Commissioner of Income Tax and Others vs Quest Informatics Pvt. Ltd.

N. Kumar, J.—As a common question of law is involved in all these three appeals and the assessee is also the same and the orders pertain to different assessment years, they are taken up for consideration together and disposed of by this common order. The substantial question of law raised in these appeals is as under:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the STPI unit established by the assessee for which section 10A deduction is claimed was not formed by splitting up or reconstruction or transfer of used assets of an existing unit and, consequently, without appreciating the fact that as per section 10A the assessee is not eligible for section 10A deduction if the STPI unit is not a new undertaking but formed by splitting up of the existing unit and reconstruction of business already in existence?"

The assessee is an Indian company engaged in the business of computer software development and business processing out source. During the financial year 2005-06, the assessee was running its business from a non-STPI unit under a rented premises. In this period the party has applied for permission to set up the STPI unit at the ground floor of the said premises. The STPI authorities granted approval for setting up of the STPI unit for development of computer service/IT enabled services (TIES) on February 31, 2006. The assessee started the business in the newly set up unit during the financial year 2006-07. The assessee also continued to carry out its business from the non-STPI unit also. Separate books of account were maintained by the assessee for the STPI unit and the non-STPI unit. In respect of the STPI unit the claim for deduction under section 10A made by the assessee was rejected on the ground that the STPI unit is found by splitting of the existing unit. In appeal, on appreciation of the material on record, the said order was set aside and the benefit under section 10A was extended to the STPI unit and the Revenue preferred an appeal before the Tribunal which has confirmed the same.

This court had an occasion to consider the similar question in the case of CIT v. Wipro GE Medical System Ltd. reported in [2015] 4 ITR-OL 288 (Karn) : [2014] 226 Taxman 156 (Karn), and in the case of CIT v. Maxim India Integrated Circuit Design (P.) Ltd. reported in [2011] 202 Taxman 365 (Karn) and CIT Vs. Expert Outsource (P) Ltd., (2011) 243 CTR 411 . The law laid down in the aforesaid cases squarely applies to the facts of this case. Therefore, the findings recorded by both the appellate authorities are in accordance with law. Thus, the substantial question of law raised in these appeals is answered in favour of the assessee and against the Revenue and the appeals are dismissed.