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2016 (8) TMI 696 - AT - Income TaxAddition u/s.41 - Held that:- The impugned creditors were having regular business transactions in subsequent years also and the actual payments were made to these parties in the subsequent years and the very foundation called for an addition u/s 41(1) of the Act gets demolished if an assessee proves that the impugned liabilities were paid off. From going through the observation of ld. CIT(A) and also the fact that the impugned creditors were paid in subsequent years, we find no reason to interfere with the order of ld. CIT(A), we uphold the same. This ground of Revenue is dismissed. Depreciation on application software license @ 60% - 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 ld. CIT(A) has done so. We find no reason to interfere with the order of ld. CIT(A) on this issue. Deduction u/s.80IAB - income earned from operation and maintenance of SEZ - Held that:- From going through the proviso (2) of section 80IAB of the Act which says that if the work of operation and maintenance of SEZ is transferred from one developer to another then the deduction allowable in sub-sec.(1) of sec.80IAB 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 80IAB for the income from operation and maintenance of SEZ then certainly transferor i.e. developer is eligible for deduction u/s 80IAB from operation and maintenance. 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 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. We are of the view that assessee being a developer of SEZ is eligible for deduction u/s 80IAB for income earned from operation and maintenance of SEZ. In the result ground no.3(a) of Revenue is dismissed. Deduction u/s 80IAB on the income received from sale of scrap and professional fees - Held that:- On the basis of submissions made by ld. AR we understand that fixation of water charges was approved in the Developer Committee meeting held on 22nd April, 2009 in which a specific agenda relating to fixation of water charges was taken up for consideration for the first time and the charges for use of water were approved and fixed at ₹ 25 kl effective from the beginning of SEZ. On the basis of this decision necessary effect was given in books of account for F.Y.2008-09 and as far as F.Y.2007-08 was concerned, the income relating to water charges was impossible to be incorporated in the account of F.Y. 2007-08 as they were already closed and finalised and, therefore, this amount of ₹ 23,09,372/- was shown as a prior period income from water charges. In the given facts and circumstances, we are of the view that as the assessee being eligible u/s 80IAB of the Act for a particular block of years it will not make any impact to the Revenue if the deduction u/s 80IAB of the Act is allowed for prior period water charges also when the raw water charges in the year under appeal has not been questioned by ld. Assessing Officer for being eligible for deduction u/s 80IAB of the Act. We, therefore, find no reason to interfere with the order of ld. CIT(A) on this issue. - Decided against revenue.
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