9911796707
TMI Blog2011 (11) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... pany was incorporated on 04.11.1992. It indicated profit from business/profession of Rs. 1,17,83,132/- and the exemption has been claimed on this amount also. Return was processed on 7.12.2000 resulting in nil demand. In the return of income for the AY 2002 03 assessee has filed form 56F indicating that it was third year of claim of exemption under Sec. 10A of the Income Tax Act (hereinafter called as 'Act' for short). Since the records revealed that no two undertakings existed, question of admissibility of exemption under Sec. 10A and the extent of admissibility was examined after issuing notice to the assessee by the Assessing Officer. It was contended by the assessee that though the establishment of the manufacturing unit was started in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied with. However, condition in 10A(2)(ii) is not complied with and accordingly held that the establishment was the reconstruction of the unit which was already in existence and accordingly confirmed the finding given by the Assessing Officer that the assessee cannot claim exemption under Sec. 10A and upheld the order passed by the Assessing Officer that the bad and doubtful debts should be included for the purpose of calculating book profit under Sec. 115JB of the Act. 2. Being aggrieved by the said order passed by the Appellate Authority ITA Nos.315, 31.6 and 317/Bang./2005 were filed before the ITAT and the ITAT by order dt. 23.12.2005 held that Clause (i) and (iii) of Sec. 10A(2) had already been satisfied and it was not a case of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als involve adjudication of the following two substantial questions of law : "(1) Whether the Tribunal was correct in holding that the assessee would be entitled to claim allowance under Section 10A of the Act in respect of Software Development Center at Devaiah Court, Jayanagar, Bangalore by ignoring the finding of the Assessing Officer that the same was set up by reconstruction of the assessee's business and consequently, the claim was not allowable in view of Sections 10A(2)(I)(b); 10(2)A(I); 10(2)(iii) and 33B of the Act? (2) Whether the Tribunal was correct in holding that the provision for doubtful debts, doubtful investments and doubtful advances should not be added back for the purpose of computing back profit under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC), wherein the Hon'ble Supreme Court has clearly held that the bad and doubtful debts are not liability and cannot be added back for the purpose of calculating book profit under Sec. 115JA(2)(c) of the Act. Wherefore, the second substantial question of law has to be answered against the Revenue and in favour of the assessee and so far as the first substantial question of law is concerned, the ITAT which is the final authority on the question of fact having regard to the material on record that was produced before the Assessing Officer and the Appellate Authority, has rightly come to the conclusion and cogent reasons are given and following the earlier decisions of the ITAT and the High Court, ITAT has rightly held that there was no recons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10A(2) (i) find (iii) of the Act are satisfied. So far as condition as per Sec. 10A(2)(ii) is concerned, the ITAT has held that it was not a case of reconstruction of already existing business. The ITAT on the basis of the material that was produced by the assessee, has referred to the facts which would clearly show that all the assets purchased after 31.3.1996 are stated to be located at STP unit, electronic city, while the assets purchased upto 31.3.1996 arc stated to be located in Devaiah Court. It is clarified that the assets located in Devaiah Court unit are still there. 11. The material produced would clearly show that there was no reconstruction of already existing business and the Assessing Officer and the appellate authority cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness will not be attracted when a company which is already running one industrial unit sets up another industrial unit. In fact in the said case, the old mill was completely dismantled and a new mill was installed in the adjacent premises and this Court held that there is no reconstruction. However, the finding of the ITAT that merely because no separate account is maintained in respect of the STP unit and the manufacturing unit at Devaiah Court, the same would not be a ground to disallow the exemption when the assessee is otherwise entitled to exemption having fulfilled the condition of no reconstruction of business of an already existing unit. Wherefore, the said finding arrived at by the ITAT which is a pure question of fact and based ..... X X X X Extracts X X X X X X X X Extracts X X X X
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