Unique Waste Plastic Management & Research Company Private Limited, Nagpur V. Assistant Commissioner of Income Tax Circle-7, Nagpur

ITA 262/NAG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1941 (ITAT-NAGPUR)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Assessee Lawyers: KAPIL A HIRANI
• Keywords: Charitable institution
• Section: 15

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI RAJENDRA , A M ITA NO. 262 / N AG / 20 1 2 ( ASSESSMENT YEAR : 200 7 - 0 8 ) UNIQUE WASTE PLASTIC MANAGEMENT & RESEARCH COMPANY PRIVATE LIMITED, K - 13, BUTOBORI IND. ESTATE, WARDHA ROAD, NAGPUR (MAHARASHTRA) - 441 108 VS. ACIT, CIR - 7, AAYKAR BHAWAN, CIVIL LINES, NAGPUR (MAHARASHTRA) - 440 001 . PAN/GIR NO. : A AACU 6655 N ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. KAPIL A. HIRANI /REVENUE BY : MR. B. RAJARAM DATE OF HEARING : 1 9 TH DEC ., 2012 DATE OF PRONOUNCEMENT : 1 ST FEB . ,201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH E ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AG AINST THE ORDER DATED 12 - 3 - 2012 OF LEANED CIT (A) - I I , NAGPUR (MAHARASHTRA) , WHICH HAS BEEN HEARD THROUGH E - COURT, MUMBAI . 2 . THE ASSESSEE IN ITS APPEAL RAISES OBJECTION IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT . ITA NO . 262 /20 1 2 2 3 . THE ASSESSEE COMPANY IS MANUFACTURING LIQUID HYDROCARBON FROM PLASTIC WASTE. THE ASSESSEE IN ITS RETURN CLAIMED DEDUCTION OF RS. 52,57,322/ - UNDER SECTION 80IA(4). DEDUCTION UNDER SECTION 80IA(4) IS APPLICABLE TO AN ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY, MEANS SOLID WASTE MANAGEMENT SYSTEM AMONG OTHER THINS AS MENTIONED IN THE CLAUSES OF THE SECTION. SINCE THE ASSESSEE IS MANUFACTURING LIQUID HYDROCARBON FROM PLASTIC WASTE, ACCORDINGLY, IT WAS STATED BEFORE THE AO THAT THE SAME IS COVERED UNDER WASTE MANAGEMENT SYSTEM AND QUALIFIES AS AN INFRASTRUCTURE FACILITY. IT WAS EXPLAINED THAT ANOTHER CONDITION IS THAT IT HAS ENTERED INTO AN AGREEMENT WITH A STATUTORY BODY FOR DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY . DETAILED SUBMISSIONS WERE FILED BEFORE THE AO, WHICH HAS BEEN INCORPORATED IN THE ORDER OF THE AO. 3.1 IN THE WRITTEN SUBMISSION IT WAS EXPLAINED THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH MAHARASHT RA ENERGY DEVELOPMENT AGENCY (HEREINAFTER CALLED AS MEDA) , WHICH IS A DESIGNATED AGENCY TO CO - ORDINATE, REGULATE AND ENFORCE PROVISION OF THE ACT. IT WAS EXPLAINED THAT MEDA BECAME A NODAL AGENCY FOR SAID PURPOSE UNDER THE NOTIFICATION ISSUED ON 12 TH MAR CH, 2003 (COPY OF THE SAME WAS ALSO FILED). ACCORDINGLY, IT WAS SUBMITTED THAT EXEMPTION UNDER SECTION 80IA(4) OF THE ACT IS ALLOWABLE AS THE CONDITION FOR DEDUCTION IS THAT THE ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING A NY INFRASTRUCTURE FACILITY AND THERE SHOULD BE AN ITA NO . 