Deduction under section 10A/10AA on transfer of Technical Manpower in case of software industry - CBDT Clarifies
CBDT clarifies that:
The transfer or re-deployment of technical manpower from existing units(s) to a new unit located in SEZ, in the first year of commencement of business, shall not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred as at the end of the financial year does not exceed 50 per cent of the total technical manpower actually engaged in development of software or IT enabled products in the new unit.
In the alternative, if the assesses (enterprise) is able to demonstrate that the net addition of the new technical manpower in all units of the assessee (enterprise) is at least equal to the number that represents 50% of the total technical manpower of the new SEZ unit during such previous year, deduction under section 10A/10AA would not be denied provided the other prescribed conditions are also satisfied.
It is further clarified that this clarification will not apply to the assessments which have already been completed and no appeal shall be filed by the Department in cases where the issue is decided by an appellate authority in consonance with this Circular.
CBDT Circular No. 14/2014, Dated: October 8, 2014