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2018 (11) TMI 1896 - AT - Income Tax


Issues:
Assessment of deduction u/s 80IC for two units, determination of initial assessment year for Unit-3, reconstruction of existing business activity.

Analysis:
The appellant, engaged in Information and Communication Technology business, claimed deduction u/s 80IC for Unit-II and Unit-III. The Assessing officer contended that both units were identical, operating from the same premises, and Unit-III was a reconstruction of an existing business, thus not eligible for separate treatment. The CIT(A) upheld the Assessing officer's decision.

The appellant argued that Unit-II operated from STPI Building, while Unit-III was at a different location, supported by registration documents. The appellant purchased a building for Unit-III, shifted the registered office there, and commenced operations with new employees and machinery. Unit-II and Unit-III had separate buildings, employees, client base, and registrations. Unit-III expanded services to non-telecom clients, demonstrating growth and attracting new clients.

The Tribunal found the Assessing officer's objection unsubstantiated, as Unit-III's operation from the registered office did not imply reconstruction from Unit-II. No evidence suggested Unit-II's resources were used for Unit-III. The appellant's significant business growth and new client base supported the claim of Unit-III as a distinct unit. The Tribunal set aside lower authorities' orders, directing relief u/s 80IC for Unit-III as a separate unit.

The Tribunal's decision in ITA No. 330/Chd/2018 applied to other appeals for subsequent assessment years. The appellant's appeals for those years were allowed accordingly. In a separate appeal for A.Y. 2014-15, the appellant raised similar grounds and an additional issue of disallowance. As no arguments were presented on the disallowance issue, it was dismissed as not pressed, partially allowing the appeal.

In conclusion, the Tribunal allowed the appeals for various assessment years, recognizing Unit-III as a separate unit eligible for deduction u/s 80IC. The decision emphasized the distinct operations, growth, and client base of Unit-III, refuting claims of reconstruction or non-eligibility.

 

 

 

 

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