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2021 (1) TMI 1073 - AT - Income TaxDeduction u/s. 80IAB - assessee has claimed the said deduction on the rental income shown under the head income from house property - claim of deduction u/s. 80 IAB should not be denied as the claim is made on the rental income and not from any profits and gains of business - assessee strongly contended that the relevant factor is profit and gain should be derived from the eligible business irrespective of the head of the income - HELD THAT - As per the scheme of the Income Tax Act the assessee has shown the rental income derived from its SEZ projects under the head income from other sources . Scheme of SEZ is governed by the provision of law contained under the SEZ 2005. Section 51 of the SEZ Act 2005 provides that the SEZ Act shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. In our considered opinion developing SEZ by itself is the business contemplated u/s. 80 IAB of the Act and the SEZ itself provides that the lease rental income generated in the hands of a developer engaged in setting up of the SEZ, is the profits and gains derived from the business of developing a SEZ. - Decided against revenue.
Issues:
Allowance of deduction u/s. 80IAB of the Income Tax Act to the assessee. Analysis: The appeal was filed by the revenue against the order of the CIT(A)-3, Delhi pertaining to A.Y. 2012-13, challenging the allowance of deduction u/s. 80IAB of the Act to the assessee. The revenue contended that the deduction was erroneously allowed on rental income under the head "income from house property." The AO denied the claim, stating that the deduction is only available from profits and gains derived by an undertaking from any business, which did not include income from house property. The assessee argued that it was engaged in developing SEZ, and income derived from such eligible business should qualify for the deduction, irrespective of the income head. The CIT(A) allowed the claim, emphasizing the eligibility of the assessee engaged in developing SEZ projects. The scheme of the SEZ Act 2005, as per Section 51, provides that the SEZ Act shall have an overriding effect on any other law, and developing SEZ itself constitutes a business under section 80IAB of the Act. Citing the decision of ITAT Chennai in Coimbatore Hitech Infrastructure (P) Ltd. case, it was established that the business of developing SEZ qualifies for deduction under section 80IAB, irrespective of running eligible units. The ITAT Chennai also held a similar view in the case of Lulu Tech Park Pvt. Ltd., emphasizing that lease rental income from house property developed as a SEZ is eligible for deduction under section 80IAB. The ITAT Delhi, considering these precedents, upheld the CIT(A)'s decision to allow the deduction to the assessee. In conclusion, the ITAT Delhi dismissed the revenue's appeal, affirming the allowance of deduction u/s. 80IAB to the assessee engaged in developing SEZ projects. The judgment highlighted the eligibility criteria and the nature of income derived from developing SEZ projects, emphasizing that the income source, even if categorized under a specific head, should not disqualify it from claiming the deduction under section 80IAB of the Income Tax Act.
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