order of the AO and submitted that the findings of the CIT(A) is perfunctory and does not distinguish the decision in the case of Sharp Business System, ITA no. 492/2012 and CM Appeal 14836/2012 and CIT vs Hindustan Coco Cola Beverages (P) Ltd.,331 ITR 192 (Delhi). He submitted that the decision of the Hon'ble Supreme Court in the case of Smifs Securities Ltd. (supra) which has been relied on by the assessee is not applicable to the facts of the present case since, in that case, the agreement specifically contains an article of non-compete fee. Thus, the assessee cannot take the stand that the purchase consideration in excess of tangible assets of the business of the business was on account of goodwill and the stand of the ass....
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.... not in respect of non-compete fee. He submitted that non-compete fee was an incidental obligation of M/s Planet Online Pvt. Ltd. and there was no separate consideration paid towards noncompete fees. He submitted that as per various judicial precedents it has been consistently recognised and held that any sum paid over and above the book value is to be held as exclusive unless there is an agreement to the contrary and, thus, in absence of an agreement to the contrary in any manner holding that the sum is paid towards non-compete fee is absolutely misplaced and untenable. 106. So far as the decision relied on by the AO in the case of Sharp Business System vs. CIT, 254 CTR 233 is concerned the Ld. counsel submitted that this decision has no application to the facts of the case of the assessee. In the said case, the expenditure had been incurred of Rs. 3 lacs towards non-compete fee and the same was claimed as revenue expenditure and under the facts of that case it was held to be a capital expenditure. However, no such expenditure has been claimed by the assessee company. Further, in that case, non- compete fee had been paid for a period of 7 years which was held to be enduring ben....
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....d as under:- "BUSINESS TRANSFER AGREEMENT This BUSINESS TRANSFER AGREEMENT ("Agreement") dated 1 st June 2012 is made by and between Ebix Software India Private Limited. ("Purchaser") with its Registered Office at 311, B 4 A Pariytan Vihar, Vasundhara Enclave Delhi 110096, and PlanetOnline Private Limited with its Registered Office at 604 / 605, 6th floor, Ashoka Bhoopal Chambers, SP Road,, Secunderabad, 500 003 ("Seller", which expression includes its Subsidiaries). Recitals A. Seller is an software provider registered in India which is inter alia, engaged in offering software services/solutions to business to business (B2B), e-commerce and website development for the insurance industry worldwide. B. Purchaser is a company, having a wide repertoire of information technology services including but not limited to computer programming, software/development/ customization/ installation/maintenance with expertise in the provision of insurance software. C. Purchaser desires to acquire from Seller and Seller desires to sell and transfer to the Purchaser, the Business as an undertaking, together with all specified tangible and intangible assets, l....
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.... "Assets" means all tangible and intangible assets, properties, and rights used by the Seller to carry out the Business as specifically reflected in the list of Assets as set out in Exhibit 1 hereto. Seller shall deliver to the Purchaser such bills of sale, assignments, endorsements, and other recordable instruments of assignment, transfer, conveyance, in respect of the above Assets, in form and substance reasonably satisfactory to Purchaser and its counsel, as shall be effective to vest in the Purchaser all of the right, title and interest of Seller in and to the Assets free and clear of all Liens. 2.4 Liabilities. The term "Liabilities" means all liabilities and obligations of the Seller as of the Transfer Date arising out of the Business. Without limiting the generality of the foregoing, it is expressly understood that the Liabilities shall exclude the following liabilities and obligations; (a) All liabilities and obligations incurred by the Seller in connection with the conduct of its businesses other than the Business; (b) All liabilities as of Transfer Date, in excess of Rs. 1,00,000/- (Rupees One Lakh only), reasonably known to the Seller ....
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..../Agent carry on or cause to carry on any business which is in competition with the Business. 109. From the above it is seen that Planet Online Private Limited has transferred to the purchaser, i.e., the assessee company its business undertaking as a going concern, as a slump sale that is to say, of all the assets, transferred employees, liabilities, licenses, contracts and receivables as defined in definition schedule relating to the business, free and clear of all liens, mortgages, pledges, security interests, restrictions, prior assignments, encumbrances and claims of every kind, nature or character. It has further been stated that as sole and entire consideration for the purchase of a business undertaking, purchaser shall pay to the seller purchase price equivalent to US dollars 7 million on and subject to the terms of Article III hereinabove. The expression assets, liabilities, contracts, receivables have been separately defined. Thus, apparently from the reading of both Article II and III it is seen that there is no reference of payment of purchase price being paid for non-compete fees. On the contrary, the entire purchase price has been paid for purchase of the business un....
