AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2021 (12) TMI 1200
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed on the assessee. In response to the notice, the assessee filed the details as called for. After considering the submissions of the assessee and materials available on record, the assessment under section 143(3) of the Act was completed by assessing total taxable income of the assessee at Rs..1,51,38,640/- after making disallowance of claim of deduction under section 10AA of the Act at Rs..52,61,428/-. On appeal, the ld. CIT(A) confirmed the disallowance made by the Assessing Officer. 3. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that similar issue was subject matter in appeal before the Tribunal for the assessment year 2011- 12 and by following the decision of the Tribunal for the assessment year 2011-12, the ld. CIT(A) has allowed the appeal for the assessment years 2012-13 and 2013-14. However, by following the appellate order for the assessment year 2011-12, the ld. CIT(A) decided the issue erroneously against the assessee for the assessment year 2014-15 and prayed that the order of the Tribunal for the assessment year 2011-12 may be followed for the assessment year under consideration. On the other han....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al contentions and perused material placed on record including orders of the authorities relied upon. We have observed that assessee is in business of manufacturing and export of pillows and cushions. It is observed that initial date of registration of the business undertaking of the assessee for manufacturing of pillows and cushion in Tambaram MPEZ was 30.08.2000 and date of commencement of manufacturing of aforesaid products was 09.12.2000. The assessee claimed deduction u/s 10A effective from ay: 2001-02 from profits derived from export of pillows and cushions manufactured from its unit located in Tambaram MEPZ. Later, there was conversion of assessee's unit located in Tambaram MEPZ into an SEZ unit effective from 01.01.2003. The assessee had claimed and was allowed deduction u/s 10A of the 1961 Act by Revenue for period commencing from ay: 2001-02 to 2010-11 viz. ten consecutive assessment years, while in the impugned ay: 2011-12 which is under consideration before us is the eleventh year of claim of deduction by the assessee in which assessee had claimed deduction u/s. 10AA of the 1961 Act in the return of income filed with the Revenue. This claim of deduction u/s 10AA of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y assessee u/s 10A of the 1961 Act were allowed by Revenue until ay: 2010-11. It is only in this eleventh year viz. impugned ay: 2011-12 with which we are presently seized with, the assessee invoked provisions of Section 10AA of the 1961 Act for the first time to claim benefit of deduction to the tune of 50% of the profits derived from export of pillows and cushions, which claim of the assessee was repelled by Revenue authorities both by AO as well learned CIT(A) and said deduction claimed by assessee u/s 10AA stood disallowed for impugned ay: 2011-12. However, it is matter of record that learned CIT(A) was pleased to allow benefit of deduction u/s 10AA to the assessee for immediately succeeding ay's: 2012-13 and 2013-14 while adjudicating first appeal of the assessee. This is purely a legal issue which requires interpretation of law applied to as facts are undisputed and admitted and there is no dispute so far as facts are concerned between rival parties. The question of law which is to be adjudicated is as to whether the assessee on facts and circumstances of the case is entitled to deduction u/s 10AA of the 1961 Act for impugned ay: 2011-12 which is eleventh year of commencement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall not be included in the total income of the assessee in respect of any [ten] consecutive assessment years, beginning with the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things. (4) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,- (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, machinery, plant or furniture used for the purposes of the business of the industrial undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent year. (6) The provisions of sub-section (8) and sub-section (9) of section 80-I shall, so far as may be, apply in relation to the industrial undertaking referred to in this section as they apply for the purposes of the industrial undertaking referred to in section 80-I. (7) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, [before the due date for furnishing the return of income under sub-section (1) of section 139] [***], furnishes to the [Assessing] Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years. [(8) References in sub-section (5) to any other provision of this Act which has been amended or omitted by the Direct Tax Laws (Amendment) Act, 1987 shall, notwithstanding such amendment or omission, be construed, for the purposes of that sub-section, as if such amendment or omission had not been made.] Explanation.