262 /20 1 2 3 AGREEMENT WITH THE GOVERNMENT WHETHER STATE GOVERNMENT OR CENTRAL GOVERNMENT, HENCE, IT WAS STATED THAT THE CONDITIONS ARE SATISFIED AND, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION. IT WAS ALSO EXPLA INED THAT MEDA IS THE NOTIFIED AUTHORITY UNDER THE ACT. SECTION 80IA(4) IS AN INCENTIVE SECTION TO PROMOTE SOLID WASTE MANAGEMENT, WHICH IS NECESSARY FOR A BUSINESS ENTERPRISE AND CANNOT BE A CHARITABLE INSTITUTION. FOR BUSINESS ENTERPRISE, IF SOME TAX CON CESSION ARE NOT GIVEN, THERE SHOULD BE NO INCENTIVE TO DEVELOP, MAINTAIN AND OPERATE SUCH SYSTEM. THE AGREEMENT WITH MEDA IS STATUTORY REQUIREMENT UNDER SECTION 80IA(4) WITH WHOM THE AGREEMENT CAN BE MADE FOR AVAILING THE BENEFIT OF 100% TAX DEDUCTION. SO ME MORE LITERATURE IN RESPECT OF MANAGEMENT SYSTEM WAS ALSO FILED BEFORE THE A.O. 3.2 THE AO AFTER CONSIDERING THE SUBMISSIONS, WAS OF THE VIEW THAT THE CLAIM OF THE ASSESSEE IS NOT CORRECT. THE AO OBSERVED THAT THE ASSESSEE HAD EARNED PROFIT FROM ITS BU TOBORI FACILITY, WHICH IS NOT AT ALL RELATED TO THE BUSINESS AGREEMENT WITH MEDA, NEITHER MEDA HAD ANYTIME APPROVED THE BUTIBORI FACILITY NOR WAS IT UNDER ANY SUPERVISION OF MEDA. THE BASIC CONDITION IS THAT WHEN THE ASSESSEE AND CENTRAL/STATE GOVERNMENT/L OCAL AUTHORITY/STATUTORY BODY HAVE ENTERED INTO AN AGREEMENT FOR DEVELOPING/OPERATING AND MAINTAINING/DEVELOPING, OPERATING AND MAINTAINING ANY INFRAST R U CTURE FACILITY THEN THE PROFIT DERIVED FROM THAT ENTERPRISE BY THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUC TION U/S 80IA. THE AO FURTHER NOTED THAT IN ASSESSEES CASE, THE PROFIT IS FROM AN UNDERTAKING WHICH IS NOT A ITA NO . 262 /20 1 2 4 SUBJECT OF ANY AGREEMENT WITH THE REQUIRED BODIES. THIS UNDERTAKING IS A PURE COMMERCIAL ENTERPRISE OF THE ASSESSEE. THE SECTION DOES NOT PROVIDE DEDUCTION TO ALL UNDERTAKINGS/ENTERPRISES OF AN ASSESSEE, ONLY THOSE UNDERTAKINGS WHICH FULFILL ALL THE CONDITIONS LAID DOWN IN SECTION 80IA(4) WOULD BE ELIGIBLE ENTERPRISES. THE AO ALSO NOTED THAT EVEN THE ASSESSEE HAS ENTERED INTO AN AGREEMENT FOR DEVELO PMENT OF SOME FACILITIES IN FUTURE, WOULD NOT MAKE THE NAGPUR UNDERTAING AND INELIGIBLE UNDERTAKING. ACCORDINGLY, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA WAS REJECTED. 4 . BEING AGGRIEVED WITH THE ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A) . DETAILED SUBMISSIONS WERE FILED BEFORE HIM, WHICH ARE RECORDED IN PARA 4 AT PAGE 3 TO 9 OF THE IMPUGNED ORDER. THE CONTENTIONS RAISED BEFORE THE AO WERE REITERATED BEFORE THE LEARNED C IT(A) . VARIOUS CORRESPONDENCE WITH MEDA AND ASSESSEE AND STATUTORY NOTIFICATIONS ISSUES BY THE STATE GOVERNMENT WERE ALSO FILED AND IT WAS SUBMITTED THAT MEDA IS A STATUTORY BODY NOTIFIED BY THE STATE GOVERNMENT, THEREFORE, THE SAME IS ELIGIBLE FOR DEDUCTI ON. REGARDING THE OBJECTION OF THE AO THAT AGREEMENT WITH MEDA IS A BUSINESS AGREEMENT FOR PROMOTIONS OF THE APPROVED UNITS AND AGREEMENT WITH MEDA IS NOT ONE OF DEVELOPING, OPERATING AND MAINTAINING OR ANY INFRASTRUCTURAL FACILITY AND AGREEMENT IS NOT WIT H CENTRAL GOVERNMENT/STATE GOVERNMENT OR LOCAL AUTHORITY OR STATUTORY BODY, WAS EXPLAINED THAT THE GOVERNMENT OF MAHARASHTRA CREATED AN ITA NO . 262 /20 1 2 5 AGENCY CALLED MAHARASHTRA ENERGY DEVELOPMENT AGENCY IN JULY 1985 AND THE AGENCY WAS REGISTERED UNDER THE SOCIETY REGISTR ATION ACT AS A SOCIETY AS WELL AS A CHARITABLE TRUST UNDER BOMBAY PUBLIC TRUST ACT, 1950. ITS PURPOSE WAS DETAILED IN THE PAMPHLET AS ON 31 - 7 - 2010 (COPY OF THE SAME WAS ALSO FILED). THE GOVERNING BODY OF THE TRUST IS HONORABLE MINISTER IN CHAR GE OF NON - CON VENTIONAL EN ERGY AS HONBLE CHAIRMAN, GENERAL DIRECTOR, MEMBER SECRETARY ETC. THE OBJECTS OF THE AGENCY WERE THAT TO DEVELOP AND TO PROPAGATE THE NON - CONVENTIONAL, RE - PRODUCTABLE, REGENERATIVE AND ALTERNATE ENERGY SO URCES, TO UNDERTAKE THE PROGRAM OF SAVIN G ENERGY AND TO PROPAGATE IT AND TO IMPLEMENT THE PROGRAMS OF NON - CONVENTIONAL ENERGY SOURCE OF MINISTRY OF CENTRAL GOVERNMENT . IT WAS FURTHER EXPLAINED THAT IN 2001, AN ACT WAS PASSED BY THE PARLIAMENT KNOWN AS ENERGY CONSERVATION ACT OF 2001 TO PROVIDE F OR EFFICIENT USE OF ENERGY AND ITS CONSERVATION AND MATTERS CONNECTED AND INCIDENTAL TO UNDER SECTION 3 OF THE ACT. UNDER SECTION 15 OF THE ACT, STATE GOVERNMENT IS AUTHORIZED TO EXERCISE POWERS TO ENFORCE CERTAIN PROVISION FOR EFFICIENT USE OF ENERGY AND ITS CONSERVATION. THE STATE GOVERNMENT IS ALSO AUTHORIZED TO DESIGNATE ANY AGENCY AS DESIGNATED AGENCY TO C - ORDINATE REGULATE AND ENFORCE PROVISION OF THE ACT IN THE STATE U/S 15(D) BY THE STATE GOVERNMENT AND THEREAFTER FULL SCRIPT OF THE STATE GOVERNMEN T WAS FILED PROVING THAT THE MEDA IS A STATUTORY BODY UNDER THE RULES OF MAHARASHTRA STATE GOVERNMENT. ITA NO . 262 /20 1 2 6 4.1 REGARDING THE CONTENTION OF THE AO THAT THE AGREEMENT IS A BUSINESS AGREEMENT FOR PROMOTION OF APPROVED UNITS, IS NOT CORRECT BECAUSE TO COMMENCE A B USINESS OF WASTE MANAGEMENT NO APPROVAL OR PERMISSION OF MEDA IS REQUIRED EXCEPT FOR 80IA(4). HOWEVER, MEDA HAS POWER TO ENFORCE THE REQUIREMENT OF THE ACT OF 2001 INDEPENDENTLY OF THE CLAIM AS IT ENFORCES ON ALL ENERGY USERS WHO IRRESPECTIVE OF THEIR CATE GORY OR CLASS. THE OTHER ARGUMENT THAT IT IS NOT ON FOR DEVELOPING, OPERATING AND MAINTAINING ON A NEW INFRASTRUCTURE ACTIVITY IS ALSO NOT CORRECT BECAUSE IF THE UNDERTAKING IS NOT AN INFRASTRUCTURE ACTIVITY UNDER SECTION 80IA(4) WHAT ELSE IT IS 15 IS INCO MPREHENSIBLE . PROVISIONS OF SECTION WERE ALSO EXPLAINED BEFORE THE LEARNED