TMI Blog2011 (7) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... laim the deduction under section 80-IA of the Act - Decided against the assessee. - 124 (MUM.) OF 2010 - - - Dated:- 22-7-2011 - D. MANMOHAN, R.K. PANDA, JJ. K. Shivaram for the Appellant. P.K.B. Menen for the Respondent. ORDER R.K. Panda, Accountant Member. This appeal filed by the assessee is directed against the Order dated 29-10-2009 passed by the CIT(A)-XXII, Mumbai relating to assessment year 2004-05. 2. The grounds raised by the assessee are as under : "1. The learned CIT(A) erred in confirming the disallowance of Rs. 23,00,728 under section 80-IA, on the ground that the activities of cleaning of beaches with mechanized solid waste management system is not eligible under section 80-IA. 2. The learned CIT(A) failed to appreciate that, the appellant is maintaining the solid waste management system as approved by the Mumbai Municipal Corporation which is the competent authority to approve the solid waste management system, hence as the appellant has satisfied all the conditions of section 80-IA, disallowance of claim under section 80-IA, may be directed to be allowed. 3. Without prejudice to above, the learned CIT(A) erred in observi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es" was defined. Sub-clause (c) thereof, takes into its ambit, "solid waste management system". Inspired by the definition given in the Municipal Solid Wastes (Management and Handling) Rules, 2000, the assessee-company claimed deduction under section 80-IA on the ground that the assessee-company is rendering the services for and on behalf of Municipal Corporation of Mumbai and hence the system devised by the assessee-company should be considered within the meaning of the expression "solid waste management system" in which event, deduction is permissible under section 80-IA of the Act on the profits earned thereon. 5. It may be noted here that during the assessment proceedings there was a confusion as to whether the ten years period prescribed under section 80-IA of the Act has commenced from assessment year 2004-05 or had elapsed in the assessment year 2003-04. Upon appreciating the explanation of the assessee, the Assessing Officer admitted that claim under section 80-IA, for the assessment year 2004-05, is maintainable subject to proving that the profits and gains are derived from the utilisation of solid waste management system. 6. Admittedly, the expression "solid waste man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Park to Mahim. There is no definition of the expression "solid waste management system" in the Municipal Solid Wastes (Management and Handling) Rules, 2000. Learned CIT(A) approved the observations of the Assessing Officer that the work of cleaning beaches cannot be equated with the solid waste management system. It appears that assessee has given its own definition of SWM system as a "self-contained facility of men, machine and resources combining with each other inconformity of a common plan of managing solid waste". In this regard, learned CIT(A) observed that the Municipal Solid Wastes (Management and Handling) Rules, 2000 do not refer to section 80-IA or vice versa and thus mere arrangement of some unskilled labour for cleaning work cannot be equated to development of full-fledged solid waste management system. He also doubted the claim of the assessee with regard to use of the plant and machinery equipment etc., stated to be purchased by the assessee for the purpose of cleaning the beaches. In this regard, he observed that the assessee failed to provide the details of machines purchased for being used in the sanitation work. Regarding the assessee's claim that it has purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As could be noticed from page 100 of the paper book, the work of cleaning beaches should be done by machines and/or supplemented by manual method. The work includes cleaning of the beaches, uploading of refuse in the dumper/containers and transporting the same to the designated disposal sites of MCGM or any other disposal site in operation. As per the Engineer's instructions assessee has to prepare a daily work performance report. He has to segregate the waste on the spot and arrange for its disposal through recycling. Only biodegradable municipal solid waste has to be transported to disposal site for final disposal, on the same day. Ministry of Environment and Forests issued notification dated 25-9-2000, in exercise of the powers conferred under the Environment (Protection) Act, 1985. Accordingly, MSW (M H) Rules, 2000 were framed. 