Gujarat Enviro Protection & Infrastructure Ltd., Surat V. The ACIT., Circle-1(1)(2), Surat

ITA 2605/AHD/2016

AI Insights

This case involves a series of appeals by the Gujarat Enviro Protection & Infrastructure Ltd. against the orders of the Deputy Commissioner of Income Tax, which disallowed deductions claimed under section 80IA(4) of the Income Tax Act for various assessment years. The main contention revolved around whether the company qualified for deductions under section 80IA(4) for its units engaged in solid waste management, based on the nature of the agreements and compliance with statutory requirements. The Tribunal examined the agreements, the nature of the operations, and the statutory provisions, ultimately concluding that the company did not meet the necessary conditions for the deductions claimed. The Tribunal also addressed issues related to the computation of income under section 115JB and the applicability of interest and penalties under sections 234B, 234C, and 271(1)(c) of the Act.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 301681 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2022
• Assessment Year: misc
• Appeal Filed On: 06-07-2020
• Other Referred Cases: Phul Chand Bajrang Lal and another vs. ITO, Dishman Pharmaceuticals and Chemicals Ltd. vs. DCIT (OSD), Ahmedabad, M/s TARMAT BEL(JV.) KCL, RAJKOT Vs. ITO Wd 1(4), B. T. Patil & Sons Belgaum Construction P. Ltd. vs. ACIT, Circle-2, Kolhapur, Dilip Kumar and Company & Ors vs. Exide Industries Limited & Ors
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Reopening of assessment; Business income; Depreciation; Rule of consistency; Retrospective amendment; Question of law; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 43B; 143(3); 142(1); 234B; 115JB; 80IA; 143(2); 139(1); 64; 43; 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, HON'BLE JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, HON'BLE ACCOUNTNAT MEMBER (Physical Court Hearing) Sl. No. ITA No. Asst. Year Appellant Respondent 1. 1048/AHD/2012 2009-10 Gujarat Enviro Protection & Infrastructure Ltd. 252/2, Lutha Mill Compound, GIDC, Pandesara, Surat-394221. PAN: AABCG3746 K Deputy Commissioner of Income Tax, Circle-1, Surat. 2. 1236/AHD/2012 2009-10 The Assistant Commissioner of Income Tax, Circle-1, Room No. 108, Aaykar Bhavan, Majura Gate, Surat-395001 Gujarat Enviro Protection & Infrastructure Ltd. 252/2, GIDC, Pandesara, Surat-394221. PAN: AABCG 3746 K 3. 1395/AHD/2010 2007-08 Gujarat Enviro Protection and Infrastructure (D & NH) Pvt. Ltd. 0252-02-01, GIDC, Pandesara, Surat PAN: AACCG 6016 F The DCIT, Circle-1, Surat. 4. 1438/AHD/2011 2006-07 Gujarat Enviro Protection and Infrastructure Ltd. 252/2, Luthra Mill Compound, GIDC, Pandesara, Surat. PAN: AABCG 3746 K Deputy Commissioner of Income Tax, Circle-1, Surat. 5. 1393/AHD/2010 2007-08 Gujarat Enviro Protection and Infrastructure Ltd. 252/2, Luthra Mill Compound GIDC, Pandesara, Surat PAN No.AABCG 3746 K DCIT, Circle-1, Surat 6. 1910/AHD/2015 2010-11 Gujarat Enviro Protection & Infrastructure Ltd. 252/2, Lutha Mill Compound, GIDC, Pandesara, Surat-394221. PAN: AABCG 3746 K Assistant Commissioner of Income Tax, Cricle-1, Surat. 7. 2250/AHD/2015 2010-11 Assistant Commissioner of Income Tax, Circle-1(1)(2), Room No. 110, Aayakar Bhavan, Majura Gate, Surat- 395001 M/s Gujarat Enviro Protection & Infrastructure Ltd. 252/2, GIDC, Pandesara, Surat-394221. PAN: AABCG 3746 K 8. 2521/AHD/2016 2012-13 Deputy Commissioner of Income Tax, Circle-1(1)(2), Room No.114, 1 st Floor, Aayakar Bhavan, Majura Gate, Surat-395001 M/s Gujarat Enviro Protection & Infrastructure Ltd. 252/2, GIDC, Pandesara, Surat-394221. PAN: AABCG 3746 K 9. 2605/AHD/2016 2012-13 Gujarat Enviro Protection & Infrastructure Ltd. 252/2, Lutha Mill Compound, GIDC, Pandesara, Surat-394221. PAN: AABCG 3746 K Assistant Commissioner of Income Tax, Circle-1(1)(2), Surat. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 2 आदेश / O R D E R PER BENCH: This is bunch of nine appeals, consisting six appeals filed by the Assessee and three cross-appeals filed by the Revenue, pertaining to different assessment years, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the “Act”]. 2. Since the issues involved in all these appeals are common and identical, therefore these six appeals of assessees and three cross-appeals of Revenue have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. Although, these appeals filed by the Assessees and Revenue, contain multiple grounds of appeals. However, at the time of hearing, we have carefully perused all the grounds raised by the Assessee as well as Revenue. We find that most of the grounds raised by the Assessee as well as Revenue are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of assessee and the Revenue as well. With this background, we summarize and concise the grounds raised by Assessee as well as, Revenue, as follows: (A) Concise and summarised grounds of appeal of assessee, in case of Gujarat Enviro Protection and Infrastructure ( D and NH) Pvt. Ltd ( PAN No.AACCG6016F) in ITA No.1395/Ahd/2010, for assessment year 2007-08. Ǔनधा[ǐरती कȧ ओर से /Assessee by: Shri Rasesh Shah, CA राजèव कȧ ओर से /Respondent by: Shri H. P. Meena, CIT(DR) with Shri J. K. Chandnani, Sr. DR स ु नवाई कȧ तारȣख/Date of Hearing: 07/10/2022 उɮघोषणा कȧ तारȣख/Date of Pronouncement: 25/11/2022 ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 3 “Learned CIT(A) has erred in law and on facts in confirming action of assessing officer in disallowing of Rs. 8,033/- being liability for expenditure on top liner expenses” (B) Concise and summarised grounds of appeal of Assessee, in case of Gujarat Enviro Protection and Infrastructure Ltd (PAN No.AABCG3746K). “(1) ITA No.1438/Ahd/2011, for A.Y.2006-07: Assessee challenged the validity of reassessment under section 147 r.w.s.143(3) of the Act stating that ld CIT(A) erred in not appreciating that relevant material was disclosed in the original return of income and mere change of opinion does not empower the assessing officer to reopen concluded assessment” (2) The ld CIT(A) erred in confirming the action of the assessing officer in disallowing deduction claimed under the provisions of section 80IA(4) of the Act in respect of profits and gains of eligible infrastructure facility. (a) ITA No.1438/Ahd/2011, A.Y. 2006-07, Alang Unit Rs.1,18,364/-. (b) ITA No.1395/Ahd/2010, A.Y. 2007-08, Alang Unit Rs.9,00,178 /- (c)ITA No.1048/Ahd/2012, A.Y. 2009-10, Alang Unit Rs.44,33,160/- (d) ITA No.1236/Ahd/2012, A.Y. 2009-10, VMC Unit Vadodara, Rs.1,01,40,667/- (e) ITA No.1910/Ahd/2015, A.Y. 2010-11, Alang Unit, Rs.30,66,609/- (f) ITA No.1910/Ahd/15, A.Y. 2010-11, SMC Unit Rs.27,40,226 /- (g) ITA No.1910/Ahd/15, A.Y. 2010-11, NMC Unit Rs.1,01,40,667/- (h) ITA No.2605/Ahd/16, A.Y. 2012-13, Alang Unit Rs.57,74,450/- (i) ITA No.2605/Ahd/16, A.Y. 2012-13, NMC Unit Rs.1,62,84,844 /- (3) Learned CIT(A) has erred in law and on facts in disallowing following expenses: (i) Top Liner Expenses (a)ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.62,09,335/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.64,06,835/- (c ) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.54,96,526/- (ii) Post Monitoring Expenses (a)ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.22,47,292/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.32,41,860 /- (c ) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.33,65,220/- (iii) Land utilization charges/expenses (a)ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.4,16,669/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.5,40,310/- (c) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.4,55,383/- ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 4 (4) Learned CIT(A) has erred in law and on facts in confirming income computed by assessing officer under section 115JB of the Act, by making adjustments to the book profit: (a) ITA No.1393/Ahd/10, A.Y.2007-08 (b) ITA No.1048/Ahd/12, A.Y.2009-10 (5) Learned CIT(A) has erred in disallowing employees contribution towards ESIC of Rs.3,46,338/- ignoring the fact that same was paid before due date of filing of return on income. This ground is raised by the assessee in ITA No.2605/Ahd/2016 for assessment year 2012-13. (6) Initiation of levy of interest u/s 234B and 234C of the Act is not justified (a) ITA No.1393/Ahd/2010 for A.Y.2007-08 (b) ITA No.1048/Ahd/2012 for A.Y.2009-10 (7) Initiation of penalty u/s 271(1) (c) of the Act is not justified (a) ITA No.1393/Ahd/10, A.Y.2007-08 (b) ITA No.1048/Ahd/12, A.Y. 2009-10 (c) ITA No.1910/Ahd/15, A.Y. 2010-11 (d) ITA No.2605/Ahd/16, A.Y. 2012-13 (8) Grounds of appeal not pressed by the assessee: (i) In ITA No.1393/Ahd/2010, for A.Y.2007-08: Assessee did not press ground No.3 and ground No.5. (ii) In ITA No.1910/Ahd/2015, for A.Y.2010-11: Assessee did not press ground No.5. (c) Concise and summarised grounds of appeal of Revenue, in case of Gujarat Enviro Protection and Infrastructure Ltd (PAN No.AABCG3746K). (1) On the facts and circumstances of the case and in law, the ld CIT(A) has erred in deleting the addition made on account of disallowance of claim under section 80IA(4) of the Income Tax Act, in respect of the following units: (i) ITA No.1236/A/12, A.Y. 2009-10, Gabheni Unit, Rs.15,35,59,562/- (ii) ITA No.2250/A/15, A.Y. 2010-11, Gabheni Unit, Rs.19,32,33,992/- (iii) ITA No.2521/A/16, A.Y. 2012-13, Gabheni Unit, Rs. 1,42,35,127/- (iv) ITA No.2521/A/16, A.Y. 2012-13, Co-Processing Unit, Rs. 1,25,70,515/- (v) ITA No.2521/A/16, A.Y. 2012-13, Palsana Unit, Rs. 6,50,77,043/- 4. Now, we shall take these concise and summarized grounds of appeal one by one, as follows: ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 5 5. (A) Concise and summarised grounds of appeal of assessee, in case of Gujarat Enviro Protection and Infrastructure (D and NH) Pvt. Ltd ( PAN No.AACCG6016F) in ITA No.1395/Ahd/2010, for assessment year 2007-08. “Learned CIT(A) has erred in law and on facts in confirming action of assessing officer in disallowing of Rs. 8,033/- being liability for expenditure on top liner expenses” 6. At the outset, Learned Counsel for the assessee, informs the Bench that assessee does not wish to press this appeal, therefore, we dismiss assessee`s appeal in ITA No.1395/Ahd/2010, for assessment year 2007-08, as not pressed. 7. Now we shall take concise and summarised grounds of appeal of Assessee, in case of Gujarat Enviro Protection and Infrastructure Ltd (PAN No.AABCG3746K). “(1) ITA No.1438/Ahd/2011, for A.Y.2006-07: Assessee challenged the validity of reassessment under section 147 r.w.s.143(3) of the Act stating that ld CIT(A) erred in not appreciating that relevant material was disclosed in the original return of income and mere change of opinion does not empower the assessing officer to reopen concluded assessment” 8. Succinct facts qua the issue are that in assessee`s case under consideration, the assessment u/s 143(3) of the Act was completed on 26.12.2008, determining the total income at Rs.3,10,033/-. Subsequently on perusal of the case records, it was noticed that assessee-company has claimed deduction of Rs.2,58,47,697/- u/s 80IA(4) of the Act, which includes income of Rs.1,18,364/- derived from the Alang unit of the assessee-company, the work contract of which was awarded by some other person and executed by the assessee-company and the same was allowed by the Assessing Officer while finalizing the assessment u/s 143(3) of the Act, on 26.12.2006. Further, it was noticed that assessee-company has not fulfilled the conditions laid down for claiming deduction u/s 80IA of the Act and therefore the assessee was not eligible for deduction u/s 80IA(4) of the Act, in respect of profit derived from Alang unit of the assessee-company. Since the deduction of Rs.1,18,364/- claimed by the assessee was wrongly allowed by the Assessing Officer while ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 6 finalising the assessment u/s 143(3) of the Act, there was an underassessment of income to the extent of Rs.1,18,364/-. Therefore, the case was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act, dated 25.02.2010, after recording the reasons for doing so. The notice u/s 148 of the Act dated 25.02.2010 was duly served upon the assessee on 26.02.2010. In response to the same the assessee vide letter dated 15.03.2010 stated that the return of income filed on 20.12.2006 may be treated as the return of income filed in response to notice issued u/s 148 of the Act, dated 25.02.2010. The reasons recorded for re-opening of the assessment has also been given to the assessee. The assessee, vide its letter dated 15.03.2010, objected the reopening of the assessment. The objection filed by the assessee was carefully considered by AO and the same was rejected, vide order dated 16.03.2010. Subsequently, notice u/s 143(2) & 142(1) of the Act was issued and duly served upon the assessee. The assessee was asked to show cause as to why the deduction of Rs.1,18,364/- claimed u/s 80IA(4) of the Act in respect of profit derived from Alang unit of the assessee-company, should not be disallowed. In response to the same, the assessee, vide its letter dated 30.03.2010 furnished its written submission. The assessing officer, after considering the submission of the assessee, disallowed the deduction claimed by the assessee under section 80IA(4) of the Act, to the tune of Rs.1,18,364/-. 9. On appeal, ld CIT(A) held that reassessment proceedings initiated by the assessing officer was valid. Aggrieved, the assessee is in appeal before us. Learned Counsel for the assessee submitted that re-opening of assessment u/s 147 of the Act was based on change of opinion. Such reason to believe must be based on some material coming to the possession of the Ld. Assessing Officer which may trigger reason to suspect. There must be the direct nexus or link between the material and the formation of such belief. Since in the assessee`s case, the issues/items for which the Assessing Officer has reopened the assessment had already been disclosed by the assessee in the return of income filed by him u/s 139(1) of the Act, therefore reopening is bad in law. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 7 by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 10. We have heard both the parties and gone through the reasons recorded by the assessing officer and noted that there is no infirmity in the reasons so recorded by the assessing officer. The Hon'ble Supreme Court in the case of Phul Chand Bajrang Lal and another vs. ITO 203 ITR 456, was considering the question of reassessment beyond the period of four years in the case of an assessee firm; and had held that in case of acquiring fresh information specific in nature and reliable, relating to the concluded assessment, which went to falsify the statement made by the assessee at the time of original assessment and, therefore, he would be permitted under the law to draw fresh inference from such facts and material. The Court also went to an extent of saying that there are two distinct and different situations where the transaction itself on the basis of subsequent information is found to be bogus transaction and in such event, mere disclosure of the transaction cannot be said to be true and full disclosure and the Income-tax Officer would have jurisdiction to reopen the concluded assessment. The Apex Court in the case of Phul Ghand Bajrang Lal (supra), observed as following: "...one has to look to the purpose and intent of the provisions. One of the purposes of Section 147 appears to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice to turn around and say you accepted my lie, now your hands are tied and you can do nothing'. It would, be travesty of justice to allow the assessee that latitude." 11. The Hon'ble Gujarat High Court in the case of Dishman Pharmaceuticals and Chemicals Ltd. vs. DCIT (OSD), Ahmedabad (2012) 346 ITR 228 (Guj) has summed up the requirements of the law, in such circumstances and has held as follows: "There is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Officer had reason to believe that certain income has escaped assessment and such escapement of income was on account of non-filing of the return by the assessee or failure on ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 8 his part to disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor, absence of any such statement would be fatal, if on the basis of reasons recorded, it can be culled out that there were sufficient grounds for the Assessing Officer to hold such beliefs." 12. We note that reasons recorded by the assessing officer were in accordance with law, therefore, we dismiss the summarized ground no.1 raised by the assessee in ITA No.1438/Ahd/2011, for A.Y.2006-07 13. Concise and summarized ground No.2 raised by the assessee is reproduced below for ready reference: “(2) The ld CIT(A) erred in confirming the action of the assessing officer in disallowing deduction claimed under the provisions of section 80IA(4) of the Act in respect of profits and gains of eligible infrastructure facility. (a)ITA No.1438/Ahd/11, A.Y. 2006-07, Alang Unit Rs.1,18,364/-. (b) ITA No.1393/Ahd/10, A.Y. 2007-08, Alang Unit Rs.9,00,178 /- (c) ITA No.1048/Ahd/12, A.Y. 2009-10, Alang Unit Rs.44,33,160/- (d) ITA No.1048/Ahd/12, A.Y. 2009-10, VMC Unit Vadodara, Rs.1,01,40,667/- (e) ITA No.1910/Ahd/15, A.Y. 2010-11, Alang Unit, Rs.30,66,609/- (f) ITA No.1910/Ahd/15, A.Y. 2010-11, SMC Unit Rs.27,40,226 /- (g) ITA No.1910/Ahd/15, A.Y. 2010-11, NMC Unit Rs.1,01,40,667/- (h) ITA No.2605/Ahd/16, A.Y. 2012-13, Alang Unit Rs.57,74,450/- (i) ITA No.2605/Ahd/16, A.Y. 2012-13, NMC Unit Rs.1,62,84,844 /- 14. The contention raised by the assessee in the concise ground No.2 is that these above units are engaged in operating and maintaining solid waste management system and thus qualifying as infrastructure facility. That is, these units are engaged in developing infrastructure facility, hence eligible for deduction under section 80IA(4) of the Act and Ld. CIT(A) wrongly applied the amendment made in section 80IA(4) by Finance Act, 2009. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 9 15. In order to adjudicate the issue relating to deduction under section 80IA(4) in respect of the above units, we take lead case of Alang Unit- assessment year 2010-11. The facts narrated by the assessing officer in respect of Alang Unit for assessment year 2010-11, are as follows: The assessee has claimed deduction u/s 80IA(4) of the I.T. Act of Rs,30,66,609/-. The assessee company has works contract of which was awarded by some other person and executed by the assessee company. Since the assessee company is not the owner of the project, deduction u/s 80IA(4) will not be allowable to the assessee- company in respect of Alang Unit in view of the amended provision of Explanation to Section 80IA inserted by the Finance Act (No.2) 2009 effective with retrospective effect from 01.04.2000. Accordingly, the assessee was asked to explain and justify the claim of deduction u/s 80IA(4) in respect of income derived from Alang Unit with supporting proof and documentary evidences. 