CIT(A). THEREAFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND PERUSING THE ORDER OF THE AO, THE CIT(A) FOUND THAT THE OBJECTION OF THE AO THAT MEDA IS NOT A STATUTORY BODY AS RE QUIRED BY LAW IS NOT CORRECT TO THE EXTENT THAT THOUGH MEDA IS A REGISTERED SOCIETY AS STATED BY THE AO BUT UNDER SECTION 15(D) OF ENERGY CONSERVATION ACT, 2001, THE STATE GOVERNMENT HAD POWER TO DESIGNATE AN AGENCY AND MAHARASHTRA GOVERNMENT VIDE NOTIFICA TION DATED 12 - 3 - 2003 DESIGNATED MEDA AS THE AGENCY TO COORDINATE, REGULATE AND ENFORCE THE PROVISIONS OF THE ACT AND IMPLEMENT THE SCHEME, HENCE, FOR MAHARASHTRA MEDA IS THE DESIGNATED AGENCY AS REQUIRED BY LAW FOR THE PURPOSES OF SECTION 80IA(4). ACCORDIN GLY, THE OBJECTION OF THE AO THAT MEDA IS NOT A STATUTORY BODY WAS NOT FOUND CORRECT BY THE CIT(A) AND THE SAME WAS DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO . 262 /20 1 2 7 4.2 REGARDING OBJECTION OF THE AO, WHICH STARTED WITH REFERENCE TO 1 - 4 - 1995 AND NOT WITH REFERENCE TO DAT E OF AGREEMENT. THE AO HAS OBSERVED IN HIS ORDER THAT SECTION 80IA(4) CLEARLY STATES THAT BENEFIT CAN GO TO ANY FACILITY, WHICH MAY HAVE BEEN FUNCTIONING IN PAST ALSO BUT THE BENEFIT UNDER SECTION 80IA(4) IN THE FORM OF EXEMPTION OF INCOME WILL GO ONLY AF TER THE AGREEMENT IS ENTERED WITH THE REQUIRED BODY. IN THIS RESPECT THE CIT(A) FOUND THAT THE AO IS CORRECT. LEARNED CIT(A) HAS OBSERVED THAT THE WORD HAS STARTED IS USED IN SECTION 80IA(4) WITH REFERENCE TO THE DATE I.E. 1 - 4 - 1995 AND ASSESSEE CAN BECOME ELIGIBLE UNDER SECTION 80IA(4) ONLY AFTER IT ENTERS INTO AN AGREEMENT AS ENVISAGED IN THE ACT. IN CASE OF ASSESSEE, THOUGH IT ENTERED INTO AN AGREEMENT WITH MEDA BUT IT WAS FOR FUTURE DEVELOPMENT OF FACILITIES I.E. ASSESSEE IF DEVELOPED CERTAIN FACILITIES FOR OTHERS THAN IT WAS ENTITLED TO BENEFIT UNDER THIS SECTION. 4.3 LEARNED CIT(A) FURTHER NOTED THAT IN BUSINESS AGREEMENT, IT IS CLEARLY LAID THAT THE TECHNOLOGY DEVELOPED AND PATENTED BY ASSESSEE WILL BE JOINTLY MARKED AND CLEAR DIVISION OF ROYALTY FOR BETWEEN ASSESSEE AND MEDA IS THERE. IT IS CLEAR THAT IT IS FUTURISTIC AGREEMENT AND THE AO IS RIGHT IN HOLDING THAT NAGPUR PLANT IS JUST NOT PART OF THIS AGREEMENT AND IT CANNOT BE SAID THAT THE NAGPUR PLANT WAS SUBJECT MATTER OF ANY AGREEMENT WITH MEDA O R ANY OTHER STATUTORY BODY AND ONLY THE DEVELOPMENT OF NEW FACILITIES BY ASSESSEE USING THESE TECHNOLOGY DEVELOPED BY ASSESSEE WOULD HAVE QUALIFIED FOR 80IA(4), BUT IT APPEARS THAT NO FACILITIES COULD BE DEVELOPED DUE TO CERTAIN REASONS AND THE ITA NO . 262 /20 1 2 8 BUSINESS AG REEMENT REMAINED DEAD LETTER. ACCORDINGLY , HE CONFIRMED THE ORDER OF THE AO IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA(4) FOR THE REASON STATED ABOVE. 5 . AGGRIEVED THEREBY, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6 . LEARNED AR OF THE ASSESSEE REITERATED THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES. IT WAS EXPLAINED THAT THE AO HAS DENIED THE DEDUCTION ON TWO GROUNDS, FIRSTLY, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH MEDA, WHICH IS NOT A BODY AS PRESCRIBED UN DER THE PROVISION OF LAW AND SECONDLY, THE AGREEMENT WITH MEDA WAS FOR FUTURE DEVELOPMENT AND, THEREFORE, THE ASSESSEE IS NOT ENTITLED DEDUCTION. LEARNED CIT(A) HAS DECIDED ONE ISSUE IN FAVOUR OF THE ASSESSEE THAT MEDA IS A STATUTORY BODY, WHICH WAS STARTE D BY THE STATE OF MAHARASHTRA AND, THEREFORE, AGREEMENT WITH MEDA IS QUALIFIED FOR DEDUCTION. HOWEVER, LEARNED CIT(A) WAS IN AGREEMENT WITH SECOND OBJECTION OF THE AO RAISED THAT THE DEVELOPMENT AGREEMENT WAS OF FUTURE AND NOT FOR NAGPUR UNIT. IT WAS EXPLA INED THAT THERE IS NO DISTINCTION UNDER THE ACT WHETHER ONE UNIT IS ELIGIBLE AND SECOND UNIT IS INELIGIBLE. THE PRELIMINARY CONTENTION IS THAT THERE SHOULD BE A VALID AGREEMENT. THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH MEDA IS A VALID AGREEMENT, WHO IS A STATUTORY BODY AND LEARNED CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS EXPLAINED THAT THE AGREEMENT WAS ENTERED INTO IN NAGPUR AND IT CANNOT BE SAID THAT THE NAGPUR UNIT WAS NOT QUALIFIED FOR DEDUCTION. THE ASSESSEE IS PRODUCING ITA NO . 262 /20 1 2 9 T HE MATERIAL AS PER REQUIRED CONDITION OF SECTION 80IA(4). THE DEDUCTION UNDER SECTION 80IA(4) IS ELIGIBLE FOR SOLID WASTE MANAGEMENT SYSTEM. THE ASSESSEE HAS SOLID BASED MANAGEMENT SYSTEM. IT WAS EXPLAINED THAT THE ASSESSEE COMPANY REGISTERED UNDER THE COM PANIES ACT AND HAVING EXPERIENCE IN THE FIELD OF PROCESSING WASTE PLASTIC LIQUID HYDROCARBON FUEL. IT WAS EXPLAINED THAT THE A SSESSEE COMPANY HAS THREE FUL L - SCALE COMMERCIAL PLANTS OF 5 MT. CAPACITY TO CONVERT FROM MUNICIPAL PLASTIC WASTE TO LIQUID HYDROCA RBON FUEL AND OPERATING SUCCESSFULLY AT NAGPUR. IT WAS ALSO EXPLAINED THAT THE COMPANY HAS FILED VARIOUS APPLICATIONS FOR PATENT TO THE PATENT REGISTRATION AUTHORITY AND ALL THE APPLICATIONS HAVE BEEN REGISTERED. IT WAS FURTHER EXPLAINED THAT THE COMPANY H AS SIGNED MOU WITH MEDA EXPRESSING ITS WILLINGNESS TO WORK WITH MEDA JOINTLY FOR MARKETING AS WELL AS EXECUTION & IMPLEMENTATION OF THEIR INVENTION OF CATALYTIC ADDITIVE PROCESS FOR CONVERSATION OF WASTE PLASTIC TO LIQUID HYDROCARBON FUEL. 6.1 IT WAS FURT HER STATED THAT THE AO HAS OBSERVED THAT THIS AGREEMENT WAS NOT EVEN REMOTELY CONNECTED TO NAGPUR UNDERTAKING FROM WHICH ASSESSEE HAS EARNED PROFIT DURING THE YEAR AND THEREFORE, PROFIT EARNED IS NOT ELIGIBLE FOR DEDUCTION. IN THIS REGARD IT WAS EXPLAINED THAT THIS CONTENTION OF THE AO, WHICH IS CONFIRMED BY THE CIT(A) IS NOT CORRECT. IT WAS STATED THAT IN THE PREAMBLE OF THE AGREEMENT ITSELF THERE IS MENTION ABOUT THE EXISTENCE OF ASSESSEES OWN PLANT AT NAGPUR FOR CONVERSION OF MUNICIPAL WASTE INTO LIQUID HYDROCARBON FUEL. IT WAS ALSO EXPLAINED THAT AS PER CLAUSE 1.1, WHICH SAYS THAT THIS AGREEMENT IS TO ITA NO . 262 /20 1 2 10 PROMOTE THE COMMERCIAL PROCESS TO MANUFACTURE LIQUID HYDROCARBON FUEL FROM PLASTIC WASTE AND ALSO TO JOINTLY MARKET AND TO CO - ORDINATE EXECUTION AND IMPLE MENTATION OF CATALYTIC ADDITIVE PROCESS FOR CONVERSION OF WASTE PLASTIC TO LIQUID HYDROCARBON FUEL IN STATE OF MAHARASHTRA AS WELL AS OUTSIDE DURING THE VALIDITY OF THIS BUSINESS AGREEMENT. THEREFORE, THIS AGREEMENT, WHICH IS TO DEVELOP, OPERATE AND MAINTA IN THE INFRASTRUCTURE FACILITY OF CONVERTING THE PLASTIC WASTE INTO LIQUID HYDROCARBON FUEL. THE BASIS OF THE AGREEMENT IS ITSELF BASED ON EXPERTISE AND EXPERIENCE OF THE ASSESSEE IN THE FILED OF PROCESSING WASTE INTO LIQUID HYDROCARBON FUEL, FOR WHICH THE ASSESSEE HAS INVENTED AN ENVIRONMENTAL FRIENDLY CATALYTIC ADDICTIVE PROCESS FOR CONVERSION OF WASTE INTO LIQUID HYDROCARBON FUEL AND PATENTS WERE FILED FOR REGISTRATION AND THIS INVENTION IS THE BASIS FOR THEIR COMMERCIAL PLANT AT NAGPUR. THEREFORE, THES E FACTS GOT TO SHOW THAT THE AGREEMENT IS BASICALLY CONNECTED TO THE NAGPUR UNIT FOR PURPOSE OF FURTHER EXPANSION OF UNITS IN MAHARASHTRA OR OUTSIDE. MAHARASHTRA UNIT ITSELF WAS ESTABLISHED AFTER THIS AGREEMENT AND NOT BEFORE FOR WHICH THE ASSESSEE HAS MAD E THE CLAIM. THE PROMOTION OF OTHER UNITS CONTEMPLATED IN THE AGREEMENT IS IN ADDITION TO THE NAGPUR UNIT. WITHOUT DEVELOPMENT OPERATION AND MAINTENANCE OF NAGPUR PLANT, NO OTHER PLANT CAN COME INTO EXISTENCE. IT WAS ALSO SUBMITTED THAT THE AGREEMENT IS TO READ AS A WHOLE AND NOT A PART OF THAT AGREEMENT AS HAS DONE BY THE LEARNED ASSESSING OFFICER. ACCORDINGLY, IT WAS SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4). ITA NO . 262 /20 1 2 11 7. PER CONTRA, LEARNED DR PLACED RELIANCE ON THE ORDER OF THE LEARNED ASSESSING OFFICER AS WELL AS ON THE ORDER OF THE LEARNED CIT(A) . ATTENTION OF THE BENCH WAS DRAWN AT PAGE 10 OF THE ORDER OF THE CIT(A) , WHERE FINDING HAS BEEN RECORDED THAT THE AGREEMENT IS FOR FUTURE ACTIVITY. 8 . WE HAVE HEARD RIVAL SUBMISSION S OF THE PARTIES AND CONSIDERED THEM CAREFULLY. WE HAVE ALSO GONE THROUGH THE CLAUSES OF THE PROVISION OF SECTION 80IA(4) , WHICH PROVIDES THAT 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, ( 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 EST ABLISHED 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 ( I ) DEVELOPING OR ( II ) OPERATING AND MAINTAINING OR ( II I ) 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, 199 5 . ALL THE ABOVE CONDITIONS PROVIDED UNDER SECTION 80IA(4) FOR CLAIMING EXEMPTION AND SATISFIED IN THE PRESENT CASE. THE ASSESSEE IS A COMPANY. THE COMPANY HAS ENTERED INTO AN AGREEMENT WITH A STATUTORY BODY, WHICH IS INCORPORATED BY THE STATE GOVERNMENT OF MAHARASHTRA AND THE COMPANY HAS EXPRESSED ITS WILLINGNES S TO WORK WITH MEDA JOINTLY FOR MARKETING AS WELL AS EXECUTION & IMPLEMENTATION OF THEIR ITA NO . 