The DCIT, Circle-4(1)(2), Ahmedabad V. Zydus Infrastructure Pvt.Ltd., Ahmedabad

ITA 450/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9779 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Competent authority
• Section: 80IB; 143(1); 80IA

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.450 /AHD/2019 ASSTT.YEAR : 2014-15 DCIT, CIR.4(1)(2) AHMEDABAD. VS ZYDUS INFRASTRUCTURE P.LTD. 8 TH FLOOR, ZYDUS TOWER SATELLITE CROSS ROAD AHMEDABAD 380 015. PAN : AAACZ 0629 H / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI S.S. SHUKLA, SR.DR ASSESSEE BY : SHRI MUKESH M. PATEL, AR / DATE OF HEARING : 22/07/2021 /DATE OF PRONOUNCEMENT : 28/07/2021 O R D E R PER RAJPAL YADAV, VICE-PRESIDENT: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)-8, AHME DABAD DATED 17.1.2019 PASSED FOR THE ASSTT.YEAR 2014-15. 2. ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IAB OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.2,15,25,030. 3. FACTS OF THE CASE IN NUTSHELL ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN DEVELOPMENT, OPERATION AND MAINTENANCE O F SPECIAL ECONOMIC ZONE. THE RETURN OF INCOME WAS FILED ON 3 0.9.2014 DECLARING TOTAL INCOME OF RS.97,69,303/-, WHICH WAS PROCESSED UNDER SECTION 143(1) ITA NO.450/AHD/2019 - 2 - OF THE ACT. THEREAFTER, THE CASE OF THE ASSESSEE WA S SELECTED FOR SCRUTINY ASSESSMENT BY ISSUANCE OF NOTICE UNDER SECTION 143( 2) OF THE ACT. DURING THE COURSE OF ASSESSMENT, THE LD.AO NOTICED THAT TH E ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IAB OF THE ACT WH ICH INCLUDED PROFIT ON BUSINESS OF OPERATION AND MAINTENANCE OF SEZ. T HE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM OF DEDUCTION UNDER SECTI ON 80IAB. ASSESSEE FILED A DETAILED EXPLANATION IN THIS BEHALF, AND SU BMITTED AMONGST OTHER THAT THE ASSESSEE BEING A DEVELOPER OF A SEZ, WHICH DEVELOPS, OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK OR SPE CIAL ECONOMIC ZONE, AS PER THE NOTIFICATION ISSUED BY THE GOVT. OF INDI A, THE BENEFIT OF THE DEDUCTION UNDER SECTION 80IA SHOULD BE ALLOWED IN R ESPECT OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING, AND THEREFORE, THE CLAIM OF THE ASSESSEE WAS FULLY IN ACCORDANCE OF WITH THE LAW. HOWEVER, THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE ACC EPTABLE BY THE AO. HE WAS OF THE VIEW THAT THE ACTIVITIES OF DEVELOPME NT OF SEZ IS DISTINCT AND SEPARATE FROM THE ACTIVITIES OF OPERATION AND MAINTENANCE OF SEZ, AND BENEFIT OF DEDUCTION ON PROFITS AND GAINS DERIV ED FROM OPERATION AND MAINTENANCE ACTIVITIES WHICH ARE SPECIFICALLY A VAILABLE TO A TRANSFEREE DEVELOPER CANNOT BE EXTENDED TO THE TRAN SFEROR DEVELOPER, I.E. ASSESSEE IN THE PRESENT CASE, AS THE ASSESSEE WAS N OT TRANSFEREE BUT TRANSFEROR. AFTER A DETAILED DISCUSSION, THE LD.AO HELD THAT THE ASSESSEE COMPANY WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTIO N 80IB OF THE ACT ON THE INCOME DERIVED FROM OPERATION AND MAINTENANCE ACTIVITIES OF SEZ. AGGRIEVED BY ORDER OF THE LD.AO, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY. THE LD.CIT(A) FOLL OWING ORDER OF HIS PREDECESSOR IN THE ASSTT.YEAR 2012-13, WHO IN TURN RELIED ON THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE ON SIMILAR SET OF FACTS FOR THE ITA NO.450/AHD/2019 - 3 - ASSTT.YEARS 2010-11 AND 2011-12, HELD THAT THE ASSE SSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IAB. DISSATISFIED WITH O RDER OF THE LD.CIT(A) THE REVENUE IS BEFORE THE TRIBUNAL WITH THE PRESENT APPEAL. 