16. In response to the same, the assessee has filed its submission dated 16.02.2013, before the assessing officer, which is reproduced as under: “As regards allowability of deduction u/s 80IA(4) in respect of profits and gains from Company's Alang Unit we Have to submit as under: The Company's Alang unit is engaged in operating and maintaining of solid waste site under a contract from Gujarat Maritime Board governed by Government of Gujarat. Copy of the agreement is enclosed as Annexure "B-3". It is submitted that as the Company has entered into contract with the government body for operating and maintaining infrastructure facility it is eligible for deduction u/s 801A(4) of the I.T. Act beyond doubt. Relevant portion of section 80IA the Act as it stood then is reproduced hereinabove under submission justifying claim in respect of SMC unit. On plain reading of above it is very clear thar any undertaking engaged in business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the conditions specified under sub section 4 to section 80IA shall be eligible to claim deduction of 100 % of profits and gains derived from that business carried on by any undertaking owned by Company. It is pertinent to note that ownership condition is with reference to undertaking and not with reference to infrastructure facility, and as such Company need not own infrastructure facility. The condition regarding ownership is unambiguous and very clear, which states that undertaking carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing. operating and maintaining any infrastructure facility should be owned by Company. It is contended that the sub-clause (a)(b)&(c) begins with the word "it" and the reference to the word ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 10 "it" in these sub-clauses to clause (i) to sub-section (4) of section 80IA is with regard to the undertaking / enterprise and not with reference to the infrastructure facility. Had the intention of the legislature was to lay down the condition regarding owning of the infrastructure facility by the undertaking than it would not have categories operating and maintaining of facility as separate category. It is pertinent to note that the intention of the legislature is very clear and therefore it categories separate category of operating and maintaining which can only be of the facility owned by others. It may be noted that operating and marinating of facility owned by the undertaking itself is otherwise covered under developing, operating and maintaining. It is therefore clear beyond doubt that undertaking which is engaged in the business of operating and maintaining infrastructure facility should be owned by Company and not that infrastructure facility should be owned by the undertaking. In view of above it is submitted that profits and gains derived by Alang unit is eligible for deduction u/s 80IA and we request your good self to please allow the same. It is submitted that even the amended explanation inserted vide, Finance Act (No,2) 2009 w.e.f. from 01-04-2000 which is reproduced hereunder does not come in way for claiming deduction under section 80IA in respect of Alang unit. The explanation was amended vide "Finance (No. 2) Act, 2009 after the assessee company entered into agreement with Gujarat Martime Board. Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub- section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1) On plain reading of above it does not speak of any ownership condition. It only specifies that the provisions of sub-section (4) are not applicable to business referred therein in case of works contract awarded by any person (including Central or State Government) and executed by any undertaking. It is further submitted that the undertaking has not entered into any works contract but it is exclusive operation and maintenance contract and therefore deduction u/s 80IA(4) of the Act is allowable beyond doubt. It may be noted that recently Hon'ble Rajkot Bench of ITAT also allowed deduction u/s 80IA in case of contract between undertaking and government body in the case of M/s TARMAT BEL(JV.) KCL, RAJKOT Vs. ITO Wd 1(4) in ITA No. 1111/RJT/2010, thus dissenting with the decision in case of B. T. Patil & Sons Belgaum Construction P. Ltd. The case of the assessee company is also clearly distinguishable from the case of B. T. Patil and Sons and it does not operate against the assesses- company because the facts of that case are clearly distinguishable from the facts of the case of assessee Company. In case of B. T. Patil and Sons the assessee therein was a sub- contractor and in case of the assessee Company it has directly entered into contract with the statutory body for operating and maintenance of infrastructure facility. The aforesaid views of the assessee company also find supports from various decisions of ITAT and High Court. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 11 Without prejudice to the contentions that the assessee Company is not hit by the rigors of the Explanation as it is operating and maintaining infrastructure facility, the assessee contends that it is well settled that only procedural amendments can have retrospective effect. Any amendment which is otherwise substantive in nature can never have a retrospective effect unless the same is beneficial to an assessee. The Explanation of any section has to subserve the main provisions of the statute and it cannot be read to curtail it or override it. In the facts of the present case, the impugned explanation added with respect to section 80-IA(4) of the Act is a substantive amendment substantially curtailing the right of an assessee to claim the deduction under section 80-IA(4) of the Act, which was otherwise available to it. This retrospective amendment is thus unduly oppressive and confiscatory. It is also contended that the relief granted under the main provisions of the Act cannot be taken away by way of amendment with retrospective effect by substituting the Explanation. It is submitted that the explanation cannot override the main provisions. It is submitted that the newly inserted Explanation to section 80-IA(4) of the Act with retrospective effect from 01/01/2000 is ultra vires the Constitution of India, suffers from lack of legislative competence, violates fundamental rights of the Petitioner and also suffers from the vice of arbitrariness, unreasonableness, discrimination and it is a colourable exercise of legislative powers and therefore the same is in gross violation of Articles 14 and 19(1)(g) of the Constitution of India, The assessee Company has therefore filed writ petition in Hon'ble High Court of Gujarat challenging the amendment. In view of above deduction u/s 80IA(4) of the Act claimed in respect of profits and gains derived from the Alang unit is fully justified.” 17. However, the assessing officer rejected the contention of the assessee and held that as per the amended provision of Explanation to Section 80IA, of the I.T. Act, deduction u/s 80IA(4) of the I.T. Act shall not be allowable to an assessee engaged in the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility, the nature of a work contract awarded by any person [including the Central or State Government] and executed by the undertaking or enterprise referred to Sub- Section (1) of Section 80IA. In the instant case, the work contract was awarded by some other person and executed by the assessee company. Therefore, as per the amended provision of Explanation to Section 801A inserted by the Finance Act (No.2) 2009 with retrospective effect from 01.04.2000, the deduction u/s 80IB (4) claimed by the assessee from the profits and gains of Alang Unit of the assessee company is not allowable and hence the same is disallowed and added to the total income to the tune of Rs.30,66,609/-. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 12 18. On appeal, ld CIT(A) confirmed the action of the assessing officer observing as follows: “7.2 This issue is covered against the assessee by the decisions of my predecessors for A.Y.2006-07, 2007-08 and 2009-10. The Id. CIT(A)-I, Surat vide his order dated 21.03.2012 has decided the issue against the assessee for A.Y. 2009-10 by giving detailed reasoning in Para 7.4 & 7.5 of his order. The CIT(A) has elaborated in Para 7.4.3 of the order that assessee entered into MoU with Gujarat Maritime Board (GMB) for operation of landfill site built by GMB. The assessee is entitled to collect membership charges from Ship breakers and pay 10% of the same to GMB retaining 90% as consideration for operating the landfill site. The contract is of outsourcing of operation of infrastructure facility built and owned by GMB for contract period of 3 years. The CIT(A) while distinguished the decision of ITAT, Rajkot in the case of M/s. Tarmat Bell (supra) and held that the assessee was executing a "work contract" for "operation & maintenance of Alang Facility” and not eligible for deduction u/s 80IA(4) of the Act. 7.3 The facts and arguments of the assessee remain the same, there is facts and law following the "rule of consistency", the issue is decided against the assessee following the decisions rendered by my predecessors in A.Y 2006-07, 2007-08 & 2009-10. Accordingly, the ground of appeal is hereby dismissed. 19. We also reproduce, the CIT(A)`s findings in respect of SMC unit, which is as under: “8. The AO has observed in Para 6 of the assessment order that the assessee has claimed deduction of Rs.27,40,226/- on profits derived by it from activity of developing of Municipal Solid Waste (MSW) site under a work order obtained through tender from Surat Mahanagar Seva Sadan (SMSS). The AO was of the view that since the assessee was not owner of the facility but only obtained a "works contract", it was not eligible for deduction as per amended, provision of 80IA w.e.f. 01.04.2000. As per the details filed by the assessee, an agreement was executed between GEPIL (assessee) and A.K, Patel & Co. (Const.) Pvt. Ltd. and SMSS on 23.04.2009 for approved of Rs.20,51,20,768/- towards construction of the project (i.e. MSW site) and Rs.2,88,54,370/- towards successive Operation & Maintenance of project for a period of 5 years. As per the terms of agreement, company had to first design & develop the MSW site and on completion of the same have to undertake Operation & Maintenance by levying tipping fees. During the year under consideration, SMC unit undertook development and designing of the MSW site. 8.1 During the assessment proceedings, the assessee filed the written submission which has been reproduced on page 17 to 21 of the assessment order. The ld. AO did not find the submission filed by the assessee satisfactory and for the reasons mentioned in para 6.3 of the assessment order, disallowed the claim of the deduction, the same are not reproduced here to avoid repetition. 8.2During the appellate proceedings, the AR of the assessee filed a detailed submission (pg 34 to 44 of Paper Book) which is almost similar as filed in ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 13 support of its claim about Alang Unit & VMC Unit. This submission is not reproduced here to avoid repetition. The arguments and judicial interpretation remains the same as done about Alang Unit & VMC unit (discussed in next ground of appeal) and the finding of the AO are also identical. 8.3 The Id. C1T(A) in his order for A.Y. 2009-10 of deduction in respect of profit earned from VMC Unit engaged in business of developing of Municipal Solid Waste (MSW cite for Vadodara Mahanagar Seva Sadan (VMSS) and held that the arrangement was a "works contract" of developing, operating and maintaining the facility. It was held that in view of the amendment brought in by Finance Act 2009 w.r.e.f. 01.04.2000 the assessee is not eligible for deduction u/s 80IA(4) on profit earned from ''works contract". The terms agreement and its nature is almost mirror image of agreement done for VMC Unit. The decision of AO In respect of disallowance of deduction for VMC Unit has been upheld by my predecessor in A.Y.2009-10 after giving detailed reasoning & discussion in Para 8.4 & 8.5 of the appellate order dated 21.03.2012. Therefore, following the rule of consistency, the disallowance of deduction u/s 80IA(4) of the Act of Rs.27,40,226/- in respect of SMC Unit is upheld for the reason that facts, contentions of assessee and finding of the AO being remained the same, the decision of my predecessor rendered in AY 2009-10 is followed. In view of this ground of appeal is dismissed.” 20. We also reproduce, the CIT(A)`s findings in respect of NMC unit, which is as under: “Discussion and appellate decision: 9.4 After considering the submission and facts of the case, it is noticed that this issue has similar shades & contour as were relating to VMC & SMC. On the basis of same reasoning and following the precedent in its own case in A.Y 2009-10 when ld. CIT(A)-I, Surat has upheld the disallowance made by AO, I am of the considered view that following the rule of consistency & Hon'ble jurisdictional High Court decision (in SCA 11286/2009), the issue is covered against the assessee. Hence, the disallowance of Rs.1,40,21,149/- made by AO is hereby sustained. This ground of appeal is dismissed.” 21. Aggrieved by the order of ld CIT(A), the assessee is in appeal before us. 22. The ld Counsel for the assessee, argues that assessee company claimed deduction of Rs. 30,66,609/- being profits derived from Alang Unit. The claim of deduction u/s 80IA(4) was supported by Form No. 10 CCB which was filed alongwith the return of income. The agreement with the Gujarat Maritime Board was executed on 10.10.2005 and therefore this deduction of Rs. 30,66,609/- for Alang Unit was claimed from year to year. In the course of assessment proceedings, assessing officer issued the show cause notice. In response to the show cause notice issued by the assessing officer, assessee filed the detailed ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 14 written submission which has been reproduced by the assessing officer at page no. 23 to 25. The assessing officer was not satisfied with the submission of the assessee and he made the disallowance of Rs. 30,66,609/- as per his finding given at page no. 25 on the ground that assessee entered into works contract with GMB which is hit by the newly inserted explanation to S. 80IA by Finance Act No. 2, 2009 effective retrospectively from 01.04.2000. In the reassessment order passed for A.Y. 2006-07, the assessing officer relied on the decision of Mumbai Tribunal (SB) in the case of M/s. B. T. Patil & Sons Belagaum Construction Pvt. Ltd. Vs. ACIT, Circle-2, Kolhapur. In the assessment order for A.Y. 2006-07, A.Y 2007-08 and A.Y. 2009-10, the assessing officer also rejected the claim of the assessee on the ground that assessee is not the owner of the infrastructure facility. The ld. CIT(A) agreed that assessee need not be owner of the infrastructure facility. However, ld CIT(A) held that agreement with the GMB is in the nature of work contract as the contract was mainly for operation of the facility and other incidental activities for which assessee was required to make investment but that doesn’t take out the assessee from the purview of the works contract. The assessee relies on the same arguments that it were made by it in assessment year 2006-07 at para no. 11 to 17 of the written submission. In this case, the ld. CIT(A) specifically raised the issue that deduction u/s 80IA(4) is not allowable for Alang Unit, as assessee was required to operate the infrastructure facility only. In this connection it is submitted that assessee specifically made the submission at para no. 17 of the submission made for A.Y. 2006-07 that in such case also the deduction u/s 80IA(4) is allowable. The ld Counsel also submits that facts are identical in case of Alang unit, VMC unit, SMC unit and NMC unit, therefore deduction under section 80IA(4) may be allowed in respect of these units. 23. On the other hand, ld DR for the Revenue, pleads in respect of Alang unit, VMC unit, SMC unit and NMC unit, that these units were bogus and created by the assessee to defraud the revenue. None of these units fulfils the basic conditions for claiming deductions under section 80IA(4) of the Act. The ld DR, ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 15 by taking an example of SMC unit, pointed out that assessee has claimed deduction of Rs.27,40,226/- on profits derived by it from activity of developing of Municipal Solid Waste (MSW) site under a work order obtained through tender from Surat Mahanagar Seva Sadan (SMSS). Since, the assessee was not owner of the facility but only obtained a "works contract", it was not eligible for deduction under section 80IA(4) of the Act. The ld DR cited identical examples for other units and states that assessee is not eligible to claim deduction under section 80IA(4) in respect of Alang unit, VMC unit, SMC unit and NMC unit. 24. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. In respect of Alang unit, we note that assessee entered into MoU with Gujarat Maritime Board (GMB) for operation of landfill site built by GMB. The assessee is entitled to collect membership charges from Ship breakers and pay 10% of the same to GMB retaining 90% as consideration for operating the landfill site. The contract is of outsourcing of operation of infrastructure facility built and owned by GMB for contract period of 3 years. The CIT(A) held that assessee was executing a "work contract" for "operation & maintenance of Alang Facility” and thus not eligible for deduction u/s 80IA(4) of the Act. In respect of SMC unit, the assessee was not owner of the facility but only obtained a "works contract", therefore it was not eligible for deduction under section 80IA(4) of the Act. We note that issue is similar shades & contour, relating to VMC and NMC units. We note that ld Counsel filed a detailed written submission before the Bench for each unit which is almost similar as filed in support of its claim about Alang Unit and VMC Unit. We note that Alang unit, VMC unit, SMC unit and NMC unit are engaged in works contract, therefore all these units are not eligible for deduction under section 80IA(4) of the Act. This submission is not reproduced here to avoid repetition. The arguments and judicial interpretation remains the same as done about Alang Unit and VMC unit by ld Counsel and the finding of ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 16 the AO are also identical.The findings of ld CIT(A) about VMC unit are same therefore we do not reproduce the findings of ld CIT(A) in respect of VMC unit. 25. We note that, it is the settled law that a fiscal statue shall have to be interpreted on the basis of the language used therein and not dehors the same. We note that there is no ambiguity in the provision of section 80IA(4) of the Act, and it is a settled law, in view of the decision of the Hon`ble Apex court in the case of IPCA Laboratory Ltd v Dy, CIT[2004] 266 ITR 521/135 TAXMAN 594 that when there is no ambiguity in the provisions of the stature, the provisions cannot be interpreted to confer the benefit on the assessee. Even Hon`ble Mumbai High court in the case of Indian Rayon Corp Ltd vs CIT[1998] 23 ITR 26/97 taxman.501(BOM), has categorically held that principles of beneficial interpretation would apply only in a case where there is a doubt about the true scope and ambit of the provisions. In view of above, the AO noted that assessee is not entitled to claim deduction under section 80IA(4) of the Act and therefore, we agree with the findings of the assessing officer. 