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....gible asset for depreciation. The relevant observation of the Hon'ble Supreme Court reads as under:- "1. None appears for the respondent, though served. Heard learned counsel for the Department. Leave granted. This civil appeal concerns the Assessment Year 2003-2004. Three questions arise for determination by this Court. They are as follows: Question No.[a]: "Whether Stock Exchange Membership Cards are assets eligible for depreciation under Section 32 of the Income Tax Act, 1961? Whether, on the facts and in the circumstances of the case, deletion of Rs. 53,84,766/- has been made correctly?" Answer: Learned Additional Solicitor General fairly concedes that the said question is covered by the decision of this Court in the case of Techno Shares and Stocks Limited vs. Commissioner of Income Tax, reported in [2010] 327 I.T.R. 323, in favour of the assessee. Question No.[b]: "Whether goodwill is an asset within the meaning of Section 32 of the Income Tax Act, 1961, and whether depreciation on 'goodwill' is allowable under the said Section?" Answer: In the present case, the assessee had claimed deduction of Rs. 54.85,430/- as ....
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....of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The Commissioner of Income Tax (Appeals) '(CIT(A)', for short has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above two Companies: that the assets and liabilities of M/s. YSN Shares and Securities Private Limited were transferred to the assessee for a consideration; that the difference between the cost of an asset and the amount paid constituted goodwill and that the assessee-Company in the process of amalgamation had acquired a capital right in the form of goodwill because of which the market worth of the assessee- Company stood increased. This finding has also been upheld by Income Tax Appellate Tribunal 'ITAT', for short. We see no reason to interfere with the factual finding. 7. One more aspect which needs to be mentioned is that, against the decision of 1TAT, the Revenue had preferred an appeal to the High Court in which it had raised only the question as to whether goodwill is an asset under Section 32 of the Act. In the circumstances, before the High Co....
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....tems vs CIT, reported in 254 CTR 233 and relied on by the ld. DR is concerned the same, in our opinion, is not applicable to the facts of the present case. In that case, expenditure had been incurred of Rs. 3 crores towards noncompete fee and the same was claimed as revenue expenditure which on the facts of that case was held to be capital expenditure. In that case, the assessee also made an alternate contention that the expenditure be held to be intangible assets, eligible for depreciation under Section 32 of the IT Act. The Hon'ble High Court after considering the judgement of the Hon'ble Supreme Court in the case of Techno Shares and Stocks Ltd. vs.CIT, 327 ITR 323 and the judgement in the case of Hindustan Coca-Cola Beverages Ltd. 331 ITR 192 held that non-compete fee is not eligible Capital Asset under Section 32(1) of the Act. However, since no expenditure has been incurred by the assessee company as non-compete fee, this decision is not applicable to the facts of the present case and distinguishable. In this view of the matter and in view of the detailed reasoning given by the ld. CIT(A) on this issue, we do not find any infirmity in the order of the CIT(A). Accordingly, ....
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....45 2,37,13,783 3,020 1,01.000 19,14,995 7,61,482 2,11,85,74,825 2.41.23.252 2,09,44,51,574 2.09.44.51.574 A Taxable Business Income Business Income Nagpur Profit before Tax as per Profit & Loss Account Add: Depreciation as per books of accounts Add: Late payment of PF 4,86,33,263 8,37,345 1,68,437 Less: Depreciation as per Income-Tax Act 7,50,756 4,96,39,045 7,50,756 Fotal Less: Exempt u/s 10AA 4,88,88,288 4,88,88,288 (As per Audit report attached) Taxable Business Income Business Income Coimbatore Profit before Tax as per Profit & Loss Account Add: Depreciation as per books of accounts Add: Restated difference of depreciation of Fixed Assets Add: Inadmissible Expenses of Non-SEZ unit 4,76,99,065 28,90,877 20,39,942 3,00,000 Add: Goodwill Amortisation 2,04,54,537 Add Late payment of PF 1,95,752 7.35,80,172 Less: Depreciation as per Income Tax Act 2,92,84,982 2,92,84,982 Total Less. Exempt ws 10AA (As per Audit report attached) 4,42,95,190 4,42,95,190 Taxable Business Income Business Income Uppal Profit before Tax as per Profi....
