DCIT, New Delhi V. M/s Off- Shore IT Workforce Pvt. Ltd., Delhi

ITA 5115/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77655 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHIT PARKH
• Section: 143(3); 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, A.M. AND SHRI A.T.VARKEY, JM ITA NO. 5115/DEL/2012 ASSESSMENT YEAR : 2009-10 DCIT, CIRCLE 13(1) VS. OFF SHORE IT WORKFORCE PVT. LTD. NEW DELHI D-402, PRINCE APARTMENT PLOT NO.54, IP EXTENSION, PATPARGANJ DELHI 110 092 PAN: AAACO 9244 P (APPELLANT) (RESPONDENT) APPELLANT BY:- SHRI MOHIT PARKH, C.A. RESPONDENT BY :- SHRI KEYUR PATEL, SR.D.R . O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE CIT(A)- XVI, NEW DELHI DT. 24.4.2012 FOR THE AY 2009-10. 2. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS /PROFESSION OF COMPUTER APPLICATION SERVICES. IT EXPORTS TO FO REIGN BASED CLIENTS, SINCE THE DATE OF ITS INCORPORATION. IT FILED ITS RETURN OF INCOME O N 26.9.2009 THROUGH E-FILING, DECLARING NET TAXABLE INCOME OF RS.8,88,047/-, AFTER CLAIMING DEDUCTION U/S 10A. AO PASSED AN ORDER U/S 143(3) ON 8.11.2011 ASSESSING THE TOTAL I NCOME AT RS.57,08,207/-, AFTER DENYING DEDUCTION U/S 10A. ON APPEAL THE FIRST APP ELLATE AUTHORITY APPLIED THE CIRCULAR NO. 1/2005 DT. 6.1.2005 OF CBDT AND HELD THAT THE A SSESSEE IS ELIGIBLE FOR CLAIMING ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 2 OF 9 DEDUCTION U/S 10A. SHE ALSO HELD THAT THIS IS NOT THE CASE OF RECONSTRUCTION OF BUSINESS. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ALLOWING THE DEDU CTION OF RS.48,20,160/- U/S 10A OF THE ACT BY HOLDING THAT THE CBDTS CIRCULAR NO. 1/2 005 DT. 6.01.2005 WITH REFERENCE TO S.10B IS EQUALLY APPLICABLE TO S.10A. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THER E WAS NO RECONSTRUCTION OF BUSINESS. 3. THE LD.D.R. MR.KEYUR PATEL REFERRED TO LAST PAGE OF THE ASSESSMENT ORDER AND SUBMITTED THAT (A) THE BOARDS CIRCULAR IN QUESTION WAS WITH REFERENCE TO S.10B AND THAT IT DOES NOT APPLY TO THOSE CASES WHERE THERE IS REC ONSTRUCTION OF ALREADY EXISTING BUSINESS. (B)THAT THE LEASE DEED DEMONSTRATES THAT THE ASSESSEE WAS CARRYING ON ITS BUSINESS IN THE DOMESTIC TARIFF AREA, PRIOR TO THE SHIFTING TO STPI AREA. (C ) THE ASSESSEE HAD ALREADY EXISTING BUSINESS SINCE 22.5.2 007 HAD ACQUIRED ALL FIXED ASSETS PRIOR TO THE SHIFTING TO THE STPI AREA WHICH IS EVI DENT FROM THE PROFIT AND LOSS A/C. THUS HE SUBMITS THAT THE ORDER OF THE LD.CIT(A) GRA NTING EXEMPTION SHOULD BE REVERSED. 4. THE LD.COUNSEL FOR THE ASSESSEE MR.PARIKH ON THE OTHER HAND SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ASSES SEE COMPANY SUBMITTED ALL DETAILS BEFORE THE AO WHICH INCLUDE DOCUMENTS RELATING TO ( A) GRANT OF STPI REGISTRATION, (B) REPORT OF THE AUDITOR IN FORM 56A, (C ) LIST OF SHA REHOLDERS AND DIRECTOR OF THE RESPONDENT COMPANY AS ON 31.3.2008 AND 31.3.2009; ( D) THE PHOTO COPY OF THE GREEN ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 3 OF 9 CARD NO.MCIT/STPIN2008/2045, DT. 11.8.08 ISSUED BY THE STPII WEF 28.7.2008 TO 27.7.2013; (E) COPY OF AGREEMENT ON NON JUDICIAL ST AMP PAPER WITH STPI. 4.1. HE RELIED ON THE ORDER OF THE LD.CIT(A) AND SU BMITTED THAT THE