26. On identical facts, our view is also fortified by the judgment of the Hon`ble Supreme Court in the case of M/S. DILIP KUMAR AND COMPANY & ORS, in CIVIL APPEAL NO. 3327 OF 2007, dated 30.07.2018, wherein it was held as follows: “52.To sum up, we answer the reference holding as under (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled.” 27. Under the facts and circumstances as well as the legal position in the matter, as explained above, we do not find any merit in assessee`s appeal, as the ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 17 assessee is not eligible to claim deduction under section 80IA (4) of the Act, in respect of Alang unit, VMC unit, SMC unit and NMC unit, as noted below: (a) ITA No.1438/Ahd/11, A.Y. 2006-07, Alang Unit Rs.1,18,364/-. (b) ITA No.1393/Ahd/10, A.Y. 2007-08, Alang Unit Rs.9,00,178 /- (c) ITA No.1048/Ahd/12, A.Y. 2009-10, Alang Unit Rs.44,33,160/- (d) ITA No.1048/Ahd/12, A.Y. 2009-10, VMC Unit Vadodara, Rs.1,01,40,667/- (e) ITA No.1910/Ahd/15, A.Y. 2010-11, Alang Unit, Rs.30,66,609/- (f) ITA No.1910/Ahd/15, A.Y. 2010-11, SMC Unit Rs.27,40,226 /- (g) ITA No.1910/Ahd/15, A.Y. 2010-11, NMC Unit Rs.1,01,40,667/- (h) ITA No.2605/Ahd/16, A.Y. 2012-13, Alang Unit Rs.57,74,450/- (i) ITA No.2605/Ahd/16, A.Y. 2012-13, NMC Unit Rs.1,62,84,844 /- 28. Hence, we find no reason to interfere in the said orders of the ld CIT(A), (respective assessment years and units noted above) and the same is hereby upheld. Therefore, concise ground No.2 of appeals of Assessee is dismissed. 29. The concise and summarized ground No.3 of appeals of Assessee, is reproduced below: “(3) Learned CIT(A) has erred in law and on facts in disallowing following expenses: (i).Top Liner Expenses (a) ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.62,09,335/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.64,06,835/- (c) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.54,96,526/- (ii) Post Monitoring Expenses (a) ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.22,47,292/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.32,41,860 /- (c) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.33,65,220/- (iii) Land utilization charges/expenses (a) ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.4,16,669/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.5,40,310/- (c) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.4,55,383/-“ ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 18 30. To adjudicate the issue relating to Top Cover expenses, Post Monitoring Expenses, and Land utilization charges/expenses, we have taken the lead case in ITA No.1910/Ahd/2015, for assessment year 2010-11. 31. The relevant material facts, as culled out from the material on record, are as follows. In respect of Provision for Top Cover expenses, the assessing officer examined the relevant documents and details submitted by the assessee. On verification of the audited accounts of the assessee and annexure thereof, schedule "L" of the notes on account, annexed to the audited accounts vide note no. (II)-(C) & (D) in which the accounting principle followed by the assessee is mentioned. The assessee-company is engaged in developing, operating and maintaining hazardous solid waste management and treatment and disposal. The waste is dumped into secured landfill which are the final grave, yard of solid waste. The major components of secured landfill are: a) Bottom Liner systems b) Side Liner systems c) Top Liner systems d) Leachel Collection systems and e) Ground Water Monitoring systems. The items at a), b), d) and e) have been completed at first stage and the expenses on the same have already been incurred. Top Liner system is made alter the waste is filled and compacted in the cell. The company has arrived at service charges as per tonne considering the cost estimated to be incurred on the Top Liner systems. As the cost of Top Liner system has already been built up into the revenue a view has been taken that based on the matching principle and mercantile system of accounting provision for the cost to be incurred on Top Liner system is required to be made in books to give true and fair view as on the date of balance sheet. The assessing officer noted that during the year, the assessee has claimed provision for top cover at Rs.54,96,526/-. Further assessee has also claimed Rs.32,41,860/- in its balance sheet under the head provision for post monitoring expenses, and an amount of Rs.33,65,220/- is debited to profit and loss account of the assessee. In view of that assessee was asked to show cause why not provision kept aside for top liner expenses and post monitoring expenses should not be disallowed as they are not incurred during the year. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 19 32. In response to the show cause notice, the assessee has furnished the following explanation, vide his reply dated 27.02.2013, which is reproduced as below. “Vide above referred letter we have been asked to show cause as to why top cover expenses of Rs.54,96,526/- should not be disallowed. As regards allowability of provision of top cover and post monitoring expenses, the assesses company would like to submit as under: The assessee Company is an Integrated Common Hazardous Wastes Treatment, Storage and Disposal Facility (ICHWTSDF) at Surat. ICHWTSDF is a community based approach for the treatment and disposal of solid hazardous wastes generated by the cluster of industries, where the industries have to become member of the facility. The facility collects treats and disposes off the hazardous wastes of its member industry in environmentally friendly and legally acceptable manner. The industry pays for the treatment and disposal lo the facility. The entire operation of ICHWTSDF is governed by Hazardous wastes (Management & Handling) Rules' 1989 and as amended 2003 under the Environment (Protection) Act 1986. GEPIL's ICHWTSDF is authorized by Gujarat Pollution Control Board (GPCB) and requires to be operated and managed as per the conditions of CCA (Common Consents and Authorization) issued by GPCB and guidelines issued by Central Pollution Control Board (Ministry of Environment and Forests, Govt, of India).The wastes received at ICHWTSDF passes through various pre-treatment and treatment routes and finally disposed off in Secured Landfill Facility (SLF), which is a final graveyard for the safe disposal of hazardous wastes SLF is a disposal pit / cell provided with impermeable liner systems at the bottom, top and sides in order to ensure that neither any toxic component ever escapes the pit nor water from outside enters the pit. There are set legal norms/requirements for the design and operation of Secured Landfill Facility (SLF). The bottom liner system, side liner system, top liner or top cover system, leachate collection system are important and integral component of SLF. These are developed in phases for environmentally safe operation and maintenance. The landfill with Bottorn liner, side liner is developed first, the same shall be then utilized for disposal of wastes and then once completely filled, and the same shall be closed with top cover and subsequently maintained, The span of this operation depending on [he size of SLF ceil / pit and depending upon the waste receipt quantity. The copy of CPCB guidelines and CCA issued by GPCB to GEPIL, clearly indicating the legal obligations and responsibility of GEPIL of providing top cover as a part of ICHWTSDF operations is annexed as annexure-1.The "Landfill waste disposal charges" towards the waste treatment and disposal is paid, when the waste is sent by member unit to ICHWTSDF. This charge includes cost towards the landfill bottom and side liner construction cost, top cover construction cost, landfill operation and post closure monitoring and maintenance of SLF, Administrative, Selling and Finance cost etc. The amount towards part of the landfill components like Bottom liner system, side liner system and Leachate collection system is spent before the same is paid by the user or member industry. The amount towards the landfill operation is spent ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 20 when the waste is received. The amount towards the top cover is spent when the SLF is filled and requires to be closed i.e. after the amount is paid by the user. In view of the above, it can be concluded that the user charges paid by the member industry is actually spent in 3 phases namely before the user charges is received, at the time of wastes/user charges receipt and after the wastes receipt. The member is paying once and not paying in phases. Therefore, in view of matching principles it is essential to keep provisions for the expenditures required to be incurred in future as an integral legal requirement of entire operation of SLF. In view of above it may please be noted that the user charges credited to profit and loss account is actually spent in 3 phases i.e. before the user charges are received at the time of receipt and thirdly after the charges are received. Hence, the member (i.e. user) is paying only once at the time of giving the waste and the entire amount is credited to profit and loss account as revenue and not in phases because the user is not making payment in phases. Therefore in view of matching principle and to give true and fair view of the affairs of the Company it is essential to keep provisions for expenses to be incurred for top cover because as stated herein above the charges towards the same has already been recovered from the members and credited to profit and loss account. The assessee Company further submits that the expenditure to be incurred on top cover and post monitoring is intrinsic part of the whole transaction and the revenue earned encompassed the future expenditure as well. It is also pertinent to note that when the expenses are incurred on side and bottom liners the same are shown as balance of cell in balance sheet and not debited to profit and loss account it may please be appreciated that it is only the cost corresponding to the charges of waste received from the members during the year and credited to profit and loss account is claimed under the head Cell utilization charges. It may please be appreciated that it is established law under Income Tax. This method is being consistently followed in the industry carrying on the business of Hazardous Wastes Treatment, Storage and Disposed Facility. The problem of the tax treatment where an assessee has yet to carry out some obligation at the end of the year has been examined by the three judge Bench of Supreme Court in the case of Calcutta Co. Ltd. vs. CIT (1957) 37 ITR 1 (SC) which has laid down certain fundamental principles for deduction of accrued liability to be discharged at a future date. Hon'ble Apex Court while deciding the appeal in favour of the assessee held that "The expressions "Profits and Gains' should be understood in its commercial sense and there can be no computation of profits and gains until the expenditure which is necessary for the purpose of earning the receipts is deductible there from, whether the expenditure is actually incurred or the liability in respect thereof has accrued even though it may have to be discharged at some future date. Without prejudice to above, we have to further submit that the provision for expenses for top cover attributable to the waste received are built into the charges received and credit to profit and loss account. As stated above the Company is collecting charges from its members only once at the time of receipt of waste. Even assuming without admitting that if the expenses on top cover and post monitoring built into the charges received during the year are not allowable than, under the circumstances we request your good self to please tax the waste collection charges, attributable to these expenses taxed in the year in which the these expenses are otherwise allowable. It is submitted that the department ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 21 cannot on one hand tax the entire revenue in previous year and disallow the liability for expenses attributable and necessary to earn that revenue.” 33. However, assessing officer rejected the contention of the assessee and held that as per the assessee's claim the expenditure towards Provision for Top Cover Cell "2, 3 & 4" debited to Profit & Loss Account under the head Cell Utilization comes to Rs.54,96,526/-. The assessee follows the method of debiting the entire cost of a Cell (including the un-incurred expenditure of top liner as discussed above) to the account of expenditure on cell. Out of which, the expenditure to the extent of actual sale utilization is charged to P & L account, and the remaining expenditure which pertains to the utilization to be done in future is carried to balance sheet under the head "Balance of Cell". In this way, the expenditure debited during the year under consideration is only proportionate to the actual cell utilization for which the assessee has billed its clients. This means that out of total provision of Top liner expenses of Rs.4,45,90,000/- as on 31.03.2009, assessee has debited Rs.54,96,526/- amount charged to profit and loss account as proportionate expenses incurred for current year and claimed under the head cell utilization, charges for Top cover of cell 2, 3 &, 4. Regarding this amount of expenditure, the assessee has contended that this expenditure will be incurred in future and it is a legal obligation and is, therefore, an allowable expenditure. However, the contention made by the assessee regarding allowability of such expenditure is not found acceptable on the following reasons. (i) The assessee has not in fact incurred this expenditure during the year under assessment. Expenditure can be said to have been incurred when the goods/services/utility pertaining to such expenditure is in fact received by the businessman and for which either the payment is actually made or an enforceable liability towards the supplier is created for such goods/services/utility. Merely because in future as per statutory requirement assessee will have to incur this expense does not mean that the expenditure has actually been incurred. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 22 (ii) It is undisputed fact that during the year under assessment the assessee company has neither received any goods/services/utility in respect of this expenditure nor made any payment for that nor any enforceable liability has been created in favour of a supplier of such goods/services/utility. Hence no expenditure is in fact incurred. The deduction is claimed only in respect of contingent expenditure which may be or may not be incurred in future. It is a well-established law that such type of contingent liability expenditure is not an allowable expenditure from the total income. (iii) In this regard support is found in the Apex Court's decision in the case of New India Mining Corporation Ltd. The above views have been affirmed by the Hon'ble Supreme Court in the case law mentioned below: New India Mining Corporation Pvt. Ltd. Vs. C1T (2000) 243 ITR 640 (SC). In this case the Hon'ble Supreme Court, on the facts of that case, has held as under: "Once it is held that no expense was incurred by the assessee, the question of any allowable expense being deducted in computing the income form the profits and gains of the assessee does not arise. However, the assessee is aggrieved by the observations of the High Court as well as of the Tribunal that on the interpretation of the clauses aforesaid there was no obligation on the assessee to restore the lands to its original condition. Mr. Bahuguna, honored senior counsel appearing for the assessee, refers to the aforesaid clauses of the lease and also to rule 14 of the Mining Concession Rules, 1960. He submits that it is obligatory in law on the lessee to restore the lands to its original condition after termination of the lease. Sub-clause (iv) to rule 14 of the Mining Concession Rules is as under: "Sub-rule (iv) to rule 14" save in the case of land in respect of which the licensee is granted a mining lease he shall, within six months next after the determination, of the license or the date of abandonment of the prospecting operations, whichever corffer, securely plug of bores and fill up or fence all excavations in the land covered by the license." We do not think we have to interpret either the clauses of the lease agreement or even sub-rule (iv) of rule 14 of the mining Concession Rules, I960, as in the present case, admittedly, no expense has been incurred by the assessee. The question of law, therefore, does not arise in the present case.Any question of any allowable deduction can arise only if any expense is so incurred by the; assessee". ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 23 (iv) The facts of the present case are very much similar to the above mentioned case. Merely because in future the assesses may incur certain expenses the deduction cannot be granted until and unless the expenditure is actually incurred. The fact that expenditure has not actually incurred is undisputed. In view of the above, it is clear that the top cover expenses in respect of cell 2, 3 & 4 of Rs.54,96,526/- charged to P & L account have not actually been incurred by the assessee during the year under assessment and hence not allowable as expenditure. Therefore, the sum of Rs. Rs.54,96,526/- is disallowed. Further, it is also found that the assessee has shown provision for post monitoring Expenses of Rs.1 ,92,46, 474/- in its balance sheet and out of which expenses claimed during the year aggregates to Rs.33,65,220/- for post monitoring which is also not actually incurred but it is simply a provision for a future expense. Hence, this expenditure is also disallowed for the reasons mentioned herein above. Hence total disallowance on this account is of Rs.88,61,746/- (Rs.54,96,526 + Rs.33,65,220/-. The assessee has deliberately claimed this wrong expenditure which is not at all allowable as per the well-established law. 34. About Land Utilization expenses, the assessing officer noted that on verification of the Profit & Loss account, that the assesses has debited a sum of Rs.5,60,870/- on account of land utilization. In fact, no such expenditure is incurred by the assessee but it is sort of depreciation on land. Under Income-tax law, no depreciation is allowable on land. The assessee has claimed this item as on expenditure but it is a depreciation in disguise. When asked to justify this expenditure, the assessee has made submission which is reproduced as below: "As regards land utilisation expenses we have to inform that Rs.5,60,870/- is debited to profit and loss on this account. As regards land utilization expenses allowability debited to profit and loss account, we have to submit that the assesses Company has to acquire a piece of land, make cell into it and solid waste is then filled into the cell. Before such hazardous industrial waste is dumped into cells protective liners are to be put on the bottom as also sides of the cells to ensure that hazardous industrial waste does not go out of such landfill so as to environmentally damage the surrounding area. After the whole cell is filled with waste, the assessee Company has to put top liner and seal the same. This is to ensure that even from the top the industrial hazardous waste does not pollute the environment. Effectively, therefore, it may be appreciated ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 24 that the Company is using the land for the purpose of disposal of solid waste and in the process, the land itself gets consumed. Such, land cannot be used for any purpose at any time thereafter. In fact, the assessee has to monitor the site for more than 30 years to ensure that industrial waste does not percolate or seep out of the protective liners to affect the environment. Therefore just as other industries would consume raw material, the assessee consumes land. Therefore the value of the portion of land on which the cell is constructed and used for dumping the waste is charged to profit and loss account to the extent of capacity of cell utilized during the year. In view of the above we request your goodself to allow land utilisation expenses as claimed and oblige." 35. The assessing officer, however, rejected the contention of the assessee and observed that after using the land for Solid Waste Management, this land will be of no use and, therefore, a certain percentage of the cost of land is charged to Profit & loss account as land utilization expenses. This is nothing but just depreciation. What is debited is part of cost of land which is a capital expenditure and, therefore, cannot be allowed as deduction. Hence, this expenditure of Rs.5,60,870/- was disallowed and added to the total income of the assessee. 36. On appeal, ld CIT(A) confirmed the action of the assessing officer. Aggrieved, the assessee is in appeal before us. 37. Learned Counsel for the assessee submitted before us written submission, which is reproduced below: “Assessee made the provisions for top liner expenses of Rs.54,96,526/-, post monitoring expenses of Rs. 33,65,220/- and land utilization expenses of Rs. 5,60,870/-. Assessee made the provision following the mercantile method of accounting which envisages matching principle. When the receipt is considered as income, the corresponding expenses should be considered as revenue expenditure. Assessing officer reproduced accounting principle adopted by the assessee at para no. 10.2 of the assessment order. Assessee filed the detailed submission vide letter dated 27.02.2013 justifying the allowability of provisions for top cover expenses and post monitoring expenses. The assessing officer disallowed the expenses on the ground that no such expenses have been incurred by the assessee considering the fact that assessee didn’t receive any service for the expenditure during the year under consideration relying on the decision of Supreme Court in case of New India Mining Corporation Pvt. Ltd. v/s. CIT (2000) 243 ITR 640. The ld. CIT(A) confirmed the addition on the basis of the order of CIT(A) of the earlier year. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 25 It is to be noted that the similar disallowance was made in A.Y. 2004-05 to 2009-10 where the Tribunal confirmed the disallowance. The Honourable Tribunal also dismissed the miscellaneous application on the ground that it was the case of review and not the case of mistake apparent from records. Arguments: The assessee relies on the same arguments that it were made by it in assessment year 2007-08 at para no. 5 to 12 of the written submission. Alternative Argument: Even assuming without admitting that if the expenses on top cover and post monitoring built into the charges received during the year are not allowable than, under the circumstances we request your good self to please tax the waste collection charges received, attributable to these expenses taxed in the year in which the these expenses are otherwise allowable. It is submitted that the department cannot on one hand tax the entire revenue in previous year and disallow the liability for expenses attributable and necessary to earn that revenue. Accordingly, relying assessee’s written submission made at para no. 14, 15 & 16 of A.Y. 2007-08, it is submitted that the provision for expenses of Rs. 88,61,746/- plus net profit 34.58% should be excluded from the income.” 38. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 39. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee. So far Top Covering expenses are concerned, we note that merely because in future the assesses may incur certain expenses the deduction cannot be granted until and unless the expenditure is actually incurred. Such type of contingent liability for expenditure is not an allowable expenditure from the total income. So far the amount of Rs.33,65,220/- for post monitoring expenses is concerned, we note that it is not actually incurred by assessee but it is simply a provision for a future contingent expense, therefore not allowable. About land utilization expenses Rs.5,60,870/-, we note that no such expenditure is incurred by the assessee but it is sort of depreciation on land. Under Income-tax law, no depreciation is allowable on land, therefore it has been rightly disallowed by the assessing officer. We note that after using the land for Solid Waste Management, as per ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 26 assessee this land will be of no use and, therefore, a certain percentage of the cost of land is charged to Profit and loss account as land utilization expenses. However, this is nothing but just depreciation. What is debited is part of cost of land which is a capital expenditure and, therefore, cannot be allowed as deduction. 40. Hence, we confirm the following findings of ld CIT(A), which is reproduced below: “10.1 The ld. AO stated in para 10.3 of the assessment order that the assessee has claimed deduction for ‘”provision for Top cover” at Rs.54,96,526/-. The assessee furnished its explanation which was not found acceptable, therefore for the reason given in para 10.4 (1) to (iv) of the assessment order and after relying on the decision of Apex Court in the case of New India Mining Corp. Pvt. Ltd. vs. CIT (2000) 234 ITR 640 (SC) disallowed the expenditure being in the nature of provision and not actually incurred. The made disallowance of Rs.88,611,746/- (54,96,526 + 33,65,220) and added to the total income. 10.2 The AO noticed that as has debited Rs.5,60,870//- on account of land utilization for the reasons stated that after using the land for Solid Waste Management, the land will be of nouse and dtherefore certain percentage of cost of land is charged to P&L A/c. It is claimed that this nothing but just like depreciation. The AO being not convinced with this argument held that land is a capital assets and therefore cannot be allowed as expenditure. The AO disallowed the claim of Rs.5,60,870/- and added to the total income. 10.3 In respect of Ground No.5,6, & 7, the AR of the assessee has submitted the reply on 16.03.2015 vide paper book on page No.54 to 67. The same is considered. However, it is seen that these issues are squarely covered against the assessee by the decision of Hon'ble ITAT, Ahmedabad for A.Y 2004-05, 2005-06 & 2006-07 dated 30.11.2011. Respectfully following the binding precedent, all these grounds are dismissed.” 41. In assessment years 2007-08, and 2009-10, the similar and identical issues are noted by us. We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the order of ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the following grounds raised by assessee (appeal-wise): (i).Top Liner Expenses (a)ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.62,09,335/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.64,06,835/- (c ) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.54,96,526/- ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 27 (ii) Post Monitoring Expenses (a)ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.22,47,292/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.32,41,860 /- (c ) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.33,65,220/- (iii) Land utilization charges/expenses (a)ITA No.1393/Ahd/10, A.Y. 2007-08, Rs.4,16,669/- (b) ITA No.1048/Ahd/12, A.Y. 2009-10, Rs.5,40,310/- (c ) ITA No.1910/Ahd/15, A.Y. 2010-11, Rs.4,55,383/-“ 42. In the result, Concise and Summarized ground No.3 is dismissed. 43. The concise and summarized ground No.4 of appeals of Assessee, is reproduced below: “(4) Learned CIT(A) has erred in law and on facts in confirming income computed by assessing officer under section 115JB of the Act, by making adjustments to the book profit: (a) ITA No.1393/Ahd/10, A.Y.2007-08 (b) ITA No.1048/Ahd/12, A.Y.2009-10” 44. We have heard both the parties. Learned Counsel for the assessee submits that assessing officer must make adjustment in the book profit only as per the provisions of section 115JB of the Act, for that ld Counsel relied on the judgment of Hon`ble Supreme Court in the case of Apollo Tyres Limited Vs. CIT 255 ITR 273(SC). On the other hand, learned DR for the Revenue reiterated the stand taken by the assessing officer. We note that while making adjustment in the book profit, the assessing officer must adhere with the provisions of section 115JB of the Act, therefore, we direct the assessing officer to make adjustment in the book profit as per the provisions of section 115JB of the Act. For statistical purposes the ground raised by the assessee is allowed. 45. In the result, the concise and summarized ground No.4 of appeals of Assessee, is allowed for statistical purposes. 46. The concise and summarized ground No.5 of appeals of Assessee, is reproduced below: ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 28 (5) Learned CIT(A) has erred in disallowing employees contribution towards ESIC of Rs.3,46,338/- ignoring the fact that same was paid before due date of filing of return on income. This ground is raised by the assessee in ITA No.2605/Ahd/2016 for assessment year 2012-13. 47. We have heard both the parties. Learned Counsel for the assessee submits that assessee paid the ESIC before the due date of filing return of income, hence no disallowance should be made. On the other hand, learned DR for the Revenue reiterated the stand taken by the assessing officer. We note that issue under consideration is squirely covered against the assessee by the judgment of Hon`ble Supreme Court in the case of CHECKMATE SERVICES P. LTD in CIVIL APPEAL NO. 2833 of 2016, wherein, the Hon`ble Supreme Court held as follows: “30. Analysis and Conclusions The factual narration reveals two diametrically opposed views in regard to the interpretation of Section 36(1)(va) on the one hand and proviso to Section 43(b) on the other. If one goes by the legislative history of these provisions, what is discernible is that Parliament’s endeavour in introducing Section 43B [which opens with its non-obstante clause] was to primarily ensure that deductions otherwise permissible and hitherto claimed on mercantile basis, were expressly conditioned, in certain cases upon payment. In other words, a mere claim of expenditure in the books was insufficient to entitle deduction. The assessee had to, before the prescribed date, actually pay the amounts – be it towards tax liability, interest or other similar liability spelt out by the provision. 18 31. Section 43B falls in Part-V of the IT Act. What is apparent is that the scheme of the Act is such that Sections 28 to 38 deal with different kinds of deductions, whereas Sections 40 to 43B spell out special provisions, laying out the mechanism for assessments and expressly prescribing conditions for disallowances. In terms of this scheme, Section 40 (which too starts with a non obstante clause overriding Sections 30-38), deals with what cannot be deducted in computing income under the head “Profits and Gains of Business and Profession”. Likewise, Section 40A(2) opens with a non-obstante clause and spells out what expenses and payments are not deductible in certain circumstances. Section 41 elaborates conditions which apply with respect to certain deductions which are otherwise allowed in respect of loss, expenditure or trading liability etc. If we consider this scheme, Sections 40- 43B, are concerned with and enact different conditions, that the tax adjudicator has to enforce, and the assessee has to comply with, to secure a valid deduction. 32. The scheme of the provisions relating to deductions, such as Sections 32- 37, on the other hand, deal primarily with business, commercial or professional expenditure, under various heads (including depreciation). Each of these deductions, has its contours, depending upon the expressions used, and the ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 29 conditions that are to be met. It is therefore necessary to bear in mind that specific enumeration of deductions, dependent upon fulfilment of particular conditions, would qualify as allowable deductions: failure by the assessee to comply with those conditions, would render the claim vulnerable to rejection. In this scheme the deduction made by employers to approved provident fund schemes, is the subject matter of Section 36 (iv). It is noteworthy, that this provision was part of the original IT Act; it has largely remained unaltered. On the other hand, Section 36(1)(va) was specifically inserted by the Finance Act, 1987, w.e.f. 01-04-1988. Through the same amendment, by Section 3(b), Section 2(24) – which defines various kinds of “income” – inserted clause (x). This is a significant amendment, 19 because Parliament intended that amounts not earned by the assessee, but received by it, - whether in the form of deductions, or otherwise, as receipts, were to be treated as income. The inclusion of a class of receipt, i.e., amounts received (or deducted from the employees) were to be part of the employer/assessee’s income. Since these amounts were not receipts that belonged to the assessee, but were held by it, as trustees, as it were, Section 36(1)(va) was inserted specifically to ensure that if these receipts were deposited in the EPF/ESI accounts of the employees concerned, they could be treated as deductions. Section 36(1)(va) was hedged with the condition that the amounts/receipts had to be deposited by the employer, with the EPF/ESI, on or before the due date. The last expression “due date” was dealt with in the explanation as the date by which such amounts had to be credited by the employer, in the concerned enactments such as EPF/ESI Acts. Importantly, such a condition (i.e., depositing the amount on or before the due date) has not been enacted in relation to the employer’s contribution (i.e., Section 36(1)(iv)). 33. The significance of this is that Parliament treated contributions under Section 36(1)(va) differently from those under Section 36(1)(iv). The latter (hereinafter, “employers’ contribution”) is described as “sum paid by the assessee as an employer by way of contribution towards a recognized provident fund”. However, the phraseology of Section 36(1)(va) differs from Section 36(1)(iv). It enacts that “any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date.” The essential character of an employees’ contribution, i.e., that it is part of the employees’ income, held in trust by the employer is underlined by the condition that it has to be deposited on or before the due date. 34. It is therefore, manifest that the definition of contribution in Section 2 (c) is used in entirely different senses, in the relevant deduction clauses. The 20 differentiation is also evident from the fact that each of these contributions is separately dealt with in different clauses of Section 36 (1). All these establish that Parliament, while introducing Section 36(1)(va) along with Section 2(24)(x), was aware of the distinction between the two types of contributions. There was a statutory classification, under the IT Act, between the two. 35. It is instructive in this context to note that the Finance Act, 1987, introduced to Section 2(24), the definition clause (x), with effect from 1 April 1988; it also ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 30 brought in Section 36(1)(va). The memorandum explaining these provisions, in the Finance Bill, 1987, presented to the Parliament, is extracted below: “Measures of penalising employers mis-utilising contributions to the provident fund or any funds set up under the provisions of the Employees State Insurance Act, 1948, or any other fund for the welfare of employees - 12.1. The existing provisions provide for a deduction in respect of any payment by way of contribution to the provident fund or a superannuation fund or any other fund for welfare of employees in the year in which the liabilities are actually discharged (Section 43B). The effect of the amendment brought about by the Finance act, is that no deduction will be allowed in the assessment of the employer, unless such contribution is paid into the fund on or before the due date. “Due date” means the date by which an employer is required to credit the contribution to the employees account in the relevant fund or under the relevant provisions of any law or term of the contract of service or otherwise. (Explanation to Section 36 (1) of the Finance Act) 12.2. In addition, contribution of the employees to the various funds which are deducted by the employer from the salaries and wages of the employees will be taxed as income within brackets insertion of new [clause (x) in clause (24) of Section 2] of the employer, if such contribution is not credited by the employer in the account of the employee in the relevant fund by the due date. Where such income is not chargeable to tax under the head “profits and gains of business or profession” it will be assessed under the head “income from other sources.” 