On transfer of technical manpower upto 50%, deduction u/s 10A/AA cannot be denied.

Mere transfer or redeployment of existing technical manpower to the extent of “50% of total technical manpower actually deployed in new unit” from an existing unit to a new SEZ unit in the first year of commencement of business will not construed as splitting up or reconstruction of an existing business. Hence deduction under section 10A or 10AA of the act cannot be denied.

Earlier, CBDT had issued circular no. 12/2014 dated 18th July, 2014 to clarify that mere transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred does not exceed 20 percent of the total technical manpower actually engaged in developing software at any point in the given year in the new unit.
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