TaxTMI 
TaxTMI 
2011 (11) TMI 384
X X X X Extracts X X X X
X X X X Extracts X X X X
....ains derived by an undertaking or an enterprise from a business referred to in sub-section (4), the assessee would be allowed, in accordance with the provisions, in computing the total income, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. Under sub-section (2) the assessee has an option to claim the deduction for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops an industrial park. Sub-section (4) of Section 80-IA contains a description of the undertakings or enterprises to which the provision applies. Clause (iii) of sub-section (4) as it stood during the material period to which the controversy relates was to the following effect : "(iii) any undertaking which develops, develops and operates or maintains and operates an industrial park 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 of March, 2006." 3. Under Section 80-IA (4) (iii) the Central Government was empo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial Park Scheme, which envisages commissioning of the Parks, latest by March 31, 2002. (2) The tax benefits under the Act can be availed only after the number of units indicated in the application, are located in the industrial park." 4. The Petitioners initially applied to the Government of Maharashtra on 14 June 2005 for the registration of their project at Jogeshwari (West) Mumbai as a private Information Technology Park under a resolution of the State Government. The State Government issued a letter of intent on 8 July 2005. On 27 September 2005 the Directorate of Industries of the State Government drew the attention of the Petitioners to the Industrial Park Scheme of 2002 notified by the Union Government under Section 80-IA(4)(iii). On 27 December 2005 the Petitioners submitted an application to the Union Ministry of Commerce and Industry for approval of their Information Technology Park under the Scheme. The proposed area of the Park was stated to be 8261-56 sq.mt. and it was proposed that the total number of industrial units would be eight. The expected date of commencement of the Industrial Park was stated to be 15 March 2006. The proforma provided by the Union Govern....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted a building completion certificate on 8 March 2007 after completion of the work at site. The view of the State Government on the actual completion of the work was as follows :- " The Municipal Corporation of Greater Mumbai concludes that the Building under reference was completed on 08/03/2007 and thereafter, issued OC on 02/06/2007 on the basis of application filed by the applicant on 08/03/2007 considering completion of Building on 08/03/2007. In this case, as per the confirmation report given by Brihanmumbai Mahanager Palika (now MCGM) Applicant/Developers have completed building work on 08/03/2007, and thereby complied with norms of Industrial Park Scheme, 2002. Hence, it is recommended to consider the request of applicant under the said scheme." 8. On 10 July 2007 an intimation was addressed to the Petitioners by the Union Ministry of Commerce and Industry in the following terms : "The date of commencement of your park is 15-03-2006. With one year grace period the park should start functioning before 14-03-2007. However, the State Government report indicated that construction work is at final stage of Completion & Occupation Certificate is awaited. 2. You are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e only to Industrial Parks set up between 1 April 1992 and 31 March 2006. 11. The initial order dated 6 January 2009 was set aside by a Division Bench of this Court on 16 June 2009 on the ground that an opportunity of being heard was not granted to the Petitioners and the matter was referred back to the Empowered Committee for a fresh decision. Upon remand, a hearing took place before the Empowered Committee on 7 September 2009 during the course of which the Committee noted that "the most crucial element here is the date of completion of the building." The Empowered Committee noted the submissions of the Petitioners that the date of the completion of the building should be reckoned from the date of the application, for the grant of an occupation certificate and not from the date of the issuance thereof. Accordingly, it was decided that the matter should be referred to the State Government to take a report from the Municipal Corporation about (i) The date of the application for issuance of a completion certificate; (ii) The date of the completion of the building as per law. Following this reference, on 20 November 2009, a report was submitted by the State Government clarifying th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would extend the scope of exemption beyond what was intended in the main statute. In sum and substance the view of the Empowered Committee was that since the Petitioners had not commenced the industrial park by 31 March 2006, they were not entitled to the benefit of the Scheme. 14. This second order of the Empowered Committee was set aside by a Division Bench of this Court on 18 October 2010 in a Writ Petition under Article 266 of the Constitution on the ground that the Committee had relied upon material which was not disclosed to the Petitioners. Following the second order of remand, the Empowered Committee convened fresh hearings and thereafter rejected the application of the Petitioners for the benefit of the Scheme of 2002 by an order dated 21 February 2011. 