36. Significantly, the same Finance Act, 1987 also introduced provisos to Section 43B, through amendment (clause 10 of the Finance Bill). The 21 memorandum explaining the Bill, pertinently states, in relation to second proviso to Section 43B that: “...The second proviso seeks to provide that no deduction shall be allowed in regard to the sum referred to in clause (b) unless such sum has actually been paid during the previous year on or before the due date. The due date for the purposes of this proviso shall be the due date as under Explanation to clause (va) of sub-section (1) of Section 36.” 37. It is evident that the intent of the lawmakers was clear that sums referred to in clause (b) of Section 43B, i.e., “sum payable as an employer, by way of contribution” refers to the contribution by the employer. The reference to “due date” in the second proviso to Section 43B was to have the same meaning as provided in the explanation to Section 36(1)(va). Parliament therefore, through this amendment, sought to provide for identity in treatment of the two kinds of payments: those made as contributions, by the employers, and those amounts credited by the employers, into the provident fund account of employees, received from the latter, as their contribution. Both these contributions had to necessarily be made on or before the due date. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 31 38. This court had occasion to consider the object of introducing Section 43B, in Allied Motors. The court held, after setting out extracts of the Budget speech of the Finance Minister, for 1983-84, that: "Section 43B was, therefore, clearly aimed at curbing the activities of those tax-payers, who did not discharge their statutory liability of payment of excise duty, employer’s contribution to provident fund, etc., for long periods of time but claimed deductions in that regard from their income on the ground that the liability to pay these amounts had been incurred by them in the relevant previous year. It was to stop this mischief that Section 43B was inserted.” 39. Original Section 43B(b) enabled the assessee/employer to claim deduction towards contribution as an employer, “by way of contribution to any provident fund”. The second proviso was substituted by Finance Act, 1989 with effect from 01.04.1989 and read as under: “...Provided further that no deduction shall in respect of any sum referred to in clause (b) be allowed unless such sum has actually been 22 paid in cash or to by issue of a cheque or draft or by any other mode on or before the due date as defined in the explanation below Clause (va) of sub-section (1) of Section 36, and where such payment has been made otherwise than in cash, the same has been realised within 15 days from the due date." 40. The position in law remained unchanged for 14 years. The Central Government then constituted the Kelkar Committee, to suggest tax reforms. The report suggested amendments inter alia, to Section 43B. The relevant extract of the report is as follows: "In terms of the provisions of section 43B of the Income-tax Act, deduction for statutory payments relating to labour, taxes and State and public financial institutions are allowed as deductions, if they are paid during the financial year. However, under the provisions payment of taxes and interest to State and public financial institution are deemed to have been paid during the financial year even if they are paid by the due date of filing of return. Further if the liability is discharged in the subsequent year after the due date of filing of return, the payment is allowed as a deduction in the subsequent year. In the case of statutory payment relating to labour, the deduction for the payment is disallowed if such payment is made any time after the last date of payment of the about related liability. Trade and industry across the country represented that the delayed payment of statutory liability related to labour should be accorded the same treatment as delayed payment of taxes and interest, i.e. they should be allowed in the year of account. Since the objective of the provision is to ensure that a tax-payer does not avail of any statutory liability without actually making a payment for the same, we are of the view that these objectives would be served if the deduction for the statutory liability relating to labour are allowed in the year of payment. The complete disallowance of such payments is too harsh a punishment for delayed payments. Therefore, we recommend that the deduction for delayed payment of statutory liability relating to labour should be allowed in the year of payment like delayed taxes and interest." Based on the report, the Union introduced amendments to the IT Act, including an amendment to Section 43B; the memorandum ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 32 explaining the provisions in the Finance Bill, 2003 in the matter of Section 43B. inter alia, reads thus: "The Bill also proposes to provide that in case of deduction of payments made by the assessee as an employer by way of contribution to any provident fund or superannuation fund or any other fund for the welfare of the employees shall be allowed in computing the income of the year in which such sum is actually paid. In case the same is paid before the 23 due date of filing the return of income for the previous year, the allowance will be made in the year in which the liability was incurred. These amendments will take effect from 1st April, 2004 and will accordingly apply in relation to the assessment year 2004-05 and subsequent years.” 41. The Notes on Clauses inter alia, reads as follows: "It is also proposed to amend the first proviso to the said section so as to omit the references of clause (a), clause (c), clause (d), clause (e) and clause (f) which is consequential in nature. It is also proposed to omit the second proviso to the said section. These amendments will take effect from 1st April, 2004 and will, accordingly, apply in relation to the assessment year 2004-2005 and subsequent years." 42. The rationale for introduction of Section 43B was explained by this court in M.M. Aqua Technologies Ltd. vs. Commissioner of Income Tax, Delhi: 16 “19. The object of Section 43B, as originally enacted, is to allow certain deductions only on actual payment. This is made clear by the nonobstante Clause contained in the beginning of the provision, coupled with the deduction being allowed irrespective of the previous years in which the liability to pay such sum was incurred by the Assessee according to the method of accounting regularly employed by it. In short, a mercantile system of accounting cannot be looked at when a deduction is claimed under this Section, making it clear that incurring of liability cannot allow for a deduction, but only "actual payment", as contrasted with incurring of a liability, can allow for a deduction.” 43. This condition, i.e., of payment of actual amount on or before the due date to enable deduction, continued for 14 years. By the amendment of 2003, the second proviso was deleted. This court interpreted the law, in the light of these developments, in Alom Extrusions. The court considered the effect of omission of the second proviso, and observed as follows: “10. “Income” has been defined under Section 2(24) of the Act to include profits and gains. Under Section 2(24)(x), any sum received by the assessee from his employees as contributions to any provident fund/superannuation fund or any fund set up under the Employees’ State Insurance Act, 1948, or any other fund for the welfare of such employees constituted income. This is the reason why every assessee(s) 16 M.M. Aqua Technologies Ltd. vs. Commissioner of Income Tax, Delhi, 2021 SCC On Line SC 575. 24 [employer(s)] was entitled to deduction even prior to 1-4-1984, on mercantile system of accounting as a business expenditure by making provision in his books of accounts in that regard. In other words, if an assessee(s) [employer(s)] is maintaining his books on accrual system of accounting, even after collecting the contribution from his ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 33 employee(s) and even without remitting the amount to the Regional Provident Fund Commissioner (RPFC), the assessee(s) would be entitled to deduction as business expense by merely making a provision to that effect in his books of accounts. The same situation arose prior to 1-4-1984, in the context of assessees collecting sales tax and other indirect taxes from their respective customers and claiming deduction only by making provision in their books without actually remitting the amount to the exchequer. To curb this practice, Section 43-B was inserted with effect from 1-4-1984, by which the mercantile system of accounting with regard to tax, duty and contribution to welfare funds stood discontinued and, under Section 43-B, it became mandatory for the assessee(s) to account for the aforestated items not on mercantile basis but on cash basis. This situation continued between 1-4-1984 and 1-4-1988, when Parliament amended Section 43-B and inserted the first proviso to Section 43-B. 11. By this first proviso, it was, inter alia, laid down, in the context of any sum payable by the assessee(s) by way of tax, duty, cess or fee, that if an assessee(s) pays such tax, duty, cess or fee even after the closing of the accounting year but before the date of filing of the return of income under Section 139(1) of the Act, the assessee(s) would be entitled to deduction under Section 43-B on actual payment basis and such deduction would be admissible for the accounting year. This proviso, however, did not apply to the contribution made by the assessee(s) to the labour welfare funds. To this effect, the first proviso stood introduced with effect from 1-4-1988. *** 15. By the Finance Act, 2003, the amendment made in the first proviso equated in terms of the benefit of deduction of tax, duty, cess and fee on the one hand with contributions to the Employees' Provident Fund, superannuation fund and other welfare funds on the other. However, the Finance Act, 2003, bringing about this uniformity came into force with effect from 1-4-2004. Therefore, the argument of the assessee(s) is that the Finance Act, 2003, was curative in nature, it was not amendatory and, therefore, it applied retrospectively from 1-4-1988, whereas the argument of the Department was that the Finance Act, 2003, was amendatory and it applied prospectively, particularly when Parliament had expressly made the Finance Act, 2003 applicable only with effect from 1-4-2004. *** 18. However, as stated above, the second proviso resulted in implementation problems, which have been mentioned hereinabove, and which resulted in the enactment of the Finance Act, 2003, deleting 25 the second proviso and bringing about uniformity in the first proviso by equating tax, duty, cess and fee with contributions to welfare funds. Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by Parliament only with effect from 1-4-2004, would become curative in nature, hence, it would apply retrospectively with effect from 1-4-1988. 19. Secondly, it may be noted that, in Allied Motors (P) Ltd. v. CIT [(1997) 3 SCC 472 : (1997) 224 ITR 677] , the scheme of Section 43-B of the Act came to be examined. In that case, the question which arose for determination was, whether sales tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales tax law should be disallowed under Section 43-B of the Act while computing the business income of the previous year? That was a case which related to Assessment Year 1984- 1985. The relevant accounting period ended on 30-6-1983. The Income Tax Officer disallowed the deduction claimed by the assessee which was on account ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 34 of sales tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under Section 43-B which, as stated above, was inserted with effect from 1-4-1984 *** 22. It is important to note once again that, by the Finance Act, 2003, not only is the second proviso deleted but even the first proviso is sought to be amended by bringing about a uniformity in tax, duty, cess and fee on the one hand vis-à-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003 is retrospective in operation. Moreover, the judgment in Allied Motors (P) Ltd. [(1997) 3 SCC 472 : (1997) 224 ITR 677] was delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that the Finance Act, 2003 will operate retrospectively with effect from 1-4-1988 (when the first proviso stood inserted). 23. Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that the Finance Act, 2003, to the above extent, operated prospectively. Take an example, in the present case, the respondents have deposited the contributions with RPFC after 31st March (end of accounting year) but before filing of the returns under the Income Tax Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under Section 43-B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right up to 1-4-2004, and who pays 26 the contribution after 1-4- 2004, would get the benefit of deduction under Section 43-B of the Act.” 44. There is no doubt that in Alom Extrusions, this court did consider the impact of deletion of second proviso to Section 43B, which mandated that unless the amount of employers’ contribution was deposited with the authorities, the deduction otherwise permissible in law, would not be available. This court was of the opinion that the omission was curative, and that as long as the employer deposited the dues, before filing the return of income tax, the deduction was available. 45. A reading of the judgment in Alom Extrusions, would reveal that this court, did not consider Sections 2(24)(x) and 36(1)(va). Furthermore, the separate provisions in Section 36(1) for employers’ contribution and employees’ contribution, too went unnoticed. The court observed inter alia, that: “15. ...It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgement in Allied Motors (P) Limited (supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003 will operate retrospectively with effect from 1st April, 1988 [when ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 35 the first proviso stood inserted]. Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, 2003, to the above extent, operated prospectively. Take an example - in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March [end of accounting year] but before filing of the Returns under the Income Tax Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under Section 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under Section 43B of the Act. In our view, therefore, Finance 27 Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate with effect from 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003”. 46. A discussion on the Principles of interpretation of tax statutes is warranted. In Ajmera Housing Corporation & Ors. vs. Commissioner of Income17 this court held as follows: “27. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. (See: Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 KB 64 and Federation of A.P. Chambers of Commerce and Industry and Ors. v. State of A.P. and Ors.(2000) 6 SCC 550. In interpreting a taxing statute, the Court must look squarely at the words of the statute and interpret them. Considerations of hardship, injustice and equity are entirely out of place in interpreting a taxing statute. (Also see: Commissioner of Sales Tax, Uttar Pradesh v. The Modi Sugar Mills Ltd. 1961 (2) SCR 189.)” 47. Likewise, this court underlined the rule, regarding interpretation of taxing statutes, in Commissioner of Income Tax-III v Calcutta Knitwears, Ludhiana. 18 Recently, in Union of India & Ors. vs. Exide Industries Limited & Ors, 19 this court examined, and repelled a challenge to the constitutionality of Section 43B, especially the provision requiring actual payment, in respect of leave encashment benefit of employees. The court observations in this regard are relevant: ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 36 “20. Section 43B, however, is enacted to provide for deductions to be availed by the Assessee in lieu of liabilities accruing in previous year without making actual payment to discharge the same. It is not a provision to place any embargo upon the autonomy of the Assessee in adopting a particular method of accounting, nor deprives the Assessee of any lawful deduction. Instead, it merely operates as an additional condition for the availment of deduction qua the specified head. 17 Ajmera Housing Corporation & Ors. vs. Commissioner of Income, 2010 (8) SCC 739. 18 Commissioner of Income Tax-III v Calcutta Knitwears, Ludhiana 2014 (6) SCC 444. 19 Union of India & Ors. vs. Exide Industries Limited & Ors., 2020 (5) SCC 274. 