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TMI Blog2012 (5) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... hese appeals challenging the orders passed by the Tribunal dismissing the appeals filed by the revenue and affirming the orders passed by the Appellate Commissioner who held that the assessee is entitled to the benefit of section 10A of the Income-tax Act, 1961. 2. The assessee is engaged in development and export of software/hardware. The assessee has plant and machinery of Rs. 13,15,083/- as on 31.03.1993 and the same is Rs. 16,65,116/- as on 31.03.1994 as could be seen from fixed asset schedule. The written down value as on 01.04.1993 in respect of machinery was Rs. 35,63,498/- and additions made during the year was Rs. 9,30,298/- bringing the gross block to Rs. 44,93,797/-. The value of the machinery used in the new business, according to the Assessing Authority, exceeded 20% of the value of the machinery transferred into the business. The assessee pointed cut that an addition of Rs. 1,38,59,994/- was made to plant and machinery, which was received from the foreign customers. This represents certain plant and machinery received on returnable basis from foreign customers and on no cost basis. Therefore, it was contended that if that machinery is taken into consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10A(2) of the Act r.w.s. 80-I of the Act that the total value of the machinery or plant so transferred does not exceed 20% of the total value of the machinery or plant already used in the business of the assessee? 2. Whether the Appellate Authorities were correct in holding that the value of plant and machinery of Rs. 1,38,59,994/- claimed to have brought in by the assessee on lease basis should be treated as an asset exceeding 80% of the existing asset when computing deduction u/s. 10A of the Act despite this machinery not being owned by the assessee nor reflected in the fixed asset schedule? 4. The learned Counsel for the revenue assailing the impugned order contends that the machinery received from the foreign customer is not reflected either in the books of the assessee or in the balance sheet. Therefore, that cannot be taken into consideration. In order to assess 20% as stipulated under section 10A(2), the total value of the machinery owned by the assessee should be reflected in their accounts. Admittedly in the instant case, if the accounts are looked into, the value of the machinery transferred to the new undertaking would be more than 20% and thus, the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only for the unexpired period of the aforesaid ten consecutive assessment years : Provided further that where an undertaking initially located in any free trade zone or export processing zone is subsequently located in a special economic zone by reason of conversion of such free trade zone or export processing zone into a special economic zone, the period of ten consecutive assessment years referred to in this sub-section shall be reckoned from the assessment year relevant to the previous year in which the [undertaking began to manufacture or produce such articles or things or computer software] in such free trade zone or export processing zone : [ Provided also that for the assessment year beginning on the 1st day of April, 2003, the deduction under this sub-section shall be ninety per cent of the profits and gains derived by an undertaking from the export of such articles or things or computer software :] Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, [2012], and subsequent years. (1A) Notwithstanding anything contained in sub-section (1), the deduction, in computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery was first put to use. (1C) Where any amount credited to the Special Economic Zone Re-investment Allowance Reserve Account under clause ( ii ) of sub-section (1A), ( a ) has been utilised for any purpose other than those referred to in sub-section (1B), the amount so utilised; or ( b ) has not been utilised before the expiry of the period specified in sub-clause ( i ) of clause ( a ) of sub-section (1B), the amount not so utilised, shall be deemed to be the profits, ( i ) in a case referred to in clause ( a ), in the year in which the amount was so utilised; or ( ii ) in a case referred to in clause ( b ), in the year immediately following the period of three years specified in sub-clause ( i ) of clause ( a ) of sub-section (1B), and shall be charged to tax accordingly.] (2) This section applies to any undertaking which fulfils all the following conditions, namely : ( i ) it has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year ( a ) commencing on or after the 1st day of April, 1981, in any free trade zone; or ( b ) commencing on or after the 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( i ) ** ** ** ( ii ) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose; ( iii ) ( iv ) ** ** ** Explanation 1. For the purposes of clause ( ii ) of this sub-section, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely: ( a ) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; ( b ) such machinery or plant is imported into India from any country outside India; and ( c ) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Explanation 2. Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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