-For the purposes of this section,- (i) "free trade zone" means the Kandla Free Trade Zone and the Santacruz Electronics Export ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng zone is subsequently located in a special economic zone by reason of conversion of such free trade zone or export processing zone into a special economic zone, the period of ten consecutive assessment years referred to in this sub-section shall be reckoned from the assessment year relevant to the previous year in which the undertaking was first set up in such free trade zone or export processing zone: Provided also that the profits and gains derived from such domestic sales of articles or things or computer software as do not exceed twenty-five per cent of total sales shall be deemed to be the profits and gains derived from the export of articles or things or computer software : Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years. (2) This section applies to any undertaking which fulfils all the following conditions, namely:- (i) it has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year- (a) commencing on or after the 1st day of April, 198....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The deduction under sub-section (1) shall not be admissible for any assessment year beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form, alongwith the return of income, the report of an account-ant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section. (6) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year, - (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, machinery, plant or furniture used for the purposes of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er cent of the voting power are not beneficially held by persons who held the shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year in which the under-taking was set up, the company shall be presumed to have transferred its ownership or the beneficial interest in the undertaking. Explanation 2-For the purposes of this section,- (i) "computer software" means,- (a) any computer programme recorded on any disc, tape, perforated media or other information storage device; or (b) any customized electronic data or any product or service of similar nature, as may be notified by the Board, which is transmitted or exported from India to any place outside India by any means; (ii) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder or any other corresponding law for the time being in force; (iii) "electronic hardware technology park" means any park set up in accordance with the Elect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t day of April 2001 in special economic zone(SEZ). So , in the year 2000 itself, when SEZ Act, 2005 was not even in statute, provision's were introduced in the 1961 Act in Section 10A itself for granting benefit of deduction u/s 10A to the units which are located in special economic zones(SEZ) and at that time it was through a notification in official gazette, Central Government was notifying SEZ's. Section 2(k) read with Section 2(za) of the Special Economic Zone Act, 2005 recognizes such existing SEZ which were in existence on or before the commencement of SEZ Act, 2005. It was on 01.01.2003, the assessee unit was converted into an SEZ unit. In the meantime Finance Act, 2002, further amended provisions of Section 10A of the 1961 Act and provisions of Section 10A of the 1961 Act as were applicable for ay : 2003-04 are reproduced hereunder: "[Special provision in respect of newly established undertakings in free trade zone, etc. 10A. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginnin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....port of such articles or things or computer software for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, and thereafter, fifty per cent of such profits and gains for further two assessment years. (2) This section applies to any undertaking which fulfils all the following conditions, namely :- (i) it has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year- (a) commencing on or after the 1st day of April, 1981, in any free trade zone; or (b) commencing on or after the 1st day of April, 1994, in any electronic hardware technology park, or, as the case may be, software technology park; (c) commencing on or after the 1st day of April, 2001 in any special economic zone; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any undertaking which is for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,- (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, machinery, plant or furniture used for the purposes of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of sub-section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such allowance or deduction; (ii) no loss referred to in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anisation had not taken place: Provided that,- (a) in the case of a firm the aggregate of the shareholding in the company of the partners of the firm is not less than fifty-one per cent of the total voting power in the company and their shareholding continues to be as such for the period for which the company is eligible for deduction under this section; (b) in the case of a sole proprietary concern, the shareholding of the sole proprietor in the company is not less than fifty-one per cent of the total voting power in the company and his shareholding continues to remain as such for the period for which the company is eligible for deduction under this section. Explanation 1.