TaxTMI 
TaxTMI 
2025 (11) TMI 1315
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.... to the following substantial question of law. i. Whether on facts and circumstances of the case and in law, Hon'ble ITAT is correct in allowing the deduction u/s 10A of the Act, ignoring the fact that the assessee's undertaking-STP Unit was formed by splitting up/reconstruction of business already in existence and therefore the new undertaking did not fulfill the second condition laid down in Section 10A(2) of the Income Tax Act, 1961. 2. The Respondent Assessee company filed its Return of Income on 14th November 2007 declaring an income of Rs. "Nil". The Nil income consists of a loss of Rs. 95,46,150/- as per the assessee's computation of income. The return was processed under Section 143(1) on 20th March 2009. The case was th....
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....n of law. We say this because the CIT (Appeals) as well as the ITAT, on facts have come to the conclusion that the setting up of the STP Unit at Pune by the Respondent assessee did not amount to reconstruction or splitting up of their existing business. There is a detailed discussion on this aspect by the CIT (Appeals) from paragraph 4.3 onwards in the order dated 7th January 2011. The learned Commissioner opined that the conclusion drawn by the Assessing Officer was primarily on the purchase order dated 15th October 2004 and the sameness of the services in the pre-existing non STPI unit and the comparable rates of pre-STPI and post-STPI jobs. The CIT (Appeals) looking into the scope of the work of the STPI unit, the investment and new infr....
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....t start of new business which was different because of its range, scale and skill sets required. He also came to the conclusion that this would further indicate that the work in relation to the purchase order was only an interim arrangement which is not a true reflection of the real scope of work of the agreement with ITEC. 6. Apart from this, the CIT (Appeals) took note of various other facts to come to the conclusion that the findings given by the Assessing Officer were incorrect. The CIT (Appeals) noted that the Respondent assessee had applied for STP registration and signed the agreement with ITEC only after receiving the STP registration. Further 50,800 sq. ft. of new premises were acquired on rent and fixed assets worth Rs.7 Crores....
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.... Hon'ble Supreme Court in the case of Textile Machinery Corporation Limited V/S Commissioner of Income Tax [(1977) 107 ITR 195 (SC)]. 8. This finding of the CIT (Appeals) was confirmed by the ITAT in the impugned order in paragraph 12. The ITAT came to the conclusion that the observations of the CIT (Appeals) was based on the evidence on record and in accordance with the settled principle of law. The ITAT therefore did not find any reason to interfere with the order passed by the CIT (Appeals) on this aspect. 9. When one looks at the observations of the CIT (Appeals) as well as that of the ITAT, we are clearly of the view that the findings that have been rendered therein are wholly fact based. In fact, in our view, the CIT (Appeals) a....
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....ce or transferring to a new business, the building, plant and machinery which was used in the business carried out earlier. Positively, a new industrial undertaking must produce a result. The five tests which have been laid down by the Supreme Court are as follows:- "(1) investment of substantial fresh capital in the industrial undertaking set up; (2) employment of requisite labour therein; (3) manufacture or production of articles in the said undertaking; (4) earning of profits clearly attributable to the said new undertaking; and (5) above all, a separate and distinct identity of the industrial unit set up." 13. The following principles of law clearly emerge from the decision of the Su....
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....essment Year made a fresh outlay of capital at one more centre besides which additional investments were made in the form of extension to the existing factory premises where a new plant and machinery was installed. The Tribunal held that as a result, the production of aluminum ingots doubled and that in view of the nature of the substantial investments it could not be said that the unit was not a new unit. These units were set up side by side with the old ones and added to the Assessee's total output. The Supreme Court followed its decision in Textile Machinery Corpn. Ltd. (supra) and dismissed the appeal of the Revenue. Indian Aluminum Co. Ltd. (supra), therefore, was a case where the claim of the Assessee was upheld on the basis of th....