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.... rate for employees deputed by them on the clients work. The rate being $32 per hour per person for Software Development services and $20 per hour per person for IT Enabled services. The operating margin is therefore directly related to the number of people employed by each division and more specifically number of people being billed out of those. Noida is the oldest and well established location with a very high number of 544 employees in FY 2013 and with almost all the employees being billable, has the best operating margin. SEZ units of Coimbatore and Uppal were acquired during the year and there always is a gestation period on account of training and creating avenues before the staff could be placed on invoicing. The above fact is clear from the fact that the net profit margin of these two units increased from 33.79% and 51.87% in 2012-13 (year when the units were acquired) to 72% and 81% in the subsequent years with other expenses remaining almost the same. As for the non-SEZ units. Hyderabad unit was acquired during the year to establish a good base in India as well. India being a new market for the assessee, it took a lot of time to bri....
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.... the non-SEZ units. Hyderabad unit was acquired during the year to establish a good these in India as well. India being a new market for the asseessee, it took a lot of time to bring results. As can be seen below, the domestic revenue has increased from 2.27 Crores in 2012-13 -3.45 Crores in 2013-14 and then took a quantum jump to 16 Crores and 19 Crores in the subsequent two years. Without prejudice to the above, the expenses of the Non-SEZ units already been disallowed in the Computaion of Income of the Assessee." Further the assessee in the reply dated 22.12.2016 (pages 206-218 at pages 214-217 of Paper Book) has specifically submitted as under: a) For justification of different net operating margins in different units as per the format provided, we have already submitted the details vide letter dated 21.11.2016 and 14.12.2016 and the same are again produced below: Nagpur- Coimbatore - NOIDA - SEZ Sales of Service 22157,04,191 SEZ 1000,35,299 1411,72,293 SEZ Uppal-SEZ Chennai Non SEZ 1672,29,903 - Hyderabad Non SEZ 227,74,589 Salary Expenses Number of 544 1828,63,898 464,39,763 534,60....
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....igh number of 544 employees in FY 2013 and with almost all the employees being billable. As a result. Noida SEZ has the highest operating margin compared to other units. SEZ units of Coimbatore and Uppal were acquired during the year and there is always gestation period on account of training and creating avenues before the staff could be placed on invoicing. The above fact is clear from the that the net profit margin of these two units increased from 33.79% and 51.87% in 2012-13 (year when the units were acquired) to 72% and 81% in the subsequent years with other expenses remaining almost the same. As for the non-SEZ units. Hyderabad unit was acquired during the year to establish a good base in India as well. India being a new market fro the assessee, it took a lot of time to bring results. As can be seen below, the domestic revenue has increased from 2.27 Crores in 2012-13 to 3.45 Crores in 2013-14 and then took a quatum jumps to 16 Crores and 19 Crores in the subsequent two years. Without prejudice to the above, the expenses of the Non-SEZ units have already been disallowed in the Computation of Income of the Asseessee. Further, th....
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....atement for year ended December 31,2012, which are enclosed as Annerxure I c) Based on the perusal of these financial statement, your office will appreciate that Ebix Singapore eans significant revenues from Ebix group entities and third party customers, which has been shown as revenues in the financial statement of Ebix Singapore. Ebix Singapore avails software development and ITES support services from Ebix India in connection with its business operations and pays remuneration to Ebix India as per agreed transfer pricing arrangement. The payment by Ebix Singapore to Ebix India forms part of the expenditure in the financial statement of Ehix Singapore. d) The Assessee has taken lease line from Vodafone and Tata Communication on pan India basis, which uis used for transfer of deliverable worked upon by the Assessee as part of its business activity related to provision of software development services and ITES services. Simple copy of invoices raised by third party telecom operations on the Asseessee enclosed as Annexure J. e) Further, with respect to remuneration model and margin earned by various business units, the Asseessee would l....