-For the purposes of this section, in the case of a company, where on the last day of any previous year, the shares of the company carrying not less than fifty-one per cent of the voting power are not beneficially held by persons who held the shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year in which the undertaking was set up, the company shall be presumed to have transferred its ownership or the beneficial interest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Technology Park Scheme notified by the Government of India in the Ministry of Commerce and Industry; (viii) "special economic zone" means a zone which the Central Government may, by notification in the Official Gazette, specify as a special economic zone for the purposes of this section.] 7a [Explanation 3.-For the removal of doubts, it is hereby declared that the profits and gains derived from on site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India.] 7.5 Now, two events happened, first the assessee unit which was located in export processing zone got converted into an SEZ unit effective from 01.01.2003 and secondly, provision was introduced by Finance Act, 2002 w.e.f. 01.04.2003 by way of Section 10A(1A) of the 1961 Act with a non obstante clause that notwithstanding anything contained in Section 10A(1) of the 1961 Act , the deduction u/s 10A is to be allowed for a total period of seven years to a unit located in SEZ which begins to manufacture or produce article or things or computer software during the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ruction of a business already in existence , or that it is not formed by the transfer to a new business of machinery of plant previously used for any purpose and then in that situation , the assessee will not at all be entitled for deduction if Section 10A(1A) is invoked. When there is a specific provisions wherein language used is simple , plain , clear and unambiguous that in case of conversion of undertaking from EPZ to SEZ unit, the deduction shall be allowed for a period of ten consecutive assessment years starting from the ay when the undertaking begins to manufacture or produce article or thing or computer software in EPZ which in the instant case the assessee began to manufacture or produce pillows and cushions during previous year relevant to ay: 2001-02 , then in the case there is no need to refer to provisions of Section 10(1A) as it will be applicable only to newly set up undertaking which begins to manufacture or produce articles or things or computer software during previous year relevant to assessment year beginning from 1st April , 2003 and onwards. It is only in those cases, when the undertaking begins to manufacture or produce article or things or computer softwar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... converted into SEZ units and Section 10A(1A) is only applicable to newly set up SEZ units . As we will see later this restriction of deduction u/s 10A to newly set up SEZ vide sub-section 10A(1A) was later relaxed with certain conditions vide Finance Act,2003 effective from 01.4.2003. As could be seen that the Finance Act, 2000 itself recognizes SEZ units and brought the benefit of aforesaid deduction u/s 10A to SEZ units, which begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to ay commencing on or after the 1st day of April , 2001 in any SEZ(Refer Sec. 10A(2)(i)(c) of the 1961 Act). Thus, the assessee was entitled for deduction u/s 10A for a period of a ten consecutive assessment years commencing from ay: 2001-02 onwards and provisions of Section 10A(1) will continue to apply to it even after being converted into an SEZ unit effective from 01.01.2003 keeping in view second proviso to Section 10A(1) of the 1961 Act. The Finance Act, 2002 restricted deduction u/s 10A(1) of the 1961 Act till ay: 2009-10 as it provided that no such deduction u/s 10A(1) shall be allowed for ay: 2010-11 and subsequent ay's , but rigors....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iod of the afore-said ten consecutive assessment years : Provided further that where an undertaking initially located in any free trade zone or export processing zone is subsequently located in a special economic zone by reason of conversion of such free trade zone or export processing zone into a special economic zone, the period of ten consecutive assessment years referred to in this sub-section shall be reckoned from the assessment year relevant to the previous year in which the [undertaking began to manufacture or produce such articles or things or computer software] in such free trade zone or export processing zone : [Provided also that for the assessment year beginning on the 1st day of April, 2003, the deduction under this sub-section shall be ninety per cent of the profits and gains derived by an undertaking from the export of such articles or things or computer soft-ware :] Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years. [(1A) Notwithstanding anything contained in sub-section (1), the deduction, in computing the total incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be utilised- (i) for the purposes of acquiring new machinery or plant which is first put to use before the expiry of a period of three years next following the previous year in which the reserve was created; and (ii) until the acquisition of new machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India; (b) the particulars, as may be prescribed in this behalf, have been furnished by the assessee in respect of new machinery or plant along with the return of income for the assessment year relevant to the previous year in which such plant or machinery was first put to use. (1C) Where any amount credited to the Special Economic Zone Re-investment Allowance Reserve Account under clause (ii) of sub-section (1A),- (a) has been utilised for any purpose other than those referred to in sub-section (1B), the amount so utilised; or (b) has not been utilised before the expiry of the period specified in sub-clause (i) of clause (a) of sub-section (1B), the amount not s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n foreign exchange. Explanation 2.