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TMI Blog2012 (9) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... f Dadra and Nagar Haveli. The new industry has been established on 13-3-1999 and filed its returns for the assessment year 1999-2000 declaring the total income of Rs.72,32,744/-. In the returns, the assessee claimed deduction under Section 80-IA of the Act to the extent of Rs.60,43,212/- in respect of new industrial undertaking at Silvassa, Union Territory of Dadra and Nagar Haveli. The Assessing Authority accepted the same, however, it was subsequently reopened under Section 147 of the Act. In the Profit and Loss account, it is shown that the assessee has achieved turnover of Rs.63,75,000/- in respect of Computer Software sales. After deducting the expenses of Rs.3,31,788/- arrived at the profit of Rs.60,43,212/- from this Unit. On reassessment, deduction under Section 80-IA was disallowed. 4. For the assessment year 2000-2001, the assessee filed the Income Tax returns on 30-11-2000 declaring the total income of Rs.1,11,76,800/- and claiming deduction of Rs.1,50,56,903/- under Section 80-IB and Rs.19,00,000/- towards the litigation expenditures. In the Profit and Loss account, it is shown that the assessee has achieved turnover of Rs.2,15,41,550/-. After claiming the expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to adopt the profit shown at 55% instead of 94.8%. Further held that the assessee is entitled for the deduction of amount towards litigation expenditure of Rs.19,00,000/- for the assessment year 2000-2001. The Revenue being aggrieved by the order dated 2-12-2005 passed by the Tribunal has filed these appeals. 8. While admitting the appeals, the following substantial questions of law have been framed: I T A 790/2006:: "Whether the Tribunal was correct in holding that the assessee would be entitled to claim deduction under section 80-IA of the Act despite the assessee's SIVASA unit having operated from 13- 03-1999 to 30-03-1999 did not produce or manufacture articles or thing as contemplated under Section 80-IA(iv) of the Act as held by the Assessing Officer. I T A 791/2006:: "Whether the Tribunal was correct in holding that the payment made for acquiring the name of 'VESESH' and intellectual properties, copy right, trade mark, brand names etc., would not amount to a capital receipt but would be a revenue expenditure?" I T A 792/2006:: "Whether the Tribunal was correct in holding g that the assessee would be entitled to claim deduction under Section 80-IB of the Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and Conciliation Act. As per Clause 6, 7 and 11 of the Settlement, it was agreed between the parties that M/s.Seshadri Group will not conduct or do business with the customers of the assessee group. For that, a sum of Rs.19,00,000/- was paid. The said amount cannot be considered as revenue expenditure and it is a capital expenditure. The deduction given by the Tribunal is contrary to law and sought for setting aside the order passed by the Tribunal by allowing these appeals. 11. On the other hand, Sri.S.Parthasarathay, learned counsel appearing for the respondent-assessee contended that the assessee-company established a new industrial Unit at Silvassa, Union Territory of Dadra and Nagar Haveli and started operating from 13-3-1999. The new Unit developed the software catered to multi-user as against the single user in respect of the product developed at Bangalore. The assessee-company is having more than 99 customers situated at India and abroad countries and the multi-user software attracted many customers and they have earned turnover of Rs.63,75,000/-. The employees are working on shift basis and since there was irregular power supply, the generator was used. Further, the pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he any other condition or conditions they may be imposed by the Commissioner of Sales Tax, Dadra and Nagar Haveli, administration of Dadra and Nagar Haveli or Central Government, as the case may be from time to time. 14. The Sales Tax Authorities of Dadra and Nagar Haveli verified the books of accounts and after fulfilling all the conditions imposed, sales tax exemption was given. The Sales Tax Authorities are primarily interested in collecting the sales tax. In the instant case, being fully satisfied by themselves that the assessee has fulfilled all the conditions, the exemption has been given. Hence the contention of the revenue that the assessee has not conducted any business at Silvassa and the assessee has diverted the sales and profit from the other Units cannot be accepted. Further, the software products are different from other commercial products. Development of the software can be undertaken in a short span of time. The specific case of the assessee is that the employees were working on shift basis. The product of the assessee is multi-user and it has attracted the customers and they have huge turnover of more than Rs.63,00,000/- within a short period. Once the software ..... X X X X Extracts X X X X X X X X Extracts X X X X
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