15. The impugned order dated 21 February 2011 of the Empowered Committee takes note of the legal opinion of the Department of Legal Affairs and of the view of the Revenue Department according to which any industrial park which commences after 31 March 2006 is not eligible to be considered under the Industrial Park Scheme, 2002 and that the one year grace period cannot extend beyond 31 March 2006. The claim of the Peti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were to be adopted, the benefit of the provision would be denied to several projects where approvals were granted within a period of one year prior to 31 March 2006 when the Scheme was to expire. In the present case itself, approval was granted to the project on 24 July 2006. As a matter of fact, queries under the Right to Information Act have revealed that approvals have been granted to at least fifty projects as late as April 2007. This would suggest that it has been the consistent stand of the Empowered Committee that the completion of the project on or before 31 March 2006 has not been regarded as an inviolable condition for availment of benefits. 17. On the other hand, learned Counsel appearing on behalf of the Revenue submitted that : (i) Para 3 of the Scheme of 2002 postulates that the development of the facility has to be completed by 31 March 2006; (ii) The Scheme cannot override the provisions of Section 80-IA (4) (iii); (iii) Para 9 of the Scheme would apply only to those cases where there is a delay in the commencement of the project of the industrial park but when the commencement does not fall back beyond 31 March 2006; (iv) In the present case occupati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o be applicable to any undertaking which develops, develops and operates or maintains and operates an Industrial Park for the period beginning on 1 April 1997 and ending on 31 March 2006. Therefore, undoubtedly it was as a result of Para 3 that a requirement to the effect that the undertaking should develop an industrial park for the period commencing on 1 April 1997 and ending on 31 March 2006 came to be introduced. The Scheme, however, stipulated in Para 9 (1) that in case the commencement of the industrial park is delayed by more than one year from the date indicated in the application, a fresh approval would have to be obtained to get the benefit of the Act. The last sentence of Para 9 (1) then clarified that this condition would also apply to the existing approvals under the Industrial Park Scheme which envisaged the commissioning of the park, latest by March 31, 2002. Para 9 (1) took notice of the fact that approvals were granted under the previous Scheme which envisaged the commissioning of parks by 31 March 2002. The new Scheme was notified on 1 April 2002. If 31 March 2002 was to be treated as an absolute cut-off then it is unlikely that the last sentence of Para 9(1) woul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the park (as recorded in the application) was 15 March 2006. The Government noted that with a one year grace period the park should start functioning before 14 March 2007. The Petitioners were, therefore, called upon to disclose as to whether the park had become functional and if not how many units had been located as on 14 March 2007. On remand a hearing took place before the Empowered Committee on 7 September 2009. During the course of hearing the Committee observed that the most crucial element was whether the completion of the building had taken place before or after 14 March 2007. The Empowered Committee was persuaded to change its view on the basis of the position which was adopted by the CBDT which was also minuted during the course of a hearing which took place on 21 December 2009. The Committee was of the view that the issue of the grace period should be first resolved between the CBDT, the Department of Revenue and the Department of Industrial Policy and Promotion and a fresh meeting of the Empowered Committee should be convened. The affidavit in reply that is filed in these proceedings contains an extract of a legal opinion which was received from the Department of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnot override the provisions of the parent enactment. That is, however, not the case here. The statute contemplated that a scheme would be notified for the period between 1 April 1997 and 31 March 2006. The Scheme contemplates that the industrial park should be developed, developed and operated or be maintained and operated for the period beginning on 1 April 1997 and ending on 31 March 2006. This stipulation in Para 3 of the Scheme must however be read harmoniously with Para 9 which contemplates a situation where the commencement of any industrial park is delayed by more than one year from the date indicated in the application in which event a fresh approval has to be granted. This condition was also made applicable to existing approvals under the Scheme which had envisaged the commissioning of the park March by 31, 2002, prior to the enforcement of the Scheme on 1 April 2002. 21. We find merit in the contention of the Petitioners that if the position which has been adopted by the Empowered Committee were to be accepted, that would result in virtually defeating the salutary public purpose which underlies Section 80-IA (4) (iii). Notice would have to be taken of the fact that in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m eight to three. However, there was no change proposed either in the area as declared earlier or in the allocable area. Learned Counsel submitted that the Petitioners fulfilled in substance the object and substance underlying the Scheme and the Department was notified on 25 July 2007 that three units located in the park as on 14 March 2007 were occupied by Tata Consultancy Services Ltd., Polaris Software Lab. Ltd., and Bharti Airtel Ltd. Subsequently, the Petitioners notified the Department that an additional unit had been occupied by Citigroup Global Services Ltd. 23. The application filed by the Petitioners for a modification of the number of approved units was not allowed purely on the ground that the development of the industrial park was completed beyond 31 March 2006. For the reasons already indicated by us in the earlier part of this judgment, we have come to the conclusion that the Respondents were not justified in rejecting the application purely on the ground that the development of the park was not complete by 31 March 2006. In holding thus, the Empowered Committee disabled itself from exercising the power and jurisdiction which it had under Para 9(1) of the Scheme. ....