IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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1 Print SCA/15836/ /25 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No of 2010 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI & HONOURABLE MS JUSTICE SONIA GOKANI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish to see the fair copy of the judgment? Whether this case involves a substantial question of law as to the 4 interpretation of the constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to civil judge? ========================================================= GANESH HOUSING CORPORATION LTD - Petitioner(s) Versus DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4 & 1 - Respondent(s) ========================================================= Appearance : MR RK PATEL for Petitioner MRS MAUNA M BHATT for Respondents ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI (1 of 25)13/01/ :37:49 PM

2 and HONOURABLE MS JUSTICE SONIA GOKANI 11/01/2012 CAV JUDGMENT (Per : HONOURABLE Ms. JUSTICE SONIA GOKANI) 1. Petitioner has challenged, by way of this writ petition, the notice of re-opening dated 1 st October,2009 issued u/s. 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) along with preliminary order dated 8 th December, 2010 for proceeding and completing the reassessment proceedings. 2. Briefly to state the facts :- 2.1 Petitioner Company is engaged in the field of construction activities i.e. building and development of housing projects as well as developing the industrial parks. The petitioner Company, is regularly assessed to tax by the Income Tax Office. For the Assessment Year , after scrutiny assessment u/s. 143(3) vide order dated 22 nd February, 2007 issue of deduction u/s. 80IA [4](iii) and 80IB [10] for processing taxability u/s. 115JB of the Act was finalized. In appeal before the Commissioner (Appeals) and before the Income Tax Appellate Tribunal also, all these issues were decided on merits. 3. It is averred that respondents, sought to reopen the assessment, as could be seen from the communication dated 1 st October, 2009 made u/s. 148 read with section 147 of the Act for the Assessment Year mainly on the ground that the (2 of 25)13/01/ :37:49 PM

3 petitioner's industrial park was not notified by the CBDT till the end of relevant year, and therefore, deduction made available under Section 80IA [4](iii) of sum of Rs. 2,83,81,688/= was wrongly claimed and granted. 3.1 The reasons for reopening also have been furnished which are accorded on 24 th September, 2009 and they read as under :- As per para 5 of the letter of approval of the Investment Promotion & Infrastructure Development Cell, Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Govt. of India dtd , following conditions in para 9 of the Industrial Park Scheme 2002 may particularly be noted for suitable compliance : (i) The Income Tax benefits under sub-section 4(iii) of Section 80IA of the Income Tax Act, 1961 will be available only after the proposed number of industrial units in para 1(vii) of this approval letter, are located in the industrial park. (ii)... In the para 1(viii) the assessee proposed to set up 30 industrial undertaking whereas as per note no.5 filed with the Return of income, the assessee during the year sold or entered MOU for sale of 9 undertakings only. The Industrial Park did not commence during the year and there were no construction or manufacturing activities by any undertaking during the year. Perusal of the records further revealed that the assessee's industrial park has not been notified by the CBDT till the end of the relevant year. In view of these facts, the deduction of Rs.2,83,81,688/- claimed u/s. 80IA(4)(iii) has been wrongly claimed. (3 of 25)13/01/ :37:49 PM

4 Therefore, I am of the opinion that income of Rs.2,83,81,688/- chargeable to tax has escaped assessment. 4. After furnishing reasons for reopening of the assessment vide communication dated 29 th November, 2010, the assessee was requested to furnish further details by the Deputy Commissioner of Income Tax in the following manner: 1.Why the deduction of Rs u/s. 80IA(4) be not disallowed in the absence of notification from the Board as well as the fact that as on , and also the fact that as per Para 5 of the letter of approval of the Investment Promotion & Infrastructure Development Cell, Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Govt. of India dated , following conditions in para 9 of the Industrial Park Scheme, 002 may particularly be noted for suitable compliance : (i) The Income Tax benefits under sub-section 4(iii) of Section 80IA of the Income Tax Act, 1961 will be available only after the proposed number of industrial units in para 1(vii) of this approval letter, are located in the industrial park. (ii)... (iii)... In the para 1(vii) the your company had proposed to set up 30 industrial undertakings whereas as per note No.5 field with the Return of income, the assessee during the year sold or entered MOU for sale of 9 undertakings only. The industrial park did not commence during the year and there were no construction or manufacturing activities by any undertaking during the year. 2. As seen from the records that you have claimed deduction u/s. 80IB(10) in respect of housing projects, the plots of which are owned by other companies and the BU certificate has also been received in the names of such companies. Give complete justification of deduction u/s. 80IB(10) in (4 of 25)13/01/ :37:49 PM

