TaxTMI 
TaxTMI 
2011 (8) TMI 654
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.... It is the case of the petitioner that the petitioner completed all works by developing infrastructural facilities. The petitioner was also required to make six monthly progress reports. Eventually, according to the petitioner, the entire development work was completed before March 31, 2006. The pharmaceutical park proposed by the petitioner and approved by the Ministry envisaged 32 sub-plots on which pharmaceutical industries would be located. It is the case of the petitioner that before March 31, 2006, all sub plots were sold to different pharmaceutical companies, and these companies were in turn required to set up their pharmaceutical units/factories on the plots assigned to them. It is thus the case of the petitioner that what ever the petitioner was required to do was completed before March 31, 2006. 4. We would take note of various provisions contained in the said Scheme later. However, at this stage, we may note that the industrial park which the petitioner was permitted to construct require a minimum of 30 units and further that the last date for implementation of the Scheme was March 31, 2006. 5. It is not in dispute that for those companies, which provide ....
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.... petitioner indicating that the Central Board of Direct Taxes had, in view of the fact that only four units having come up in the park, requested to withdraw the approval accorded to the petitioner. Under the circumstances, it is proposed to withdraw the approval. The petitioner was, therefore, required to state why such action should not be taken. The petitioner made a very detailed representation in response to such proposal under communication dated April 3, 2009. In the said representation, the petitioner raised several contentions, mainly that the entire developmental work was completed within time ; that it was not obligatory on the petitioner to ensure that the industrial units be set up by the companies to whom plots were allotted ; by allotting the plots, the petitioner had fulfilled the requirement of 30 units being located in the park. 9. On the basis of above factual background, the petitioner has approached this court in the present petition raising mainly two grievances : firstly, it is the grievance of the petitioner that the impugned show-cause notice is based on completely impermissible grounds. It is the case of the petitioner that the entire industrial pa....
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....ted that the petitioner had approached against a show- cause notice. The petition, therefore, should not be entertained. He submitted that the petitioner would have full opportunity to raise all contentions before the authorities. 15. 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 80-IA of the Income-tax Act, 1961. It was called, "Industrial Park Scheme, 2002". 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 identifiable and are provided on commercial terms." 16. Clause 2 (h) of the Scheme defines the term, "undertaking" as under : "2.(h) 'undertaking' means any undertaking wh....
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....ording that in cases of an industrial park referred to in clause (b) of paragraph 4, viz., industrial park for development of infrastructural facilities, the minimum number of units to be provided in such park is 30. 22. 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." 23. Clause 9 of the Scheme pertains to general conditions. The relevant conditions thereof are the following : "9. General conditions.-(1) . . . (2) The tax benefits under the Act can be availed of only after the number of units indicated in the application, are located in the industrial park. . . . (5) Every undertaking, which has been granted approval shall continue to furnish to the Central Government on 1st January and 1st July of every year, a report in the form num....
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....cate briefly the effective steps taken towards implementation, e.g., installation of common facilities, number of units sold or leased, number of units commencing the industrial activity. 25. 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 18C of the Rules read as under : "18C. Eligibility of industrial parks and special economic zones for benefits under section 80-IA(4)(iii).-(1) The undertaking shall begin to operate and industrial park during the period beginning on the 1st day of April, 1997, and ending on the 31st day of March, 2002. (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 1st day of April, 2001, and ending on 31st day of March, 2006. (2) The undertaking shall be duly approved by the Ministry of Commerce and Industry in the Central Government under the sche....
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....nding on the 31st day of March, 2006 : Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999, or a special economic zone on or after the 1st day of April, 2001, and transfers the operation and 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." 27. Under the Scheme, the petitioner as an undertaking engaged in the business of developing an industrial park, was required to fulfil the general conditions on which such approval was granted. Clause 9 of the Scheme, as already noted, provides such general conditions. Sub-clause (2) of clause 9 requires that the tax benefits under the Act can be availed of only after the number of units indicated in the application are located in the industrial park. Sub-clause (5) of....
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....ated 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. 32. 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 the 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". 33. On the 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 t....
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....val 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. 35. 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 CIT v. ABG Heavy Industries Ltd. [2010] 322 ITR 323 (Bom), wherein the Bombay High Court was examining the eligibility of an assessee to deductions under section 80-IA of the Act in terms of the policy of the Government to encourage private sector participation....
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.... 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. 37. In view of the 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 the Government has issued a show-cause notice calling upon the petitioner to 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 the normal circumstances, we would also have in....