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TMI Blog2013 (2) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable on the present case also. The finding of the authorities that the intimation with regard to commercial production was not given, therefore, the permission as given STPI became non-existent is not acceptable as there is nothing on record suggesting that permission granted was subsequently, cancelled or withdrawn on the basis that the assessee could not give intimation to STPI in respect of the beginning of commercial production. Moreover, in the subsequent year, STPI itself had intimated to the AO that condition of intimation is immaterial. Thus the assessee is entitled for exemption u/s 10A - in favour of assessee. Depreciation on computers - disallowance as no genuine purchases - Held that:- From the records, it is transpired that the AO has not made inquiry from the office of the assessee about the installation of computers etc. But fact remains that assessee did not controvert the report of Inspector by seeking cross-examination at any stage. AO has also not given any finding in respect of the evidence, i.e payment by cheque, how they are not credible. Such payments could not have been made in vaccum, money have traveled to some destination. AO did not feel it p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. At the request of Ld. Counsel for the assessee, ground No.-1 2 are taken together. The first effective ground is regarding disallowance of relief u/s 10A of the Act. Ld. Counsel for the assessee, Sh. V.K.Aggarwal, submitted that the assessee company is engaged in the export of engineering based software series since May 2003 and the appellant vide its application dated 10.04.2006 applied for registration with Software Technology Parks of India (STPI) for conversion from DTA to STP unit. The STPI, Noida vide its letter dated 03.05.2006 granted the requisite permission. (i) Ld. Counsel submitted that the authorities below failed to appreciate the facts in right perspective and mis-construed the letter issued by STPI. He submitted that the Assessing Officer on the basis of mis-conception of law declined relief on the basis that it was a case of business already in existence which has been reconstructed for claiming exemption u/s 10A, the assessee utilized computers, which had been used earlier in the other purposes, for accomplishing the jobs on the profits of which it is claiming exemption u/s 10A, from the fate of purchase of plant and machinery (computers), it is found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for declining the relief u/s 10A is that the purchase of computers amounting to Rs. 1,78,940/- on 19.08.2006 from M/s Gaurav Computers service has been treated as a bogus and, therefore, the commercial production has not been started in STPI. He submitted that a perusal of the schedule 2 to the balance sheet pertaining to fixed assets clearly indicates that cost of the computers in the opening balance is Rs. 6,74,310/- and an addition of Rs. 3,70,340/- was during the year. Similarly, the value of opening balance of software is Rs. 10,43,861/- and there is an addition of Rs. 3,32,000/- during the year. He submitted that from the records, it is crystal clear that the production has already been started because the assessee was in possession of many computers and intimation to this effect was given to STPI and it was informed that after registration with STPI, first approval of the work done by the company has been made on 06.05.2006 be one of its customers. He submitted that it was also intimated that the company is providing software based engineering service to its foreign customers since May 2003. He submitted that the Assessing Officer under the mis-conception of law came to conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit accrues only when sale is affected by STP unit, it will be entitled to relief u/s 10A. He relied on the decision of Hon ble ITAT, Banglore rendered in the case of Infosys Technologies Ltd. vs JCIT;(2007) 108 TTJ (Bang) 282, therefore the appellant have effected all the sales after 03.05.2006 after becoming STPI has entitled to relief u/s 10A. He submitted that without prejudice to the submissions made here in before the STPI has clearly mentioned that the intimation for commercial production was not a material condition, therefore, the assessee cannot be denied relief u/s 10A merely on the basis of mis-conception of law and mis-construction of the permission letter dated 03.05.2006. He submitted that there is nothing on record suggesting that the permission granted by the STPI was withdrawn on account of non-intimation of date of commercial production. Ld. AR submitted that before Assessing Officer as well as Ld. CIT(A), a copy of acknowledgement of intimation was duly submitted and even otherwise also non-intimation is not fatal. On the contrary, Ld. DR submitted that there is a finding of fact by the authorities below that the assessee failed to fulfill the conditions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). Further, the finding of the authorities below that the intimation with regard to commercial production was not given, therefore, the permission as given STPI became non-existent and consequently, disentitled the assessee company from claiming relief u/s 10A, this view of the authorities below is not acceptable as there is nothing on record suggesting that permission granted was subsequently, cancelled or withdrawn on the basis that the assessee could not give intimation to STPI in respect of the beginning of commercial production. Moreover, in the subsequent year, STPI itself had intimated to the Assessing Officer that condition of intimation is immaterial. Further, from a bare reading of the letter dated 03.05.2006, it is evident that clause 2 of the letter embodied the conditions in addition to the conditions mentioned in annexure. This being the position, the reliance as placed by the authorities below on clause 4 of permission letter is no correct. Therefore, in view of above discussion and the judgement relied by the Ld. Counsel for the assessee, we are of the opinion that the assessee is entitled for exemption u/s 10A. Accordingly, we direct the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial available on record. The Assessing Officer has disallowed the claim of depreciation on the basis that the firm was not existing at the given address. From the records, it is transpired that the Assessing Officer has not made inquiry from the office of the assessee about the installation of computers etc. But fact remains that assessee did not controvert the report of Inspector by seeking cross-examination at any stage. The Assessing Officer has also not given any finding in respect of the evidence, i.e payment by cheque, how they are not credible. Such payments could not have been made in vaccum, money have traveled to some destination. The Assessing Officer did not feel it proper to find out the ultimate destination of money paid by the assessee company claimed to have been paid as price of computers. Therefore, to subserve interest of justice, this issue is remitted back to the file of Assessing Officer, to decide afresh after giving adequate opportunity to the assessee of hearing. This ground of the assessee s appeal is allowed for statistical purposes. 11. Next ground is with regard to disallowance made u/s 40(a)(ia). Ld. Counsel for the assessee submitted that the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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