9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 2040 - AT - Income TaxDisallowance of deduction u/s 80IAB - income derived from Operation and Maintenance Activities of SEZ are not eligible for such deduction - HELD THAT - We find that the issue is no longer res integra. The Co-ordinate bench of Tribunal in Revenue s appeal relevant assessment year 2010-11 2017 (10) TMI 1578 - ITAT AHMEDABAD has dismissed the appeal of the Revenue and thus allowed the deduction claimed on operation and maintenance activity. From going through the proviso (2) of section 80-IAB of the Act gives a very clear picture that when the transferee is eligible for deduction u/s 80-IAB for the income from operation and maintenance of SEZ then certainly transferor i.e. developer is eligible for deduction u/s 80-IAB from operation and maintenance. Also going through the letter issued by Government of India Ministry of Commerce Industries dated 21st June 2006 to the assessee for setting up of a sector specific Special Economic Zone for Pharmaceuticals at Ahmedabad we find that in clause (ii) under the main clause (III) referring to general condition it reads that operation and maintenance of the facilities will be met as per the standard in the specific manner and proposition of the user. In view of our above discussion as well as observation made by Id. CIT(A) we are of the view that assessee being a developer of SEZ is eligible for deduction u/s 80-IAB for income earned from operation and maintenance of SEZ - Decided in favour of assessee.
Issues Involved:
1. Eligibility for deduction under section 80IAB for income from operation and maintenance of Special Economic Zone (SEZ). 2. Rate of depreciation applicable to computer software licenses. Detailed Analysis: 1. Eligibility for Deduction Under Section 80IAB for Income from Operation and Maintenance of SEZ: The primary issue in this appeal is whether the assessee, being a developer of SEZ, is eligible for deduction under section 80IAB for income earned from the operation and maintenance of SEZ. The assessee claimed a deduction amounting to ?13,43,36,398, which included ?1,94,12,129 from operation and maintenance activities. The Assessing Officer (A.O.) denied this deduction, arguing that income from "operation and maintenance" activities does not qualify for deduction under section 80IAB. Upon appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] reversed the A.O.'s decision, citing previous appellate orders for assessment years 2009-10 and 2010-11, where similar issues were decided in favor of the assessee. The Revenue then appealed to the Tribunal. The Tribunal noted that the issue had already been settled in favor of the assessee in previous years. Specifically, the Tribunal's Coordinate Bench had dismissed the Revenue's appeal for the assessment year 2010-11, allowing the deduction for operation and maintenance activities. This decision was based on an earlier ruling for the assessment year 2009-10, which interpreted the term "developer" in section 80IAB to include operation and maintenance activities, as per the SEZ Act and the letter of approval from the Central Government. The Tribunal emphasized that the activities of development, operation, and maintenance are continuous and integral, and the deduction under section 80IAB applies to all these activities. The Tribunal also highlighted that the proviso to section 80IAB, which allows deduction for transferee developers, implies that the original developer is also eligible for such deductions. 2. Rate of Depreciation Applicable to Computer Software Licenses: Another issue addressed was the rate of depreciation applicable to computer software licenses. The A.O. had restricted the depreciation rate to 25%, while the assessee claimed 60%. The CIT(A) sided with the assessee, stating that computer software, which is essential for operating hardware, qualifies for a higher depreciation rate of 60%. The Tribunal upheld the CIT(A)'s decision, noting that it is a settled issue that software applications with long-term validity are integral to computer operations and thus subject to a 60% depreciation rate. The Tribunal found no reason to interfere with this finding. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order that allowed the assessee's deduction under section 80IAB for income from the operation and maintenance of SEZ. The Tribunal also upheld the higher depreciation rate of 60% for computer software licenses. The Tribunal's decision was based on consistent rulings in previous assessment years and a thorough interpretation of the relevant legal provisions.
|
