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TMI Blog2003 (7) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... e also separately maintained. We have also carefully examined the order of the CIT(A) and noticed that the CIT(A) has examined the issue after making a threadbare analysis of the relevant provisions of law in the light of Circulars issued by the CBDT. In respect of export-oriented unit, we find force in the contention of the assessee that before the merger, this undertaking was enjoying tax exemption under s. 10B of the IT Act and since these benefits are attached to the undertaking, it will continue to enjoy the same benefit even after the merger for the remaining period. On careful perusal of the order of the CIT(A), we do not find any infirmity therein as he has dealt with the controversial issues elaborately in his order. We, therefore, find ourselves in agreement with his findings. Accordingly, the order of the CIT(A) is hereby confirmed. In the result, the appeal of the Revenue stands dismissed. - HON'BLE V. DONGZATHANG., S. K. YADAV. For the Appellant : S.N. Zibbu, Adv. For the Respondent : Ajay Vohra, Adv. ORDER S.K. Yadav, J.M. 1. This appeal by the Revenue is directed against the order of CIT(A) on following grounds: On the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packages worth Rs. 3 crores owned by M/s Ascendant Computers Systems (P) Ltd. were transferred to M/s ISCT. In March, 1992 M/s ISCT was having fixed assets of Rs. 1,90,000 and had been incorporated on 9th Jan., 1992 and had received approval to set up a unit at Software Technology Park on 14th Dec., 1992. With effect from 1st April, 1994, i.e., during the previous year relevant to the asst. yr. 1995-96, International Informatics Solutions (P) Ltd. merged with ISCT Information Technology and all properties of International Informatics Solution (P) Ltd. stood transferred to ISCT Information Technology. Later on, the name of the company, ISCT Information Technology was changed to IIS Infotech Ltd., International Informatics Solution (P) Ltd. was formed on 16th Aug., 1989, and it received approval from the Government of 23rd March, 1990, for establishment of new undertaking under the 100 per cent Export Oriented Scheme for the manufacture of software products and services. It had been claiming deduction under s. 80HHE in respect of its export income. As a result of merger, fixed assets worth Rs. 1.09 crores including computers of Rs. 55.80 lakh owned by International Infotech Solution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer Systems (P) Ltd. (ACS) commenced operations in August 1985. It was registered with the Electronics Computer Software Export Promotion Council (ESC) and was engaged in on site software development in the US and France. ACS functioned from the residence of its chairman, Mr. R. Chand and had no assets as these were not required for its business activities. ACS sent its employees to the US and France for undertaking software development for clients at client s site according to the client s systems requirements and the intellectual property rights to such software packages/products vested in the clients. These software packages were not assets of ACS. During the year 1991-92, ACVS decided to develop software packages, which could be marketed in India. The development was carried out under the overall supervision of Mr. R. Chand, the chairman of ACS and the facilities and manpower of Prism Services (P) Ltd., Bangalore was used for this. The software packages developed by ACS for the domestic market were of two types; (a) educational; and (b) commercial. These software packages are end-user application packaged solutions and not software tools, used for software development, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iday for 5 years for units producing computer software in: (a) Notified export promotion zones (b) Located in software technology parks (c) 100 per cent export oriented units. The tax holiday is available for any five years out of the initial eight years of operations but the five years have to be in a sequence once the option is exercised. The said circular explains that since computer programmes are not physical goods but are developed as a result of intellectual analysis of the systems and method followed by the purchaser of the programme. It is often prepared on site with the software personnel going to the customer s premises. It is further clarified that as long as the software is produced by the unit at its own premises or on site the tax holiday would be available. Most importantly, the circular explains that the tax holiday would be available to units located in EPZ s and 100 per cent EOU s for assessment year earlier to 1994-95. The authorised representative of the assessee-company has tackled the raison d etre given by the AO point-wise to show that the AO has not understood the actual state of affairs. The AO s basic objections are that the tax holiday is available to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of reconstructions. Therefore, there is no contravention of any statutory conditions and qualifications. The facts of the present case clearly establish that the independent units of STP and EOU were, therefore, to continue to enjoy the benefit of exemption under ss. 10A and 10B even after the merger and no reconstruction was carried out. Hence, the AO misdirected himself in disallowing the claim of tax holiday under ss. 10A/10B as claimed by the assessee-company. The AO is directed to allow the claim of the appellant. 8. Aggrieved, the Revenue has preferred an appeal before the Tribunal with the submission that the CIT(A) was not justified in allowing the claim of the assessee. 9. Learned Departmental Representative has simply placed reliance upon the order of the AO. 10. Learned counsel for the assessee besides relying upon the order of the CIT(A) has emphatically argued that the assessee has met all the objections raised by the AO through its written submissions. Learned counsel for the assessee further submits that the Ascendant Computer Systems (P) Ltd. commenced operation in August, 1985 and it was registered with the Electronics and Computer Software Export Promotion Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance upon the Circular of the CBDT No. 149/68/94-TPL, dt. 23rd Nov., 1994, and the orders of the Tribunal in the case of ITO vs. Hindustan Petroleum Corpn. Ltd. (1986) 25 TTJ (Bom) 28 : (1986) 16 ITD 574 (Bom), ITO vs. SLM Maneklal Industries Ltd. (1986) 17 ITD 515 (Ahd) and Shah Granites (P) Ltd. vs. ITO (1987) 28 TTJ (Bom) 83 : (1987) 21 ITD 282 (Bom) in which it has been held that the benefit is attached to the undertaking and not owner thereof and the deduction is available even if it is amalgamated with the other company. 12. Having considered the rival submissions and from a careful perusal of the record, we find that the Ascendant Computers Systems (P) Ltd. had no units before its merger with the assessee-company. This new STP unit was set up after the merger by the assessee-company and it was operated as a separate unit but in the case of International Informatics Solutions (P) Ltd., it was duly approved 100 per cent EOU starting from 1989-90 i.e., before its merger with the assessee. Now, the question comes whether the assessee is entitled to enjoy tax-free status with respect to his 100 per cent export-oriented unit of which accounts were separately maintained. The answe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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