28 21. Section 43B bears heading "certain deductions to be only on actual payment". It opens with a non-obstante clause. As per settled principles of interpretation, a non obstante Clause assumes an overriding character against any other provision of general application. It declares that within the sphere allotted to it by the Parliament, it shall not be controlled or overridden by any other provision unless specifically provided for. Out of the allowable deductions, the legislature consciously earmarked certain deductions from time to time and included them in the ambit of Section 43B so as to subject such deductions to conditionality of actual payment. Such conditionality may have the inevitable effect of being different from the theme of mercantile system of accounting on accrual of liability basis qua the specific head of deduction covered therein and not to other heads. But that is a matter for the legislature and its wisdom in doing so. 22. The existence of Section 43B traces back to 1983 when the legislature conceptualised the idea of such a provision in the 1961 Act. Initially, the provision included deductions in respect of sum payable by Assessee by way of tax or duty or any sum payable by the employer by way of contribution to any provident fund or superannuation fund. It is noteworthy that the legislature explained the inclusion of these deductions by citing certain practices of evasion of statutory liabilities and other liabilities for the welfare of employees...” *** 23. With the passage of time, the legislature inserted more deductions to Section 43B including cess, bonus or commission payable by employer, interest on loans payable to financial institutions, scheduled banks etc., payment in lieu of leave encashment by the employer and repayment of dues to the railways. Thus understood, there is no oneness or uniformity in the nature of deductions included in Section 43B. It holds no merit to urge that this Section only provides for deductions concerning statutory liabilities. Section 43B is a mix bag and new and dissimilar entries have been inserted therein from time to time to cater to different fiscal scenarios, which are best determined by the government of the day. It is not unusual or abnormal for the legislature to create a new liability, exempt an existing liability, create a deduction or subject an existing deduction to override regulations or conditions. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 37 24. The leave encashment scheme envisages the payment of a certain amount to the employees in lieu of their unused paid leaves in a year. The nature of this payment is beneficial and pro-employee. However, it is not in the form of a bounty and forms a part of the conditions of service of the employee. An employer seeking deduction from tax liability in advance, in the name of discharging the liability of leave encashment, without actually extending such payment to the employee as and when the time for payment arises may lead to abhorrent consequences. When time for such payment arises upon retirement (or otherwise) of the employee, an employer may simply refuse to pay. Consequently, the innocent employee will be entangled in litigation in the evening of his/her life for claiming a hard-earned right without any fault on his part. Concomitantly, it would entail in double benefit to the employer - advance deduction from tax liability without any burden of 29 actual payment and refusal to pay as and when occasion arises. It is this mischief Clause (f) seeks to subjugate.” 48. One of the rules of interpretation of a tax statute is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. 20 This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations. 49. That deductions are to be granted only when the conditions which govern them are strictly complied with. This has been laid down in State of Jharkhand v Ambay Cements 21 as follows: “23.... In our view, the provisions of exemption clause should be strictly construed and if the condition under which the exemption was granted stood changed on account of any subsequent event the exemption would not operate. 24. In our view, an exception or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the industrial policy and the exemption notifications. 25. In our view, the failure to comply with the requirements renders the writ petition filed by the respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 38 of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non- compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein.” 20 See for e.g., Eagle Flask Industries Ltd. v. Commissioner of Central Excise, 2004 Supp (4) SCR 35. 21 State of Jharkhand v Ambay Cements, (2005) 1 SCC 368. 30 This was also reaffirmed in a number of judgments, such as Commissioner of Income Tax v. Ace Multi Axes Systems Ltd.22 50. The Constitution Bench, in Commissioner. of Customs v. Dilip Kumar & Co. 23 endorsed as following: “24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution [ “265. Taxes not to be imposed save by authority of law.—No tax shall be levied or collected except by authority of law.”] prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature. *** 34. The passages extracted above, were quoted with approval by this Court in at least two decisions being CIT v. Kasturi & Sons Ltd. [CIT v. Kasturi & Sons Ltd., (1999) 3 SCC 346] and State of W.B. v. Kesoram Industries Ltd. [State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201] (hereinafter referred to as “Kesoram Industries case [State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201]”, for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G.P. Singh's treatise, summed up the following principles applicable to the interpretation of a taxing statute: ‘(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing 22 Commissioner of Income Tax v. Ace Multi Axes Systems Ltd., 2018 (2) SCC 158 23 Commissioner. of Customs v. Dilip Kumar & Co, 2018 (9) SCC 1. 31 unjust in a taxpayer escaping if the letter of the law fails to ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 39 catch him on account of the legislature's failure to express itself clearly.’” 51. The analysis of the various judgments cited on behalf of the assessee i.e., Commissioner of Income-Tax v. Aimil Ltd. 24; Commissioner of Income-Tax and another v. Sabari Enterprises25; Commissioner of Income Tax v. Pamwi Tissues Ltd. 26; Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh Utpadak Sahakari Sandh Ltd. 27 and Nipso Polyfabriks (supra) would reveal that in all these cases, the High Courts principally relied upon omission of second proviso to Section 43B (b). No doubt, many of these decisions also dealt with Section 36(va) with its explanation. However, the primary consideration in all the judgments, cited by the assessee, was that they adopted the approach indicated in the ruling in Alom Extrusions. As noticed previously, Alom Extrutions did not consider the fact of the introduction of Section 2(24)(x) or in fact the other provisions of the Act. 52. When Parliament introduced Section 43B, what was on the statute book, was only employer’s contribution (Section 34(1)(iv)). At that point in time, there was no question of employee’s contribution being considered as part of the employer’s earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions – especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That 24 Commissioner of Income-Tax Vs. Aimil Ltd., [2010] 321 ITR 508 (Delhi High Court). 25 Commissioner of Income-Tax and another Vs. Sabari Enterprises, [2008] 298 ITR 141 (Karnataka High Court). 26 Commissioner of Income Tax Vs. Pamwi Tissues Ltd., [2009] 313 ITR 137 (Bombay High Court). 27 Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh Utpadak Sahakari Sandh Ltd., [2013] 35 taxmann.com 616 (Rajasthan High Court). 32 Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee’s income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of “income” amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time – by way of contribution of the employees’ share to their credit with the relevant fund isto be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers’ contribution (Section 36(1)(iv)) and employees’ contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 40 deductions that are permissible as expenditures, or out-goings forming part of the assessees’ liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. 53. The distinction between an employer’s contribution which is its primary liability under law – in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers’ income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such 33 amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts – the employer’s liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees’ income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees’ contributions- which are deducted from their income. They are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such 34 interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 41 the assessee from its liability to deposit the employee’s contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed.” 48. Therefore, respectfully following the judgment of Hon`ble Supreme Court in the case of CHECKMATE SERVICES P. LTD (supra), we dismiss ground no.5 raised by the assessee. 49. In the result, concise and summarized ground No.5 raised by the assessee is dismissed. 50. The concise and summarized ground No.6 of appeals of Assessee, is reproduced below: “(6) Initiation of levy of interest u/s 234B and 234C of the Act is not justified (a) ITA No.1393/Ahd/2010 for A.Y.2007-08 (b) ITA No.1048/Ahd/2012 for A.Y.2009-10” 51. We have heard both the parties and direct the assessing officer to compute interest in accordance with the provisions of sections 234B and 234C of the Act. Ground No.6 of appeals of Assessee, is allowed for statistical purposes. 52. In the result, concise and summarized ground No.6 of appeals of Assessee, is allowed for statistical purposes. 53. The concise and summarized ground No.7 of appeals of Assessee, is reproduced below: “(7) Initiation of penalty u/s 271(1) (c) of the Act is not justified (a) ITA No.1393/Ahd/10, A.Y.2007-08 (b) ITA No.1048/Ahd/12, A.Y. 2009-10 (c) ITA No.1910/Ahd/15, A.Y. 2010-11 (d) ITA No.2605/Ahd/16, A.Y. 2012-13 ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 42 54. We note that the concise and summarized ground No.7 of appeals of Assessee, is pre-mature in nature and moreover, the assessee has not filed and argued the appeal under section 271(1) (c) of the Act before the Bench. The ld Counsel has argued only quantum appeals before the Bench, hence we dismiss ground No.7 of the assessee. 55. In the result, the concise and summarized ground No.7 of appeals of Assessee, is dismissed. 56. The concise and summarized ground No.8 of appeals of Assessee, is reproduced below: “(8) Grounds of appeal not pressed by the assessee: (i) In ITA No.1393/Ahd/2010, for A.Y.2007-08: Assessee did not press ground No.3 and ground No.5. (ii ) In ITA No.1910/Ahd/2015, for A.Y.2010-11: Assessee did not press ground No.5.” 57. We have heard both the parties and noted that above mentioned grounds of appeal (appeal-wise) have not been pressed by ld Counsel during the course of hearing, hence we dismiss above grounds of appeal, as not pressed. 58. Concise and summarised grounds of appeal of Revenue, in case of Gujarat Enviro Protection and Infrastructure Ltd (PAN No.AABCG3746K), assessment year-wise, is reproduced below for ready reference: (1) On the facts and circumstances of the case and in law, the ld CIT(A) has erred in deleting the addition made on account of disallowance of claim under section 80IA(4) of the Income Tax Act, in respect of the following units: (i)ITA No.1236/A/12, A.Y. 2009-10, Gabheni Unit, Rs.15,35,59,562/- (ii) ITA No.2250/A/15, A.Y. 2010-11, Gabheni Unit, Rs.19,32,33,992/- (iii) ITA No.2521/A/16, A.Y. 2012-13, Gabheni Unit, Rs. 1,42,35,127/- (iv) ITA No.2521/A/16, A.Y. 2012-13, Co-Processing Unit, Rs. 1,25,70,515/- (v) ITA No.2521/A/16, A.Y. 2012-13, Palsana Unit, Rs. 6,50,77,043/- 59. Brief facts qua the issue of allowability of 80IA deduction claimed by assessee on account of income earned from the Gabheni Unit, Surat, is as ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 43 follows: The assessee has claimed deduction u/s 80IA of the Act on the income earned from the Gabheni Unit for Rs.19,32,33,992/-. The Gabheni Unit, Surat involved in the business of developing operating & maintaining solid waste management system. In the solid waste management system assessee was claiming that he was dealing with Hazardous waste generated from the local industries at Surat. In the form 10CCB report assessee has mentioned that local/state authorities from whom approval taken was mentioned as Gujarat Pollution control Board. In order to examine the eligibility of the assessee, to claim the deduction U/s 80IA of the I.T. Act, the assessing officer analysed the provisions of section 80IA(4) of the Act which is reproduced here below for ready reference: “[Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA.(4) (4) This section applies to— (i) any enterprise carrying on the business[of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining) any infrastructure facility which fulfils all the following conditions, namely : (a) it is owned by a company registered in India or by a consortium of such companies [or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for developing or operating and maintaining or _ 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 infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 44 applies and the deduction from profit 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 supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management - system ; (d) a port, airport, inland waterway [inland port or navigational channel in the sea];) 60. The assessing officer, from the above contents of the section 801A(4) observed that any assessee who wants to claim the deduction has to fulfil the three conditions. The first condition is the infrastructure facility should be owned by the assessee and the Gabheni unit of the assessee qualifies this condition as it was formed by the investment made by the assessee himself. Third, condition is the infrastructural facility should have started operating & maintaining before 1995. The assessee Gabheni Unit ; Surat started its operations in the year 2001- 02, thereby making the unit of assessee qualifying this condition. However, problem erupted due to questionability of the qualification of the assessee for second condition which is discussed in detail by assessing officer. 61. The assessing officer noted about second condition that enterprise running the infrastructural facility should have an agreement with central government/ state Government/ local authority/statutory authority for developing operating, maintaining the infrastructural facility. This means for the planned infrastructure development government plans for different infrastructure projects. Accordingly central/state governments entered into lot of agreements in the form of MoU with private sector players for Build, own, operate, transfer (BOOT), Build, operate, lease, transfer (BOLT) etc. with single objective to promote private investment in the infrastructure of country. However, in the case of assessee there is no such agreement made with central and state government for ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 45 developing, operating, maintaining the infrastructural facility. In view of that assessee was asked to prove his eligibility for second condition mentioned in the section 801A of the I.T Act 1961 and why not the deduction claimed U/s 80IA with respect to Gabheni Unit, Surat be disallowed. For which assessee has replied as follows which is reproduced as below. “The company has entered into an agreement with MOEF and Gujarat industrial development corporation B agreed to grant authorization in 2001.Copy of the agreement is already furnished during earlier submission and the same is on record. It is submitted that this agreement is a full-fledged memorandum of understanding (MoU) between MOEF, company and Gujarat Industrial Development Corporation duly signed and executed between authorized person of these bodies. It is pertinent to note that this MoU is a very exhaustive agreement containing several documents as annexures forming integral part of it, which are listed at Sr.no. 1 to on page no.3. Annexure -II details out special conditions of MoU. Authorisation from GPCB is also part of this MoU. On first page of MoU under A, it is specifically mentioned that whereas ICHWMF facility initiated by GEPIL, Govt of Gujarat and ministry of Environment & Forest (Govt. of India) > Vide clause 3.1 of conditions of MoU (Annexure-II), under heading work delivery, it is specifically mentioned that ICHWMF shall design and construct facility > Vide clause 3.11 of conditions of MoU ( Annexure-II), it is reiterated that the ICHWFM shall design and construct the project > Vide clause 5.1 of the conditions of MOU (Annexure-II) under the heading operations, ICHWMF (i.e Company's Ghabeni Unit) has to operate and maintain facility > Under the heading life of TSDF(ICHWMF) in annexure-II of MoU, it is agreed amongst parties that " The ICHWMF" has the right and obligation to conduct and operate the project for the period commencing on the commencement date 30.06.2001 and ending nearly on the day 30 years after the practical completion date" > It is pertinent to mention that MOU entered into by the company with MOEF and G1DC is exhaustive agreement for developing, operating and maintaining integrated common hazardous waste management facility (ICHWMF), containing therein detail terms and conditions and on basis of which financial assistance of Rs.2.00 cr is granted vide this MoU > It is clear from the above that the Gabheni Unit 01 company have fulfilled the condition as laid out under sub clause (b) of clause (i) of subsection (4) of section 801A of the Act.” ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 46 62. The assessee also submitted written submissions before the assessing officer, which is reproduced by assessing officer in page no. 5 to 10 of the assessment order. The assessing officer observed that main contention of the assessee is that assessee has executed agreement with MOEF & GIDC and hence he was fulfilling the conditions laid down as per section 80IA(4)(i)(c). However, AO did not accept it, as this MoU is entered with the objective of getting subsidy from the MOEF which can be seen from the wordings of the MOU which is reproduced as below. “MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding (here in after called as MoU) entered on the day of January 2004. BETWEEN The Ministry of Environment and Forests (hereinafter called as MoEF), Government of India, having its office at Paryavaran Bhavan, CGO Complex, Lodhi Road, New Delhi, represented by its Director Dr N H Hosabettu, or Additional Director - Dr (Mrs) Usha Subramanium, on the first part AND The Gujarat Industrial Development Corporation hereafter called as G1DC having its office at Udyog Bhavan, Block 4, "GH" Road, Sector-II, Gandhinagar, Gujarat, 382 01" represented by its Mr. P.G Vinod, Dy. Chief Engineer on the second part. AND The Gujarat Enviro Protection & Infrastructure Ltd, Surat hereafter called as ICHWMF (Integrated Common Hazardous Waste Management Facility) having its registered office at plot No. 252/2 Luthra Mills Compound, Pandesara, Surat, Gujarat represented by its Chairman and Managing Director Shri, Ginsh R. Luthra on the third part WHEREAS * A. ICHWMF facility initiated by GEPIL, Govt, of Gujarat, and Ministry of Environment & Forest (Govt, of India). B. ICHWMF with the consent for establishment and consent of operation From Gujarat Pollution Control Board (GPCB) has already commenced since June 2001, Phase -I comprising of Landfill facility of waste, waste stabilization unit and incinerator etc. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 47 C. ICHWMF has approached MOEF directly as well as through GPCB for financial assistance for establishment of further provisions in the facility under Phase- I. D. GPCB, after careful examination of the same, has forwarded the request to MoEF for financial assistance. E. MoEF after careful examination of the project proposal and need for financial assistance has agreed to contribute to an extent of Rs. 200 lakh (Rupees Two hundred lakh only ) for Phase-11 of the project comprising of (i) Construction of secured landfill cell-2 and 3, (ii)Procurement of collection/transportation/monitoring equipment. F. The MoEF shall make the payments to GIDC and GIDC shall disburse its payments to ICHWMF (GEPIL) in accordance with the provisions set forth in this MoU and those stated in the Sanction Order.” 63. Ongoing through the contents of the above agreement, the assessing officer observed that ICHWMF (Integrated common hazardous waste management facility) has approached the MOEF directly as well as through GPCB for financial assistance for establishment of further provisions in the facility under Phase-II. It is also mentioned on the first page of the MOU that MOEF after careful examination of the project proposal and the need for financial assistance has agreed to contribute to an extent of Rs.200 lakh for Phase-II of the project comprising of: (i) Construction of secured land fill cell-2 and 3. (ii) Procurement of collection /transportation /monitoring equipment This clearly indicates that the MOU furnished by assessee is nothing but subsidy disbursal agreement. The assessee has not entered into any separate agreement with MOEF & GIDC for the purpose of developing, Operating, maintaining of the facility ICHWMF and nor it produced any other document in support of his claim, apart from the MOU discussed above. The only document available with the assessee is sanction letter From MOEF & authorization letter from Gujarat Pollution control Board for dealing with Hazardous waste materials as per statutory requirements which cannot be taken as agreement for developing, ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 48 operating, maintaining the infrastructural facility as laid down in section 80IA of the I.T Act. Assessee neither have development agreement and operation and maintenance agreement with any of the authorities mentioned in section 80IA(4)(i)(b ) of the I.T Act 1961. Hence the contention of the assessee that he meets the requirement of the provisions laid down as per section 80IA of the I.T Act for claiming deduction is not acceptable and squarely rejected. 64. The Assessing Officer also noted that assessee`s activities were came into limelight recently due to allegation and agitation of the local habitants that without treating the hazardous waste received from the industry assessee through underground pipe line discharging waste in to outside the premises. Due to this untreated hazardous waste effects on health of animals and habitants placed in and around the facility. In this scenario Gujarat Pollution control board has taken up enquiry and came with findings and asked the facility to stop its activities and take up corrective steps to make it fit for treatment of hazardous waste. The findings of the GPCB during their inspection are as follows: 1. Assessee has provided underground pipelines for discharge of wastes, from hazardous waste storage yards in your premises, leading to GJDC effluent pipeline near Unn khadi, outside your premises. 2. Assessee has failed to operate the co-processing plant as per the legal requirements as result of which hazardous waste in excess quantity is accumulated beyond prescribed time limits under the rules. 3. Assessee was not carrying decontamination of drum. 4. Assessee was not operating ETP regularly. 5. Assessee has stored certain hazardous waste beyond 90 days in the site. 6.Assessee has kept the drums of solid wastes on the PDF dumping site (cell) which is not supposed to be stored at this place. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 49 65. Earlier while scrutinizing the similar issue in the immediately preceding year i.e. A.Y. 2009-10, the then AO noticed that the activities of GEPIL were not upto the mark or requirement specially in treating, the hazardous waste and GEPIL has failed to fulfil the status of solid waste treatment plant eligible for deduction u/s 80IA and the conditions as laid down under section 80IA are not fulfilled by GEPIL. The newspaper reports published at the time were also taken into consideration and were made part of the order of the A.Y. 2009-10 and are also forming of this order as per Annexure which is annexed at the end of order. The then AO was of the view- point that these observations of the GPCB are clearly indicating that assesses was violating the environmental norms and not treating the waste properly as required by the Law. The section 80IA deduction is for the infrastructure facility which fulfils the norms of solid waste treatment plant. When infrastructural facility itself not following the treatment of manual of hazardous waste it won't be eligible to claim the deduction on profits which was envisaged for genuine treatment plants. During scrutiny of A.Y. 2009-10, the assessee was asked to furnish explanation regarding the developments of the GPCB for which it had submitted point- wise explanation as below. S.No GPCB Notice Point GEPIL submission You have provided underground pipelines for discharge of wastes, from hazardous waste storage yards in your premises, leading to GIDC effluent pipeline near Unn khadi, outside your premises. The underground pipelines; found in our premises; were laid for watering plantation and not for discharge of wastes. However the lines could not be used subsequently which fire corroded over a period. Because of corrosion it got punctured and broken at number of places as observed by GPCB during digging. They are unfit to carry any kind of liquid. The pipelines are not connected to any our storages but passes below storage yard building and terminate within the boundary of the company's premises. GIDC pipeline is located at about 22 meter away from GEPIL boundary wall. GPCB has excavated trenches parallel and perpendicular to boundary wall ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 50 and no line found beyond boundary wall. 2 You have failed to operate the co-processing plant as per the legal requirements as result of which hazardous waste in excess quantity is accumulated beyond prescribed time limits under the rules. The co-processing (waste preparation plant for coprocessing] plant was made operational since February' 11 with some teething troubles since these type of plant is very new and not established subject and first time in India. GPCB has at no time during its visit observed that we have failed to operate the Co processing plant as per legal requirements. We have produced and supplied 10,250 MT of waste mix to legally approved and permitted cement cos. with day to day submission of all legally required information to GPCB. We have completely complied with all requirements of permission granted on 18.2.11 and CPCB guidelines for co- processing. Our existing stock of 4500 MT (this includes raw material, product and residue as well) is well within the permitted storage capacity of 6300MT worked out as per order dt. 18.02.2011. 3 You are not carrying de- contamination of drum The activity of De-contamination of Drum is carried out regularly.  GPCB during their 8 visit in last 12 months have witnessed the activity of decontamination of Drum.  Recently at the instruction of RO, GPCB, Surat more than 400 decontaminated drums have bene donated to Forest Department for tree plantation. 4 You are not operating ETP regularly  ETP plant is being operated regularly.  ETP is 60 KLPD capacity and is a batch process. Our batch process is carried out as penalty Scheduled hours. It might be a case that during your visit the batch process ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 51 was not taken up which led you to draw the conclusion that ETP is not operated regularly.  ETP has been modified as penalty instructions and in consultation with GPCB.  Our operational records are duly audited by Environment Auditors and reports are also submitted to GPCB.  GPCB during their 8 visit in last 12 months have witnessed that ETP was operating during above visits. 5 You have stored certain hazardous waste beyond 90 days in the site.  Only 50 drums containing residue from Co-processing facility are more than 90 days. The drums were scheduled to be sent to incineration facility at Palsana.  All other stored raw hazardous wastes for co-processing. Outward and stock is being sent to GPCB on account of monthly basis.  We shall dispatch the same for incineration in 7 days time. 6 You have kept the drums of solid wastes on the PDF dumping site (cell) which is not supposed to be stored at this place. One drum was only observed on landfill near Pock-lane machine on 4 th November during GPCB visit. This was containing oil for machine under maintenance. The same as sampled, analyzed and confirmed in presence of GPCB officials. The drum was immediately shifted out of landfill, as per GPCB instruction on that day itself. 66. The Assessing Officer, however, rejected the contention of the assessee and held that preliminary enquiry proved that assessee was not treating the hazardous waste as per requisite norms and failed to fulfil the status of solid waste treatment plant eligible for deduction u/s 80IA of the I.T Act. Further assessee was also not fulfilling the conditions laid down u/s 80IA of the I.T Act, to be eligible for deduction. The conditions, facts and circumstances of the assessee company has not changed yet and due to irregularities noticed by the ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 52 authorities as well as opposed by the local residents at large, have resulted into further legal enquiries and action. As no change to the conditions and facts as was prevailing in last year noticed in the present year under scrutiny also therefore, despite of (rule of Res Judicata), the proceeding during the year under scrutiny being separate than any other year in the past, gravity of the facts contains in this year also. In view of all these facts amount of Rs.19,32,33,992/- deduction claimed by assessee u/s 80IA of the I.T Act was disallowed by the assessing officer. 67. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld CIT(A), who has allowed the deduction under section 80IA(4) of the Act. The ld CIT(A), while allowing the appeal of the assessee held that there is no change in circumstances or in law in respect of Assessee's Gabheni unit suggesting a different view and relied on the judgment of Hon'ble Apex Court in case of Radhasparnj Satsang Vs. CIT (1992) 193 ITR 321 (SC).The ld CIT(A) also held that MOU entered into by the Assessee with MOEF and GIDC is an exhaustive agreement whereby Assessee have to develop, operate and maintain Integrated Common Hazardous Waste Management Facility (ICHWMF). This MOU also prescribes detailed terms and conditions and on basis of which financial assistance of Rs.2.00 crores was granted. The AO has erred in treating it just a subsidy agreement, which was wrong. The ld CIT(A) also held that assessee has committed some minor irregularities and the same should not be considered for disallowance of deduction under section 80IA(4) of the Act. 68. Learned Counsel for the assessee submits written submission before the Bench, which is reproduced below: “Disallowances of deduction claimed u/s. 80IA(4) of Rs.19,32,33,992/- in respect of profit and gains from Gabheni Unit. Facts: In the return of income, assessee claimed the deduction u/s. 80IA(4) of Rs. 21,30,61,976/- which includes income of Rs. 19,32,33,992/- derived from the Gabheni Unit. The claim of deduction u/s 80IA(4) was supported by Form No. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 53 10 CCB which was filed alongwith the return of income. The company has entered into an agreement with MoEF and Gujarat Industrial Development Corporation (GIDC). Assessee company also applied for the authorization from GPCB and in turn GPCB agreed to grant authorization in 2001. Therefore the deduction pertaining to Gabheni Unit was claimed from year to year and the same was allowed by assessing officer in the scrutiny assessment in past. In the course of assessment proceedings, assessing officer issued the show cause notice. In response to the show cause notice issued by the assessing officer, assessee filed the detailed written submission which has been reproduced by the assessing officer at page no. 4 to 10. The assessing officer was not satisfied with the submission of the assessee and he made the disallowance of Rs.19,32,33,992/- as per his finding given at page no. 10 to 16. The assessing officer observed that assessee entered into agreement with the MoEF for securing financial assistance and not for development or operation or maintenance of the infrastructure facility. He further observed that the authorization letter from GPCB could not be considered as agreement and preliminary inquiry was conducted by GPCB which indicated that assessee was violating the environmental laws and not treating the waste properly. The Ld. CIT(A) allowed the assessee’s ground on the basis of his findings at Para No 6 (page no. 39 to 46) of the appellate order. Arguments: Assessee relies on the same written submission made for A.Y. 2009-10 at para no. 21 to 27. In view of the above, your honours are requested to allow assessee’s appeal and dismiss revenue’s appeal.” 69. On the other hand, ld DR for the Revenue submits that MOU furnished by assessee is nothing but subsidy disbursal agreement. The assessee has not entered into any separate agreement with MOEF & GIDC for the purpose of developing, Operating, maintaining of the facility ICHWMF and nor it produced any other document in support of his claim. The preliminary enquiry proved that assessee was not treating the hazardous waste as per requisite norms and failed to fulfil the status of solid waste treatment plant eligible for deduction u/s 80IA of the I.T Act. Further assessee was also not fulfilling the conditions laid down u/s 80IA of the I.T Act, to be eligible for deduction. Due to irregularities noticed by the authorities as well as opposed by the local residents at large, Gujarat Pollution control board (in brief GPCB) are clearly indicating that assesses was ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 54 violating the environmental norms and not treating the waste properly as required by the Law. The assessee`s activities were came into limelight recently due to allegation and agitation of the local habitants that without treating the hazardous waste received from the industry assessee through underground pipe line discharging waste in to outside the premises. Due to this untreated hazardous waste effects on health of animals and habitants placed in and around the facility. In this scenario Gujarat Pollution control board has taken up enquiry and came with findings and asked the facility to stop its activities and take up corrective steps to make it fit for treatment of hazardous waste. Therefore, assesse is not entitled to claim deduction u/s 80IA(4) of the Act. 70. After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Ld. Counsel, we find that assessee has not fulfilled the conditions for claiming deduction under section 80IA(4) of the Act. It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. We note that enterprise running the infrastructural facility should have an agreement with central government/ state Government/ local authority/statutory authority for developing operating, maintaining the infrastructural facility. This means for the planned infrastructure development government plans for different infrastructure projects. Accordingly central/state governments entered into lot of agreements in the form of MoU with private sector players for Build, own, operate, transfer (BOOT), Build, operate, lease, transfer (BOLT) etc with single objective to promote private investment in the infrastructure of country. However, in the case of assessee there is no such agreement made with central and state government for developing, operating, and maintaining the infrastructural facility. The MOU entered into by the Assessee with MOEF and GIDC is just a subsidy agreement. We do not agree with the findings of ld CIT(A) to the effect that it is an ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 55 agreement with Government to claim deduction under section 80IA(4) of the Act. 71. The Assessing Officer has rightly held that assessee has not entered into any separate agreement with MOEF & GIDC for the purpose of developing, Operating, maintaining of the facility ICHWMF and nor it produced any other document in support of his claim, apart from the MOU discussed above. The only document available with the assessee is sanction letter From MOEF & authorization letter from Gujarat Pollution control Board (GPCB) for dealing with Hazardous waste materials as per statutory requirements which cannot be taken as agreement for developing, operating, maintaining the infrastructural facility as laid down in section 80IA of the I.T Act. The Assessee neither have development agreement and operation and maintenance agreement with any of the authorities mentioned in section 80IA(4)(i)(b ) of the I.T Act 1961. Hence the contention of the assessee that he meets the requirement of the provisions laid down as per section 80IA of the I.T Act for claiming deduction is not acceptable and squarely rejected by the assessing officer. We agree with the findings of the assessing officer. 72. The Assessing Officer also noted that assessee`s activities were came into limelight recently due to allegation and agitation of the local habitants that without treating the hazardous waste received from the industry, the assessee through underground pipe line discharging waste in to outside the premises. Due to this untreated hazardous waste effects on health of animals and habitants placed in and around the facility. In this scenario Gujarat Pollution control board has taken up enquiry and came with findings and asked the facility to stop its activities and take up corrective steps to make it fit for treatment of hazardous waste. The findings of the GPCB during their inspection are as follows: (1) Assessee has provided underground pipelines for discharge of wastes, from hazardous waste storage yards in your premises, leading to GIDC effluent pipeline near Unn khadi, outside your premises. ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 56 (2) Assessee has failed to operate the co-processing plant as per the legal requirements as result of which hazardous waste in excess quantity is accumulated beyond prescribed time limits under the rules. (3) Assessee was not carrying decontamination of drum. (4) Assessee was not operating ETP regularly. (5) Assessee has stored certain hazardous waste beyond 90 days in the site. (6) Assessee has kept the drums of solid wastes on the PDF dumping site (cell) which is not supposed to be stored at this place. From the above, it is abundantly clear that assessee has not fulfilled the conditions for claiming deduction under section 80IA(4) of the Act. 73. We note that activities of GEPIL were not up to the mark or requirement specially in treating, the hazardous waste and GEPIL has failed to fulfil the status of solid waste treatment plant eligible for deduction u/s 80IA and the conditions as laid down under section 80IA are nor fulfilled by GEPIL. The assesses was violating the environmental norms and not treating the waste properly as required by the Law. The section 80IA deduction is for the infrastructure facility which fulfils the norms of solid waste treatment plant. When infrastructural facility itself not following the treatment of manual of hazardous waste it won't be eligible to claim the deduction on profits which was envisaged for genuine treatment plants. Therefore, we are of the view that due to irregularities noticed by the authorities, the assessee is not eligible to claim deduction under section 80IA(4) of the Act. 74. We note that ld CIT(A) has allowed the appeal of the assessee based on the principle of consistency by relying on the judgment of Hon'ble Apex Court in case of Radhasparnj Satsang Vs. CIT (1992) 193 ITR 321 (SC). The order of ld CIT(A) is not acceptable as it is well established that res- judicata does not apply to the Income Tax proceedings, which are independent from each other for ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 57 different years. Hon'ble Courts have held that when an assessee claims exemption/deduction, it is the bounder duty of the assessee to fully substantiate it, and if this is not done, the deduction claimed by the assessee may be disallowed. It has been held by the Hon`ble Supreme Court in the case of Dwarkadas Keshavdas Morarka (1962) 44 ITR 529 (SC) that an assessment year under the Act, is self-contained assessment period no res judicata for Assessing Officer, who is not a court and he is not precluded from arriving at a conclusion inconsistent with his conclusion in another year. Hence, it is well settled that principle of res judicata is not applicable to income-tax proceedings. Meaning thereby, acceptance of claim of the assessee, in past by the department has no bearing in this assessment year. We note that assessee has failed to comply status of solid waste treatment plant in the year under consideration and that is why the assessing officer has denied the deduction under section 80IA(4) of the Act. In view of above discussion, the decision of Assessing Officer should be upheld. 75. We note that assessee has not followed procedure for establishing Solid Waste Management System and ld CIT(A) allowed the deduction based on deemed agreement Concept. At this juncture, it is appropriate to quote the important para of the order of ld CIT(A), which reads as follows: “6.1.......As discussed, in the above cited case, deduction was not granted to the assessee because assessee had not entered into an agreement with the State/Central Govt. but for the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the there is no formal GPCB has issued an State Govt. Similar is the situation here, as per AO agreement with Central/State Govt., however the authorization to the assessee to develop, operate &. maintain Solid Waste: Management Facility, This should be considered as "deemed agreement", even if MOEF is considered as a mere subsidy disbursal agreement. Hence, I am of considered view that the condition enshrined in 80IA(i)(b) is duly complied with by the assessee company.....” 76. From the above findings of ld CIT(A), it is abundantly clear that ld CIT(A) has allowed the deduction under section 80IA(4) of the Act based on "deemed agreement" which is not acceptable in the eye of law. The ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 58 exemption and deductions are not allowed based on deemed agreement. We note that there is no concept of "deemed agreement" in the entire provisions of section 80IA(4) of the Act. That is, section 80IA(4) does not allow the deduction based on "deemed agreement", therefore we do not agree with the findings of ld CIT(A). 77. The Constitution Bench, of Hon`ble Supreme Court in the case of Commissioner of Customs v. Dilip Kumar & Co. 2018 (9) SCC 123, held as follows: “24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution [ “265. Taxes not to be imposed save by authority of law.—No tax shall be levied or collected except by authority of law.”] prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature. *** 34. The passages extracted above, were quoted with approval by this Court in at least two decisions being CIT v. Kasturi & Sons Ltd. [CIT v. Kasturi & Sons Ltd., (1999) 3 SCC 346] and State of W.B. v. Kesoram Industries Ltd. [State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201] (hereinafter referred to as “Kesoram Industries case [State of W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201]”, for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G.P. Singh's treatise, summed up the following principles applicable to the interpretation of a taxing statute: ‘(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly.’” ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 59 From the above judgment, it is abundantly clear that a taxing statute cannot be interpreted on any presumption or assumption. Hence deduction under section 80IA(4) of the Act, cannot be allowed based on "deemed agreement". 78. One of the rules of interpretation of a tax statute is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations. (Eagle Flask Industries Ltd. v. Commissioner of Central Excise, 2004 Supp (4) SCR 35). 79. That deductions are to be granted only when the conditions which govern them are strictly complied with. This has been laid down by the Hon`ble Supreme Court in the case of State of Jharkhand v Ambay Cements, (2005) 1 SCC 368. The findings of the Hon`ble Court is reproduced below: “23.... In our view, the provisions of exemption clause should be strictly construed and if the condition under which the exemption was granted stood changed on account of any subsequent event the exemption would not operate. 24. In our view, an exception or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the industrial policy and the exemption notifications. 25. In our view, the failure to comply with the requirements renders the writ petition filed by the respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein.” 80. Therefore, based on the facts and circumstances of the case and legal position applicable to these facts, we confirm the findings of the assessing officer, and allow the following appeals of Revenue: (i) ITA No.1236/A/12, A.Y. 2009-10, Gabheni Unit, Rs.15,35,59,562/- ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 60 (ii) ITA No.2250/A/15, A.Y. 2010-11, Gabheni Unit, Rs.19,32,33,992/- (iii) ITA No.2521/A/16, A.Y. 2012-13, Gabheni Unit, Rs. 1,42,35,127/- 81. Now we shall take ITA No.2521/AHD/2016, A.Y. 2012-13, Co-Processing Unit, Rs. 1,25,70,515/-, appeal of the Revenue: 82. Brief facts qua the issue are that assessee has claimed deduction under section 80IA of the Act on the income earned from the Co-processing unit, for Rs.1,25,70,515/-. The Co-processing unit, Surat involved in the business of developing operating and maintaining solid waste management system. In the solid waste management system, assessee was claiming that he was dealing with Hazardous waste generated from the local industries at Surat. In the form 10CCB report, the assessee has mentioned that local/state authorities from whom approval taken was mentioned as Gujarat Pollution Control Board (GPCB). The assessing officer noted that assessee company has works contract of which was awarded by some other person and executed by the assessee company. Since, the assessee company is not the owner of the project, deduction under section 80IA(4) will not be allowable to the assessee company in respect of Co processing Unit in view of the amended provision of Explanation to Section 80IA inserted by the Finance Act (No.2) 2009 effective with retrospective effect from 01.04.2000. Accordingly, the assessee was asked to explain and justify the claim of deduction under section 80IA(4) in respect of income derived from Co Processing unit with supporting proof and documentary evidences. 83. In response to the same, the assessee has filed its submission dated 09.01.2015 which is reproduced by assessing officer in assessment order. The assessing officer, however rejected the submission of the assessee and held that as per the amended provision of Explanation to Section 80IA of the I.T. Act, deduction u/s 80IA(4) of the I.T. Act shall not be allowable to an assessee engaged in the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility, the nature of a work contract awarded by any person [including the Central, or State ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 61 Government] and executed by the undertaking or enterprise referred to Section (1) of Section 80IA. In the instant case, the enterprise has not entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for developing, maintaining and operating a new infrastructure facility. Therefore, as per the amended provision of Explanation to Section 80IA inserted by the Finance Act (No.2) 2009 with retrospective effect from 01.04.2000, the deduction under section 80IB(4) claimed by the assessee from the profits and gains of Co Processing Unit of the assessee company is not allowable and hence the same was disallowed by AO to the tune of Rs.1,25,70,515/-. 84. On appeal, ld CIT(A) deleted the disallowance. Aggrieved, the Revenue is in appeal before us. 85. Learned Counsel for the assessee, submitted that Co-processing unit, Surat involved in the business of developing operating and maintaining solid waste management system. In the solid waste management system, assessee was claiming that he was dealing with Hazardous waste generated from the local industries at Surat. In the form 10CCB report, the assessee has mentioned that local authorities have given approval to this unit, therefore ld CIT(A) has correctly allowed deduction under section 80IA(4) of the Act. 86. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 87. We have heard both the parties. We note that as per the amended provision of Explanation to Section 80IA of the I.T. Act, deduction u/s 80IA(4) of the I.T. Act shall not be allowable to an assessee engaged in the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility, the nature of a work contract awarded by any person [including the Central, or State Government] and executed by the undertaking or ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 62 enterprise referred to Section (1) of Section 80IA. The assessee is executing only a works contract, therefore not eligible for deduction under section 80IA of the Act. Moreover, the assessee has not entered into an agreement with the Central Government or a State Government for developing, maintaining and operating a new infrastructure facility. The legal precedents, which we have cited in case of Ghabine Unit are applicable in this unit also, therefore, we confirm the findings of Assessing Officer and allow the appeal of the Revenue. 88. Now, coming to ITA No.2521/A/16, A.Y. 2012-13, Palsana Unit, Rs. 6,50,77,043/-. Brief facts qua the issue are that assessee has claimed deduction under section 80IA of the Act on the income earned from the Palsana Unit, for Rs.6,50,77,043/-. The Palsana Unit, Surat involved in the business of developing operating & maintaining solid waste management system. In the solid waste management system assessee was claiming that he was dealing with Hazardous waste generated from the local industries at Surat. In the form 10CCB report assessee has mentioned that approval was taken from Gujarat Pollution control Board. The assessing officer noted that assessee -company has engaged in works contract, which was awarded by some other person and executed by the assessee company. Since the assessee company is not the owner of the project, deduction u/s 80IA(4) will not be allowable to the assessee- company in respect of Palsana Unit in view of the amended provision of Explanation to Section 80IA inserted by the Finance Act (No.2) 2009 with retrospective effect, from 01.04.2000. Accordingly, the assessee was asked to explain and justify the claim of deduction u/s 80IA(4) in respect of income derived from Palsana Unit with supporting proof and documentary evidences. In response to the same, the assessee has filed its submission dated 09.01.2015 which is reproduced by the assessing officer in the assessment order. 89. The Assessing Officer observed that as per the amended provision of Explanation to Section 80IA of the I.T. Act, deduction u/s 80IA(4) of the I.T. Act shall not be allowable to an assessee engaged in the business of developing ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 63 or operating and maintaining or developing, operating and maintaining any infrastructure facility, the nature of a work contract awarded by any person [including the Central, or State Government] and executed by the undertaking or enterprise referred to Section (1) of Section 80IA. The AO noted that in the instant case the assessee is engaged in executing works contract. In the instant case, the enterprise has not entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for developing, maintaining and operating a new infrastructure facility. Therefore, as per the amended provision of Explanation to Section 80IA inserted by the Finance Act (No.2) 2009 with retrospective effect from 01.04.2000, the deduction under section 80IB(4) claimed by the assessee from the profits and gains of Palsana Unit of the assessee company is not allowable and hence the same was disallowed. 90. On appeal, ld CIT(A) deleted the disallowance of deduction under section 80IA(4) of the Act. Aggrieved, the Revenue is in appeal before us. 91. Learned DR for the Revenue, has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 92. The ld Counsel for the assessee, submitted before us written submission, which is reproduced below: “In the return of income, assessee claimed the deduction u/s 80IA(4) of Rs.11,39,41,979/- which includes income of Rs. 6,50,77,043/- derived from the Palsana Unit. The claim of deduction u/s. 80IA(4) was supported by Form No. 10 CCB which was filed alongwith the return of income. Assessee company applied for the authorization from GPCB and in turn GPCB agreed to grant authorization on 30.01.2011. In the course of assessment proceedings, assessing officer issued the show cause notice. In response to the show cause notice issued by the assessing officer, assessee filed the detailed written submission which has been reproduced by the assessing officer at page no. 34 to 39. The assessing officer was not satisfied with the submission of the assessee and he made the disallowance of Rs. 6,50,77,043/- as per his finding given at page no. 39 and 40on the ground that the assessee has entered into agreement with Central ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 64 Government or State Government or Local Authority or any Statutory Body and assessee is covered under the amended provision of Explanation to S. 80IA inserted by Finance Act No. 2, 2009. Arguments: The assessing officer has not given the reason for covering the assessee under Explanation to S. 80IA. Assessee has not entered into works contract and so it is not the case of the contracts simplicitor. On perusal of the consent letter it can be clear that assessee was required to make investment and take risk in the project. The ld. CIT(A) has given detailed finding in assessee’s favour at para no. 11 of the appellate order. The reliance is placed on the above decisions narrated at para no. 20 above. In view of the above submission, your honours are requested to allow assessee’s appeal and dismiss assessee’s appeal.” 93. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessee has entered into works contract, hence not eligible for deduction under section 80IA(4) of the Act. Besides, the assessee has not followed the due procedure for establishing Palsana unit. The letter received by assessee from GPCB for its authorization, is not a valid document to claim deduction under section 80IA(4) of the Act. Moreover, the assessee has not entered into an agreement with the Central Government or a State Government or a local authority for developing, maintaining and operating a new infrastructure facility. Therefore, as per the amended provision of Explanation to Section 80IA inserted by the Finance Act (No.2) 2009 with retrospective effect from 01.04.2000, the deduction under section 80IB(4) claimed by the assessee from the profits and gains of Palsana Unit of the assessee company is not allowable. One of the rules of interpretation of a tax statute is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. The legal precedents cited by us in case of Ghabini Unit are squarely applicable to this unit ITA Nos. 1048, 1236, 1395, 1438, 1393, 1910, 2250, 2521, 2605 A.Ys.09-10, 07-08, 06-07, 10-11 &12-13 Gujarat Enviro Protection& Infrastructure Ltd. & Ors 65 also. Hence, we confirm the findings of the assessing officer and allow the appeal of the Revenue. 94. In the result, all appeals filed by the assessee (in ITA Nos.1048/AHD/2012, 1395/AHD/2010, 1438/AHD/2011, 1393/AHD/2010, 1910AHD/2015 & 2605/AHD/2016) are dismissed/partly allowed for statistical purposes to the extent indicated above, and all appeals filed by the Revenue (in ITA Nos.1236/AHD/2012, 2250/AHD/2015 and 2521/AHD/2016) are allowed. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order pronounced on 25/11/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat / Ǒदनांक/ Date: 25/11/2022 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat