Page 175 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes 19. Section 10A (7B) makes those unit ineligible to claim deduction under section 10A, which
have begun after ………………..
20. Section 80-IC applies to any undertaking or enterprise which has begun or begins to
manufacture or produce any article or thing, not being any article or thing specified in the

………………….
21. …………………..means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim and Tripura.

Case Study Coimbatore Hi-tech Infrastructure (P) Ltd. vs Additional
Commissioner of Income Tax, Range-I, Coimbatore

he assessee is a company engaged in the business of developing Special Economic
Zone (SEZ) at Keeranatham Village, Coimbatore. The assessee company has set
Tup a sector specific SEZ for Information Technology and Information Technology

Enabled Services. A SEZ is set up, approved and governed under the provisions of the
Special Economic Zones Act (SEZ Act), 2005 and the Special Economic Zones Rules
(SEZ Rules), 2006 made there under. The administration of the scheme is vested with the
SEZ authority functioning under the Rules promulgated in 2009.
The assessee company has satisfied the conditions to be complied with for obtaining

approval from the competent authority notified under the SEZ Act. The Department of

Commerce in the Ministry of Commerce and Industry, Government of India has granted
the approval to the assessee company for setting up the sector specific SEZ through their

proceedings dated 20.8.2006. The SEZ set up by the assessee company has been notifi ed by

the concerned authority in Official Gazette as required under the SEZ Act, 2005. In short,
the assessee company is fully approved to develop SEZ under the SEZ Act, 2005.
In view of the approval granted by the competent authority, the assessee company carried
out its activities to set up the SEZ. As per the SEZ Act, 2005, the assessee is in the status
of a Developer, who shall develop, operate and maintain the SEZ in terms of the SEZ Act,
2005 and the Rules made there under. A Developer for the purpose of the SEZ Act, 2005
also includes a Co-developer. After having developed SEZ as per the conditions laid down
in the approval granted by the competent authority, the assessee has let out the developed
lands to three parties in the previous year relevant to the assessment year under appeal.
The three parties are M/s. Robert Bosch India Ltd., M/s. Cognizant Technology Solutions
India (P) Ltd. and M/s. KGISL IT Parks (P) Ltd. The assessee has leased out 21.88 acres,
23.68 acres and 11.74 acres respectively.

As the assessee company is an approved and notified SEZ, it claimed deduction in respect

of its income, being profits and gains arising from development of SEZ as provided under
sec.80-IAB. The deduction provided under sec.80-IAB is 100% of the profi ts and gains by
an undertaking or entrepreneur engaged in the development of SEZ. Accordingly, the

assessee filed a ‘NIL’ return of income.
The Assessing Officer, in the course of assessment proceedings examined the case in detail.

He found that the assessee has developed a SEZ as provided under the SEZ Act, 2005 in the
specifi c sector of Information Technology and Information Technology Enabled Services.
He examined the conditions laid down in the approval given by the competent authority.
One of the conditions is that the assessee shall develop a minimum area of one lakhs square
meters. The Assessing Officer found that the assessee has not completed that minimum

Contd...

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