9911796707
TMI Blog2010 (11) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned. The appeal for the assessment year 2003-04 arises out of the assessment completed u/s 143(3) read with sec. 147 of the Income-tax Act, 1961. 2. First, we will consider the appeal filed for the assessment year 2002-03 in ITA No.616/Bang/2008. 3. The first ground raised by the Revenue is that the CIT(A) has erred in allowing the claim of the assessee for deduction u/s 10A without taking into consideration the fact that the assessee did not fulfill the basic conditions for claiming deduction u/s 10A. It is the case of the Revenue that the new undertaking was formed by splitting up/reconstruction of the business of the assessee already in existence. 4. In the previous year relevant to the assessment year under ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee was to depute its trained personnel to the work sites of the clients in South Korea. As all the activities were carried on in the client premises at South Korea, it was not necessary for the assessee to set up infrastructural facilities in India. The CIT(A) also found that plant and machinery were purchased by the assessee mainly in the form of computers in the subsequent years as and when need arose for the same. Therefore, the CIT(A) found that there is no case of any splitting/reconstruction of an existing business. The CIT(A) further held that in the light of the judgment of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd., vs. CIT, 196 ITR 188 the new unit set up in the leased premises and paying rent by the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is entitled for claiming deduction u/s 10A. This issue is decided in favour of the assessee. The ground raised by the Revenue on this point is dismissed. 7. The next ground, which is alternative in nature raised by the Revenue is that the CIT(A) has erred in law and in facts in allowing the claim of the assessee for deduction u/s 10A despite there being a negative income for assessment the year 2002-03. 8. The Assessing Officer has denied deduction u/s 10A also on the ground that the assessee had suffered loss in the first assessment year 2002-03. The case being so, the assessing authority relied on the judgment of the Hon'ble Supreme Court in the case of IPCA Laboratories and held that no deduction could be allowed u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inds of income which do not form part of the total income of an assessee. Such income does not form part of the computation of income. Therefore, as rightly pointed out by the CIT(A), the decision relied on by the assessing authority to deny the claim of the assessee is not justified. 10. We find that the assessee has maintained separate set of account for its new STPI unit. In such circumstances, if the assessee has earned a positive income in the STP business as an independent unit, the assessee must be entitled for the exemption. But as the details of such loss or profit is not available with us at present, we remit back this issue to the Assessing Officer for the limited purpose of examining whether STPI set up by the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority and allowed by the CIT(A). 14. We considered the issue very carefully. The amount is not realized by the assessee from the bills issued to its customers. In fact, it did not per take the character of bad debts. A debt means an actionable claim. An actionable claim is an amount existed, admitted, and acknowledged both by the creditor and the debtor. If such debts are written off in the books of accounts it might be qualified as deduction u/s 36 of the Income-tax Act 1961. In the present case, the situation is different. The assessee is issuing bills say for Rs.100/-. For various reasons pointed out by the client to the assessee, the client acknowledges the liability to pay only Rs.80/-. The balance Rs.20/- was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons are satisfied, then the Assessing Officer may allow the deduction as business loss and pass orders in accordance with law. 16. Next, we will consider the appeal filed for the assessment year 2003-04 in ITA No.617/Bang/2008 17. The first ground is regarding the deduction u/s 10A. We have already held that the assessee is entitled for the deduction u/s 10A in the course of adjudicating the appeal for the assessment year 2002-03. As far as the impugned assessment year 2003-04 is concerned, there is no question of negative profit. In these circumstances, we confirm the order of the CIT(A) on this point. 18. The second ground raised by the Revenue is that the CIT(A) has erred in allowing deduction on account of bad de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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