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Issues involved: Appeal against orders passed by CIT(A) denying deduction u/s 10A for assessment years 2004-05 and 2005-06.
Summary: The Revenue filed appeals against CIT(A)'s orders denying deduction u/s 10A for the assessment years 2004-05 and 2005-06, based on the grounds that the new unit set up by the assessee was a result of reconstructing/splitting up the existing unit, thus not qualifying for the deduction u/s 10A. The Revenue contended that the assessee, being an integral part of the parent company, did not qualify as a newly established undertaking eligible for sec. 10A benefits. In the first appeal, CIT(A) allowed the assessee's claim for sec. 10A benefits after considering the grounds raised. The Revenue, aggrieved by this decision, filed second appeals before the Tribunal, challenging the CIT(A)'s findings. During the Tribunal hearing, the Revenue argued that the conditions u/s 10A(2)(ii) and 10A(2)(iii) were violated by the assessee, rendering them ineligible for the deduction. However, the assessee's counsel contended that the organizational change from a branch establishment to a subsidiary company did not alter the essential nature of the business, and therefore, the assessee remained eligible for sec. 10A benefits. After reviewing the contentions and facts presented, the Tribunal upheld CIT(A)'s orders, stating that the organizational change did not amount to splitting up or reconstruction of the existing business. The Tribunal found that the assessee's unit met all conditions stipulated in the Act and was entitled to the sec. 10A benefit. Consequently, the Tribunal dismissed the Revenue's appeals, affirming CIT(A)'s decision. In conclusion, the Tribunal upheld CIT(A)'s orders, ruling in favor of the assessee and dismissing the Revenue's appeals.
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