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TMI Blog2014 (2) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... into a company and all the partners of the firm have become the shareholders of the company - In view of the STPI scheme framed by the Government of India, the existing DTA units can also be converted into STP units and enjoy the deduction under Section 10A of the Act - the assessee has not violated any of the conditions prescribed under Section 10A of the Act - The benefit under Section 10A would also be available even when an existing unit gets converted into STP unit - it is not open to the Assessing Officer to contend that no new undertaking came into being after approval of STPI – Decided against Revenue. - ITA No.592,616,617/2007 - - - Dated:- 12-2-2014 - Dilip B Bhosale And B Manohar, JJ. For the Appellant : Sri K V Aravind, Adv. For the Respondents : Sri Tata Krishna, Adv. and Smt Chythanya K K, Adv. JUDGEMENT:- The revenue has preferred these appeals under Section 260-A of the Income Tax Act, 1961 (for short the Act'), being aggrieved by the common order dated 16-03-2007 made in ITA Nos.3014/2004, 1363 1364/Bang/2005 passed by the Income Tax Appellate Tribunal, Bangalore Bench A' (for short the Tribunal') confirming the order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the firm which continued to be single unit of the company. 3. No new plant and machinery had been put to use between the period 15.1.2002 i.e., date of receipt of approval from STPI to 31.3.2002. 4. The date of commencement of commercial production intimated to the STPI is incorrect in the absence of undertaking having come into being. 5. In the absence of any other unit, the question of maintenance of separate accounts did not arise. 3. The assessee-Company being aggrieved by the order passed by the Assessing Officer preferred an appeal before the CIT(A) contending that the assessment order passed by the Assessing Officer declining benefit of 100% exemption under Section 10A of the Act is contrary to law. The Assessing Officer has misunderstood and misread Section 10-A, Board Circular No.1/2005 and Import and Export Policy of the Government of India and contended that the assessee is entitled for the benefit under the Act. The Appellate Authority after examining the matter in detail, taking into consideration the extract of Import and Export Policy of Government of India and Board Circular No.1/2005 held that the assessee is entitled for the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company in the year 1996. An application was filed before the STPI authorities and obtained approval for setting up of a new Unit. But the assessee has not set up a new unit. Hence, they are not entitled for any exemption under Section 10A of the Act. The assessee is already enjoying the exemption under Section 80HHE of the Act. However the assessee has not fulfilled the provisions of Section 10A(2)(i)(b) of the Act and they have violated Section 10A(2)(ii) and of the Act. The Assessing Authority taking into consideration the relevant records, Import and Export Policy and conditions of STPI authorities for approval passed the assessment order. The First Appellate Authority as well as the Appellate Tribunal without examining the matter in detail set aside the order passed by the Assessing Authority and granted deduction under Section 10A of the Act, which is contrary to law. 6. On the other hand, Sri.K.K.Chaithanya, learned counsel appearing for the assessee-Company argued in support of the order passed by the Appellate Tribunal as well as the First Appellate Authority and contended that initially the respondent-assessee was a partnership firm and by virtue of the order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is not entitled for deduction under Section 10A and rejected the same for the reasons referred to in the earlier part of the order. On an appeal filed by the assessee, the First Appellate Authority considered the matter afresh and held that the assessee is entitled for the benefit under Section 10A. The said order was confirmed by the Tribunal. 9. The assessee is a 100% export oriented unit, enjoying deduction under Section 80HHE of the Act. In the CBDT Circular No.1/2005 dated 6-1-2005, it has been stated that existing Domestic Tariff Area (for short DTA') Units which were approved as 100% EOU units by the Board shall be eligible for deduction under Section 10B of the Act. Further, the scheme of Biotechnology Park framed by the Ministry of Government of India, clause 6.36.1 provides for conversion. Clauses 6.36.1 and 6.36.2 read thus: 6.36.1: Existing DTA units, may also apply for conversion into EOU/EHTP/STP/BTP unit, but no concession in duties and taxes would be available under scheme for the plant, machinery and equipment already installed. On conversion, they would get Income Tax concessions but limited to period of 10 years from original com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to Section 10A also. The benefit under Section 10A would also be available even when an existing unit gets converted into STP unit. Hence, it is not open to the Assessing Officer to contend that no new undertaking came into being after approval of STPI. In a judgment reported in CIT v/s MAXIM INDIA (supra) in paragraph 5, the Division Bench of this Court has held under: The material set out amply proves that it is not a case of reconstruction as mistook by the Assessing Authority. The facts disclosed that the assessee commenced production from 01-0-2002 and the assessee was entitled to the benefit under Section 80HHE. However after approval was granted by the Director of STPI on 31-12-2002 the assessee was entitled to the benefit of Section 10A of the Act. This is supported by the circular No.1/05 dated 06-10-2005 issued by the CBDT. 11. Further, a similar view has been taken in CIT v/s EXPERT OUTSOURCES (supra). Hence, the law declared by the Division Bench of this Court referred to above is binding on the Assessing Officer. The First Appellate Authority as well as the Tribunal after considering the matter in detail and taking into consideration the Board Circular No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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