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TMI Blog2017 (10) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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. Thus 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 the assessee. Depreciation on computer software licence - @60% instead of @25% allowed by the AO - HELD THAT:- It is almost a settled issue that software application which are having validity for long term period are basically system software on which computer hardware runs and it is impossible to use computer without having such software installed on it and, therefore, such licensed software are subject to depreciation @ 60% and Id. CIT(A) has done so. We find no reason to interfere with the order of Id. CIT(A) on this issue. X X X X Extracts X X X X X X X X Extracts X X X X ..... and was successful in getting the relief. While allowing the relief to the assessee, the ld. CIT(A) followed the order of his predecessor for A.Y. 2009-10. The relevant findings of the ld. CIT(A) reads as under:- My predecessor vide order No.CIT(A)XIV/Jt.CIT.R.8/2011-12 dated 30.04.201 2 in appellant's own case for A. Y.2009-1 0 held as under: "I have carefully perused the assessment order and the submissions given by the appellant. The appellant has submitted that since the software involves rapid obsolescence, the claim of revenue expenditure should be allowed. I am not inclined to agree with the submission of the appellant. The appellant has bought software licenses which are valid for long term and -the expenditure incurred thereon is, therefore, not in the nature of revenue. Therefore, the plea of the appellant that expenditure is in the nature of revenue is dismissed. However, the treatment of the software by the A. O. as intangible asset and allowing interest @ 25% is not justified as the computer software has been grouped as eligible to rate of depreciation @ 60% and, therefore, A. O. should' have allowed the depreciation @ 60% in place of 25% allowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive assessment years" The word 'developer' has further been defined in Explanation to Section 80IAB which reads as under: "Developer shall have the meaning as assigned under clause (g) of Sec. 2 of the Special Economic Zones Act." Further, section 2(g) of the SEZ Act has defined the term developer as under: Sec. 2(g) - "Developer" means a person who, or a State Government which, has been granted a letter of approval under sub-section (10) of Sec. 3 and includes an authority and a Co-Developer. Section 3(10) of the SEZ Act provides that the Central Government shall on receipt of communication by the Board, grant a letter of approval on such 'terms and conditions' and obligations and entitlements as may be approved by the Board to the Developer, being the person or the State Government concerned. A combined reading of the provisions of section 80IAB of the Income Tax Act with Section 2(g) and Section 3(10) of the Special Economic Zone Act show that a person would be considered as a developer in accordance with the grant of letter of approval on the basis of terms and conditions and obligation and entitlement as may be approved by the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and maintenance will go on simultaneously. It is a different fact that once all the plots are-developed and sold, the operation and maintenance can be transferred to some other party and for this purpose, the proviso to section 80IAB has been incorporated. In the case of the appellant, the approval given is for all the activities. It would not be out of place to mention here that the provisions of section 80IA(4) initially had the words developing, maintaining and operating or developing, maintaining and operating. However, once the difficulty or anomaly in implementation of the language was observed, the provisions were subsequently amended from 01/04/2001 and the words or were introduced to take the work of development or development and operation or development operation and maintenance for entitlement of deduction. In view of the preceding discussion, I am of the considered opinion that the appellant is entitled for deduction u/s. 80IAB for the income earned from operation and maintenance, as the activities are covered by the letter of approval and accordingly make the appellant entitled for deduction. The appellant has further claimed deduction on miscellaneous inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as comprised of ₹ 59,138/- as interest from M/s UGVCL and ₹ 18,250/- as scrape vide para 6.14 of impunged order, A.O. did not considered ₹ 59,138/- being same were offered by appellant as income from other sources, while, ₹ 18,250/- was disallowed. It is therefore out of ₹ 5,65,36,415/- claim, the A.O. disallowed claim of ₹ 3,25,07,625/-being income from operation & maintenance of SEZ and ₹ 18,250/- being receipt from scrape sale related to SEZ. I am inclined with appellant that on similar issue and similar facts, my predecessor vide order dt. 30/04/2012 considered the similar contention of A.O. on these issue and after considering the appellant's contention and legal proposition allowed the claim of appellant u/s 80IAB for these two receipts. Respectfully following the same, the A.O. is directed to allow the claim of appellant for deduction u/s 80IAB of the Act of ₹ 3,25,07,625/- and ₹ 18.250/- and delete the addition so made. The appellant gets relief accordingly. This ground is treated as allowed. 6. The order of the First Appellate Authority for A.Y. 20090-10 was confirmed by the Tribunal in ITA No. 1464/Ahd/2012. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to (12) of section 80-IA shall apply to the Special Economic Zones for the purpose of allowing deductions under sub-section (1). Explanation.-For the purposes of this section, "Developer" and "Special Economic Zone" shall have the same meanings respectively as assigned to them in clauses (g) and (za) of section 2 of the Special Economic Zones Act, 2005.]' 24. From going through the proviso (2) of section 80-IAB of the Act as referred above, which says that if the work of operation and maintenance of SEZ is transferred from one developer to another then the deduction allowable in subsec. (1) of sec. 80-IAB will be allowed to transferee developer for the remaining period of the remaining of consecutive 10 years. This proviso 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. 25. Further from 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 Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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