TaxTMI 
TaxTMI 
2025 (4) TMI 2035
X X X X Extracts X X X X
X X X X Extracts X X X X
....y development and also developing, operating and maintaining industrial park. In the year 2002 the Department of Industrial Policy and Promotion (DIPP) (under the Ministry of Commerce and Industry, Government of India) vide notification dated 01/04/2002, had notified a scheme for promotion, developing operating and maintaining Industrial Parks which provided incentive of deduction to the eligible undertakings u/s 80IA(4) (iii) of the Income tax Act. The assessee company, in the year 2004 made an application for obtaining approval for setting up of Industrial Park, Logitech Park, Mathuradas Vasanji Road, Andheri, Mumbai. Subsequently, in March 2005, a revised application was filed for obtaining approval for setting up of the Industrial Park, having an aggregate area of about 1,05,780 sqm. comprising of 14 industrial units in Phase I and Phase II through non-automatic route with the DIPP. The assessee company was conveyed approval of DIPP and the Empowered Committee set up under the scheme, vide communication dated 26/07/2006. Subsequently, a corrigendum was issued by the DIPP by the empowered committee on 04-08-2006 as there was some clerical error but the assessee's 14 Industrial u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the ld. AO holding that argument of the assessee challenging the order of CBDT are not sustainable and same cannot be considered either by the ld. AO or by the ld. CIT (A). 8. Accordingly, the assessee has challenged the disallowance of claim of deduction u/s. 80IA(4)(iii) confirmed in all three years by the ld. CIT(A). Apart from that assessee also raised additional ground which reads as under:- "The Ld. CIT(A) has failed to appreciate that the notification issued by the CBDT dated 26.03.2014 rescinding the earlier notification dated 17.11.2006 with retrospective effect from 17.11.2006 is illegal and bad in law. The Ld CIT(A) ought to have appreciated that no cognizance can be taken of such illegal and non-est notification of CBDT." 9. Before us the ld. Counsel for the assessee Shri Vijay Mehta, narrated the facts and the background of the matter stating that the assessee had made an application for approval of the Industrial Park to the Ministry of Commerce as stipulated under the Industrial Park Scheme, 2002. The said scheme has been notified by virtue of the power granted u/s.80IA(4)(ii) of the Act read with Rule 18C of Income Tax Rules, 1962. Pursuant to the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation for reduction of the units as approved earlier." 15. It would thus be seen that, there was no change in the ground situation and the number of units remained the same. Be that as it may the Ministry of Commerce, acting through Under Secretary rejected the application for the reduction in minimum no. of units vide his letter dated 03-02-2014 (PBP 22) Strangely, while rejecting the application for reduction in units, Under Secretary has observed that Since the undertaking had failed to meet the requirements as per the approval granted under the Scheme, CBDT would be entitled to take action accordingly. 10. Mr. Mehta pointed out that subsequently, the CBDT has completely mis-interpreted the above communication from the Under Secretary, Ministry of Commerce dated 03/02/2014 and revoked the notification dated 17/11/2006 granted-by-it-to the Industrial Park of the assessee company retrospectively The relevant part of the notification dated 26/03/2014, whereby the earlier notification has been withdrawn, reads as under:- "And, whereas, subsequently the Central Government (Ministry of Commerce and Industry) vide letter. no 15/29/2005-IP&ID dated 3rd February, 201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave challenged to the CBDT Notification dated 26th March 2014 as being beyond the decision dated 3rd February 2014 of the Central Government Ministry of Commerce and Industry which merely rejected the Petitioners Application for amendment of its approval and had only stated that it may withdraw its approval as an Industrial Park which was granted earlier by Notification dated 17th November 2006. We are prima facie satisfied that the decision dated 3 February 2014 taken by the Central Government Ministry of Commerce and Industry rejects the Petitioners application for amendment to the approval granted on 26th July 2006 and had only threatened withdrawal of the approval granted as Industrial Park. In the above view, the basis of the impugned notices is prima facie not sustainable" 13. From the above interim order, it is evident that Hon'ble Bombay High Court prima facie opined that the Ministry of Commerce had merely rejected the amendment application and threatened withdrawal of approval. The Hon'ble Bombay High Court has further observed that "in the above view, the basis of impugned notices is prima facie not sustainable". 14. Thus, in view of the liberty granted by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... again the correction letter was issued by Ministry of Commerce and Industry on 04/08/2006 wherein, there was some correction in the area of Phase-II and Phase II and accordingly, the approval was granted for Phase I of 19,027 sq.mtr and Phase II of 86,753 sq. mtr. In pursuance of the approval granted by Ministry of Commerce and Industry, CBDT issued a notification dated 17/11/2006 notifying all the 14 Units with the area approved under Industrial Park and accordingly, the assessee was entitled for claim of deduction u/s.80IA(4). Later on, assessee wrote a letter to Secretary, Department of Industrial Policy and Promotion (Ministry of Commerce and Industry) urging grant for reduction of number of units from 14 to 6 units, since existing units have been taken over by way of amalgamation or got merged with the existing unit in the Industrial Park without actually affecting the change in the areas. Thus, the assessee's request was to change the number of units and not the total area for which it was granted approval and notification by the CBDT. 3. Thereafter, it transpires that on 03/02/2014, Under Secretary to Government of India of Ministry of Commerce and Industry while d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cretary to the Government of India cannot withdraw the approval as it has to be done only by „Empowered Committee‟ of Ministry of Commerce and Industry. The assessee thereafter did approach and made representation to the Empowered Committee and in pursuance of that, the Empowered Committee, Ministry of Commerce and Industry vide Office Memorandum dated 25/11/2014 have clarified this issue in the following manner:- "(iv) The EC was informed that vide notification dated 26.03.2014, the CBDT had rescinded notification no. SO4700, dated 17.11.2006, w.e.f 17.11.2006 thereby denying the undertaking benefits under Income Tax Act 1961 from the very beginning. (v). DIPP was of the view that withdrawal of approval by CBDT w.e.f 17.11.2006 was a little too harsh which needs to be reviewed. The undertaking should be eligible for income tax benefits upto the date the undertaking adhered to the terms and conditions of approval including the condition of location of at least 14 units in its industrial park. (vi). CBDT informed the EC that the terms of approval / conditions of the notification were never met by the undertaking. Hence, CBDT rescinded notificat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rejects the Petitioners' application for amendment to the approval granted on 26th July 2006 and had only threatened withdrawal of the approval granted as Industrial Park. In the above view, the basis of the impugned notices is prima facie not sustainable. Therefore, pending disposal of this Petition, five impugned notices dated 28th March 2014 seeking to reopen the assessment of AYs 1997-98 to 2011-12 be stayed pending the final disposal of this Petition. Needless to state that the assessment and appellate proceedings for the subsequent assessment years are not in manner fettered by these proceedings though the same may be subject to final result of this Petition. The Petitioners are given liberty to approach the CBDT with a representation to modify / withdraw the Notification dated 26th March 2014." 8. Thus, the Hon'ble High Court have clarified that, firstly, the decision taken by the Central Government, Ministry of Commerce and Industry on 03/02/2015 and the application filed by the assessee for the amendment to the approval had only threatened the withdrawal of the approval granted to the Industrial Park; and secondly, assessment and appellate proceedings in the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and Industry dated 03/02/2014 which had been relied upon by the CBDT for withdrawal of notification has been clarified by the Empowered Committee Ministry of Commerce as well as by the Hon'ble Bombay High Court, then the earlier notification issued by the CBDT rescinding the notification has no legs to stand nor does it can said to be operative. We are in complete agreement with such contention of the ld. Counsel as here in this case as noted above, the Empowered Committee (Ministry of Commerce and Industry) has clarified that the approval granted to the assessee still continues and the withdrawal of the approval by the CBDT needs to be reviewed. Before us various other propositions has been made before us that the CBDT has no power to withdraw the notification retrospectively, however, at this stage we are not going into this issue. 11. Looking to the fact that already several years have lapsed either because of procrastination attitude by the CBDT or the lackadaisical approach of the Revenue authorities, the jeopardy and injustice to the assessee persists and is perpetuated year after year, whereby, on one hand the ld. AO is continuing to disallow the claim of deduction ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t assessee still hold the approval for all the 14 Units and area in the Industrial Park. Before us, the assessee has enclosed the list of occupants for all the three years of various units, which ld. JAO is directed to verify and report before us. The reason for seeking the report is that, firstly, assessee still continues to enjoy the approval of Ministry of Commerce and Industry and CBDT had also acknowledged it vide letter dated 15/03/2017, but yet no action has been taken or amended notification has been issued; and secondly, several years have lapsed whereby assessee continues to be taxed by way of disallowance of deduction u/s. 80IA(4). Ld. JAO is directed to submit his report within one month from the date of receipt of this communication / interim order. Assessee is also directed to cooperate with the Ld. AO to submit all the necessary documents. 13. List this case for hearing on 10/02/2025. The matter shall be listed as part heard. 16. The aforesaid interim order had captured all these facts which had been narrated by the ld. Counsel before us and the entire sequence of events including the order of the Hon'ble Bombay High Court dated 20/01/2016 in various comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... completion certificate was not applicable in the case of the assessee appears to be correct. He then added that the petitioner has in fact submitted Occupation Certificate (OC) issued by the Brihanmumbai Municipal Mahanagarpalika and also the completion certificate issued by the Architect, which evidence that not only the construction of the Park was completed but the same was ready to be occupied II. Number of units constructed at the time of completion of the Park The Assessing Officer in the report dated 04-08-2022 has referred to and relied upon earlier report of 13-05-2022 containing 78 pages. The Assessing Officer at page 77 of the report concluded as under As per the evidence in the form of building layout, occupation certificates, architect completion certificates, photographs submitted it is seen that the total area approved as per DIPP approval and constructed appears to be the same. The details of which are as under: a) Area and Number of Units to be constructed as per DIPP approval dated 26-07-2006 (amended vide letter dated 04-08-2006) Phase 1-5 units- Area of 19,027 Sq. mtrs. Phase II-9 units Area of 86,753 sq. mtrs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent Account Number (PAN) was the requirement of IPS 2008 which is riot applicable to the Petitioner In this regard, it is worthwhile to note that apparently, the Petitioner has mixed the terms "units with "tenants" It has originally constructed 19 (5+14) physical premises (ie units), for leasing out to 14 tenants Further, while the number of units constructed remained same since commencement of the industrial park, even when the Petitioner filed its amended application to the DIPP in December 2011, it is only the tenants, who got reduced due to the take-over/amalgamation/merger" The report indicates that the number of units or premises has remained unchanged since the beginning. There was no change in the total area of the Industrial Park or the Units. Thus it is clear that the assessee has originally constructed 19 (5+14) units or physical premises in the two phases of development of Industrial Park. That the number of units constructed remained the same even when the assessee filed its amended application to the DIPP in December 2011. It was only the number of tenants which got reduced due to the take-over / amalgamation / merger of the entities." 19. Thus, this fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ur view, once earlier notification was issued by CBDT, same cannot revoked / withdraw the notification with retrospective effect, because the withdrawal was on 03/02/2014. There is no provision which has been brought to our notice or shown that CBDT has power to withdraw the notification retrospectively. It is a well settled law that the executive orders / circulars in absence of any legislative competence cannot be made applicable with retrospective effect. This proposition has been upheld by the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. vs. Tata Communication Ltd. reported in (2022 SCC online SC 1280). For the sake of ready reference, the relevant observation and the principle laid down by the Hon'ble Supreme Court is as under:- "29. It is a settled principle of law that it is the Union Parliament and State Legislatures that have plenary powers of legislation within the fields assigned to them, and subject to certain constitutional and judicially recognized restrictions, they can legislate prospectively as well as retrospectively. Competence to make a law for a past period on a subject depends upon present competence to legislate on that subject. By ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Board ought to have notified the industrial park on getting a copy of approval letter dated June 21, 2001 of the Commerce Ministry, which is annexed to the writ-application as Annexure: A. 5. In order to appreciate the aforesaid question, it will be profitable to refer to the provision contained in Rule 18C of the Income Tax Rules, 1962 which is quoted below: "18C: Eligibility of Industrial Parks and Special Economic Zones for benefits under section 80IA[iii]:- [1] The undertaking shall begin to operate an 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 scheme for industrial park or Special Economic Zones notified by that Ministry. [3] The undertaking shall continue to fulfill the conditions envisaged in the scheme. ....