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Issues involved: Cross appeals filed by the revenue and the assessee against the order of the CIT(A)-II, Pune, relating to A.Y. 2004-05.
Revenue's Appeal: The Revenue filed an appeal with a delay of 696 days, seeking condonation of the delay, which was granted. The issue revolved around disallowing deduction u/s 10A for certain sales amounts and the eligibility of the assessee's new unit for the deduction. The CIT(A) upheld the disallowance of deduction for certain sales but allowed it for the new unit. The Revenue contended that the new unit was formed by reconstructing an existing business, making it ineligible for deduction u/s 10A. However, the Tribunal, based on the provisions of Section 10A, held that the deduction should be allowed for the turnover of sales by the new unit, as the profit was a result of work executed by the new unit. The Tribunal dismissed the Revenue's grounds and allowed the assessee's appeal, in line with a previous decision for A.Y. 2003-04. Assessee's Appeal: The assessee challenged the denial of the claim under section 10A for revenues of a specific amount, arguing that the contracts were entered into prior to the commencement of the new unit but the actual work was executed from the new unit. The Tribunal, considering the provisions of Section 10A, allowed the deduction for the turnover of sales by the new unit, emphasizing that the profit was a result of work done by the new unit. The Tribunal dismissed the Revenue's grounds and allowed the assessee's appeal, citing a previous decision for A.Y. 2003-04. Conclusion: The Tribunal, following precedent and the provisions of Section 10A, dismissed the Revenue's appeal and allowed the assessee's appeal. The decision was based on the understanding that the deduction should be allowed for the turnover of sales by the new unit, where the profit was generated, even if contracts were initially received by the old unit.
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