TMI Blog2012 (4) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... e on which this re-opening is based has been demolished. Notice for reopening; even though issued within four years from the end of the relevant assessment year and in spite of the Assessing Officer having wide powers under section 147 of the Act (in the post-amendment period - with effect from 1st 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 October 1, 2009, issued under section 148 of the Income-tax Act, 1961, and all consequential proceedings are hereby set-aside and are quashed. - 15836 of 2010 - - - Dated:- 11-1-2012 - AKIL KURESHI, SONIA GOKANI MS., JJ. JUDGMENT Ms. Sonia Gokani J.- 1. The petitioner has challenged, by way of this writ petition, the notice of reopening dated October 1, 2009, issued under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), along with the preliminary order dated December 8, 2010, for pro- ceeding and completing the reassessment proceedings. 2. Briefly to state the facts : 2.1 The petitioner _"company is engaged in the field of construction activities, i.e., building and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. In view of these facts, the deduction of Rs. 2,83,81,688 claimed under section 80-IA(4)(iii) has been wrongly claimed. 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 commu- nication dated November 29, 2010, the assessee was requested to furnish further details to the Deputy Commissioner of Income-tax in the following manner : "1. Why the deduction of Rs. 2,83,81,688 under section 80-IA(4) be not disallowed in the absence of notification from the Board as well as the fact that as on March 31, 2005, and also the fact that as per para- graph 5 of the letter of approval of the Investment Promotion and Infrastructure Development Cell, Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Com- merce and Industry, Government. of India, dated November 5, 2004, the following conditions in paragraph 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 80-IA of the Income-tax Act, 1961 will be available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 18C of the Income-tax Rules, 1962. It is obligatory on the part of the Central Board of Direct Taxes to issue notification and there is no procedure for the assessee to make any application to the Central Board of Direct Taxes for issuance of the notification. It is also further submitted by the petitioner-company that the deduction under section 80-IA(4)(iii) is available to the undertakings which develop industrial park as per the approval granted under the Industrial Park Scheme, 2002, by the Ministry of Commerce and Industry, Government of India ; which has been granted in the instant case on November 5, 2004, for setting up 30 units. The approval granted by the Government of India, Ministry of Commerce and Industry, in paragraph 5, states thus : "5. The following conditions in paragraph 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 80-IA of the Income-tax Act, 1961, will be available only after the proposed number of industrial units mentioned in para (vii) of this approval letter (30 units) are located in the industrial park." 7. The petitioner-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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-rejoin- der, it can be stated that they are more or less the same submitted while objecting to the reasons recorded for reopening of the assessment. The 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 the petitioner depended on occurrence of those events. 11. Heard learned counsel Mr. R. K. Patel appearing for the assessee _"com- pany and learned senior counsel Mr. Manish Bhatt for the Department. With their able assistance, the 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. 11.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-IA(4)(iii) is seriously questioned, holding the same to have been availed of wrongly. 12. As the central issue concerns non-issuance of notification by the Central Board of Direct Taxes, leading to the conclusion of reopening of the assess- ment, it is required to be mentioned here that in case of this very assessee in Special Civil Application No. 15962 of 2010, reported in Ganesh Housing Corporation Ltd.A v.A Padam Singh, Under Secretary [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, 1962. 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 March 31, 2006, in accordance with the approval granted by the Ministry on November 5, 2004. According to the petitioner, the entire development work was completed before the stipulated time and the ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme.' Clause 2(i) defines the 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 1st day of April, 1997, and ending on the 31st day of March, 2006. In a case, where an undertaking develops and industrial park on or after the 1st 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 trans- feree 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. Objectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 reads as under : 4 I. Proposed location of the industrial model town/industrial park/growth centre Address : District State Pin code Fax II Proposed area of industrial model town/industrial park/growth centre (in acres/sq. mtrs. specify) III Proposed allocable area of industrial model town/industrial park/growth centre (in acres/sq. mtrs. specify) IV Proposed activities (please specify item codes as defined under the National Industrial Classification of all Economic Activity (NIC), 1987). V Proposed percentage of allocable area earmarked for industrial use ; VI Proposed percentage of allocable area earmarked for commercial use ; VII Proposed No. of industrial units VIII (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 infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deve- loping, 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 pro- viding infrastructural facilities for pharmaceutical industries. The peti- tioner, 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 petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial 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 of the tax benefits to ensure that all units indicated in the application are located in the industrial park. As noted earlier, the term 'unit' has been defined in the 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 fulfils 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 peti- tioner had in fact sold all 32 plots to different units before March 31, 2006. These assertions of the petitioner are not seriously disputed by the respondents. Even the impugned show-cause notice is not based on non-fulfilme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion annexed along with the Scheme to contend that the require- ment 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 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 acti- vity 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 peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, com- missioning, 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 deduc- tion under section 80-IA. 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 load- ing, 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 ful- f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner 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 Central Board of Direct Taxes 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 Central Board of Direct Taxes 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 Central Board of Direct Taxes s opinion or that issu- ance of show-cause notice on the basis of information provided by the Central Board of Direct Taxes would be without jurisdiction. Counsel for the petitioner had further argued that once the under- taking is approved by the Ministry of Commerce under the Scheme for industrial park, the Central Board of Direct Taxes had necessarily to notify such industrial park for the benefits under section 80-IA of the Act. Heavy reliance was also placed on sub-rule (3) of rule 18C of the Income-tax Rules, 1962, which pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad- bare 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 80-IA(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, 1962. 13.3 It is needed to be mentioned here further that essentially only one reason is given while reopening 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 the Bombay High Court in the case of CIT v. Jet Airways (I) Limited [2011] 331 ITR 236 (Bom) and of the Delhi High Court in case of Ranbaxy Laboratorie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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