INCOME TAX ACT, 1961

Section 10AA

Exemption under section 10AA - Satisfaction of conditions mentioned in clause (ii) to sub-section (4) to section 10AA - Eligibility -

Assessee had 100% (EOU) income from which was entitled to exemption under section 10A. Assessee had set up a new unit in Special Economic Zone (SEZ) income from which was claimed as exempt under section 10AA for a period of ten years commencing from the assessment year 2010-11. Exemption was allowed in the assessment years 2011-12 and 2012-13 but was disallowed by AO in the assessment year 2013-14, citing clause (ii) to sub-section (4) to section 10AA. Held: Negative stipulation in clause (ii) to sub-section (4) of section 10AA mandates that to claim exemption the unit should not be formed by 'splitting up' or 'reconstruction' of a business already in existence. Tribunal had accepted that the new unit was a separate identity for its income to qualify for exemption under section 10AA for it was not formed and created by 'splitting up' or 'reconstructing' the existing business. The new unit was also not formed by transferring any machinery or plant previously used. Fresh investment was made in the new unit. Revenue earned and profits generated were clearly attributable to the new unit. Therefore, exemption under section 10AA was allowed to assessee.

REFERRED : CIT v. Heartland Delhi Transcription Services (P) Ltd. (2014) 366 ITR 523 (Delhi) : 2014 TaxPub(DT) 3669 (Del-HC) Macquarie Global Services (P) Ltd. v. DCIT 2018 TaxPub(DT) 1577 (Del-Trib) Tata Communications Ltd. v. Dy. CIT 2016 TaxPub(DT) 2101 (Mum-Trib)

FAVOUR : In assessee's favour

A.Y. :

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