5 respect of each project. 5. Assessee raised objections to the reassessment proceedings emphasizing therein that for the Assessment Year , assessee had filed return of income, declaring total loss of Rs. 67,45,092/-, where the assessee-company had claimed deduction u/s. 80IA(4)(iii) for an amount of Rs. 2,83,81,688/- and deduction u/s. 80IB(10) of the Act for an amount of Rs. 8,05,36,675/-. The scrutiny assessment was finalized u/s. 143(3) of the Act on 22 nd February 2007, determining total income at Rs.6,57,743/-; after allowing deduction u/s. 80IA (4)(iii) and Section 80IA(10) of the Act. The loss denied to be carried forward was to the tune of Rs.67,45,092/-. It is also further stated that the assessment of income was finalized while assessing income of Rs.10,18,01,672/= u/s. 115JB of the Act, as the tax payable under MAT provision was higher than the tax calculated under regular provision of the Income Tax Act, It has been emphasized that there is no failure on the part of assessee to disclose truly and fully any material facts necessary for the assessment of income for the year under consideration. It is further mentioned in the said objection by the assessee that the approval for development of an Industrial Park has been granted by the Ministry of Commerce & Industry, Government of India. Assessee had developed and executed Industrial Park as per the approval granted by the Ministry of Commerce & Industry under Rule 18C of the Income Tax Rules, (5 of 25)13/01/ :37:49 PM

6 It is obligatory on the part of CBDT to issue Notification and there is no procedure for the assessee to make any application to the CBDT for issuance of the Notification. It is also further submitted by the petitioner-company that the deduction u/s. 80IA(4) (iii) is available to the undertakings which develop Industrial Park as per approval granted under the Industrial Park Scheme-2002 by the Ministry of Commerce & Industry, Govt. of India; which has been granted in the instant case on 5 th November 2004 for setting up 30 units. The approval granted by the Govt of India, Ministry of Commerce & Industry, in paragraph 5, states thus : Para -5 Following conditions in Para 9 of the Industrial Park Scheme 2002 may particularly be noted for suitable compliance : (i) The Income Tax benefits under sub-section 4(iii) of Section 80IA of the I.T.Act, 1961 will be available only after the proposed number of Industrial units mentioned in Para (vii) of this approval letter (30units ) are located in the Industrial Park. 7. The petitioner Company developed total 48 Industrial Plots with common facilities and infrastructure. They have been sold as 32 units to 32 parties for setting up their industrial units in the said Industrial Park. The only obligation of the Company as averred in the petition is to develop a Industrial Park with common facilities and infrastructural facilities, as the assessee-company is engaged in the business of development of Industrial Parks pursuant to the Industrial Park Scheme 2002, as per the approval granted by the Ministry of Commerce & (6 of 25)13/01/ :37:49 PM

7 Industry vide its letter dated 5 th November In short, the petitioner-assessee contended that all the requisite criteria for availing the benefit u/s. 80IA(4)(iii) of the Act are duly fulfilled by the petitioner and it has in turn made the petitioner eligible for the deductions. Accordingly, request is made to drop the proceedings u/ s. 147 of the Act on all the grounds mentioned hereinabove. 8. The said objections have been dealt with at length by the Assessing Officer vide its order dated 8 th December, 2010 while disposing of the objections raised against the reasons recorded for reopening the assessment of the petitioner-company for the year under consideration. The impugned order is also challenged along with notice of reassessment. 9. On due service of notice, Deputy Commissioner of Income Tax, Circle IV, Ahmedabad has filed an affidavit-in-reply urging, inter alia, that the petition is preferred at a pre-matured stage in as much as there is an alternative efficacious remedy available with the petitioner, since the notice had been issued within 4 years from the end of the relevant assessment year. It is also denied that there was a mere change of opinion after the regular assessment order. Assessee was called upon to state as to how deduction u/s. 80IA(4) was claimed in excess of the income. The Industrial Parks had not been notified under the Central Board of Direct Taxes in as much as the Industrial Parks did not commence during the year under consideration and even construction activity was not undertaken during the (7 of 25)13/01/ :37:49 PM