-The sale proceeds referred to in this sub-section shall be deemed to have been received in India where such sale proceeds are credited to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. 6[(4) For the purposes of [sub-sections (1) and (1A)], the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in re-spect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking.] (5) The deduction under [this section] shall not be admissible for any assessment year beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form 7, alongwith the return of income, the report of an account-ant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section. (6) Notwithstanding anything c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0A by the Finance Act, 2003, w.e.f. 1-4-2004 : (7A) Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger,- (a) no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, as far as may be, apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. (8) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years. [(9) Where during any p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er software" means- (a) any computer programme recorded on any disc, tape, perforated media or other information storage device; or (b) any customized electronic data or any product or serv-ice of similar nature, as may be notified 10 by the Board, which is transmitted or exported from India to any place outside India by any means; (ii) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder or any other corresponding law for the time being in force; (iii) "electronic hardware technology park" means any park set up in accordance with the Electronic Hardware Technology Park (EHTP) Scheme notified by the Government of India in the Ministry of Commerce and Industry; (iv) "export turnover" means the consideration in respect of export 11[by the undertaking] of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign ex-change in accordance with sub-section (3), but does not include freigh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of said reserves within specified period or utilization for purposes other than specified u/s 10A(IB) , which consequences are provided u/s 10A(1C) of the 1961 Act. 7.7 It will be profitable at this stage to refer to Notes on Clauses and Memorandum to Finance Bill, 2003. The notes on clause in Finance Bill, 2003 proposing to amend Section 10A of the 1961 Act stipulated as under: "Clause 7 seeks to amend section 10A of the Income-tax Act relating to special provision in respect of newly established undertakings in free trade zone, etc. Under the existing provision contained in sub-section (1) of the said section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years is allowed from the total income of the assessee. However, no deduction is allowable to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years. Sub section (1A) of the said section provides that an undertaking set up in a special economic zone on or after the 1st day of April, 2003 is eligible for a deduction of hun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in 'begins to manufacture...' and the word 'begun' is conspicuously missing in Section 10A(1A) and by no stretch of imagination provisions of Section 10A(1A) can be made applicable to existing EPZ/FTZ units which got themselves converted into an SEZ unit which shall continue to be governed by provisions of Section 10A(1) of the 1961 Act. For the units which are converted from EPZ/FTZ units to SEZ units, second proviso to Section 10A(1) shall continue to apply. For a newly established SEZ , now deductions are 100% of profits derived from exports for first five years and 50% for next 2 years, while for the next three years, deduction u/s 10A(1A) will be 50% subject to creation of specified reserves which can only be used for specified purposes within stipulated time limits as provided in Section 10A itself. . The legislature in its own wisdom while granting benefit of deduction u/s 10A(1A) to newly set up SEZ's units have put additional conditions for creation of reserves in 8th to 10 year and their utilization in a prescribed manner, while for the units which are set up prior to previous year relevant to ay: 2003-04, or are merely converted from EPZ to SEZ, this condition shall no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to the Special Economic Zone Re-investment Reserve Account is to be utilised- (i) for the purposes of acquiring machinery or plant which is first put to use before the expiry of a period of three years following the previous year in which the reserve was created; and (ii) until the acquisition of the machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India; (b) the particulars, as may be specified by the Central Board of Direct Taxes in this behalf, under clause (b) of sub-section (1B) of section 10A have been furnished by the assessee in respect of machinery or plant along with the return of income for the assessment year relevant to the previous year in which such plant or machinery was first put to use. (3) Where any amount credited to the Special Economic Zone Re-investment Reserve Account under