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2016 (8) TMI 744 - GUJARAT HIGH COURT

2016 (8) TMI 744 - GUJARAT HIGH COURT - TMI - Grant of deduction under section 80IA(4) - Application for approval and for notification of its industrial part under the Industrial Park Scheme, 2008 came to be rejected - Held that:- To begin with CBDT is not accurate in commenting that MARS Planning & Engineering Services Pvt. Ltd., was appointed by the petitioner as an agency for quality maintenance. MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC in order to advise the Gover .....

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Ltd., and GIDC that the specially constituted committee in its meeting dated 28.2.2011 decided to grant the subsidy under the said scheme at the rate of 20% of the eligible investment in such park. A final approval in this respect was issued on 14.3.2011 and subsequently the Industries Commissioner under letter dated 8.4.2013 certified that as per the joint inspection team report, the park has completed industrial park as per the guidelines issued by Government Resolution dated 10.6.2004. - .....

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was not part of the requirement of the scheme at all, as held in case of Ganesh Housing Corporation Ltd.(2011 (8) TMI 654 - Gujarat High Court ). For such reasons, the second part of the CBDT's objection must fail. - Coming to the first objection, of the petitioner having failed to produce a completion certificate from the local authority, we have noticed that MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC for the purpose of certifying the quality control and completio .....

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its responsibility. It is in this regard that completion certificate should be provided by a local authority. In strict sense of the term, perhaps the petitioner did not fulfill this requirement. However, a more liberal or practical approach could be that when MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC who had certified that the project was completed before 31.3.2011 and when the State Government had acted on such report and approved the subsidy, this should have been .....

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ithin three months from the date of receipt of such certificate. - SPECIAL CIVIL APPLICATION NO. 17118 of 2014 - Dated:- 9-8-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR RK PATEL WITH MR BD KARIA WITH MR DARSHAN R PATEL, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged an order dated 5.11.2014 passed by the Central Board of Direct Taxes ( CBDT for short) on which the pe .....

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x Act,1961 ( the Act for short). This was done under the then prevailing Industrial Park Scheme, 2002. The Ministry of Commerce and Industry informed the petitioner on 5.1.2009 that the petitioner should apply under the new Industrial Park Scheme, 2008. The petitioner accordingly applied for approval under application dated 27.1.2009. According to the petitioner, the petitioner completed the development of the industrial park on 5.9.2010 which was well before the extended last date of 31.3.2011 .....

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ner had also availed such subsidy benefits upon completion of the development of the industrial park which was examined by the agency appointed by the GIDC. On the basis of certificate issued by such agency, the State Government had also noted that the petitioner had completed the development of industrial park before 31.3.2011 and on the basis of which the payable subsidy was released in favour of the petitioner. 4. The petitioner produced such materials before the CBDT and sought approval that .....

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neering Services Pvt. Ltd., an agency approved by Government of Gujarat for Third Party Quality Assurance, a project completion certificate dated 8.4.2013 issued by the Industries Commissioner, Government of Gujarat. CBDT also referred to certain certificates and letters issued by Ahmedabad Urban Development Authority ( AUDA for short). Such evidence was however, discarded by the CBDT making the following observations : Sl No. Document Inference Work completion certificate dated 08/5/2013 issued .....

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a Completion Certificate for the Development work of infrastructure of Devraj Industrial Park... This indicates that the applicant had approached AUDA on 04.03.2012 to issue a completion certificate. The question that arises is why the applicant approached the authority almost one year late to issue completion certificate and not immediately after the project was completed as per the claimed date. Further, on the basis of this, request the 'work' completion certificate (being discussed h .....

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the site and after satisfying that the required infrastructure under General Development Control Regulation (GDCR) has been completed This certificate issued by AUDA in Gujarati, is in respect of occupation of the first unit only and does not cover the occupation of 182 units that form part of the entire project. It also gives area related information pertaining to that first unit and not the entire project. The certificate is dated 17.06.2010 and as mentioned in the text, it is based on physica .....