ISSUE IN QUESTION IS COVERED IN HIS FAVOUR BY THE JUDGEMENT OF HONBL E KARNATAKA HIGH COURT IN THE CASE OF CIT ;VS. MAXIM INDIA INTEGRATED CIRCUIT DESIGN P VT.LTD., 202 TAXMAN 365, WHEREIN IT IS HELD THAT THE CIRCULAR OF THE CBDT IS EQUALLY AP PLICABLE TO S.10A OF THE ACT. HE ALSO RELIED ON THE FOLLOWING CASES. I. CIT VS. EDS ELECTRONIC DATA SYSTEMS (INDIA)P.LTD. (20 12) 211 TAXMAN 133 (DEL); II. CIT VS. SONATA SOFTWARE LTD. (2012) 343 ITR 397 (BO M.); III. M.L.OUTSOURCING SERVICES P.LTD. VS IYO, ITAT DELHI E BENCH (2011) 140 TTJ (DEL) (UO) 59 IV. CIT VS. FUSION SOFTWARE ENGG.P.LTD. (2012) 205 TAXMA N 396 (KARNATAKA HIGH COURT); V. ITO VS. ANITA SYNTHETICS P.LTD., ITAT AHMADABAD C B ENCH IN ITA 1263/AHD/2005 100 TTJ (AHD) 227 VI. CIT VS. SASKEN COMMUNICATIONS TECH LTD. (2012) 204 TAXMAN 84 (KAR.H.C.); VII. CIT VS. WESTERN OUTDOOR INTERACTIVE P.LTD. (2012) 3 49 ITR 309 (BOM.) VIII. ITO VS. HEARLAND DELHI TRANSCRIPTION & SERVICES P.L TD., ITAT DELHI C BENCH REPORTED (2011) 45 SOT 89 (DEL) ; IX. CIT VS. HEARTLAND KG INFORMATION LTD. (2012) 359 IT R 1 (MAD.); X. CIT VS. TECHNOVATE SOLUTIONS P.LTD. (2013) 354 ITR 110 (DELHI); XI. CIT VS. BULLET INTERNATIONAL (2012) 349 ITR 267 (AL L.); XII. DCIT VS. ARTS BEAUTY EXPORTS (2011) 12 TAXMAN..COM 223 (DEL-ITAT); XIII. CIT VS. LOVELESH JAIN (2012) 204 TAXMAN 134 (DEL); XIV. OPUS SOFTWARE SOLUTIONS P.LTD. VS ACIT (2012) 139 I TD 427 (ITAT PUNE BENCH B); XV. CIT VS. EXPERT OUTSOURCING P.LTD. (2013) 358 ITR 518 (KAR.); XVI. NAGESH CHUNDUR VS. CIT (2013) 358 ITR 521 (MAD.). ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 4 OF 9 5. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER OF THE LOWER AUTHO RITIES, MATERIAL FILED AND CASE LAWS CITED, WE HOLD AS UNDER. 6. THE ASSESSEE WAS ORIGINALLY CARRYING ON BUSINESS IN THE DOMESTIC TARIFF AREA. LATER IT HAD SHIFTED TO STPI AREA AND WAS GRANTED R EGISTRATION FOR THE PERIOD OF 5 YEARS FROM 20 TH JULY,2008. THE ASSESSEE CLAIMED PROPORTIONATE DED UCTION U/S 10A OF THE ACT FOR THE VERY FIRST TIME. THE AO, ON THE GROUND THA T THE ASSESSEE HAS ACQUIRED ALL THE FIXED ASSETS, PRIOR TO SHIFTING OF THE COMPANY TO S TPI AREA, WAS OF THE OPINION THAT THERE WAS RECONSTRUCTION OF BUSINESS AND THUS DEDUCTION U/S 10A WAS NOT ALLOWABLE AND THAT THE CIRCULAR NO.1/05 DT. 6.1.2005 IS ALSO NOT APPLI CABLE. SECTION 10A OF THE ACT READS AS UNDER: [ SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED U NDERTAKINGS IN FREE TRADE ZONE, ETC. 10A. (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A D EDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR C OMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE A SSESSEE : PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME OF THE UN DERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AND GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITLED TO DED UCTION REFERRED TO IN THIS SUB-SECTION 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 PROCES SING ZONE INTO A SPECIAL ECONOMIC ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 5 OF 9 ZONE, THE PERIOD OF TEN CONSECUTIVE ASSESSMENT YEAR S REFERRED TO IN THIS SUB-SECTION SHALL BE RECKONED FROM THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE 4 [UNDERTAKING BEGAN TO MANUFACTURE OR PRODUCE SUCH A RTICLES OR THINGS OR COMPUTER SOFTWARE] IN SUCH FREE TRADE ZONE OR EXPORT PROCESS ING ZONE : 5 [ PROVIDED ALSO THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2003, THE DEDUCTION UNDER THIS SUB-SECTION SHALL BE NINET Y PER CENT OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM THE EXPORT OF SUCH A RTICLES OR THINGS OR COMPUTER SOFTWARE :] PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLO WED TO ANY UNDERTAKING FOR THE ASSESSMENT YEAR BEGINNING ON TH E 1ST DAY OF APRIL, 6 [2012] AND SUBSEQUENT YEA.R A PLAIN READING OF S.10(A) DEMONSTRATES THAT THERE IS NO BAR THAT A BUSINESS UNIT WHICH IS ALREADY OPERATING IN A DOMESTIC TARIFF AREA, CAN BE SHIFTED TO STPI AREA AS AN EXPORT UNIT. 6.1. THE CBDT IN ITS CIRCULAR NO.01/2005 DT. 06.01. 2005 READS AS FOLLOWS. INCOME-TAX ACT CERTAIN CLARIFICATION REGARDING TAX HOLIDAY UNDER S ECTION 10B OF THE INCOME-TAX ACT TO 100% EXPORT ORIENTED UNDERTAKING CIRCULAR NO. 1/2005, DATED 6-1-2005 1. SECTION 10B OF THE INCOME-TAX ACT PROVIDES FOR 1 00% DEDUCTION OF PROFITS DERIVED BY A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING, FRO M EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT. T HE DEDUCTION IS AVAILABLE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNIN G WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAK ING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE. HO WEVER, NO DEDUCTION UNDER SECTION 10B IS AVAILABLE AFTER ASSESSMENT YEAR 2009-10. 2. THE DEDUCTION UNDER SECTION 10B IS AVAILABLE TO AN UNDERTAKING WHICH FULFILS ALL THE FOLLOWING CONDITIONS:- ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 6 OF 9 (I) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THIN G OR COMPUTER SOFTWARE; (II) IT IS NOT FORMED BY THE SPLITTING UP, OR THE R ECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE EXCEPT IN THE CIRCUMSTANCES SPECIFIED UND ER SECTION 33B OF THE IT ACT. (III) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. 3. REPRESENTATIONS HAVE BEEN RECEIVED FROM VARIOUS QUARTERS AS TO WHETHER AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA, WHICH I S SUBSEQUENTLY APPROVED AS 100% EOU BY THE BOARD APPOINTED BY THE CENTRAL GOVERNMENT IN EXERCISE OF POWERS CONFERRED UNDER SECTION 14 OF THE INDUSTRIES (DEVEL OPMENT AND REGULATION) ACT, 1951, IS ELIGIBLE FOR DEDUCTION UNDER SECTION 1 OB OF THE INCOME-TAX ACT. 4. THE MATTER HAS BEEN EXAMINED AND IT IS HEREBY CL ARIFIED THAT AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA (DTA) AND DERIVING PROFIT FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT, W HICH IS SUBSEQUENTLY CONVERTED INTO A EOU, SHALL BE ELIGIBLE FOR DEDUCTION UNDER SE CTION 10B OF THE IT ACT, ON GETTING APPROVAL AS 100% EXPORT ORIENTED UNDERTAKING. IN SU CH A CASE, THE DEDUCTION SHALL BE AVAILABLE ONLY FROM THE YEAR IN WHICH IT HAS GOT TH E APPROVAL AS 100% EOU AND SHALL BE AVAILABLE ONLY FOR THE REMAINING PERIOD OF TEN CONS ECUTIVE ASSESSMENT YEARS, BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS Y EAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COM PUTER SOFTWARE, AS A DT A UNIT. FURTHER, IN THE YEAR OF APPROVAL, THE DEDUCTION SHA LL BE RESTRICTED TO THE PROFITS DERIVED FROM EXPORTS, FROM AND AFTER THE DATE OF APPROVAL O F THE DTA UNIT AS 100% EOU. MOREOVER, THE DEDUCTION TO SUCH UNITS IN ANY CASE W ILL NOT BE AVAILABLE AFTER ASSESSMENT YEAR 2009-10. 