262 /20 1 2 12 INVENTION OF CATALYTIC ADDITIVE PROCESS FOR CONVERSION OF WASTE PLASTIC TO LIQUID HYDROCARBON FUEL. THE EXEMPTION WAS DENIED BY THE AO BY OBSERVING THAT THE AGREEMENT IS NOT FOR NAGPUR UNIT BUT FOR A FUTURE PERIOD IF THE ASSESSEE ESTABLISHES NEW UNIT. LEARNED CIT(A) ALSO IN AGREEMENT WITH THE FINDINGS OF THE AO. IN OUR CONSIDERED VIEW, THE OBSERVATIONS MADE BY THE AO AS WELL AS THE FINDINGS OF THE LEARNED CIT(A) ARE NOT CORRECT BECAUSE THE ASSESSEE COMPANY HAS ENTERED INTO AN AGREEMENT WITH MEDA AT THE UNIT SITUATED AT NAGPUR. IT MEANS IF THE ASSESSEE DEVELOPS THE REQUIRED ITEM IN NAGPUR UNIT, THAT WILL QUALIFY FOR EXEMPTION. IN THE AGREEMENT, IT HAS ALSO BEEN MENTIONED THAT IF THE ASSESSEE OPENS NEW UNITS IN MAHARASHTRA THEN ALSO THE ASSESSEE WILL ENTITLE FOR EXEMPTION ON ACCOUNT OF DEVELOPING THE INFRASTRUCTURE IN NEW UNITS. 8.1 AFTER GOING THROUGH THE CLAUSES OF THE AGREEMENT, COPY OF WHICH IS PLACED AT PAGE 26 TO 41 IN COMPILATION, WE NOTED THAT THE AGREEMENT DOES NOT PROVIDE IN ANY OF THE CLAUSES THAT ANY INFRASTRUCTURE DEVELOPED IN THE NAGPUR UNIT THAT WILL NOT QUALIFY FOR EXEMPTION UNDER SECTION 80IA(4). WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE THAT THE AGREEMENT HAS TO BE READ AS A WHOLE NOT IN PART. LEARNED AO AND THE LEARNED CIT(A) HAS CONSIDERED ONE PART OF THE AGREEMENT WHERE IT IS PROVIDED THAT IN FUTURE IF THE ASSESSEE STARTS NEW UNITS THEN ALSO THE EXEMPTION WILL BE GRANTED. IF WE READ WHOLE OF THE AGREEMENT, THEN IT IS CLEAR THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION OF THE INCOME EARNED IN NAGPUR UNIT. IN NAGPUR ITA NO . 262 /20 1 2 13 UNIT ALSO THE ASSESSEE DEVELOPS THE INFRASTRUCTURE FOR THE ITEM WHICH IS QUALIFIED FOR EXEMPTION UNDER SECTION 8 0IA(4) AS THERE IS NO DISPUTE IN IT. EXEMPTION UNDER SECTION 80IA(4) IS AN INCENTIVE AND IF THE ASSESSEE FULFILLS THE CONDITIONS OF SECTION 80IA(4) , IN OUR CONSIDERED VIEW THE EXEMPTION SHOULD BE GRANTED TO THE ASSESSEE BY ADOPTING BROAD APPROACH. SINCE TH E ASSESSEE HAS FULFILLED ALL THE CONDITIONS FOR GETTING EXEMPTION UNDER SECTION 80IA(4) , ACCORDINGLY, WE DIRECT TO ALLOW THE EXEMPTION CLAIMED UNDER SECTION 80IA(4) . 9 . RESULTANTLY , APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE E - COURT ON THIS 1 ST DAY OF FEB . 201 3 . - 201 3 SD/ - SD/ - ( ) ( RAJENDRA ) ( ) ( R.K.G UPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 1 / 0 2 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI