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Devraj Infrastuctures Ltd. Versus Chairman/Member (Industrial Park)

2017 (11) TMI 582 - GUJARAT HIGH COURT

Eligibility of deduction u/s 80IA(4)(iii) - industrial park scheme - seeking rectification in the notification dated 26.12.2016 - As per the Revenue's interpretation, an assessee cannot claim deduction under the said provision till all units are sold - whether the benefit of deduction to the petitioner's industrial park would be available to such park from the date of its commencement i.e. 05.09.2010? - Held that:- Once the minimum number of units are located, to expect the Park to postpone bene .....

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ting point of deduction is deferred till all units are sold, the assessee would get no deduction on the income arising out of sale of units in earlier years. For example, if the industrial park consists of 100 units, it is possible that the assessee may sell 30 units in the first year, 30 more units in the second year and 30 more in the third year. Remaining 10 units may be sold in the fourth year. As per the Revenue, the deduction would be available only during the year when the sale of these l .....

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ability of deduction over a span of year would not occur in case of an enterprise carrying on the business of developing any infrastructural facility and would be confined to only one assessment year. - Once, as held in the case of Ganesh Housing (2011 (8) TMI 654 - Gujarat High Court) that the minimum number of units, namely 30 have been located, the Park becomes eligible to opt for the benefit under Section 80IA.It is then that,in accordance with the Circular dated 15.2.2016 that the Proje .....

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. The condition in the Notification extending the benefit of availing of deductions under Section 80IA(4)(iii) from the date of commencement of 5.09.2010 is a condition not found in any of the other notifications vis-a-vis other such projects, produced in other such cases. Accordingly, the respondents are directed to delete Condition No. 7 in the Notification of 26.12.2016 - Special Civil Application No. 7098 of 2017 - Dated:- 3-11-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Peti .....

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rejected. 2. By the notification dated 26.12.2016, the petitioner s undertaking was notified as eligible for the benefit of deduction of tax under the provisions of Clause (iii) of subsection (4) of Section 80IA of the Income Tax Act, 1961 ( the Act for short). According to the notification, the benefit of deduction to the petitioner's industrial park would be available to such park from the date of its commencement i.e. 05.09.2010. Condition no. 7 of the notification granted such benefit t .....

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of Commerce and Industry, New Delhi returned the application by a letter of 05.01.2009 advising the petitioner to apply under the Industrial Park Scheme, 2008. Accordingly, the petitioner applied under the Scheme of 2008, in the prescribed form IPS-I on 27.01.2009. The application was acknowledged by the Ministry by a letter of 09.02.2009. 3.2 According to the petitioner, the petitioner had completed the development of the park much before the date envisaged under the Scheme i.e. 31.03.2011. Th .....

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ire development work of the industrial park and had submitted a progress report from time to time finally giving a completion report dated 05.09.2010. 3.3 Based on this material, the petitioner sought approval from the Central Board of Direct Taxes ( CBDT for short) requesting that since the park was duly developed before the specified date i.e. 31.03.2011, a notification be issued so that the petitioner can claim deduction under section 80IA(4) of the Act. That application was rejected by the C .....

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tion certificate must be obtained from AUDA and it was only on 08.05.2013 that AUDA certified that the petitioner had carried out and completed the work of infrastructural development and construction as per AUDA rules and regulations. The certificate of AUDA recorded that the petitioner had set up a sewerage system and therefore the project was completed after the final date of 31.03.2011. In other words, the main objection of CBDT in the order impugned in the said petition was that the evidenc .....

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its opinion the CBDT had brought in the element of completion of industrial units on the proposed industrial park instead of completion of project. According to the Court, the insistence of the CBDT to proceed on the basis that AUDA, which was the local authority had not given any clear certificate that the industrial park was completed with constructed units by 31.03.2011, was impermissible. This Court in its order held as under: 16. Ignoring such evidence, CBDT proceeded on the basis that AUD .....

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ld in case of Ganesh Housing Corporation Ltd. (supra). For such reasons, the second part of the CBDT's objection must fail. 17.Coming back 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 completion of the project for State subsidy. MARS Planning & Engineering Services Pvt. .....

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e 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 seen as a substantial compliance of such requirement. However, to put the .....

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ch purpose, impugned order dated 5.11.2014 is set aside. The Petition is allowed and disposed of. 3.5 In other words, the order dated 05.09.2014 impugned in the petition was set aside noticing that the MARS Planning and Engineering Service Private Limited, an agency appointed by the GIDC for the purpose of certifying quality control and completion of the project had already given a completion certificate stating that the project was completed well before 31.03.2011. Petitioner was permitted to p .....

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ferred by clause (iii) of sub-section (4) of secton 80-IA of the said Act, read with rule 8C of the Income-tax Rules, 1962, the Central Government hereby notifies the undertaking from the date of commencement of the industrial park the 5th September, 2010 being developed and being maintained and operated by M/s Devraj Infrastructure Ltd., for the purposes of the said clause (iii) subject to the terms and conditions mentioned in the Annexure to this notification. ANNEXURE The terms and conditions .....

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al Park Scheme, activities 2008 notified by the Government of India, Ministry of Finance (Department of Revenue, Central Board of Direct Taxes) vide notification Number. S.O. 51€, dated the 8th January, 2008. (v) Percentage of allocable area earmarked for industrial use : 75% or more (vi) Percentage of allocable area earmarked for commercial use : 10% or less (vii) Minimum number of industrial units :30 units (viii) Date of commencement :5th September, 2010 3.7 Further condition no. 7 of th .....

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ch notification granting the benefit of deduction with effect from 05.09.2010 as stipulated in condition no. 7 of the said notification, approached CBDT for request of a rectification in the notification dated 26.12.2016. Rectification was sought in condition no. 7 of the notification on the ground that the development of the industrial park was initiated from the year 2008-09. The project was launched in 2009 for setting up 182 units. Between April 2009 and March 2011 as many as 135 units were .....

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fit of the option of deduction ought to have been given to the petitioner from the assessment year 2009-10 and not assessment year 2011-12 by recording a condition in the notification of the date of commencement of 05.09.2010. In other words, rectification was sought of condition no. 7 as under: Condition No. 7 The undertaking subject to the fulfillment of the term and conditions mentioned in this notification, may as its option claim deduction under clause (iii) of sub-section 80IA of the Incom .....

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n for rectification was rejected giving rise to the present petition. 4. Mr. R.K. Patel, learned advocate appearing for the petitioner has taken us through the impugned order dated 17.03.2017 together with the notification granting the benefit of option of deduction with effect from the date of commencement of 05.09.2010. According to Mr. Patel, the rectification sought for, ought to have been considered, in light of the observation made by this Court in the previous order dated 09.08.2016 passe .....

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ar being 2010-11. The conditions stipulated in the scheme for availing benefits under section 80IA of the Act had been complied with and, as observed by the Court in its earlier petition, by stipulating a condition of extending such benefits of option of deduction from the date of commencement i.e. 05.09.2010 was against the spirit of the Section and also brought in an element of completion of industrial units in the proposed industrial park instead of completion of the project. According to Mr. .....

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production activities on such units. On facts it was even not disputed by the CBDT that the minimum number of units stipulated in the Scheme had been located. 4.3 Heavy reliance was placed by Mr. Patel on the CBDT circular dated 15.02.2016. According to Mr. Patel, sub-section (2) of Section 80IA of the Act read together with the circular of 15.02.2016 provided that the deduction would be available beginning from the year in which the undertaking commences operation, begins development or starts .....

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he Act will be available to the undertaking only after minimum number of thirty units are located in the Industrial Park. Hence, merely the beginning of the development of the industrial park is not suffice to claim deduction as contended by the undertaking but its complete development along with the location of industrial units is a prerequisite so as to start availing deduction. 4.5 According to Mr. Patel, even according to the authority tax benefits under the Act would be available once the m .....

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upation certificate as the case may be from the local authority certifying thereby that all the required activities have been completed. 5.1 According to Mr. Bhatt, since the completion certificate issued by GIDC clearly stated that as per available records, in the respect of work of development of common infrastructure facilities like road, water system, sewerage system, storm water, drainage system, first aid center, street lights were completed on or before 05.09.2010 i.e. the date of certifi .....

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have come up, it is open for the undertaking to avail the option of deduction. Section 80IA of the Act nowhere stipulates such a condition. 5.3 According to Mr. Bhatt, even the form prescribed to be filled in by the undertaking which needs such an option, clearly stipulates that it has to show the actual date of commencement of the industrial park. Once the completion certificate by the agency categorically stated that the park was completed with effect from 05.09.2010, the date of commencement .....

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uch benefit has to be granted to the petitioner's project from the date of commencement as notified or allow the claim of deduction under clause (iii) of sub-section(4) of Section 80IA of the Income Tax Act beginning from the assessment year of development of Industrial Park begun i.e. previous year 2009-10 relevant to the assessment year 2010-11, as prayed for by the Petitioner. 7. In order to appreciate the controversy at hand, before we may consider the factual aspects of the matter, a br .....

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rofits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment year s. (2) The deduction specified in sub-sect .....

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ntial renovation and modernisation of the existing transmission or distribution lines : Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of sub-section (4), the provisions of this sub- section shall have effect as if for the words fifteen years , the words twenty years had been substituted. …........ …......... (4) .....

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th the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastruc .....

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plies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. Explanation.-For the purposes of this clause, infrastructure facility means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water suppl .....

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ay of March, 2005. Explanation.-For the purposes of this clause, domestic satellite means a satellite owned and operated by an Indian company for providing telecommunication service; (iii) any undertaking which develops, 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 1st day of April, 1997 and ending on the 31st day o .....

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maining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee undertaking : Provided further that in the case of any undertaking which develops, develops and operates or maintains and operates an industrial park, the provisions of this clause shall have effect as if for the figures, letters and words 31st day of March, 2006 , the figures, letters and words 31st day of March, 2011 had been substituted 7.1 Rule 18C of the Incom .....

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under the Industrial Park Scheme,2008. (3).The undertaking shall continue to fulfill the conditions envisaged in the Industrial Park Scheme,2008. 7.2 Relevant portion of The Industrial Park Scheme,2008 is as under: NOTIFICATION NO. 3/2008, DATED 8-1-2008 S.O. 51 (E) In exercise of the powers conferred by clause (iii) of subsection (4) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby frames the following scheme for Industrial Parks, namely: 1. Short title, .....

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the units for industrial activity or commercial activity and shall exclude the area utilized for providing common facility or infrastructure facility; (c) associated enterprise shall have the same meaning as assigned to it in section 92A of the Act; (d) commercial activity means any activity which is not an industrial activity; (e) common facility means facilities required for proper functioning of industrial park and commonly shared by all the units located in the industrial park and include fa .....

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h) industrial park means a project in which plots of developed space or built up space or a combination, with common facilities and quality infrastructure facilities, is developed and made available to the units for the purposes of industrial activities or commercial activities in accordance with this scheme; (i) infrastructure facility means facilities required for development, operation and maintenance of the industrial park and include roads (including approach roads), water supply, sewerage .....

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t having a separate Permanent Account Number (PAN); and (iii) carrying out industrial activity; (l)words and expressions used in this Scheme and not defined but defined in the Act, shall have the same meanings respectively assigned to them in the Act. 3. Procedure for approval. - (1) Any undertaking which develops, develops and operates or maintains and operates an industrial park may make an application for notification under clause (iii) of subsection (4) of section 80-IA of the Act, in the pr .....

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ection 80-IA of the Act, if it fulfills all of the following conditions, namely:- 1. The date of commencement of the Industrial Park should be on or after the 1st day of April 2006 and not later than 31st of March 2009; 2. The area allocated or to be allocated to industrial units shall not be less than ninety per cent of the allocable area; 3. There shall be a minimum of thirty industrial units located in a industrial park; 4. For the purpose of computing the minimum number of industrial units; .....

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04, Code issued by the Central Statistical Organisation, Department of Statistics. 5.General Conditions.- (1) The industrial park shall be construed as developed on the date of commencement. 2. Tax benefits under the Act will be available to the undertaking only after minimum number of thirty units are located in the Industrial Park. 3. The tax benefits under the Act will be available to the undertaking only if the undertaking and the industrial park have been notified by Central Board of Direct .....

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Industrial Park Scheme, 2002 will continue to be governed by the provisions of that Scheme to the extent it is not in contravention with the provisions of Act, as amended from time to time. 7. The undertaking shall electronically furnish an annual report to the Central Board of Direct Taxes in Form IPS-II. 6.Withdrawal of approval.-The Central Government may withdraw the approval given to an undertaking under this Scheme if the undertaking fails to comply with any of the conditions listed in pa .....

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ised the development work and submitted a progress report dated 5.09.2010 stating that the entire project was completed on 5.9.2010 i.e. before 31.3.2011, the date relevant before which the project had to be established as per the Scheme. The State, based on the facts recorded in the meeting of the State Level Approval committee on 28/2/2011 granted a subsidy of ₹ 92,63,000/- Therefore the petitioner's project had been completed before the statutory date of 31.3.2011. 9. As per the app .....

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of help. The same reads as under: 5. CBDT noted that the petitioner had produced various documents including the completion report dated 5.9.2010 of MARS Planning & Engineering 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 .....

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Further, this letter in the beginning mentions as follows' with reference to, letter dated 04.03.2012 from M/s. Devraj Infrastructure Ltd., Ahmadabad requesting to issue 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 .....

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2013 (date of issue of certificate 2. Occupancy certificate dated 17/06/2010 given by AUDA to the one of the unit of the said project. It was issued after verification of 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 .....

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ot all the units. The obvious indication is that since only one unit was complete before the cutoff date, the applicant obtained this certificate and has been using it as 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 par .....

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at undertakings for Third Part Quality Assurance (TPQA) as per requirement of Industries Commissioner, Government of Gujarat. M/s. MARS Planning and Engineering Service Pvt. 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 .....

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completion of work in respect of entire project by 17.6.2010. Further M/s. MARS, in this certificate has confined itself to development pertaining to infrastructure only, 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- 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 1 .....

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this table) that only one unit was fit for occupation. Moreover, it specifically mentions that 'Construction in progress' is in respect of 19 units and therefore the completion 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, .....

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ot suitable to throw light on the present issue. At the end, it relies on the report of M/s. MARS (as discussed at Sl No.3 above) to repeat that project was completed. However, neither 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 .....

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tion on the 'specific request' of the applicant and issued a work completion certificate. However, as discussed at Sl No.(1) at the above table, it does not provide any certain 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 lett .....

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is not known whether these are plots or units. Even if these are presumed to be constructed areas, it is not ascertainable whether these are warehouses, First Aid Centre, Canteen, 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 .....

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to be a fit case for notification u/s 80IA(4)(iii) of the Act. Hence, the competent authority has decided to reject the application. 10. The reading of the table above indicates that according to CBDT, the completion report dated 5/09/2010 of MARS Planning and Engineering Services Private Limited indicated as under: (1) No. Of Units sold - 180. (2) Out of which agreement executed - 99 (3) Out of which construction in progress - 19 (4) Out of which production started in - 4. 11. According to the .....

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the completion of the Project. It is only from the letter dated 8.4.2013 it can be inferred that the project was completed on 8.4.2013. It observed that what definitely emerges is that the project was actually completed in 2013 and not before 31.3.2011 as claimed. It was in this context that the Court made its observations in paras 15 and 16 which read as under: 15. Ignoring such evidence, CBDT proceeded on the basis that AUDA which was a local authority had not given any clear certificate that .....

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, the second part of the CBDT's objection must fail. 16. Coming back 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 completion of the project for State subsidy. MARS Planning & Engineering Services Pvt. Ltd. had already given such completion certificate well before 31.3.20 .....

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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 seen as a substantial compliance of such requirement. However, to put the issue beyond any controversy, we permit the petitioner to produce such .....

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ted 17.3.2017 would indicate that the CBDT is of the opinion that unless the Park develops and begins to operate i.e. unless the entire Park is set up with all the units in place, as applied for and undertaking their manufacturing activities, such project cannot be said to be completed. It is in this context that the date of commencement is notified as 5.09.2010. Whereas the petitioner would suggest that they had begun development of the Industrial Park during the year 2008-2009 after purchasing .....

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minimum number stipulated for the scheme were located, benefit of claiming deductions would be available without waiting for the entire Park to have all the Units applied for being functional and working. Once having set up the Park and invested therein, it would be against the spirit of the Section 80IA to postpone the benefit of claiming deductions till the whole park with all Units start functioning when in effect the existing units have come up and working with an eye on claiming the benefit .....

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he submission of the Petitioner the language of Section 80IA which provides that the Park should be developed and begins to operate includes a condition where the Park begins to develop or starts providing services. 15. We, at the outset, before discussing the intent of the Section 80IA and the Scheme and the view we take on the question, do not agree with the interpretation canvassed by the Petitioner,seeking support of the Circular, for interpretation of Section 80IA,that benefit of deductions .....

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as the first year of commencement/operation. This was against the clear mandate provided under sub-section (2) which allowed a choice to the assessee for deciding the year from which it desires to claim deduction out of applicable slab of fifteen years. 17. After having examined the matter, the Board opined that it is abundantly clear from sub-section (2) that the assessee has the option to choose the initial/first year from which it may desire the claim of deduction. The 'initial assessmen .....

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le for a period of ten years. 18. Therefore, what the Circular does is only clarify the misconception that the Assessing Officers harboured regarding the starting point of the option to claim deduction under Section 80IA.It nowhere suggests the interpretation of the question of date of commencement as stipulated in the Scheme and the Section. The language of the Circular therefore may not be of assistance to the Petitioner. Except for clarifying and extending the concept of initial assessment ye .....

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he requirements of providing infrastructure and that the private sector also needs to be actively engaged in the process by providing such infrastructural services. In light of this,an appropriate policy framework which gives them adequate confidence and incentives to invest on a framework on a large scale was essential. 20. Section 80IA of the Income Tax Act, 1961 provides the extent and the scope of deductions available to undertakings involved in the business of infrastructure development. Th .....

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rea of potential weakness. If we are to aim at economic growth of 7 to 8%, which has been achieved in other countries and which alone can provide the jobs we need for our growing labour force, then we need much larger investment and much greater efficiency in key infrastructure sectors such as power, roads, ports, irrigation, railways and telecommunications. Sound financial management holds the key to progress in this area. Adequate supply of quality infrastructure depends crucially on the finan .....

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ivate sector investors are unwilling to invest in power unless the State Governments and the Central Government provide guarantees and counter-guarantees to reassure the private sector producers that they will be paid for the power they generate. Such counter guarantees are justifiable only if they are viewed as providing temporary breathing space, during which State Electricity Boards undertake necessary reforms of their institutional structure, operating practices and pricing policies. In the .....

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investment is such sector. Let us now therefore appreciate these facets of the Section, the Rule and the Scheme in light of the facts on hand. (i) The Petitioner applied for setting up an Industrial Park under the Scheme of 2008 on 27.1.2009, after having initially applied on 23.5.2006 under the Scheme of 2002. (ii) According to the Petitioner it completed the development on 5.09.2010,well before the extended last date of 31.3.2011. (iii) As many as 182 units were to be allocated to the Park. Th .....

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Park in the FY.2009-2010 relevant to the Assessment Year 2010-2011. 22. According to the Revenue as on 5.09.2010 of the 180 Units sold, agreements were executed of 99. The Board opined that execution of agreements would not necessarily mean units were actually ready for possession. The revenue based on the letter of the local authority inferred that since the work completion certificate was issued by AUDA on 8/5/2013, the date of commencement, according to the Revenue is the date of obtaining t .....

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the private players, as the Government could not be a participant in each and every activity to the fullest. A fillip to such projects would receive the necessary stimulus only if tax concessions are granted to the project aspirant so that the investments that go into the making of the project bear fruit,in as much as option is given to claim deductions in tax over profits arising out of setting up such facilities are given. 24. Rule 18C of the Income Tax Rules provide that if such an Industrial .....

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heme, though defines the date of commencement in 2 (f) to mean the date of obtaining the completion certificate or occupation certificate from the relevant local authority, the criteria for the approval suggests that it will be approved when there shall be a minimum of thirty units located in a industrial park. General Conditions prescribe that Tax benefits under the Act will be available to the undertaking only after the minimum number of thirty units are located in the Industrial Park. 25. Thi .....

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sidering the scheme of industrial parks in context of pharmaceutical parks under the scheme of 2002, the court considered clause 9(2) of the General Conditions, which when read, were similar to the present clause (2) of General Conditions of the Scheme of 2008. On facts, the Court found that the minimum number stipulated was 30 and the Park had 32 units located. It addressed itself to the question whether the Petitioner fulfilled the requirement of the Scheme. In this context the Court observed .....

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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 Par .....

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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 t .....

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t 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. 27. According to the Court, the duty and responsibility of the Petitioner was to ensure that the industrial activity is facilitat .....

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k. It was therefore fulfilling the requirement of availing tax benefits as it had the minimum number of plots located as per the Scheme to avail such Tax Benefits. Therefore before the last date of the Scheme the Park had provided the infrastructure facilities. The Industrial Park had been set up with a purpose that the Units allocated therein once set up, the Park could get its option for availing of tax deductions under Section 80IA(4)(iii). Once the minimum number of units are located, to exp .....

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s sold out. It could prove to be counter-productive to setting up such projects, if the developer has to wait to avail of tax concessions till such time. He could be left to fend for himself and be deprived of tax concessions though he opted to set up and develop an infrastructure facility with a view to avail of tax sops. This would go against the spirit of the purpose of the Section's object. 28. The issue can be looked from a slightly different angle. As per the Revenue's interpretati .....

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dustrial park consists of 100 units, it is possible that the assessee may sell 30 units in the first year, 30 more units in the second year and 30 more in the third year. Remaining 10 units may be sold in the fourth year. As per the Revenue, the deduction would be available only during the year when the sale of these last 10 units are completed. This in turn would mean that the assessee would get no deduction on the sale of 90 units in the earlier years, completely defeating the object of the pr .....

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one assessment year. 29. Once, as held in the case of Ganesh Housing (supra) that the minimum number of units, namely 30 have been located, the Park becomes eligible to opt for the benefit under Section 80IA.It is then that,in accordance with the Circular dated 15.2.2016 that the Project Developer has the option to opt for such concession from the first year of setting up or in a subsequent year as the initial assessment year as clarified in the Circular dated 15.2.2016. Therefore, applying the .....

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