5. TO CLARIFY THE ABOVE POSITION, CERTAIN ILLUSTRAT IONS ARE GIVEN AS UNDER:- (I) UNDERTAKING 'A' IS SET UP IN DOMESTIC TARIFF AR EA AND STARTS MANUFACTURE OR PRODUCTION OF COMPUTER SOFTWARE IN FINANCIAL YEAR 1 999- 2000 RELEVANT TO ASSESSMENT YEAR 2000-01. IT GETS A PPROVAL AS 100% EOU ON 10TH SEPTEMBER, 2004 IN THE FINANCIAL YEAR 2004-05 RELEV ANT TO ASSESSMENT YEAR 2005-06. ACCORDINGLY, IT SHALL BE ELIGIBLE FOR DEDUCTION UND ER SECTION 10 B FROM ASSESSMENT YEAR 2005-06 I.E., THE YEAR IN WHICH IT FULFILS THE BASI C CONDITION OF BEING A 100% EOU. FURTHER, THE DEDUCTION SHALL BE AVAILABLE ONLY FOR THE REMAINING PERIOD OF TEN YEARS I.E. FROM ASSESSMENT YEAR 2005-06 TO ASSESSMENT YEAR 200 9-10. THIS DEDUCTION UNDER SECTION 10 B FOR ASSESSMENT YEAR 2005-06 SHALL BE RESTRICTED TO THE PROFITS DERIVED FROM EXPORTS, FROM AND AFTER THE DATE OF APPROVAL OF THE DTA UNIT AS 100% EOU. ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 7 OF 9 (II) UNDERTAKING 'B' SET UP IN DOMESTIC TARIFF AREA , BEGINS TO MANUFACTURE OR PRODUCE COMPUTER SOFTWARE IN FINANCIAL YEAR 1996-97 RELEVAN T TO ASSESSMENT YEAR 1997~98. IT GETS APPROVAL AS 100% EOU IN FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09. NO DEDUCTION UNDER SECTION 10 B SHALL BE A DMISSIBLE TO UNDERTAKING B AS THE PERIOD OF 10 YEARS EXPIRES IN FINANCIAL YEAR. 2005- 06 RELEVANT TO ASSESSMENT YEAR 2006- 07, PRIOR TO ITS APPROVAL AS 100% EOU. (III) UNDERTAKING 'C' IS SET UP IN DOMESTIC TARIFF AREA IN THE FINANCIAL YEAR 2000-01 RELEVANT TO ASSESSMENT YEAR 2001-02 AND ENGAGED IN THE BUSINESS OF PROVIDING COMPUTER RELATED SERVICES, OTHER THAN THOSE NOTIFIE D BY THE BOARD FOR THE PURPOSES OF SECTION 10 B. IN FINANCIAL YEAR 2002-03, IT ACQUIRE S MORE THAN 20% OF OLD PLANT AND MACHINERY AND STARTS MANUFACTURING COMPUTER SOFTWAR E. IT ALSO GETS APPROVAL AS 100% EOU IN FINANCIAL YEAR 2002-03. UNDERTAKING 'C' SHALL NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10 B, AS THERE HAS BEEN TRANSFER OF OLD PLA NT AND MACHINERY. (IV) UNDERTAKING 'D' IS SET UP AND STARTS PRODUCING COMPUTER SOFTWARE IN FINANCIAL YEAR 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05. IT GET S APPROVAL AS 100% EOU IN FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08. IT SHALL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 10 B FROM ASSESSMENT YEAR 2 007-08. HOWEVER, THE DEDUCTION SHALL NOT BE AVAILABLE AFTER ASSESSMENT YEAR 2009-1 0. (V) UNDERTAKING 'E' IS SET UP AND STARTS PRODUCING C OMPUTER SOFTWARE PRIOR TO 31-3-1994. IT GETS APPROVAL AS 100% EOU IN FINANCIAL YEAR 2004- 05 RELEVANT TO ASSESSMENT YEAR 2005-06. UNDERTAKING 'E' SHALL NOT BE ELIGIBLE FOR D EDUCTION UNDER SECTION 10 B AS THE PERIOD OF DEDUCTION OF 10 YEARS EXPIRES PRIOR TO AS SESSMENT YEAR 2005-06. 6.2. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F MAXIM INDIA INTEGRATED CIRCUIT DESIGN PVT.LTD. (2011) 202 TAXMAN 365/14, HELD AS F OLLOWS. CBDT CIRCULAR NO. 1/2005 DATED 06.01.2005 GRANTS C ERTAIN BENEFITS U/S 10B, THOUGH THE CIRCULAR IS IN THE CONTEXT OF SECTION 10B, THE RATIO OF THE CIRCULAR EQUALLY APPLIES TO SECTION 10A ALSO. IN FACT THE CIT(A) HAS REFERRED TO VARIOUS JUDGEMENTS ON THE POINT AND HAD COME TO THE CONCLUSION THAT THE BENEFIT OF SECTION 10A WOULD ALSO BE AVAILABLE EVEN WHEN AN EXISTING UNIT GET CONVERTED INTO A STP II UNIT. IN FACT THE MATERIAL ON RECORDS DISCLOSES THAT NO EXPORT OF COMPUTER SOFTWA RE WAS MADE BEFORE THE 04.08.2004. THE EXPORT COMMENCED ONLY AFTER 4.8.20 04. THE INVOICES PRODUCED IN THE ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 8 OF 9 CASE CLEARLY ESTABLISH THE SAID FACT. THE APPELLAT E AUTHORITY AS WELL AS THE TRIBUNAL WAS JUSTIFIED IN EXTENDING THE BENEFIT OF S.10A OF THE UNIT IN QUESTION. 6.3. THE LD.CIT(A), IN OUR OPINION, HAS RIGHTLY APP LIED THIS DECISION TO THE FACTS OF THE CASE AND ALLOWED THE CLAIM OF THE ASSESSEE. 6.4. ON THE ISSUE AS TO WHETHER THERE WAS RECONSTRU CTION OF THE BUSINESS, CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE AND HELD AS FO LLOWS. COMING TO THE FACTS OF THE APPELLANTS CASE, THE AR HAS FURNISHED BEFORE THE AO AND BEFORE ME COPY OF THE REPORT U/S 10A IN FORM 56F GI VING THE COMPUTATION OF THE DEDUCTION CLAIMED U/S 10A, COPY OF THE GREEN CARD D ATED 11.8.2008 ISSUED BY THE STPII, COPY OF LETTER DATED 11.8.2008 OF THE STPII SPECIFYING THE LIST OF CAPITAL GOODS TO BE IMPORTED/PROCURED LOCALLY FOR THE PURPOSE OF BUS INESS OF THE APPELLANT AS WELL AS COPY OF THE LETTER DATED 11.8.2008 OF THE STPII WIT H RESPECT TO THE ACCEPTANCE OF LEGAL AGREEMENT. THESE DETAILS SUPPORT THE CASE OF THE A PPELLANT THAT IT IS ELIGIBLE FOR DEDUCTION U/S 10A. AS REGARDS THE CONTENTION OF TH E ASSESSING OFFICER THAT THE APPELLANT COMPANY WAS FORMED BY THE RECONSTRUCTION OF BUSINESS, THE APPELLANTS AR HAS FURNISHED LIST OF SHARE HOLDERS AND DIRECTORS A S ON 31.3.2008 AND 31.3.2009 TO PROVE THAT THERE WAS NO RECONSTRUCTION OF THE BUSIN ESS. NO ASSETS ARE STATED TO HAVE BEEN DISPOSED OF DURIN G THE EYAR AND INSTEAD, THERE HAVE BEEN SOME ADDITIONS TO THE FIXED ASSETS. IN VIEW OF THE FOREGOING DISCUSSION, IT IS HEREBY HELD THAT THE CLAIM OF THE APPELLANT UNDER T HIS SECTION FOR THE ASSESSMENT YEAR UNDER APPEAL WAS IN ORDER AND THIS CLAIM IS DIRECTE D TO BE ALLOWED. HOWEVER, THE APPELLANT WOULD BE ELIGIBLE FOR DEDUCTION ON THE EX PORT PROFITS OF THE YEAR UNDER APPEAL, EARNED BY IT AFTER IT WAS GRANTED REGISTRATION BY T HE STPII AND MOREOVER THIS DEDUCTION WOULD BE AVAILABLE ONLY UPTO ASSESSMENT YEAR 2012-1 3, AS PER THIRD PROVISO TO S.10A(1). GROUNDS NOS. 1 AND 2 OF THE APPEAL ARE A LLOWED. ITA 5115/DEL/2012 ASSESSMENT YEAR 2009-10 OFF SHORE IT WORKFORCE P.LTD. PAGE 9 OF 9 6.5. THE LD.D.R. COULD NOT CONTROVERT THESE FACTUAL FINDINGS OF THE LD.CIT(A). 7. IN THE RESULT, WE UPHOLD THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THIS APPEAL OF THE REVENUE. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL,2014. SD/- SD/- (A.T. VARKEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 11 TH APRIL, 2014 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR