Ita/189/2014 Of Commissioner Of Income Tax-Iii v. M/S. Quest Informatics Pvt Ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATBD THIS THER DAY OF JANUARY, 2015 PRESENT THR HON' BLE MR. JUSTICK N.KUMAR ANT) THR HON' BLE MR. JUSTICEK B. VEBRAPPA Income Tax Appeal 189/2014 C/w.Income Tax Appeal Nos. 188/ 2014 & 1900/2 ITA No.189/2014 BETWEEN: 1.)Commissioner of Income Tax-lIll, C.R. Buildings, Queens Road, Bangalore-560 OO1 2 |Deputy Commissioner of Income, — Circle-12(2), Bangalore| .. Appellants. (By Sri E.I. Sanmathi, Advocate) ANT) M/s. Quest Informatics Pvt. Ltd., No.960, II Main Road,IV Block, Rajajinagar,Bangalore-560 O10 ... Respondent. (By Sri Chythanya K.K., Advocate) This ITA is filed under Section J6O0O-A of thIncome Tax Act, 1961 arising out of Order dated06.12.2013 passed in ITA No.647/Bang/2012, tor theassessment year 2008-09 praying to decide theforegoing question of law and/or such other questionsof law as may be formulated by the Hon’ble Court asdeemed fit and to set aside the appellate order dated06.12.2013 passed by the ITAT, ‘A’ Bench, Bangalore inappeal proceedings No. ITA No.64/7/Bang/2012 forassessment year 2008-09.| ITA No.188/2014 BRHTIWHR 1.)Commissioner of Income Tax-lIll, C.R. Buildings, Queens Road,Bangalore-560 OO1Bangalore-560 OO1 2 |Deputy Commissioner of Income, — Circle-12(2), Bangalore| .. Appellants. (By Sri E I Sanmathi, Advocate) AND: M/s. Quest Informatics Pvt. Ltd.,No.960, II Main Road,IV Block, Rajajinagar,Bangalore-560 O10 ... Respondent. (By Sri Chythanya K.K., Advocate) This ITA is filed under Section J6O0O-A of thIncome Tax Act, 1961 arising out of Order dated06.12.2013 passed in ITA No.640/Bang/2012, tor theassessment year 2007-08 praying to decide theforegoing question of law and/or such other questionsof law as may be formulated by the Hon’ble Court asdeemed fit and to set aside the appellate order dated06.12.2013 passed by the ITAT, ‘A’ Bench, Bangalore inappeal proceedings No. ITA No.640/Bang/2012 forassessment year 2007-08. ITA No.190/2014 BRHTIWHR 1.)Commissioner of Income Tax-lIll, C.R. Buildings, Queens Road,Bangalore-560 OO1Bangalore-560 OO1 2 |Deputy Commissioner of Income, — Circle-12(2), Bangalore| .. Appellants. (By Sri E.]. Sanmathi, Advocate) AND: M/s. Quest Informatics Pvt. Ltd.,No.960, II Main Road,IV Block, Rajajinagar,Bangalore-560 O10 ... Respondent. (By Sri Sri Chythanya K.K., Advocate) This ITA is filed under Section J6O0O-A of thIncome Tax Act, 1961 arising out of Order dated06.12.2013 passed in ITA No.181/Bang/2013, for theassessment year 2009-10 praying to decide theforegoing question of law and/or such other questionsof law as may be formulated by the Hon’ble Court asdeemed fit and to set aside the appellate order dated06.12.2013 passed by the ITAT, ‘A’ Bench, Bangalore inappeal proceedings No. ITA No.181/Bang/2013 forassessment year 2009-10.| TheseIncomeTax|AppealscomingOTlforAdmission this day, N. Kumar, J., delivered thefollowing: JUDGMENT As a common question of law is involved in all these)three appeals and the assessee is also the same and theorders pertain to different assessment years, they are takenup for consideration together and disposed of by thiscommon order. 2 |The substantial question of law raised in| these appeals is as under: “Whether, on the facts and in_ thecircumstances of the case, the Tribunalwas justified in law in holding that the STPI unit established by the assessee forwhich 10A deduction is claimed, was notformed by splitting up or reconstruction ortransfer of used assets of an existingunit,and|consequentlywithoutappreciating the fact that as per SectionIOA the assessee is not eligible for 1OAdeduction if the STPI unit is not a newundertaking but formed by splitting up ofexisting unit|and|reconstructionof|business already in existence?” 2 |The substantial question of law raised in| these appeals is as under: “Whether, on the facts and in_ thecircumstances of the case, the Tribunalwas justified in law in holding that the STPI unit established by the assessee forwhich 10A deduction is claimed, was notformed by splitting up or reconstruction ortransfer of used assets of an existingunit,and|consequentlywithoutappreciating the fact that as per SectionIOA the assessee is not eligible for 1OAdeduction if the STPI unit is not a newundertaking but formed by splitting up ofexisting unit|and|reconstructionof|business already in existence?” 3.|The assessee is an Indian Company engagedin the business of computer software development andbusiness processing out source. During the financialyear 2005-2006 the assessee was running its businessfrom a non-STPI unit under a rented premises. In thisperiod the party has applied for permission to set up theSTPI unit at ground floor of the said premises. The STPIauthorities granted approval for setting up of the STPIunit for development of computer service/IT Enabled services (ITES) 31.02.2006. The assessee started thebusiness in the newly set up unit during the financialyear 2006-2007. The assessee also continued tocarryout its business from non-STPI unit also. Separatebooks of accounts were maintained by the assessee forthe STPI unit and non-STPI unit. In respect of STPIunit the claim for reduction under Section 10A made bythe assessee was rejected on the ground that STPI unitis found by splitting of the existing unit. In appeal, onappreciation of the material on record, the said orderwas set aside and the benefit under Section 10OA wasextended to the STPI Unit and the Revenue preferred anappeal before the Tribunal which has confirmed theSame. 4This Court had an occasion to consider the|Similar question in the case of)Commissioner ofIncome-tax, Central Circle, Bangalore v. Wipro GEMedical System Ltd reported in (2014) 226 Taxman 156 (Karnataka),and in the case ofCOMMISSIONER OFINOCMETAXasANR.DS|MAXITIINDIA|INTEGRATED CIRCUIT DESIGN (P) LTD.,reported in(2011) 202 TAXMAN 3609 (Kar) andCOMMISSIONER OF INCOME TAX & ANR. vs. EXPERT OUTSOURCE (P)LTD..,reported in(2013) 358 ITR page 518 (Karn) 5The law laid down in the atoresaid cases|squarely applies to the facts of this Case. Therefore, thefindings recorded by both the appellate authorities arein accordance with law. Thus, the substantial questionof law raised in these appeals is answered in favour ofthe assessee and against the revenue and the appealsare dismissed. Sbs* od/-|JUDGE| od/-JUDGE