8 relevant year. Out of 32 units proposed to be set up, only 4 units have been set up. It could be noted that the assessee, during the year under consideration, sold and entered into MOU for sale of only 9 undertakings. The Industrial Park since did not commence during the year and with there being no construction or manufacturing activities undertaken by any of the undertakings during the relevant year and the same also did not get notified by the Board, till end of the relevant year, there is no entitlement of the petitioner for deduction and that amount escaped the assessment. 10. Affidavit-in-rejoinder is also filed by the petitioner Company. Without dilating further the grounds which have been raised in affidavit-in-rejoinder, it can be stated that they are more or less the same submitted while objecting to the reasons recorded for reopening of the assessment. Crux of which is that the petitioner fulfilled its part of obligation and the rest was not in its hand nor was deduction available to petitioner dependend on occurrence of those events. 11. Heard learned counsel Mr. RK Patel appearing for the assessee company and learned sr. counsel Mr. Manish Bhatt for the Department. With their able assistance, entire material placed before us has been thoroughly considered and on the basis thereof, this petition is being allowed for the reasons to be followed hereinafter As can be noted from the material adduced by both the sides, the petitionerhttp://gujarathc-casestatus.nic.in/gujarathc/showoj.js &caseyr=2010&orddate=11/01/2012&ordno=2&findcatg= (8 of 25)13/01/ :37:49 PM

9 Company is engaged in business of building and development of Housing Project as well as developing Industrial Parks For the Assessment Year , return was filed by the Company on 25 th October 2005 declaring total loss of Rs. 67,45,092/=. Petitioner filed revised return on 3 rd January 2006 declaring the same amount of loss and also computing the book profit under Section 15JB of the Act at Rs. 10,18,01,672/= and paid tax on MAT income. Assessment was finalized in February 2007 where, its income was assessed to Rs. 10,18,01,672/= under Section 115JB of the Act as the tax payable under MAT provision was higher than the tax calculated under regular provisions of the I.T Act. This assessment order was challenged before CIT [A] which confirmed partly the view of the Assessing Officer and on the issue of taxability u/s. 115JB, it confirmed the Assessing Officer's findings. CIT [A]'s order was further carried in appeal before the ITAT and after elaborately dealing with the scheme of the Income-tax Act, it held that the petitioner could not be allowed deduction u/s. 80IB while computing the book profit u/s. 115JB of the Act as the 'Book Profit' and 'Total Income' have to be computed independently. While arriving at such findings, adjudicating authorities extensively dealt with the various claims made by the petitioner company which included the loss as also exemption of profit available u/s. 80IB (10) of the Act It is noted in the notice of reopening that Section 80IA is applicable to the undertaking which develops, develops & operates; and maintains & operates (9 of 25)13/01/ :37:49 PM

10 Industrial Park notified by the Central Government in accordance with Scheme framed and notified by the Government beginning on 1 st April 1997 and ending on 31 st March Ministry of Industries of Central Government is required to approve the same and on its so doing, the Central Board of Direct Taxes is required to notify Industrial Parks for the benefit under Section 80IA. For want of notification issued on CBDT for Industrial Park Scheme 2002, benefit availed to the petitioner under Section 80IA (4)(iii) is seriously questioned, holding the same to have been availed wrongly. 12. As the central issue concerns non-issuance of notification by CBDT, leading to conclusion of re-opening of assessment, it is required to be mentioned here that in case of this very assessee in Special Civil Application No of 2010, reported in [2011] 339 ITR 441 (Guj), this Bench had an occasion to deal with the challenge to withdrawal of the approval of the industrial park developed by the petitioner by the respondents therein. A direction was also sought by the petitioner-ganesh Housing Corporation Limited for notifying the said industrial park under Rule 18C of the Income Tax Rules, In that case, the petitioner had applied for setting up of an industrial park in the nature of Pharmaceutical Park in terms of the Industrial Park Scheme 2002 which was completed before 31 st March 2006 in accordance with approval granted by the ministry on 5 th November According to the petitioner, the entire development work was completed before stipulated time and the pharmaceutical park proposed by the petitioner was (10 of 25)13/01/ :37:49 PM

11 approved by the ministry, which envisaged 32 sub-plots on which pharmaceutical industries were to be located. Although, all the sub-plots were sold to different pharmaceutical companies; the petitioner was permitted to develop infrastructural facilities for minimum 30 units and the last date for implementation of the Scheme was 31 st March 2006 for those companies which provide such industrial parks at the relevant date, the tax benefit under Section 80IA [4](iii) was available and such deduction was claimed for AY and after scrutiny assessment, the same was allowed, however, when in subsequent year such benefit was claimed, the State did not notify the park in terms of sub-rule (2) of Rule 18C of the Rules despite the petitioner having developed such a park and having completed all the developmental works within the stipulated period ie., 31 st March After considering elaborate submissions of both the sides, that petition came to be allowed vide order dated 10 th August The impugned notice was quashed directing the respondents to take consequential steps for issuance of the notification in terms of Rule 18C(4) of the Income Tax Rules, 1962 with respect to the said industrial park, by holding thus - Having thus heard learned counsel for the parties, we would like to record relevant provisions of the Scheme and other connected documents. The said Scheme was formulated in exercise of powers under clause (iii) of sub-section (4) of Section 80IA of the Income Tax Act, It was called, Industrial Park Scheme, Clause [2](f) of the Scheme defines the term Infrastructure development as follows :- [2](f) infrastructure development includes, roads (including approach roads), water supply and sewerage, common effluent treatment facility, telecom network, generation and distribution of power, air conditioning and such other facilities as are for common use for industrial activity which are identified and (11 of 25)13/01/ :37:49 PM

12 are provided on commercial terms. Clause 2 (h) of the Scheme defines the term, Undertaking as under :- [2](h) undertaking means any undertaking which is engaged in the business of developing, developing and operating or maintaining and operating an industrial park notified by the Central Government in accordance with this Scheme. Clause 2 (I) defines term unit as under :- [2](i) unit means any separate and distinct entity for the purpose of one or more state or central tax laws. Clause 3 of the Scheme provides for period of operation of the scheme and reads as under :- 3. Period of operation of the Scheme This Scheme shall be applicable for any undertaking which develops, develops and operates or maintains and operates an Industrial Park for the period beginning on the 1 st day of April, 1997 and ending on the 31 st day of March, In a case, where an undertaking develops and Industrial Park on or after the 1 st day of April, 1999 and transfers the operation and maintenance of such Industrial Park to another undertaking (transferee undertaking), the benefits shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years in a manner as if the operation and maintenance were not so transferred to the transferee undertaking. Clause 4 of the Scheme pertains to objectives of the industrial park. The purpose of objectives of infrastructural industrial park is provided in sub-clause (b) thereof reads as under :- 4. Objectives of the industrial park Any project, being an industrial park, shall (12 of 25)13/01/ :37:49 PM

13 aim at setting up of - (a) xx xx (b) an industrial park for development of infrastructural facilities or built up space with common facilities in any area allotted or earmarked for the purposes of industrial use specified in explanation to para 6 sub-clause (c). Explanation to para 6 sub-clause (c) of the Scheme provides that for the purpose of this clause, the Industrial use shall include any activity defined in the National Industrial Classification 1987 Code; except certain industries excluded therein. We may notice that Clauses (5) & (6) of the said Scheme pertain to automatic approval and criteria for automatic approval of such industrial parks. Whereas, clause (7) pertains to non automatic approval. We are, however, not directly concerned with such niceties, except for recording that in cases of an industrial park referred to in clause (b) of para-4 viz., industrial park for development of infrastructural facilities, the minimum number of units to be provided in such Park is 30. Clause (8) of the Scheme pertains to withdrawal of approval and reads as under:- 8. Withdrawal of approval The Central Government may withdraw the approval given to an undertaking under this Scheme when such undertaking fails to comply with any of the conditions of grant of approval : Provided that before withdrawal of approval, the undertaking being industrial park, shall be given an opportunity of being heard. Clause (9) of the Scheme pertains to General conditions. Relevant conditions thereof are the following :- (13 of 25)13/01/ :37:49 PM

14 9. General Conditions - (1) xx xx xx (2) The tax benefits under the Act can be availed only after the number of units indicated in the application, are located in the Industrial Park. (3) xx xx xx (4) xx xx xx (5) Every undertaking, which has been granted approval shall continue to furnish to the Central Government on 1 st January and 1 st July of every year, a report in the form number IPS- II during the period in which the benefits under the Act are to be availed. Form IPS-I under the said Scheme provides for Model Application form for setting up Industrial Parks/Model Town, etc. Paragraph 4 of the said form pertains to details pertaining to location, area, proposed activities, proposed investment, etc., in such proposed industrial park. Paragraph 4 reads as under :- 4 I. Proposed location of the Industrial model town/industrial park/ growth centre Address : State Pin Code Fax II Proposed area of industrial model town/industrial park/growth centre (in acres/sq. Mtrs. Specify) (14 of 25)13/01/ :37:49 PM

15 III Proposed allocable area of industrial model town/industrial park/growth centre (in acres/sq. Mtrs. Specify] IV V Proposed activities (please specify item codes as defined under the National Industrial Classification of all Economic Activity (NIC), 1987}. Proposed percentage of allocable area earmarked for industrial use; VI Proposed No. of Industrial units VII (a) Total Investment proposed (amount in rupees) (b) Proposed investment on built-up space for industrial use (if applicable) (amount in Rs.) (c) Proposed investment on infrastructure development (including (b)) (amount in rupees) (d) Percentage of (c) to (a); IX Total foreign equity proposed (amount in rupees) X *Expected /actual date of commencement of industrial model town/industrial park/growth center. *{The Expected/actual date of commencement of industrial model town/industrial park/ growth centre denotes the date when all the infrastructural facilities for the proposed number of industrial units have been provided. If the park is proposed to be developed in phases, the details information on the same may be also suitably mentioned along with the application}. In terms of paragraph 9 (5) of the Scheme, the developer has to submit 6 monthly progress reports. Form IPS-II prescribes proforma for such reports. Paragraph 5 thereof, inter alia, pertains to number of industrial units in the project; para-7 requires developer to indicate briefly the effective steps taken towards implementation eg., installation of common facilities, number of units sold or leased, number of units commencing the industrial activity. Having taken note of the provisions of the Scheme and other related documents, we may also, at this stage, take note of Rule 18C of the Income Tax Rules, 1962 which pertains to Eligibility of Industrial Parks and Special Economic Zones for benefits under Section 80-IA(4)(iii). The said Rule (15 of 25)13/01/ :37:49 PM

16 18C of the Rules read as under :- Eligibility of Industrial Parks and Special Economic Zones for benefits under Section 80IA [4](iii). 18C (1) The undertaking shall begin to operate and industrial park during the period beginning on the 1 st day of April 1997, and ending on the 31 st day of March, (1A) The undertaking shall begin to develop or develop and operate or maintain and operate a special economic zone any time during the period beginning on the 1 st day of April 2001 and ending on 31 st day of March, (2) The undertaking shall be duly approved by the Ministry of Commerce and Industry in the Central Government under th scheme for industrial park or Special Economic Zones notified by that Ministry. (3) The undertaking shall continue to fulfill the conditions envisaged in the scheme. (4) On approval under sub-rule(2), the Central Board of Direct Taxes, shall notify industrial parks for benefits under section 80-IA. From the Scheme, we have noticed that an undertaking is defined to mean, any undertaking which is engaged in the business of developing, developing and operating or maintaining and operating an industrial park notified by the Central Government in accordance with the Scheme. The undertakings, thus to be notified by the Central Government in accordance with the Scheme, falls in three different categories viz., (a) those engaged in the business of developing; (b) those engaged in the business of developing and operating; and (c) those engaged in the business of maintaining and operating an industrial park. These three categories are thus separate and distinct. Admittedly, the petitioner approached the Central Government with a proposal for developing an Industrial Park providing infrastructural facilities for Pharmaceutical industries. The petitioner, thus made a proposal to the Government with a scheme for development of an Industrial Park for Pharmaceutical industries. The application of the petitioner and the approval granted by the Government, therefore, has to be seen as one granting permission to the petitioner for developing an (16 of 25)13/01/ :37:49 PM

17 Industrial Park by providing infrastructural facilities. The petitioner had not applied for, nor was it granted, permission for developing and operating the Industrial Park, or for maintaining and operating such a Park. In view of this, one has to ascertain what exactly were requirements which the petitioner was to fulfill. Section 80IA (4)(iii) of the Income Tax Act, 1961; as applicable at the relevant time, read as under :- Deductions in respect of profits and gains from industrial undertakings or enterprise engaged in infrastructure development, etc. 80IA. (1) xx xx xx (2) xx xx xx (3) xx xx xx (4) xx xx xx (i) xx xx xx (ii)xx xx xx (iii) Any undertaking which develops and operates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1 st day of April 1997 and ending on the 31 st day of March, Provided that in a case where an undertaking develops an industrial park on or after the 1 st day of April 1999 or a special economic zone on or after the 1 st day of April, 2001 and transfers the operation and (17 of 25)13/01/ :37:49 PM

18 maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub-section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee undertaking. Under the Scheme, the petitioner as an undertaking engaged in the business of developing an Industrial Park, was required to fulfill the general conditions on which such approval was granted. Clause-9 of the Scheme, as already noted, provides such general conditions. Subclause (2) of Clause-9 requires that the tax benefits under the Act can be availed only after the number of units indicated in the application are located in the Industrial Park. Sub-clause (5) of Clause-9 further requires the developer to submit six monthly progress report. Much has been argued by the Counsel for the respondents with respect to such requirements. They have tried to link the application form in format IPS-I, which is appended to the said Scheme, to contend that the petitioner was required not only to develop an industrial park but also had to ensure that all units put up their industries and start their manufacturing activities as well. We, however, look at the requirements of the Scheme differently. Sub-clause (2) of Clause-9 required the petitioner before availing the tax benefits to ensure that all units indicated in the application are located in the Industrial Park. As noted earlier, term Unit has been defined in Definition clause-2(i) to mean, any separate and distinct entity for the purpose of one or more state or central tax laws. The question arises Did the petitioner fulfills this requirement? For this purpose, we may note that the entire infrastructural facilities were created by the petitioner before the last date envisaged under the Scheme by providing various facilities such as roads, drainage, electricity, lights, water, etc. The entire plot on which the Industrial Park was located was further sub-divided into several plots. The petitioner had in fact sold all 32 plots to different units before 31 st March These assertions of the petitioner are not seriously disputed by the respondents. Even the impugned show cause notice is not based on non-fulfillment of (18 of 25)13/01/ :37:49 PM

19 above requirements. We, therefore, proceed on the premise that considerably had taken these steps before 31 st March 2006 in furtherance of implementation of the Scheme. To out mind, under the Scheme, the petitioner had full-filled all the requirements for availing the tax benefits. The petitioner was required to develop the infrastructural facilities. In short, the petitioner was required to set-up an Industrial Park with all infrastructural facilities to enable the pharmaceutical industries to set-up their units on the plots so allotted. Term locate used in sub-clause (2) of Clause-9 of the Scheme must be viewed from the angle of having allocated the plots to the producing industries. In the Advanced Law Lexicon by P. Ramanatha Aiyar [2009 Edition], while explaining the term Locate, it is stated that according to the context the word may be employed as meaning : To ascertain and determine the place of; to state the locality of; to designate the site or place of; to determine the situation or limits. So according to the context it may mean to direct, or to lead to; to fix in place; to select or determine the bounds or place; to set in a particular spot or position; as applied to land, to select, survey, and settle the boundaries of a particular tract of land, or to designate a particular portion of land by limits. Similarly, in Black's Law Dictionary, the term Location has been explained as to mean, the specific place or position of a person or things; the act or process of locating. In context of real estate to mean, the designation of the boundaries of a particular piece of land, either on the record or on the land itself. On part of the petitioner, therefore, the requirement was to ensure that before claiming the tax benefit, units indicated in the application are located in the Industrial Park. It is not in dispute that the petitioner in addition to developing the entire park by providing infrastructure, sub divided the plots into smaller units, sold the plots to individual industries and such industries were allocated specific plots for such purpose. The requirement of ensuring that the industries, as indicated in the application approved, by the Government were located before the last date prescribed, was thus fulfilled. Counsel for the respondents, however, relied on Forms of Declaration annexed alongwith the Scheme to contend that the requirement went much beyond and the petitioner was required to ensure that such industries must set up their units on the plots so allotted. To our mind, such requirement can neither be read in the Scheme nor can it be fastened on the petitioner in any other manner. The petitioner was a developer of the Industrial Park. The duty and (19 of 25)13/01/ :37:49 PM

20 responsibility of the petitioner, to be able to claim tax deductions, was to set-up an industrial park by providing necessary infrastructural facilities. We have seen that the development of such a park would require providing of all infrastructural facilities; sub plotting the entire plot and also ensuring that the number of units indicated in the application are sold to the intending industries. In short, the duty and responsibility of the petitioner was to ensure that the industrial activity is facilitated on the Industrial Park so developed by it. It was thereafter not responsible to ensure that industries do in fact set-up their units and commence production activities on such units that too before the last date envisaged in the Scheme. To our mind, such responsibility fastened on the petitioner is not borne out from the Scheme. The duty and responsibility of the petitioner was to provide infrastructural facilities which would be a catalyst for industrial growth by enabling the intending industries to set-up their industry in such a Park. Such manufacturing units or the intending industries were in no way under the control of the petitioner. There can be variety of reasons why such industries may not be able to start their units, such as, non-availability of funds for setting up of the units, pending approval and clearances from the Government and other agencies and such similar reasons which can be attributed only to the intending industries and not to the petitioner. In fact, the scheme requires that the petitioner not only fulfill but continue to fulfill all conditions of approval assessing the period when the tax benefit is available. If we accept the strict requirements insisted by the respondents, it would mean that not only that to that number of industrial units indicated in the application for approval of Industrial Park must be operational on the last date of expiry of the Scheme, they must continue to operate till the petitioner avails of all the tax benefits. In a given situation, it may happen that the number of units, after initially coming into existence, may have to be closed down for variety of reasons such as non-availability of market for their product or non-availability of raw materials, or even labour problems. Would in such a case the petitioner be denied tax benefits? To our mind, the answer has to be empathetically in the negative. In this regard, we may refer to the decision of the Bombay High Court relied by the learned counsel for the petitioner in the case of Commissioner of Income Tax vs. ABG Heavy Industries Limited, [(2010) 322 ITR 323 (Bom)], wherein, the Bombay High Court was examining the eligibility of an assessee to deductions under Section 80IA of the Act in terms of the policy of the Government to encourage Private sector participation in development of infrastructural facilities. In this context, the Bombay High Court observed as under :- (20 of 25)13/01/ :37:49 PM

21 19. The obligations which have been assumed by the assessee under the terms of the contract are obligations involving the development of an infrastructure facility. Section 80-IA of the Act essentially contemplated a deduction in a situation where an enterprise carried on the business of developing, maintaining and operating an infrastructure facility. A port was defined to be included within the purview of the expression infrastructure facility. The obligations which the assessee assumed under the terms of the contract were not merely for supply and installation of the cranes, but involved a continuous obligation right from the supply of the cranes to the installation, testing, commissioning, operation and maintenance of the cranes for a term of ten years which the cranes were to vest in JNPT free of cost. An assessee did not have to develop the entire port in order to qualify for a deduction under section 80IA. Parliament did not legislate a condition impossible of compliance. A port is defined to be an infrastructure facility and the circular of the Board clarified that a structure for loading, unloading, storage, etc., at a port would qualify for deduction under Section 80-IA. The condition of a certificate from the Port Authority was fulfilled and JNPT certified that the facility provided by the assessee was an integral part of the port. The assessee developed the facility on a BOLT basis under the contract with JNPT. On the fulfillment of the lease of ten years, there was a vesting in the JNPT free of cost. [Underline supplied by us] We may notice that in the present case, there are no allegations that the plots were not actually sold by the petitioner before the last date envisaged under the Scheme ie., 31 st March There is no allegation that infrastructural facilities were not provided because of which industrial units of the industries which purchased such plots could not be set-up. It is also not an allegation of the respondents that the petitioner had only shown Benami sell of the plots and had indirectly held on to such property for profiteering at a future date, only seeking to derive the benefit of price escalation in real estate. That being the situation, to our mind as per the Scheme, what was required to be done by the petitioner was to provide for infrastructural facilities before the last date envisaged under the Scheme. Thereafter, there was no obligation on the part of the petitioner to ensure that industrial units on such plots must also come into existence and commence their production activities. In view of above conclusion, we are of the opinion that the petitioner has made out a case for interference even at this stage. We are conscious that the petitioner has approached the Court at a stage where Government has issued a show-cause notice calling upon the petitioner to (21 of 25)13/01/ :37:49 PM

22 answer to certain queries. However, the proposal to withdraw the approval is only on the basis that the industries had not commenced production even during the grace period. This allegation is based on premise that as per the respondents, out of thirty two units envisaged in the Park, only four had been set-up and none of them were functional on the date of the visit by the Assessing Officer. We are conscious that ordinarily Courts do not encourage litigation at the show-cause notice stage. Under normal circumstances, we would also have insisted that the petitioner should appear before the authorities and reply to the show cause notice and would have permitted the authorities to pass final order in accordance with law. However, in the present case, the entire show cause notice is based on premise which we do not find legally sustainable. Under the circumstances, we are inclined to interfere at this stage. No useful purpose would be served in driving the petitioner to a long drawn litigation in the form of replies, orders and appeals. We may, however before closing, dispose of couple of peripheral issues raised on behalf of the petitioner. It was contended that the show cause notice is based on the opinion of the CBDT and that the Ministry cannot be guided by such opinion, and that therefore, the show cause notice was bad in law. We are, however, of the opinion that simply because the CBDT brought certain issues to the notice of the Ministry, that by itself would not mean that the Ministry was being guided or governed by the CBDT's opinion or that issuance of show cause notice on the basis of information provided by CBDT would be without jurisdiction. Counsel for the petitioner had further argued that once the undertaking is approved by the Ministry of Commerce under the Scheme for Industrial Park, CBDT had necessarily to notify such industrial park for the benefits under Section 80IA of the Act. Heavy reliance was also placed on sub-rule (3) of Rule 18C of the Income Tax Rules, 1962 which prevailed at the relevant time. On the other hand, counsel for the Revenue had contended that it was open for the CBDT to examine whether the assessee had fulfilled the requirements under the Scheme before issuance of any such notification. To our mind, in the present case, this issue has become one of academic interest. We, therefore, leave this question open. In the result, the impugned Notice dated 16 th February 2009 is quashed. Consequently, the respondents, and in particular, the respondent no.2 shall take consequential steps to ensure that necessary notification in terms of Rule-18C (4) of the Income Tax Rules, 1962; as prevalent at the relevant time, is issued by the CBDT with respect to the petitioner's Industrial Park. (22 of 25)13/01/ :37:49 PM

23 Direct service is permitted. 13. As held hereinabove, only on scrutiny assessment the total income of the petitioner was determined after allowing deductions under Section 80IA [4](iii) and Section 80IA [10] and the assessment was finalized, assessing the income at Rs. 10,18,01,672/=,. this matter was also carried right upto the Tribunal. There being nothing on record to point out any new material justifying issuance of the notice for re-assessment; the notice for re-opening within the period of four years from the end of the relevant assessment year is not found sustainable. It is also required to be noted that while disposing of the objections, it was harped upon the Assessing Officer that the mandated condition for availing the benefit under Section 80IA [4](iii) was to have an industrial park notified by the Central Board of Direct Taxes and the factum of not possessing the CBDT notification was not brought on the record by the assessee. This failure also attributed to the assessee company for not disclosing fully and truly. This very basis; as mentioned hereinabove, is not sustainable in wake of clear direction by this Bench to the Union of India for issuance of such notification and this very edifice on which this re-opening is based, has been demolished There is thus, an additional potent reason for the Court to quash and set-aside the impugned notice. As mentioned in Special Civil Application No of 2010 in case of this very assessee, the very issue on the basis of which assessment is (23 of 25)13/01/ :37:49 PM

24 sought to be re-opened has been threadbare examined by this Bench and those questions are adjudicated in favour of the petitioner-assessee where not only it has been found entitled to deduction under Section 80IA [4] (iii) but there is a specific direction also issued to the Union of India for issuance of the Notification in terms of Rule 18C (4) of the Income Tax Rules, It is needed to be mentioned here further that essentially only one reason is given while re-opening the assessment. It is contended by learned counsel Mr. Bhatt that other income also are noticed to have escaped assessment as was noticed during the course of reassessment. Both the sides have argued on this aspect as to whether, if the income which he has initially formed a reason to believe has escaped assessment, in fact did not escape assessment and his notice falls on that particular ground, whether additional grounds are available to him for other income which do not find place in the notice or not. Reliance is also placed by the learned counsel of the petitioner on the judgments of Bombay High Court in case of Commissioner of Income Tax v. Jet Airways (I) Limited, reported in 331 ITR 236; and of Delhi High Court in case of Ranbaxy Laboratories Limited v. Commissioner of Income-Tax, reported in [2011] 336 ITR 136 (Delhi). The issue here is essentially and centrally the one which had been examined and discussed elaborately. Moreover, as noted hereinabove, by virtue of the decision of this Court, the very edifice of re-opening is completely gone. Notice for reopening itself is therefore required to be quashed. If notice was held valid and assessment permitted in which additions other than those for which notice was issued could (24 of 25)13/01/ :37:49 PM

25 have been made or not is an issue not arising in this petition and we would therefore not like to comment upon the same. 14. In the aforementioned background, notice for re-opening; even though issued within four years from the end of the relevant assessment year and inspite of the Assessing Officer having wide powers under Section 147 of the Act [in post amendment period - with effect from 1 st April 1989] overwhelmingly, the factual matrix and the decision of this Court would not permit such a notice to continue, and resultantly, the impugned notice dated 1 st October 2009 issued under Section 148 of the Income Tax Act, 1961 and all consequential proceedings are hereby setaside and are quashed. Petition stands allowed in terms thereof with no order as to costs. {Akil Kureshi, J.} Prakash* {Ms. Sonia Gokani, J.} Top (25 of 25)13/01/ :37:49 PM