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an evidence under the camouflage that entire project was complete by this date and the applicant can avail huge tax benefits for ten years. It may further be clarified here that the completion of project not only means completion of basic infrastructure but also industrial units which are the integral part of any industrial park. Hence, the date of completion would mean not only completion of infrastructure but also the completion of all industrial units as well. Hence, the only information this .....

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t. Ltd. (MARS) Ahmedabad is an entity appointed by the applicant as a Third Party Quality Assurance (TPQA). This was done as a matter of compliance of State Level Approval Committee (SLAC) with the purpose of monitoring the quality of infrastructure work. This is not a local authority as stipulated under IPS 2010 but a private entity appointed by the applicant itself. This letter has been claimed to be a Completion Report dated 05.09.2010. This certificate mentions under the heading Ref...3) our .....

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as evident from para (B) and not to construction of units, which is an important constituent of development work. In para(C), it gives the status of park as Follows ( c) Status of Industrial Park is as follows (1) No of units sold 180 (2) out of which agreement executed 99 (3) Out of which construction is in progress 19 (4) out of which commencement/ production / manufacturing started 04 As can be seen, number of agreements in respect of industrial units executed as on 05.09.2010 is 99 only. Thi .....

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etion of project as a whole on that day remains unsubstantiated. Therefore, this document does not prove completion of project by 05.09.2010. 4 A letter dated 08/04/2013 related to Project completion certificate issued by Industries Commissioner, Government of Gujarat This letter issued by the Industrial Commissioner, Gandhinagar dated 08.04.2013 is in response to applicant's request for issuing completion certificate made vide its letter dated 14.03.2013. Why the applicant applied for the i .....

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her the date of completion has been mentioned, not any independent finding has been given. Since this letter is dated 08.04.2013 what can at best be inferred is that the project was completed on 08.04.2013. 12. Thus the above documents do not provide any specific date of completion. What definitely emerges is that the project was actually completed sometime in 2013 and not before 31.03.2011 as claimed by the applicant. Xxx 14. In order to verify the applicant's claim, independent enquiries w .....

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ain or worthwhile evidence in support of applicant's claim. ii. AUDA does not mention that applicant had made a request for inspection when all the 182 units were completed. Instead, it has given occupancy certificate dated 17.06.2010, when only one unit was ready. It is rather clearly pointed out in the said letter that AUDA could not certify the date of final completion earlier iii. AUDA suggests to make reliance to the four documents already relied upon by the applicant listed in the abov .....

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Sewage Plant etc. constituting the common facility or industrial units. Hence, it has no evidentiary value. v. AUDA's letter also suggests that the decision regarding the actual date or final completion of said project may be taken at your level.' 15. In view of the above, the only choice that remains with us is to decide the date of completion based on the information contained in the said four documents. As already discussed, after analyzing these documents, the date of completion/occu .....

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incipally two elements. One is the objection of CBDT that no completion certificate was issued by the local authority, one of the requirements under the Industrial Development Scheme of 2008. The second and the factual aspect of the matter is regarding the availability of evidence that the petitioner's project was completed before 31.3.2011. This later element can be further subdivided into two parts. First is with respect to the evidence produced by the petitioner and the second is with res .....

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scheme envisages grant of subsidy relatable to the investment made by the developer. Some of the conditions for grant of subsidy provided as under : 7.6 Industrial Park is required to have minimum infrastructure facilities required for the park namely internal roads, water distribution network, drainage treatment, effluent treatment, power distribution network, communication network and other facilities. 7.8 The incentive is for development of Industrial Park. One single unit in the park will n .....

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round of this scheme, the petitioner had claimed the subsidy. The State Level Approval Committee in its meeting dated 28.2.2011 had taken various decisions as can be seen from a letter dated written by the Joint Industries Commissioner (Infrastructure) to the GIDC and other Governmental authorities. In its meeting dated 28.2.2011, the Committee noted that infrastructural development in question was granted approval on 4.9.2006 for the project cost of ₹ 531.92 lacs. The committee perused th .....

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ustries Commissioner conveyed to the petitioner the final approval for the subsidy assistance of ₹ 92.63 lacs sanctioned in favour of the petitioner. 11. On 8.4.2013, the Industries Commissioner once again conveyed to the petitioner with respect to project completion certificate for industrial park, in which it was stated that the petitioner had completed the work of infrastructure in the park as per the sanction by the State Level Approval Committee in total area of industrial park of 500 .....

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ng Service Pvt. Ltd. Ahmadabad for inspection at the site during development work. As per joint inspection team report the part has completed infrastructure work as per guidelines issued under Gujarat G.R. APN/102003/1161/7/I dtd:10/06/2004. 12. The above documents were produced by the petitioner before the CBDT. However, it appears that CBDT insisted that the project completion certificate must be obtained from AUDA. At the request of the petitioner, AUDA on 8.5.2013, certified that the petitio .....

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n, canteen display center, etc. As noted, despite such evidence produced by the petitioner, CBDT was unmoved and formed an opinion that there was inconclusive evidence of the petitioner having completed the project before the final date of 31.3.2011. 13. For discarding various documents produced by the petitioner before the CBDT, detailed reasons have been given. Regarding Work Completion Certificate dated 8.5.2013 issued by AUDA, it was observed that there is no specified date of completion in .....

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es with AUDA's certificate dated 17.6.2010 as per which it was found that only one unit was in occupation. Regarding the letter of Industries Commissioner dated 8.4.2013, it was observed that same was in response to the petitioner's letter. In any case, a letter which was issued on 14.3.2013 would throw no light on the question of completion of the project as on 5.9.2010, as claimed by the petitioner. 14. In our opinion CBDT has brought in the element of completion of industrial units on .....

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tarted production before the last date. In this background, the Court held as under : 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. Clause9 of the Scheme, as already noted, provides such general conditions. Subclause (2) of Clause9 requires that the tax benefits under the Act can be availed only after the number of units indicated in the application ar .....

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ties as well. We, however, look at the requirements of the Scheme differently. Subclause (2) of Clause9 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 clause2( 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 .....

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s. Even the impugned show cause notice is not based on nonfulfillment of above requirements. We, therefore, proceed on the premise that considerably had taken these steps before 31st March 2006 in furtherance of implementation of the Scheme. To out mind, under the Scheme, the petitioner had fullfilled all the requirements for availing the tax benefits. The petitioner was required to develop the infrastructural facilities. In short, the petitioner was required to setup an Industrial Park with all .....

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ocality 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 .....

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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 peti .....

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ld 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 setup their units and commence production activities on such units - that too .....

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industries may not be able to start their units, such as, nonavailability 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 requirement .....

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roduct or nonavailability 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. 15. One of the main objections of the CBDT in the said order that the evidence suggested that as on 5.9.2010 only one industry had set up its unit which would imply non completion of the project, would not survive. In other words, if there was other independent evidence of completion of the project, the .....

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cheme for the specified period. It was in this background that MARS Planning & Engineering Services Pvt. Ltd. had in its report dated 5.9.2010 certified that the infrastructure work was completed and the assessee should be approved as having completed the project of industrial park. It was on the basis of such recommendations from MARS Planning & Engineering Services Pvt. Ltd., and GIDC that the specially constituted committee in its meeting dated 28.2.2011 decided to grant the subsidy u .....

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ficate that the industrial park was completed with constructed units by 31.3.2011. This insistence from CBDT was impermissible for two reasons. Firstly, the scheme pertained to certificate from a local authority and would not confine its purview to certification by AUDA alone and second that the insistence on demonstrating completion of industrial units by the leasing industries was not part of the requirement of the scheme at all, as held in case of Ganesh Housing Corporation Ltd.(supra). For s .....

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