11. It may be noticed here that the Ministry of Environment and Forests appears to have drawn a line between the activity of 'management' and 'handling'. Before we proceed to analyse the definition given in the MSW (M H) Rules, 2000 and the report of the Environmental Audit of MSW Management as well as World Bank, it may be appropriate to extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt" involves not only collection, segregation, storage, transportation, processing and disposal of solid waste but also the steps to be taken by the municipal authorities to prohibit littering and facilitate compliance by devising various methods. For example, municipal authorities shall create awareness programmes for segregation of waste, direct public not to burn dry leaves, identify the landfill sites for disposal of non-biodegradable wastes. The expressions "operator of a facility" and "processing" were defined in rule 3(xvi) and (xviii) as under : "(xvi) "operator of a facility" means a person who owns or operates a facility for collection, segregation, storage, transportation, processing and disposal of municipal solid wastes and also includes any other agency appointed as such by the municipal authority for the management and handling of municipal solid wastes in the respective areas. (xviii) "processing" means the process by which solid wastes are transformed into new or recycled products;" 15. It appears that power to control generation of waste is an essential attribute so as to consider the same as 'a management activity'. Power to impose certain prohibitions on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial mechanisams (f) incorporating formal/informal elements of the private sector as well as community based activities. 19. A careful perusal of the development study report of the World Bank shows that an activity can be considered as a solid waste management activity in a case where an organization involves itself in a comprehensive activity of not only collection, transport and treatment of waste but also participates in the policy making such as (a) steps taken for prohibition of littering (b) making public awareness etc. A dominant activity undertaken to control solid waste is a sine qua non for being considered as a SWM system. 20. Learned Counsel has filed a copy of the Order of the Assessing Officer, passed under section 143(3) of the Act (assessment year 2004-05), to submit that the deduction claimed by the assessee was accepted by the Assessing Officer in the subsequent year. 21. Learned Counsel has also adverted our attention to pages 59 onwards of the paper book to submit that the list of the machinery used by the assessee and the relevant bills etc., are available on record and in fact the Assessing Officer had never disputed the use of machinery. Since there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches was never disputed by the municipal authorities and hence Assessing Officer cannot put himself in the shoes of the municipal authorities for re-verification of the nature of the activity. 24. We have heard the rival submissions and carefully perused the record. As rightly pointed out by the learned Counsel, appearing on behalf of the assessee, the expression "Solid Waste Management System" was not defined under the Income-tax Act or in any of the known Indian enactments and hence, we have to take into consideration the common parlance meaning or the commercial parlance meaning of the said expression. 25. In the case of CIT v. Taj Mahal Hotel [1971] 82 ITR 44 the Apex Court observed that where a word is not defined in statute it must be construed in its popular sense i.e., that sense which people conversant with the subject matter, with which the statute is dealing, would attribute to it. Similarly, in the case of S.P. Jain v. Krishna Mohan Gupta [1987] 1 SCC 91 the Court observed that in the matter of interpretation, a pragmatic view has to be taken by responding to the purpose for which it was made. In the case of S.P. Gupta v. Union of India [1981] Suppl. SCC 87 Court ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted everyday. Therefore, it was thought fit to encourage private participation by giving them certain incentives in the form of tax deductions etc. However, under the Income-tax Act such benefit is extended to solid waste management system only. In our opinion, the Legislature has consciously not extended the benefit to agencies who are merely 'handling' a part of the activity such as collection and storage at the stipulated place. 28. As analysed by us in the preceding paras, when language of the section is plain and clear and can be understood with the help of the surrounding circumstances and the setting in which the expression is used, it is not necessary to seek opinion of a technical expert since judiciary has a duty to interpret the laws by keeping in mind the social purpose for which the provision has been introduced in the statute book. As could be seen from the definition in the National Solid Waste Management Act of Jamaica as well as the reports of the Environmental Audit, of World Bank, Department of Economic Affairs (Government of India) and also having regard to the scheme spelt out in MSW (M H) Rules, 2000 we hold that the activity of the assessee i.e., cleaning ..... 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