TaxTMI 
TaxTMI 
2018 (6) TMI 358
X X X X Extracts X X X X
X X X X Extracts X X X X
....-off of losses. The assessee also declared book profit of Rs. 17,16,89,516 under section 115JB of the Act. Similarly, for the assessment year 2007-08, the assessee filed its return of income on 15th November 2007, declaring nil income under the normal provisions after set-off of losses and book profit of Rs. 15,30,44,724 under section 115JB of the Act. The assessments for the aforesaid assessment years were originallycompleted under section 143(3) of the Act vide order dated 26th December 2008 and 3rd December 2009 respectively. Subsequently, the Assessing Officer having reason to believe that the assessee is not eligible to avail deduction under section 80IAB of the Act re-opened the assessment for both the assessment years under section 147 of the Act. For that purpose the Assessing Officer issued a notice under section 148 of the Act for the assessment year 2006-07 on 15th January 2010 and for the assessment year 2007-08 on 24th January 2011. During the re-assessment proceedings, the Assessing Officer noted that sanction for establishment of Special Economic Zone (SEZ) at Chennai, Tamil Nadu, was accorded to M/s. Mahindra Industrial Park Ltd. by the Ministry of Commerce and Indu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submitted, during the original assessment proceedings the Assessing Officer has examined the issue relating to assessee's claim of deduction under section 80IAB of the Act, hence, formed an opinion which cannot be reviewed in the proceedings under section 147 of the Act. He submitted, though, the re-opening of assessment was before expiry of four years from the relevant assessment years, however, it cannot be allowed on a mere change of opinion in the absence of any tangible material. The learned Authorised Representative submitted that during the original assessment proceedings, the assessee had furnished audit report in form no.10CCB in support of its claim of deduction under section 80IAB of the Act which was verified by the Assessing Officer. Drawing our attention to the copy of reasons recorded which is placed in the paper book the learned Authorised Representative submitted in the reasons recorded, nowhere the Assessing Officer has referred to any fresh tangible material coming to his possession after completion of original assessment. That being the case, re-opening of assessment on a mere change of opinion is invalid. In support of his contention, learned Authorised Represe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....used materials on record. We have also applied our mind to the decisions relied upon. It is relevant to observe that the assessee has claimed deduction under section 80IAB of the Act in the return of income filed for both the assessment years. In fact, in support of the deduction claimed under section 80IAB of the Act the assessee has furnished audit reports in form no.10CCB before the Assessing Officer. Undisputedly, the return of income filed by the assessee for both the assessment years under appeal were selected for scrutiny and in course of the assessment proceedings, as it appears from material on record, the Assessing Officer specifically enquired into assessee's claim of deduction under section 80IAB of the Act. This fact, as far as assessment year 2006-07 is concerned, is evident from the letter dated 10th December 2008, filed by the assessee before the Assessing Officer in course of original assessment proceedings, a copy of which is at Page-14 of the paper book. A perusal of the said letter reveals that the assessee has specifically responded to Assessing Officer's query regarding claim of deduction under section 80IAB of the Act. Similarly, in assessment year 2007-08 in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... original assessment proceedings the Assessing Officer did enquire into assessee's claim of deduction under section 80IAB of the Act. It has to be accepted that the Assessing Officer after due application of mind to the material on record being satisfied that the claim of deduction under section 80IAB of the Act is allowable has not found it necessary to discuss the issue in the assessment order. However, that does not mean that the Assessing Officer while completing the original assessment has not formed any opinion on the issue. As could be seen from the reasons recorded, on the basis of approval granted by the Ministry of Commerce, Government of India, to M/s. Mahindra Industrial Park Ltd. dated 8th September 2004, the Assessing Officer has re-opened the assessment under section 147 of the Act. The reasons recorded further reveal that the aforesaid fact came to the notice of the Assessing Officer on perusal of the records. Thus, it is evident from the reasons recorded that there was no fresh tangible material available before the Assessing Officer at the time of re-opening of assessment. Rather, on re-appreciation / reappraisal of the material available on record during the orig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nent issue, we propose to deal with the issue on merits as well. 8. Brief facts are, as discussed earlier, taking note of the fact that the Ministry of Commerce, Government of India, has granted approval for establishment of Special Economic Zone to M/s. Mahindra Industrial Park Ltd., Chennai, on 8th September 2004, the Assessing Officer was of the view that the assessee is not eligible to claim deduction under section 80IAB of the Act, since, the SEZ in respect of which it has claimed deduction was not notified on / or after 1st April 2005. Accordingly, he disallowed assessee's claim of deduction under section 80IAB of the Act for both the assessment years. While deciding assessee's appeal against disallowance of deduction claimed under section 80IAB of the Act, the learned Commissioner (Appeals) after referring to the provisions of section 80IAB of the Act held that the deduction under the said provision is allowable to a person engaged in the development of SEZ on/or after 1st April 2005.Since, the approval for Mahindra Industrial Park SEZ was granted by the Ministry of Commerce, Government of India, on 8th September 2004, learned Commissioner (Appeals) held that the project is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....SEZ Act) the learned Authorised Representative submitted that the proviso to section 4(1) of the SEZ Act clearly states that an existing SEZ shall be deemed to have been notified and established under the provisions of the SEZ Act and all other provisions of the Act shall apply to the existing SEZ. Thus, he submitted, the reasoning of the Departmental Authorities would, therefore, fail since as per the proviso to section 4(1) of the SEZ Act, the SEZ developed by the Mahindra Industrial Park Ltd. will be deemed to have been notified and established under the SEZ Act.Therefore, would be eligible to avail all benefits provided under the SEZ Act including deduction under section 80IAB of the Act. 10. Without prejudice to the aforesaid submissions, the learned Authorized Representative submitted that on 28th February 2006, assessee entered into a co-developer agreement with Mahindra World City Developers Ltd., formerly Mahindra Industrial Park Ltd., for development of social infrastructure facility.In pursuance to such agreement both Mahindra World City and the assessee approached the Board of Approval, Ministry of Commerce, Government of India, seeking approval of the assessee as a co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....approval granted on 8th September 2004, hence, is prior to 1st April 2005. 13. Of-course, the learned Commissioner (Appeals) has also observed that the assessee as a transferee developer cannot avail the benefit of section 80IA(b|) of the Act since the original developer was not entitled to such benefit. Therefore, we have to decide the validity / acceptability of the aforesaid reasonings of the learned Commissioner (Appeals) keeping in view the provisions of section 80IAB of the Act and SEZ Act. A reading of section 80IAB of the Act makes it clear that the benefit provided therein is available to an assessee in respect of profit or gain derived from the business of developing a SEZ notified on / or after the first day of April 2005 under the SEZ Act. Putting emphasis on the expression "notified on/or after the 1st Day of April 2005" as used in section 80IAB of the Act the Departmental Authorities have disallowed assessee's claim of deduction, since, the approval for the SEZ to the original developer was granted by the Ministry of Commerce, Government of India on 8th September 2004. No doubt, the provisions of section 80IAB of the Act provides for deduction in respect of a SEZ not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ule of the SEZ Act. In clause-13 of Second Schedule of SEZ Act, a number of amendments to other enactments were made which would have a bearing on the development of SEZ in India. One of such amendments made under Second Schedule of SEZ Act was by way of introduction of section 80IAB of the Income Tax Act which provides for deduction on profit derived from the business of developing SEZ. Even, the Income Tax Act, 1961 makes it clear that the provisions of section 80IAB of the Act were inserted to the statute w.e.f. 10th February 2006 by the Special Economic Zone Act, 2005. As discussed earlier, under the provisions of section 80IAB of the Act 100% of the profit derived by an assessee from business of developing SEZ notified on/or after 1st April 2005 under the SEZ Act, 2005 will be eligible for deduction. Explanation to section 80IAB of the Act provides that the terms "Developers" and "Special Economic Zone" shall have the same meaning as assigned to them respectively in clauses (g) and (za) of section (2) of SEZ Act. 14. Thus, at this juncture it is necessary to look into some of the provisions of SEZ Act. Section 2(c) of the SEZ Act defines 'authorised operation' to mean such op....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be seen that the assessee as a co-developer has entered into an agreement with the developer on 28th February 2006. After entering into such agreement, the assessee has made a proposal for approval before the Board of Approval. The Board of Approval vide its meeting held on 17th March 2006, has approved the proposal of the assessee as a co-developer of infrastructure facility and in terms of the approval granted by the Board of Approval, the Ministry of Commerce and Industry, Government of India, has issued a letter of approval to the assessee on 19th April 2006 as a co-developer for providing infrastructure facility. Thus, keeping in view the provisions contained under section 3(11) and (12) of the SEZ Act the assessee has to be treated as a developer of SEZ as the definition of "Developer" under section 2(g) of the SEZ Act r/w Explanation-1 to section 80IAB of the Act includes a co-developer. Thus, in simple terms, as per the provisions contained under the SEZ Act read in conjunction with section 80IAB of the Act, the assessee has to be considered as a developer of SEZ by virtue of the letter of approval granted by the Central Government. Moreover, such approval to the assessee h....