4. BEFORE US, WHILE THE LD.DR SUPPORTED ORDER OF TH E AO, THE LD.COUNSEL FOR THE ASSESSEE DEFENDED IN SUPPORT OF ORDER OF THE LD.CIT(A). HE FURTHER SUBMITTED THAT CONTINUOUSLY FOR THE LAST TWO YEARS, SIMILAR CLAIM HAS BEEN AGITATED BOTH BEFORE THE LD.FIRST AP PELLATE AUTHORITY AND BEFORE THE TRIBUNAL, AND THE CLAIM OF DEDUCTION UND ER SECTION 80IAB HAS BEEN ALLOWED TO THE ASSESSEE. IN THIS YEAR ALSO, C LAIM IS SIMILAR, FACTS ARE IDENTICAL AND THEREFORE THERE IS NO REASON TO DEVIA TE FROM THE VIEW TAKEN BY THE TRIBUNAL ON THE ISSUE ON HAND. THE LD.CIT(A ) HAS RIGHTLY APPRECIATED THE FACTUM OF EARLIER YEARS CLAIM AND ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE TRIBUNALS ORDER P ASSED IN THE ASSESSEES CASE. THE LD.COUNSEL FOR THE ASSESSEE HAS FILED COP IES OF ORDERS OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEARS 2009-10, 2010-11 AND 2011-12 INVOLVING IDENTICAL ISSUE. 5. WE HAVE CONSIDERED SUBMISSION OF THE LD.REPRESEN TATIVES AND GONE THROUGH THE MATERIAL PLACED ON RECORD AND ALSO EARL IER ORDERS OF THE TRIBUNAL PASSED IN THE CASE ASSESSEES CASE FOR THE ASSTT.YEARS 2009-10, 2010-11 AND 2011-12 ON THE SIMILAR ISSUE. WE FIND THAT THE LD.CIT(A) WHILE ALLOWING CLAIM OF THE ASSESSEE HAS FOLLOWED O RDER OF HIS PREDECESSOR FOR THE ASSTT.YEAR 2013-14 IN THE ASSES SEES OWN CASE. THE RELEVANT PART OF THE CIT(A)S READS AS UNDER: 4. IN GROUND NO.1 OF THE APPEAL, APPELLANT HAD CHA LLENGED THE ACTION OF AO DENYING THE DEDUCTION U/S,80IAB OF THE ACT AMOUNTING TO RS.2,15,25,030/-. FACTS OF THE CASE ARE THAT APPELLANT ESTABLISHED A SPECIAL ECONOMIC ZONE AND ON ITA NO.450/AHD/2019 - 4 - THE PROFITS ON OPERATIONS AND MAINTENANCE OF THE SA ID SEZ CLAIMED DEDUCTION U/S.80IAB OF THE ACT. AO DISALLOWED THE SAID DEDUCTION BY HOLDING THAT THE INCOME DERIVED FROM 'OPERATION AND MAINTENANCE ACTI VITIES' OF SEZ ARE NOT ELIGIBLE FOR SUCH DEDUCTION. BEFORE THE AO, APPELLAN T INTER-ALIA CONTENDED THAT THE FIRST CLAIM OF SUCH DEDUCTION WAS MADE BY THEM IN A.Y.2009-10 WHICH WAS DENIED BY THE THEN AO BUT THE CIT(A) ALLOWED THEIR C LAIM. HOWEVER, ASSESSING OFFICER WAS NOT CONVINCED AS THE CIT(A)'S ORDER WAS CHALLENGED BEFORE THE ITAT. IN THE COURSE OF APPELLATE PROCEEDINGS, THE ID.AR CO NTENDED THAT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF HON'BLE ITAT IN THEIR ORDERS PERTAINING TO A.YS.2009-10, 2010-11 & 2011-12. THE D EPARTMENT'S APPEAL IN ALL THESE YEARS HAVE BEEN DISMISSED BY THE HON'BLE ITAT. I FIND THAT IN ITA NO.1464/AHD/2012, A.Y.2009-10 ORDER DATED 21.07.2016 , HON'BLE ITAT, AHMEDABAD HAVE DISMISSED THE APPEAL OF THE DEPARTMEN T ON THIS VERY ISSUE. RELEVANT PART OF THE SAID JUDGMENT IS REPRODUCED AS BELOW;- '24. FROM GOING THROUGH THE PROVISO(2) OF SECTIO N 80IAB OF THE ACT AS REFERRED ABOVE, WHICH SAYS THAT IF THE WORK OF O PERATION AND MAINTENANCE OF SEZ IS TRANSFERRED FROM ONE DEVELOPE R TO ANOTHER THEN THE DEDUCTION ALLOWABLE IN SUB-SEC(1) OF SEC. 80IAB W ILL BE ALLOWED TO TRANSFEREE DEVELOPER FOR THE REMAINING PERIOD OF TH E REMAINING OF CONSECUTIVE 10 YEARS. THIS PROVISO GIVES A VERY CLE AR PICTURE THAT WHEN THE TRANSFEREE IS ELIGIBLE FOR DEDUCTION U/S.80IAB F OR THE INCOME FROM OPERATION AND MAINTENANCE OF SEZ THEN CERTAINLY TRA NSFEROR I.E. DEVELOPER IS ELIGIBLE FOR DEDUCTION U/S.80IAB FROM O PERATION AND MAINTENANCE. 25. FURTHER FROM GOING THROUGH THE LETTER ISSUED BY GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRIES DATED 21ST JUNE, 2006 TO THE ASSESSES FOR SETTING UP OF A SECTOR SPECIFIC SPECIA L ECONOMIC ZONE FOR PHARMACEUTICALS AT AHMEDABAD, WE FIND THAT IN CLAUS E (II) UNDER THE MAIN CLAUSE (III) REFERRING TO GENERAL CONDITION IT READS THAT OPERATION AND MAINTENANCE OF THE FACILITIES WILL BE MET AS PE R THE STANDARD IN THE SPECIFIC MANNER AND PROPOSITION OF THE USER. 26. IN VIEW OF OUR ABOVE DISCUSSION AS WELL AS OBSE RVATION MADE BY ID. CIT(A), WE ARE OF THE VIEW THAT ASSESSEE BEING A DE VELOPER OF SEZ IS ELIGIBLE FOR DEDUCTION U/S 80IAB FOR INCOME EARNED F ROM OPERATION AND MAINTENANCE OF SEZ. IN THE RESULT GROUND NO.3(A) OF REVENUE IS DISMISSED.' RELYING UPON THIS JUDGMENT, HON'BLE ITAT HAVE ALLOWE D THE SAME DISALLOWANCE IN A.Y.2010-11 VIDE THEIR ORDER NO.LTA/ 2236/AHD/2014, DATED 27.10.2017 AND FOR A.Y.2011-12 IN 1TA NO.1088/AHD/2015 , DATED ITA NO.450/AHD/2019 - 5 - 02.02,2018. FOLLOWING THE HON'BLE ITAT'S ORDER, APPE LLANT'S APPEAL HAVE BEEN ALLOWED BY MY ID.PREDECESSOR IN A.Y.2013-14. AS THE D ENIAL OF DEDUCTION U/S.80IAB OF THE ACT CLAIMS SINCE A.Y.2009-10 HAVE BEE N ALLOWED BY THE HON'BLE ITAT, RESPECTFULLY FOLLOWING THE HON'BLE ITAT 'S ABOVE JUDGMENT, IT IS HELD THAT APPELLANT IS ENTITLED TO DEDUCTION U/S.80 IAB ON OPERATIONS & MAINTENANCE OF SEZ. ACCORDINGLY, THE DISALLOWANCE MA DE BY THE AO IS DELETED ON THIS ACCOUNT. GROUND NO.1 OF THE APPEAL IS ALLOW ED. 6. AFTER GOING THROUGH ORDERS OF THE LD.CIT(A) AND THE TRIBUNAL, WE FIND THAT THE IMPUGNED ISSUE IS NO MORE REMAIN RES INTEGRA WITH THE TRIBUNAL, BECAUSE, THE TRIBUNAL ON IDENTICAL SET OF FACTS FOR THE EARLIER YEARS CITED (SUPRA) HAD ALLOWED SIMILAR CLAIM OF TH E ASSESSEE. THE TRIBUNAL HAS DISCUSSED THE ISSUE AT LENGTH BOTH ON FACTS AND IN LAW. WE ARE OF THE VIEW THAT BEING A SETTLED ISSUE, THERE I S NO NEED FOR REPEATEDLY RECORDING THE FINDING OF THE TRIBUNAL GIVEN IN THE EARLIER YEARS IN THIS ORDER AS WELL, BUT IT IS SUFFICIENT TO FOLLOW THE F INDINGS AND THE RATIO LAID IN THOSE ORDERS. THE RATIO IS THAT A COMBINED REA DING OF PROVISIONS OF SECTION 80IAB OF THE ACT WITH SECTION 2(G) AND SECT ION 3(10) OF THE SPECIAL ECONOMIC ZONE ACT THAT A PERSON WOULD BE CONSIDERED AS A DEVELOPER WITH THE GRANT OF LETTER OF APPROVAL FROM COMPETENT AUTHORITY, IF THE APPROVAL HAS BEEN GRANTED FOR DEVELOPMENT, OPERATIN G AND MAINTAINING THE SEZ. THEREFORE, ACTIVITIES OF THE ASSESSEE BEI NG A DEVELOPER, INCLUDE OPERATION AND MAINTENANCE OF SEZ, AND THEREFORE ENT ITLED FOR DEDUCTION UNDER SECTION 80IAB OF THE ACT. THE LD.DR HAS NOT DISPUTED OR POINT OUT ANY MATERIAL DIFFERENCE IN THIS YEAR FROM THAT OF E ARLIER YEARS, SO THAT THE TRIBUNAL CAN TAKE A DIFFERENT VIEW ON THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IAB OF THE ACT. THEREFORE, RESPECT FULLY FOLLOWING ORDERS OF THE TRIBUNAL FOR THE ASSTT.YEARS 2009-10 TO 2013 -14 IN THE ASSESSEES OWN CASE CITED (SUPRA), BASED ON WHICH THE LD.CIT(A ) HAS ALLOWED THE ITA NO.450/AHD/2019 - 6 - CLAIM OF THE ASSESSEE, WE UPHOLD ORDER OF THE LD.CI T(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 28 TH JULY, 2021 SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) VICE-PRESIDENT