clause (ii) of sub-section (1),- (a) has been utilised for any purpose other than those referred to in sub-section (2), the amount so utilised; or (b) has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section applies to any undertaking being the Unit, which has begun or begins to manufacture or produce articles or things or services during the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006, in any Special Economic Zone. (5) Where any undertaking being the Unit which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit in a scheme of amalgamation or demerger,- (a) no deduction shall be admissible under this section to the amalgamating or the demerged Unit, being the company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, as they would have applied to the amalgamating or the demerged Unit being the company as if the amalgamation or demerger had not taken place. (6) Loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, in so far as such loss relates to the business of the undertaking, being the Unit shall be allowed to be carried forward or set off. (7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elopment of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India.]" 7.10 Sub-section 7B was also simultaneously added to Section 10A by the Special Economic Zones Act, 2005 w.e.f. 10.02.2006 , which reads as under: Section 10A "[(7B) The provisions of this section shall not apply to any undertaking, being a Unit referred to in clause (zc) of section 2 of the Special Economic Zones Act, 2005, which has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006 in any Special Economic Zone.]:" 7.11 Before we proceed further, It is important to understand the concept rationale of Special Economic Zones and reasons for bringing a separate Statute namely Special Economic Zone Act, 2005, dealing with SEZ in India. We have referred to GOI web-site sezindia.nic.in to understand the concept of SEZ , wherein relevant extract is from the said GOI website is reproduced as under": "India was one of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Zs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities. The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and creation of related infrastructure. A Single Window SEZ approval mechanism has been provided through a 19 member inter-ministerial SEZ Board of Approval (BoA). The applications duly recommended by the respective State Governments/UT Administration are considered by this BoA periodically. All decisions of the Board of approvals are with consensus. The SEZ Rules provide for different minimum land requirement for different class of SEZs. Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing area where the supporting infrastructure is to be created. The SEZ Rules provide for: " Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs; Single window clearance for setting up of an SEZ; Single window clearance for setting up a unit in a Special Economic Zone; Single Window ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uded in the 1961 Act effective from 10.02.2006 and simultaneously sub-section 7B was inserted in Section 10A of the 1961 Act through insertion in Second Schedule to the 2005 Act. 7.13 The Section 10AA(1) of the 1961 Act , inter-alia, stipulates that subject to provisions of Section 10AA, its applicability is limited to units in SEZ which begins to manufacture or produce articles or things or computer software in SEZ during the previous year relevant to assessment year commencing on or after 1st April, 2006. Similarly Section 7B simultaneously excludes allowability of deduction under Section 10A of the 1961 Act to undertakings being units referred to in Section 2(zc) of the 2005 Act which has begun or begins to manufacture or produce article or thing during the previous year relevant to assessment year commencing on or after 1st April 2006 in any SEZ. Careful perusal of sub-section 7B of the 1961 Act which was inserted in Section 10A of the 1961 Act by SEZ Act, 2005 w.e.f. 10.02.2006, clearly reveals that it excludes applicability of entire Section 10A to any undertaking , being a Unit referred to in clause (zc) of Section 2 of the SEZ Act, 2005 which has begun to manufacture or pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....things in old regime will be entitled for deduction u/s 10A of the 1961 Act only for unexpired period of consecutive ten years and thereafter they will be entitled for a further deduction for a period of five years under newly enacted provisions of Section 10AA(1)(ii) of the 1961 Act. It is also pertinent to mention that provisions of Section 10A of the 1961 Act refers to grant of deduction for a period of ten consecutive assessment years and Section 10AA for a newly set up SEZ units did not uses the terminology 'ten consecutive assessment years', which further strengthen the belief that Section 10AA shall be applicable to all SEZ whether these were established under old regime or under newly enacted SEZ Act, 2005. The Second proviso which is placed after sub-section 10AA(3) also provides that in case of units initially located in EPZ or FTZ but subsequently located in SEZ by reasons of conversion of such FTZ or EPZ into SEZ , the period of ten consecutive assessment years referred to above shall be reckoned from the assessment year relevant to the previous year in which the unit begins to manufacture or produce or process such articles or things or service in such FTZ or EPZ, whic....