Deputy Commissioner of Income-tax, Central Circle - 1(1), Pune V. Balakrishnan Shanmugam Chettiar alias S. Balan, Pune

ITA 3004/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6142 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Transfer pricing; Opportunity of being heard; Rule of consistency; Earning of tax free income
• Section: 5(2); 14A; 250; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.3004/PUN/2017 / ASSESSMENT YEAR : 2014-15 DCIT, CENTRAL CIRCLE-1(1), PUNE. ....... / APPELLANT / V/S. BALAKRISHNAN SHANMUGAM CHETTIAR ALIAS S. BALAN, 1133/5, NIRANKAR, F.C. ROAD, SHIVAJINAGAR, PUNE-411016. PAN : AALPC5158J / RESPONDENT . / ITA NO.3055/PUN/2017 / ASSESSMENT YEAR : 2014-15 MR. PUNEET BALKRISHNAN CHETTIAR L/H OF S. BALAN, SAI CHAMBERS, PUNE-MUMBAI ROAD, WAKDEWADI, PUNE-411003. PAN : AALPC5158J ....... / APPELLANT / V/S. DCIT, CENTRAL CIRCLE-1(1), PUNE. / RESPONDENT REVENUE BY : SHRI N. ASHOK BABU ASSESSEE BY : SHRI M. R. BHAGWAT / DATE OF HEARING : 19.07.2019 / DATE OF PRONOUNCEMENT : 19.09.2019 / ORDER PER D. KARUNAKARA RAO, AM: THESE ARE THE CROSS APPEALS UNDER CONSIDERATION FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE. BOTH THE CROSS APPEALS ARE DIRECTED 2 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 AGAINST THE ORDER OF CIT(A)-11, PUNE DATED 06.10.2017 FOR THE ASSESSMENT YEAR 2014-15. 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.3004/PUN/2017 FOR ADJUDICATION IN THE FOLLOWING PARAGRAPHS. ITA NO.3004/PUN/2017 BY REVENUE 3. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN LAW IN DIRECTING THE AO TO RESTRICT THE DISALLOWANCE U/S. 14A. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80IA(4)(III) IGNORING THE PROVISIONS OF SECTION 80IA(2) EVEN THOUGH THERE WAS DELAY COMPLETING THE ENTIRE PROJECT BY 31/03/2017 WITHOUT OBTAINING APPROVAL TO THE INDUSTRIAL PART FROM THE GOVERNMENT FOR AVAILING TAX BENEFITS? 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80IA(4)(III) LIBERALLY INTERPRETING THE INCOME TAX RULES 18C AND THE INDUSTRIAL PARK SCHEME 2008 WERE THE WORD SHALL HAS BEEN USED TO EMPHASIZE STRICT COMPLIANCE OF THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S. 80IA(4)? 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN THE INTERPRETATION OF THE STATUE WHEN THE HONBLE SUPREME COURT HAS HELD A CONTRARY VIEW IN THE CASE OF CIT VS. CALCUTTA KNIT WEARS 2014 43 TAXMAN.COM 446(SC)? 4. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, TRADING IN SHARES, RUNNING OF AN INDUSTRIAL PARK ETC. DURING THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER QUANTIFIED THE ASSESSED INCOME AT RS.9.20 CRORES (ROUNDED OFF) AGAINST THE RETUNED INCOME OF RS.3,86,63,302/-. THE ASSESSING OFFICER MADE DISALLOWANCES (I) U/S 14A OF THE ACT AMOUNTING TO RS.15,52,989/- 3 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 AND (II) CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT AMOUNTING TO RS.4,60,33,983/-. FURTHER, THE ASSESSING OFFICER ALSO ADDED AN AMOUNT OF RS.48,52,836/- ON ACCOUNT OF UNDISCLOSED INTEREST INCOME. BEFORE THE CIT(A), IN CONNECTION WITH THE DISALLOWANCE U/S 14A OF THE ACT, THE ASSESSEE ARGUED THAT THE AMOUNT DISALLOWED AT RS.15,52,989/- AGAINST THE EXEMPT INCOME OF RS.5,46,798/- IS EXTREMELY HIGH AND DISPROPORTIONATE TO THE EXEMPT INCOME WHICH IS INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) CONSIDERED THE SAID ASPECT AND DIRECTED TO ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO EXEMPT INCOME. IN THE PROCESS, THE CIT(A) RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DAGA GLOBAL CHEMICALS VIDE ITA NO.5592/MUM/2012 DATED 01.01.2015. 5. AGGRIEVED WITH THE ABOVE DIRECTION OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. ON HEARING BOTH THE SIDES AND CONSIDERING THE DIRECTION OF THE CIT(A), WE FIND THE CIT(A) RIGHTLY FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE OF DAGA GLOBAL CHEMICALS (SUPRA) WHICH IS RELEVANT FOR THE PROPOSITION THAT THE DISALLOWANCE, IF ANY IS RESTRICTED TO THE TOTAL EXEMPT INCOME ONLY INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, THE RELEVANT GROUNDS RAISED BY THE REVENUE ON THIS ISSUE ARE DISMISSED. 4 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 7. REGARDING THE SECOND ISSUE ON ALLOWABILITY OF DEDUCTION U/S 80IA(4) OF THE ACT, THE ASSESSEE, BEFORE THE ASSESSING OFFICER, SUBMITTED THAT THE CLAIM IS RIGHTLY MADE AND THE SAME WAS ALLOWED IN THE PAST. THEREFORE, CONSIDERING THE PRINCIPLE OF CONSISTENCY, THE CLAIM SHOULD NOT BE DISTURBED. HOWEVER, THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S 80IB(4) OF THE ACT STATING THAT THE COMMENCEMENT OF THE INDUSTRIAL PART WHICH YIELDED THE DEDUCTIBLE INCOME WAS HELD BY MORE THAN ONE YEAR AND HENCE THE ASSESSEE FAILED TO FULFIL THE CONDITIONS NOTIFIED AND APPROVED BY THE GOVERNMENT. IT IS ALSO EVIDENT THAT THE SIMILAR DISALLOWANCES WERE MADE AND THE ISSUE WAS THE BONE OF CONTENTION FOR THE ASSESSMENT YEARS 2012-13 AND 2013-14 IN THE PAST. DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DISCUSSED THIS ISSUE IN PARA 9 TO 12 OF HIS ORDER. THE CIT(A), RELYING ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 DATED 25.11.2016 DISMISSED THE APPEAL OF THE REVENUE. THE CIT(A) ALSO RELIED ON THE HONBLE BOMBAY HIGH COURTS JUDGEMENT IN THE CASE OF SILVER LAND DEVELOPERS (P) LTD. AND OTHERS VS. EMPOWERED COMMITTEE (2012) 343 ITR 439 (BOM) AS WELL AS THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. KOLTE PATIL DEVELOPERS LTD. VS. DCIT VIDE ITA NOS.1411 TO 1415/PUN/2013 AND OTHERS FOR THE ASSESSMENT YEARS 2004-05 TO 2009-10. FOLLOWING THE PRINCIPLE OF PRO-RATA, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE RELYING ON THE SAID PREVIOUS ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 (SUPRA). 5 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 8. AGGRIEVED WITH THE ABOVE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 9. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS.1311, 1313, 1315 TO 1317/PUN/2013 FOR THE ASSESSMENT YEARS 2004-05, 2006-07 & 2008-09 TO 2010-11 DATED 25.11.2016 AND RELYING ON THE SAID DECISION OF THE TRIBUNAL (SUPRA) SUBMITTED THAT THE ISSUE IS NOW STAND COVERED IN FAVOUR OF THE ASSESSEE. 10. ON HEARING BOTH THE SIDES, WE PROCEED TO EXTRACT THE RELEVANT PARA 66, 67 AND 68 OF THE SAID ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05, 2006-07 & 2008-09 TO 2010-11 DATED 25.11.2016 (SUPRA) AND THE SAME ARE EXTRACTED AS UNDER :- 66. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). WE FIND THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S.80IA(4)(III) ON THE BASIS OF THE LETTER DATED 04-03-2009 FROM THE UNDER SECRETARY IN THE MINISTRY OF COMMERCE AND INDUSTRY THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S.80IA(4). FURTHER IN THE STATEMENT RECORDED DURING THE COURSE OF SURVEY ACTION U/S.133A THE ASSESSEE HAD WITHDRAWN SUCH CLAIM MADE U/S.80IA(4). ACCORDING TO THE ASSESSING OFFICER PENDENCY OF THE REVIEW PETITION BEFORE THE CONCERNED AUTHORITY DID NOT MAKE THE ASSESSEE ELIGIBLE FOR THE SAID DEDUCTION. WE FIND IN APPEAL THE LD.CIT(A) AFTER OBTAINING A REMAND REPORT FROM THE ASSESSING OFFICER AND CONSIDERING THE COMMENTS OF THE ASSESSEE TO SUCH REMAND REPORT ALLOWED THE CLAIM OF DEDUCTION U/S.80IA(4), THE REASONS OF WHICH ARE ALREADY REPRODUCED IN THE PRECEDING PARAGRAPHS. 67. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF M/S. KOLTE PATIL DEVELOPERS LTD. VS. DCIT AND VICE VERSA VIDE ITA NOS. 1411 TO 1415/PN/2013 AND ITA NOS. 1478 TO 1483/PN/2013 FOR A.YRS. 2004-05 TO 2009-10. THE TRIBUNAL AFTER ELABORATELY CONSIDERING IDENTICAL ISSUE HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 6 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 37. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. FACTUALLY SPEAKING, THE INDUSTRIAL PARK GIGA SPACE DEVELOPED BY THE ASSESSEE IS NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE IPS, 2008. THERE IS ALSO NO DENYING THE FACT THAT THE INDUSTRIAL PARK GIGA SPACE APPROVED UNDER THE IPS, 2008 HAS BEEN FOUND TO BE ELIGIBLE FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT IN THE SUBSEQUENT ASSESSMENT YEARS. IN THE SUBSEQUENT ASSESSMENT YEARS, THE PROFITS DERIVED FROM THE DEVELOPMENT OF INDUSTRIAL PARK GIGA SPACE HAVE BEEN CONSIDERED FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT BY THE ASSESSING OFFICER. IN THE INSTANT ASSESSMENT YEAR 2007-08, WHICH IS THE FIRST YEAR OF CLAIM BY THE ASSESSEE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE REJECTED THE CLAIM. THE GROUNDS ON WHICH THE SAID CLAIM HAS BEEN DENIED, HAVE ALREADY BEEN ENUMERATED BY US IN THE EARLIER PART OF THIS ORDER. 38. BEFORE WE PROCEED TO ADDRESS THE CONTROVERSY SURROUNDING THE OBJECTIONS RAISED BY THE REVENUE, IT WOULD BE APPROPRIATE TO BRIEFLY TOUCH-UPON THE RELEVANT PROVISIONS OF THE ACT AND THE CLAUSES OF THE IPS, 2008 IN QUESTION. SECTION 80-IA OF THE ACT PRESCRIBES FOR DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT, ETC.. SUB-SECTION (1) OF SECTION 80-IA PRESCRIBES THAT WHERE THE GROSS TOTAL INCOME OF ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (4), THERE SHALL BEEN ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE SECTION. SUB-SECTION (2) OF SECTION 80-IA PRESCRIBES THAT THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICES OR DEVELOPS AN INDUSTRIAL PARK OR DEVELOPS A SPECIAL ECONOMIC ZONE OR GENERATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OF POWER OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIZATION OF THE EXISTING TRANSMISSION OR DISTRIBUTION LINES. SHORN OF OTHER DETAILS, WE MAY NOW COME TO SUB-SECTION (4) OF SECTION 80-IA, WHICH ENUMERATES THE VARIOUS BUSINESSES TO WHICH THE PROVISIONS OF SECTION 80-IA OF THE ACT ARE APPLICABLE, SUCH BUSINESS BEING REFERRED TO AS THE ELIGIBLE BUSINESS. FOR THE PURPOSE OF THE PRESENT CONTROVERSY, WE ARE CONCERNED WITH THE SUB-CLAUSE (III) OF SUB- SECTION (4) TO SECTION 80-IA OF THE ACT, WHOSE RELEVANT PORTION READS AS UNDER :- (III) ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK [OR SPECIAL ECONOMIC ZONE] NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THAT GOVERNMENT FOR THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MARCH, [2006] : [ PROVIDED THAT . .. [ PROVIDED FURTHER THAT IN THE CASE OF ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK, THE PROVISIONS OF THIS CLAUSE SHALL HAVE EFFECT AS IF 7 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 FOR THE FIGURES, LETTERS AND WORDS 31ST DAY OF MARCH, 2006, THE FIGURES, LETTERS AND WORDS 31ST DAY OF MARCH, 2011' HAD BEEN SUBSTITUTED;] 39. IN TERMS OF THE AFORESAID, ANY UNDERTAKING WHICH IS ENGAGED IN (I) DEVELOPING; (II) DEVELOPING AND OPERATING; OR (III) MAINTAINING AND OPERATING AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVERNMENT FOR THE PERIOD BEGINNING ON 1 ST DAY OF APRIL, 1997 AND ENDING ON 31 ST MARCH, 2006 SHALL BE ELIGIBLE FOR THE BENEFIT OF SECTION 80-IA OF THE ACT. IT MAY BE NOTED THAT BY THE FINANCE (NO.2) ACT, 2006, THE APPLICABILITY OF SUB-CLAUSE (III) WAS EXTENDED FROM 31.03.2006 TO 31.03.2009. IN OTHER WORDS, ANY UNDERTAKING WHICH WAS ENGAGED IN (I) DEVELOPING; (II) DEVELOPING AND OPERATING; OR (III) MAINTAINING AND OPERATING AN INDUSTRIAL PARK SHALL BE ELIGIBLE FOR DEDUCTION FOR THE PERIOD BEGINNING ON 1 ST DAY OF APRIL, 1997 AND ENDING ON 31 ST MARCH, 2009. 40. NOTABLY, FOR THE PERIOD UNDER CONSIDERATION BEFORE US, THE CENTRAL GOVERNMENT FORMULATED A SCHEME IN EXERCISE OF THE POWERS UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT AND IT WAS CALLED INDUSTRIAL PARK SCHEME, 2008. THE SAID SCHEME DEFINES INDUSTRIAL PARK IN CLAUSE 2(H) AS UNDER :- 2(H) INDUSTRIAL PARK MEANS A PROJECT IN WHICH PLOTS OF DEVELOPED SPACE OR BUILT UP SPACE OR A COMBINATION, WITH COMMON FACILITIES AND QUALITY INFRASTRUCTURE FACILITIES, IS DEVELOPED AND MADE AVAILABLE TO THE UNITS FOR THE PURPOSES OF INDUSTRIAL ACTIVITIES OR COMMERCIAL ACTIVITIES IN ACCORDANCE WITH THIS SCHEME. 41. SIMILARLY, CLAUSE 2(I) OF THE SCHEME DEFINES INFRASTRUCTURE FACILITY AS UNDER :- 2(I) INFRASTRUCTURE FACILITY MEANS FACILITIES REQUIRED FOR DEVELOPMENT OPERATION AND MAINTENANCE OF THE INDUSTRIAL PARK AND INCLUDE ROADS (INCLUDING APPROACH ROADS), WATER SUPPLY, SEWERAGE AND EFFLUENT TREATMENT FACILITIES, SOLID WASTE MANAGEMENT FACILITIES, TELECOM NETWORK, GENERATION AND DISTRIBUTION OF POWER, AIR CONDITIONING. 42. CLAUSE 2(F) OF THE SCHEME DEFINES THE TERM DATE OF COMMENCEMENT AS UNDER :- 2(F) DATE OF COMMENCEMENT MEANS THE DATE OF OBTAINING THE COMPLETION CERTIFICATE OR OCCUPATION CERTIFICATE, AS THE CASE MAY BE, FROM THE RELEVANT LOCAL AUTHORITY, CERTIFYING THEREBY THAT ALL THE REQUIRED DEVELOPMENT ACTIVITIES FOR THE PROJECT HAVE BEEN COMPLETED. 43. CLAUSE 3 OF THE SCHEME PROVIDES FOR THE PROCEDURE FOR APPROVAL, WHICH READS AS UNDER :- (1) ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK MAY MAKE AN APPLICATION FOR NOTIFICATION UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT, IN THE PRESCRIBED FORM, IPS-I, TO THE 8 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 SECRETARY (ITA-I SECTION), CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI. (2) THE CENTRAL BOARD OF DIRECT TAXES SHALL PROCESS THE APPLICATION FOR APPROVAL AND NOTIFICATION BY THE CENTRAL GOVERNMENT AND FOR THIS PURPOSE IT MAY CALL FOR REPORTS FROM OTHER DEPARTMENTS OR AGENCIES, AS IT MAY DEEM FIT. 44. CLAUSE 4 OF THE SCHEME PROVIDES THE CRITERIA FOR APPROVAL, WHICH READS AS UNDER :- 4. AN UNDERTAKING SHALL BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT, IF IT FULFILS ALL OF THE FOLLOWING CONDITIONS, NAMELY :- (1) THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK SHOULD BE ON OR AFTER THE 1 ST DAY OF APRIL, 2006 AND NOT LATER THAN 31 ST OF MARCH, [2011]; (2) THE ARE ALLOCATED OR TO BE ALLOCATED TO INDUSTRIAL UNITS SHALL NOT BE LESS THAN SEVENTY-FIVE PER CENT OF THE ALLOCABLE AREA; (2A) THE AREA ALLOCATED OR TO BE ALLOCATED FOR COMMERCIAL ACTIVITY SHALL NOT BE MORE THAN TEN PER CENT OF THE ALLOCABLE AREA; (3) THERE SHALL BE A MINIMUM OF THIRTY INDUSTRIAL UNITS LOCATED IN AN INDUSTRIAL PARK; (4) FOR THE PURPOSE OF COMPUTING THE MINIMUM NUMBER OF INDUSTRIAL UNITS; ALL UNITS OF A PERSON AND HIS ASSOCIATED ENTERPRISES WILL BE TREATED AS A SINGLE UNIT; (5) THE MINIMUM CONSTRUCTED FLOOR AREA SHALL NOT BE LESS THAN 15,000 SQUARE METERS; (6) NO INDUSTRIAL UNIT, ALONG WITH THE UNITS OF AN ASSOCIATED ENTERPRISE, SHALL OCCUPY MORE THAN TWENTY- FIVE PER CENT OF THE ALLOCABLE AREA; (7) THE INDUSTRIAL PARK SHOULD BE OWNED BY ONLY ONE UNDERTAKING; AND, (8) INDUSTRIAL UNITS SHALL ONLY UNDERTAKE ACTIVITIES DEFINED IN CLAUSE (J) OF PARA (2). 45. CLAUSES 5 AND 6 OF THE SCHEME PERTAIN TO GENERAL CONDITIONS AND WITHDRAWAL OF APPROVAL WHICH READ AS UNDER :- GENERAL CONDITIONS. 5. (1) THE INDUSTRIAL PARK SHALL BE CONSTRUCTED AS DEVELOPED ON THE DATE OF COMMENCEMENT. (2) TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE TO THE UNDERTAKING ONLY AFTER MINIMUM NUMBER OF THIRTY UNITS ARE LOCATED IN THE INDUSTRIAL PARK. (3) THE TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE TO THE UNDERTAKING ONLY IF THE UNDERTAKING AND THE INDUSTRIAL PARK HAVE BEEN NOTIFIED BY CENTRAL BOARD OF DIRECT TAXES UNDER SECTION 80-IA OF THE ACT. (4) THE TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE ONLY TO THE UNDERTAKING NOTIFIED BY THE CENTRAL GOVERNMENT AND NOT TO ANY OTHER PERSON WHO MAY SUBSEQUENTLY DEVELOP, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES THE NOTIFIED INDUSTRIAL PARK, FOR ANY PERSON. 9 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 (5) THE UNDERTAKING MUST KEEP SEPARATE BOOKS OF ACCOUNT FOR THE INDUSTRIAL PARK AND MUST FILE ITS INCOME-TAX RETURNS BY THE DUE DATE TO THE INCOME-TAX DEPARTMENT. (6) AN INDUSTRIAL PARK APPROVED UNDER INDUSTRIAL PARK SCHEME, 2002 WILL CONTINUE TO BE GOVERNED BY THE PROVISIONS OF THAT SCHEME TO THE EXTENT IT IS NOT IN CONTRAVENTION WITH THE PROVISIONS OF ACT, AS AMENDED FROM TIME TO TIME. (7) THE UNDERTAKING SHALL ELECTRONICALLY FURNISH AN ANNUAL REPORT TO THE CENTRAL BOARD OF DIRECT TAXES IN FORM IPS-II. WITHDRAWAL APPROVAL. 6. THE CENTRAL GOVERNMENT MAY WITHDRAW THE APPROVAL GIVEN TO AN UNDERTAKING UNDER THIS SCHEME IF THE UNDERTAKING FAILS TO COMPLY WITH ANY OF THE CONDITIONS LISTED IN PARAGRAPHS 4 AND 5 OF THIS SCHEME : PROVIDED THAT BEFORE WITHDRAWAL OF APPROVAL, THE UNDERTAKING SHALL BE GIVEN AN OPPORTUNITY OF BEING HEARD BY THE CENTRAL GOVERNMENT. 46. HAVING TAKEN NOTE OF THE PROVISIONS OF THE SCHEME, WE MAY ALSO REFER TO RULE 18C OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES) WHICH DEALS WITH THE ELIGIBILITY OF AN INDUSTRIAL PARK FOR BENEFITS OF SECTION 80-IA(4)(III) OF THE ACT. RULE 18C OF THE RULES, AS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION READS AS UNDER :- ELIGIBILITY OF INDUSTRIAL PARKS FOR BENEFITS UNDER SECTION 80- IA(4)(III). 18C. (1) THE UNDERTAKING SHALL BEGIN TO DEVELOP, DEVELOP AND OPERATE OR MAINTAIN AND OPERATE AN INDUSTRIAL PARK ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 2006, AND ENDING ON THE 31 ST DAY OF MARCH, [2011]. (2) THE UNDERTAKING AND THE INDUSTRIAL PARK SHALL BE NOTIFIED BY THE CENTRAL GOVERNMENT UNDER THE INDUSTRIAL PARK SCHEME, 2008. (3) THE UNDERTAKING SHALL CONTINUE TO FULFILL THE CONDITIONS ENVISAGED IN THE INDUSTRIAL PARK SCHEME, 2008. 47. FROM A PERUSAL OF THE AFORESAID RELEVANT PROVISIONS OF THE ACT, RULES AND SCHEME, IT IS NOTICED AS FOLLOWS. THAN AN UNDERTAKING WHICH IS ENGAGED IN (I) DEVELOPING; (II) DEVELOPING AND OPERATING; OR (III) MAINTAINING AND OPERATING AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME SHALL BE ELIGIBLE FOR THE BENEFITS OF SECTION 80-IA(4)(III) OF THE ACT. THE AFORESAID THREE CATEGORIES ARE DISTINCT AND SO FAR AS THE ASSESSEE IS CONCERNED, IT HAS CLAIMED APPROVAL UNDER THE SCHEME ON THE STRENGTH OF IT BEING ENGAGED IN DEVELOPING OF AN INDUSTRIAL PARK. THEREFORE, IT IS IN THE AFORESAID CONTEXT THAT ONE HAS TO DETERMINE THE REQUIREMENTS WHICH THE ASSESSEE IS CALLED UPON TO FULFILL IN ORDER TO CLAIM DEDUCTION U/S 80-IA(4)(III) OF THE ACT. 48. UNDER THE SCHEME, ASSESSEE WAS ELIGIBLE TO BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT, IF IT FULFILLED THE CRITERIA LAID DOWN IN CLAUSE 4 OF THE SCHEME, WHICH WE HAVE REPRODUCED ABOVE. THE FOREMOST REQUIREMENT WAS THAT THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK SHOULD BE ON OR AFTER THE 1 ST DAY OF APRIL, 2006 AND NOT LATER THAN 31 ST MARCH, 2009. CLAUSE 4 OF THE SCHEME HAS SEVEN OTHER CRITERION FOR 10 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 APPROVAL WHICH WE ARE NOT DEALING INDIVIDUALLY, AS UNDISPUTEDLY THE INDUSTRIAL PARK OF THE ASSESSEE FULFILLS ALL THE CRITERIA PRESCRIBED IN CLAUSE 4 OF THE SCHEME FOR OBTAINING THE NOTIFICATION UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT. WE SAY SO FOR THE REASON THAT THE REVENUE DOES NOT DISPUTE THAT THE UNDERTAKING OF THE ASSESSEE HAS BEEN APPROVED UNDER THE SCHEME AND FOR THE SUBSEQUENT ASSESSMENT YEARS THE CLAIM OF DEDUCTION U/S 80-IA OF THE ACT STANDS ALLOWED BY THE ASSESSING OFFICER. SECONDLY, THE GENERAL CONDITIONS PRESCRIBED IN CLAUSE 5 OF THE SCHEME HAVE BEEN FULFILLED BY THE ASSESSEE AND IN-FACT THERE IS NO CASE MADE OUT BY THE REVENUE THAT THE CENTRAL GOVERNMENT HAS INVOKED CLAUSE 6 OF THE SCHEME, WHICH PERMITS THE CENTRAL GOVERNMENT TO WITHDRAW THE APPROVAL GIVEN TO THE UNDERTAKING UNDER THE SCHEME IF IT FAILS TO COMPLY WITH ANY OF THE CONDITIONS LISTED IN CLAUSES 4 AND 5 OF THE SCHEME. BE THAT AS IT MAY, IT WOULD BE APPROPRIATE TO INFER THAT SO FAR AS THE COMPLIANCE OF ASSESSEES UNDERTAKING TO THE REQUIREMENTS OF THE SCHEME ARE CONCERNED, THERE IS NO DISPUTE. 49. NOW, THE CLAIM OF THE ASSESSEE IS THAT IT STARTED THE PROCESS OF DEVELOPMENT OF THE INDUSTRIAL PARK SOMEWHERE IN OCTOBER, 2004 AND THE CONSTRUCTION WAS SPREAD OVER A NUMBER OF YEARS. AS AND WHEN THE INDIVIDUAL UNITS WERE BEING COMPLETED, ASSESSEE SOLD IT TO THE CLIENTS. THE ASSESSEE WAS OFFERING AND RECOGNIZING INCOME ON SUCH SALES IN THE RESPECTIVE YEARS, AND THE INCOME UNDER CONSIDERATION THIS YEAR IS FROM THE SALE OF UNITS. DURING THE YEAR UNDER CONSIDERATION, ASSESSING OFFICER HAS NOTED THAT ONLY 21 UNITS WERE LOCATED IN THE INDUSTRIAL PARK. IN OTHER WORDS, ONLY 21 UNITS WERE OPERATIONAL AND NOT THE COMPLETE 30 UNITS, I.E. THE TOTAL NUMBER OF UNITS WHICH WERE TO BE DEVELOPED IN THE INDUSTRIAL PARK. THE ASSESSING OFFICER HAS REFERRED TO CLAUSE 2(F) OF THE SCHEME TO SAY THAT THE DATE OF COMMENCEMENT OF INDUSTRIAL PARK IS THE DATE ON WHICH THE COMPLETION CERTIFICATE WAS OBTAINED FROM THE LOCAL AUTHORITY CERTIFYING THEREBY THAT ALL THE REQUIRED DEVELOPMENT ACTIVITIES OF THE PROJECT HAS BEEN COMPLETED. AS PER THE ASSESSING OFFICER, IN THIS CASE, THE CERTIFICATE FROM THE LOCAL AUTHORITY HAS BEEN OBTAINED ON 09.05.2007 AND THEREFORE IN TERMS OF THE SCHEME, THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK IS TO BE UNDERSTOOD AS 09.05.2007 WHICH FALLS BEYOND THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. ON THIS BASIS, IT IS SAID THAT THE INDUSTRIAL PARK OF THE ASSESSEE WAS NOT COMPLETE AS ON 31.03.2007, AND THUS DEDUCTION U/S 80-IA OF THE ACT COULD NOT BE ALLOWED FOR ASSESSMENT YEAR 2007-08. 50. IT IS TO BE APPRECIATED THAT CLAUSE 2(F) OF THE SCHEME DEFINING THE EXPRESSION DATE OF COMMENCEMENT IS RELEVANT IN THE CONTEXT OF CONDITION (1) OF CLAUSE 4 OF THE SCHEME WHICH PRESCRIBES THE CRITERIA FOR APPROVAL OF AN INDUSTRIAL PARK. CONDITION (1) OF CLAUSE 4 OF THE SCHEME PRESCRIBES THAT AN UNDERTAKING SHALL BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT IF THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK IS ON OR AFTER 01.04.2006 AND NOT LATER THAN 31.03.2009. IN THIS CASE, DATE OF COMMENCEMENT OF 09.05.2007 DETERMINED IN ACCORDANCE WITH CLAUSE 2(F) OF THE SCHEME FULFILLS THE CONDITION (1) OF CLAUSE 4 OF THE SCHEME. PERTINENTLY, THE MEANING OF THE EXPRESSION DATE OF COMMENCEMENT CONTAINED IN CLAUSE 2(F) OF THE SCHEME IS TO BE UNDERSTOOD IN THE CONTEXT OF THE SCHEME. THE QUESTION IS AS TO WHETHER THE DATE OF COMMENCEMENT IN CLAUSE 2(F) OF THE SCHEME 11 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 CAN BE USED TO DENY A CLAIM OF DEDUCTION U/S 80-IA(4) OF THE ACT, ESPECIALLY IN THE FACE OF AN UNDISPUTED FACT-SITUATION THAT THE UNDERTAKING OF THE ASSESSEE CONTAINS TO BE APPROVED/NOTIFIED UNDER THE SCHEME. IF A CONDITION PRESCRIBED IN THE SCHEME IS FOUND TO FULFILLED FOR THE PURPOSES OF NOTIFICATION OF THE SCHEME U/S 80- IA(4)(III) OF THE ACT, CAN IT BE SIMULTANEOUSLY SAID THAT THE SAME CONDITION IS NOT FULFILLED IN THE CONTEXT OF APPLICATION OF SECTION 80- IA(4)(III) OF THE ACT R.W. RULE 18C OF THE RULES; AND, THE ANSWER, IN OUR VIEW, IS OBVIOUSLY NO. 51. AT THIS POINT, WE MAY ALSO REFER TO RULE 18C OF THE RULES WHICH PRESCRIBES THE ELIGIBILITY OF AN INDUSTRIAL PARK FOR BENEFITS OF SECTION 80-IA(4)(III) OF THE ACT. THE PROVISIONS OF THE RULE AS APPLICABLE FOR THE YEAR UNDER CONSIDERATION HAVE BEEN REPRODUCED BY US IN THE EARLIER PARAGRAPHS. SUB-RULE (1) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING OUGHT TO BEGIN TO DEVELOP, DEVELOP AND OPERATE OR MAINTAIN AND OPERATE AN INDUSTRIAL PARK AT ANY TIME DURING THE PERIOD BEGINNING ON 01.04.2006 AND ENDING ON 31.03.2009. SUB-RULE (2) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING OF AN INDUSTRIAL PARK SHALL BE NOTIFIED BY THE CENTRAL GOVERNMENT UNDER THE IPS, 2008. SUB-RULE (3) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING SHALL CONTINUE TO FULFILL THE CONDITIONS ENVISAGED THE IPS, 2008. NOTABLY, THERE IS NO DISPUTE THAT THE UNDERTAKING OF THE ASSESSEE I.E. INDUSTRIAL PARK GIGA SPACE IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT UNDER THE IPS, 2008 AND IT CONTINUES TO FULFILL THE CONDITIONS ENVISAGED IN THE IPS, 2008 INASMUCH AS THERE IS NO WITHDRAWAL OF APPROVAL BY THE CENTRAL GOVERNMENT, AS PROVIDED FOR IN CLAUSE 6 OF THE SCHEME. THEREFORE, TO SAY ON THE STRENGTH OF CLAUSE 2(F) OF THE SCHEME THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF THE SCHEME FOR STAKING CLAIM U/S 80-IA(4)(III) OF THE ACT IN THE FACE OF THE FACT THAT THE UNDERTAKING I.E. THE AN INDUSTRIAL PARK CONTINUES TO BE NOTIFIED BY THE CENTRAL GOVERNMENT, IS UNJUSTIFIED AND UNCALLED FOR. 52. THE REVENUE HAS EMPHASIZED THAT THE DEVELOPMENT ENVISAGED IN THE APPROVAL OUGHT TO HAVE BEEN COMPLETED BY THE ASSESSEE BEFORE 31.03.2007 ITSELF I.E. WITHIN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, BEFORE IT COULD CLAIM THE BENEFITS OF SECTION 80-IA(4)(III) OF THE ACT. THERE IS NO DISPUTE THAT THE UNDERTAKING OF THE ASSESSEE IS NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE IPS, 2008 FOR THE PURPOSES OF CLAUSE (III) OF SECTION 80-IA(4) OF THE ACT. MOREOVER, THE ELIGIBILITY CONDITIONS PRESCRIBED IN RULE 18C OF THE RULES, WHICH WE HAVE REPRODUCED IN THE EARLIER PARAS AND WHICH IS RELEVANT FOR THE YEAR UNDER CONSIDERATION, BELIES THE STAND OF THE REVENUE. THE OPENING SENTENCE IN SUB-RULE (1) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING SHALL BEGIN TO DEVELOP; DEVELOP AND OPERATE; AND, MAINTAIN AND OPERATE . THE AFORESAID WORDINGS SHOW THAT THE INDUSTRIAL PARK IN QUESTION IS ELIGIBLE FOR THE BENEFIT OF SECTION 80-IA(4)(III) OF THE ACT IN THE INSTANT YEAR ALSO. QUITE CLEARLY, AN UNDERTAKING WHICH BEGINS TO DEVELOP IS ALSO ELIGIBLE FOR THE BENEFIT OF SECTION 80-IA(4)(III) OF THE ACT. IN THIS CASE, IN THE INSTANT ASSESSMENT YEAR, ASSESSEE HAS DEVELOPED AND SOLD 21 UNITS OUT OF THE TOTAL 30 UNITS ENVISAGED IN THE APPROVAL AND IT HAS OBTAINED THE COMPLETION CERTIFICATE ON 09.05.2007 AFTER COMPLETING THE BALANCE UNITS. THE UNITS SOLD BY THE ASSESSEE HAVE YIELDED PROFITS DURING THE YEAR UNDER CONSIDERATION WHICH THE ASSESSEE HAS DECLARED IN ITS 12 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 PROFIT & LOSS ACCOUNT. THUS, GOING BY THE ELIGIBILITY CONDITIONS CONTAINED IN RULE 18C OF THE RULES, THE UNDERTAKING OF THE ASSESSEE WHICH STANDS NOTIFIED FOR THE PURPOSES OF SECTION 80-IA(4)(III) OF THE ACT, IS ENTITLED TO THE BENEFITS OF SECTION 80-IA(4)(III) OF THE ACT QUA THE PROFITS FROM SUCH DEVELOPMENT WHICH HAVE BEEN DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION. THE STAND OF THE REVENUE THAT THE CLAIM OF DEDUCTION CAN BE AVAILED ONLY AFTER THE PARK IS DEVELOPED I.E. ONLY AFTER ISSUANCE OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY DOES NOT EMERGE FROM THE READING OF SECTION 80-IA(4)(III) OF THE ACT R.W. RULE 18C OF THE RULES, AS IT STANDS FOR THE PERIOD UNDER CONSIDERATION. 53. AT THIS STAGE, WE MAY ALSO REFER TO THE STAND OF THE REVENUE BASED ON THE CLAUSE 5 OF SCHEME. AS PER THE CONDITION (2) OF CLAUSE 5, IT IS PRESCRIBED THAT THE TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE TO THE UNDERTAKING ONLY AFTER MINIMUM NUMBER OF THIRTY UNITS ARE LOCATED IN THE INDUSTRIAL PARK. ON THE STRENGTH OF THIS, IT IS POINTED OUT THAT AS ON 31.03.2007 I.E. BEFORE THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE MINIMUM NUMBER OF THIRTY UNITS ARE NOT LOCATED IN THE INDUSTRIAL PARK; AND, THUS AS PER THE REVENUE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION IN THIS ASSESSMENT YEAR. THE AFORESAID CONDITION CONTAINED IN CLAUSE 5(2) OF THE SCHEME HAVE TO BE UNDERSTOOD IN THE CONTEXT OF CONDITION (3) OF CLAUSE 4 OF THE SCHEME. THE CONDITION (3) OF CLAUSE 4 OF THE SCHEME PRESCRIBES THAT FOR OBTAINING APPROVAL, THE INDUSTRIAL PARK SHOULD HAVE A MINIMUM OF THIRTY INDUSTRIAL UNITS LOCATED IN IT. THE GENERAL CONDITION CONTAINED IN CLAUSE 5(2) ONLY ECHOES THE CRITERIA FOR APPROVAL PRESCRIBED IN CLAUSE 4 OF THE SCHEME. HOWEVER, THE CONDITIONS PRESCRIBED IN THE SCHEME ARE FOR THE PURPOSES OF ENABLING THE CENTRAL GOVERNMENT TO CONSIDER AN UNDERTAKING FIT FOR NOTIFICATION FOR THE PURPOSES OF SECTION 80-IA(4)(III) OF THE ACT. THE APPROVAL GRANTED TO THE INDUSTRIAL PARK OF THE ASSESSEE UNDER THE SCHEME CONTINUES TO HOLD THE FIELD AND THERE IS NO CASE OF THE REVENUE THAT IT HAS BEEN WITHDRAWN IN TERMS OF CLAUSE 6 OF THE SCHEME. THUS, IT IS SAFE TO DEDUCE THAT THE INDUSTRIAL PARK OF THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS PRESCRIBED IN CLAUSE 5 OF THE SCHEME. 54. MOREOVER, EVEN IF ONE HAS TO APPRECIATE THE CONDITION (2) OF CLAUSE 5 OF THE SCHEME WHICH USES THE WORDS TAX BENEFITS .. WILL BE AVAILABLE . ONLY AFTER MINIMUM NUMBER OF THIRTY UNITS ARE LOCATED ... THE IMPLICATION OF THE SAID CONDITION, AS UNDERSTOOD BY THE REVENUE, IS THAT A MINIMUM NUMBER OF THIRTY UNITS SHOULD BE LOCATED BEFORE THE END OF THE FINANCIAL YEAR FOR WHICH THE DEDUCTION IS BEING CLAIMED. QUITE CLEARLY, THE AFORESAID CONDITION IN CLAUSE 5 OF THE SCHEME DOES NOT PRESCRIBE THAT THE COMPLIANCE FOR THE LOCATION OF MINIMUM NUMBER OF THIRTY UNITS IN THE INDUSTRIAL PARK IS TO BE SEEN IN THE CONTEXT OF EVERY ASSESSMENT YEAR IN WHICH THE ASSESSEE IS CLAIMING DEDUCTION U/S 80-IA OF THE ACT. THE COMPLIANCE HAS TO BE SEEN IN THE CONTEXT OF THE PERIOD PERMISSIBLE UNDER THE SCHEME FOR DEVELOPMENT OF THE INDUSTRIAL PARK. OSTENSIBLY, THE PERIOD PERMISSIBLE IN THE SCHEME FOR LOCATION OF MINIMUM THIRTY UNITS HAS BEEN COMPLIED WITH BY THE ASSESSEE AS ITS DATE OF COMPLETION IS 09.05.2007 I.E. MUCH EARLIER THAN THE OUTER LIMIT OF 31.03.2009 PRESCRIBED BY THE SCHEME. ON THIS ASPECT, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT THAT CLAUSE 5(2) OF THE SCHEME MERELY IMPLIES THAT WHEN THE CLAIM OF 13 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 DEDUCTION IS BEFORE AN INCOME-TAX AUTHORITIES, IT SHOULD BE SEEN THAT THE MINIMUM NUMBER OF THIRTY UNITS ARE LOCATED IN THE INDUSTRIAL PARK. IT IS POINTED OUT THAT EVEN THE OUTER LIMIT FOR AVAILMENT OF BENEFIT OF SECTION 80-IA(4)(III) OF THE ACT IN THE PRESENT CASE IS 31.03.2009; AND, WHEN THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER IN THIS CASE ON 31.03.2010, THE ONLY POINT OF SCRUTINY WAS TO ENQUIRE WHETHER OR NOT THIRTY UNITS HAVE BEEN LOCATED IN THE INDUSTRIAL PARK ? IN THE PRESENT CASE, IT IS POINTED OUT THAT IT IS UNDISPUTED THAT THE MINIMUM THIRTY UNITS HAVE BEEN LOCATED IN THE INDUSTRIAL PARK BEFORE THE DATE SPECIFIED IN THE SCHEME AS WELL AS THE ACT AND THEREFORE THE SAID CONDITION HAS BEEN FULFILLED. 55. WE FIND ENOUGH MERIT IN THE INTERPRETATION PUT-FORTH BY THE ASSESSEE. OSTENSIBLY, THE CONDITIONS IN THE SCHEME HAVE BEEN INSERTED WITH AN OBJECTIVE THAT ONCE AN UNDERTAKING IS CONSIDERED FOR NOTIFICATION U/S 80-IA(4)(III) OF THE ACT, THERE IS A MECHANISM AVAILABLE TO CHECK AS TO WHETHER THE CONDITIONS PRESCRIBED IN THE SCHEME HAVE BEEN COMPLIED WITH. IN OTHER WORDS, IN THE CONTEXT OF THE PRESENT CONTROVERSY VIS--VIS CLAUSE 5(2) OF THE SCHEME THE OBJECTIVE IS TO ENSURE THAT THE ASSESSEE DOES NOT CLAIM DEDUCTION WITHOUT PUTTING THE PARK TO USE FOR MINIMUM 30 INDUSTRIAL UNITS IN ACCORDANCE WITH THE SCHEME APPROVED BUT IT DOES NOT ENVISAGE THAT THE LOCATION OF MINIMUM 30 INDUSTRIAL UNITS BE SEEN FOR EVERY ASSESSMENT YEAR FOR WHICH THE CLAIM IS LODGED, MORESO, WHEN THE PROFITS ARE DECLARED BY AN ASSESSEE BASED ON ITS NORMAL METHOD OF INCOME RECOGNITION. IT MAY BE POINTED OUT THAT THE PROVISIONS OF SECTION 80-IA(4)(III) OF THE ACT ITSELF ENVISAGES DEDUCTION IN CASE OF AN UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK FOR THE PERIOD BEGINNING ON THE 1 ST APRIL, 2006 AND ENDING ON OR BEFORE 31 ST MARCH, 2009. SIMILARLY, THE SCHEME ALSO ENVISAGES THAT THE DATE OF COMMENCEMENT OF AN INDUSTRIAL PARK SHOULD BE ON OR AFTER 01.04.2006 BUT NOT LATER THAN 31.03.2009. WHERE THE PROJECTS INVOLVE A PERIOD OF GESTATION IN ITS CONSTRUCTION, THE PERIOD OF DEVELOPMENT MAY EXTEND BEYOND ONE ASSESSMENT YEAR. THEREFORE, ASSESSEE WOULD BE ELIGIBLE TO CLAIM DEDUCTION WITH RESPECT TO THE PROFITS FROM INDUSTRIAL PARK OVER MULTIPLE ASSESSMENT YEARS SO LONG AS THE DATES PRESCRIBED IN THE ACT AS WELL AS IN THE SCHEME FOR DEVELOPMENT OF THE INDUSTRIAL PARK ARE ADHERED TO. THE ASSESSEE WOULD DECLARE PROFITS ON THE BASIS OF ITS METHOD OF ACCOUNTING AND IN OUR VIEW, IN RESPECT OF THE RELEVANT ASSESSMENT YEARS, ANY PROFITS DERIVED FROM THE ELIGIBLE BUSINESS CATEGORIZED IN SECTION 80-IA(4)(III) OF THE ACT SHALL BE ENTITLED FOR A DEDUCTION U/S 80-IA(4)(III) OF THE ACT. IN OUR VIEW, SO LONG AS THE PROFITS ARE DERIVED FROM THE ELIGIBLE BUSINESS AND THE BUSINESS OF THE UNDERTAKING HAS BEEN DEVELOPED IN ACCORDANCE WITH THE SCHEME IN WHICH IT IS NOTIFIED, THEN ASSESSEE SHALL BE ELIGIBLE FOR THE BENEFIT OF SECTION 80-IA(4)(III) OF THE ACT. 56. IN THIS CONTEXT, WE MAY MENTION THAT A SIMILAR CONTROVERSY HAD ARISEN IN THE CONTEXT OF THE CLAIM OF DEDUCTION U/S 80-IB(10) OF THE ACT, WHEREIN AN ASSESSEE CAN CLAIM DEDUCTION IN THE YEARS WHEN IT SELLS SOME OF THE RESIDENTIAL UNITS ALTHOUGH THE HOUSING PROJECT IS STILL UNDER CONSTRUCTION PERIOD AS STIPULATED IN SECTION 80- IB(10) OF THE ACT. THE CBDT VIDE INSTRUCTION NO.4 OF 2009 DATED 30.06.2009 CLARIFIED THAT THE DEDUCTION U/S 80-IB(10) OF THE ACT CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHERE AN ASSESSEE WAS SHOWING 14 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 PROFITS FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. IT HAS ALSO BEEN CLARIFIED BY THE CBDT THAT ON A LATER DATE, IF IT IS FOUND THAT THE CONDITION OF THE COMPLETION OF PROJECT WITHIN THE STIPULATED TIME IS NOT FULFILLED BY THE ASSESSEE THEN THE ASSESSING OFFICER CAN WITHDRAW THE DEDUCTION ALLOWED TO THE ASSESSEE IN EARLIER YEARS. IN OUR CONSIDERED OPINION, A SIMILAR ANALOGY HAS TO BE APPLIED IN THE PRESENT CASE TO UNDERSTAND THE IMPORT AND MEANING OF CONDITION (2) OF CLAUSE 5 OF THE SCHEME. IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80-IA(4)(III) OF THE ACT MERELY BECAUSE THE MINIMUM NUMBER OF THIRTY UNITS ARE NOT LOCATED IN THE INDUSTRIAL PARK BEFORE 31.03.2007 WHEN OTHERWISE IT IS FACTUALLY TRUE THAT THE MINIMUM NUMBER OF UNITS HAVE BEEN LOCATED IN INDUSTRIAL PARK IN COMPLIANCE WITH PERIOD STIPULATED AND APPROVED IN THE SCHEME. THEREFORE, ON THIS ASPECT, WE FIND NO REASON TO UPHOLD THE OBJECTION OF THE REVENUE. 57. IN-FACT, THE CONTROVERSY BEFORE US IN RELATION TO THE CLAIM OF DEDUCTION U/S 80-IA(4)(III) OF THE ACT PERTAINING TO THE INSTANT ASSESSMENT YEAR IS SIMILAR TO WHAT WAS CONSIDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. VS. DCIT, VIDE ITA NOS.1828 & 1829/MUM/2009 DATED 24.02.2012 PERTAINING TO ASSESSMENT YEARS 2004-05 AND 2005-06. THE AFORESAID DECISION WAS RELIED UPON BY THE ASSESSEE IN THE COURSE OF HEARING. IN THE CASE BEFORE THE MUMBAI BENCH OF THE TRIBUNAL, ASSESSEE HAD CLAIMED DEDUCTION U/S 80-IA(4)(III) OF THE ACT IN RESPECT OF PROFITS FROM DEVELOPMENT OF AN INDUSTRIAL PARK. THE CLAIM WAS DISPUTED BY THE REVENUE FOR ASSESSMENT YEARS 2004-05 AND 2005-06. THE OBJECTION OF THE REVENUE WAS THAT THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT NOTIFYING THE INDUSTRIAL PARK WAS DATED 12.07.2006. IT WAS ALSO THE CASE OF THE REVENUE THAT AS ON THE LAST DAY OF THE RELEVANT ASSESSMENT YEARS I.E. 2004-05 AND 2005-06, ALL THE 33 UNITS APPROVED IN THE SCHEME WERE NOT DEVELOPED IN THE INDUSTRIAL PARK. AS PER THE REVENUE, THE NOTIFICATION WAS ALSO ISSUED BY THE CENTRAL GOVERNMENT ON 12.07.2006, WHICH WAS POSTERIOR TO THE ASSESSMENT YEARS 2004-05 AND 2005-06. THE CLAIM OF THE ASSESSEE WAS THAT IT WAS FOLLOWING PERCENTAGE COMPLETION METHOD OF ACCOUNTING AND WAS OFFERING INCOME ON THE BASIS OF THE PERCENTAGE OF CONSTRUCTION COMPLETED. THUS, THE PROFITS FROM THE INDUSTRIAL PARK WERE ALSO OFFERED FOR ASSESSMENT YEARS 2004-05 AND 2005-06 ON WHICH CLAIM FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT WAS MADE. ASSESSEE ALSO SUBMITTED THAT ULTIMATELY ALL THE CONDITIONS PRESCRIBED FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT WERE COMPLIED WITH AND THAT IN THE SUBSEQUENT ASSESSMENT YEAR 2006-07 ASSESSEE WAS INDEED ALLOWED THE DEDUCTION BY THE ASSESSING OFFICER. THE TRIBUNAL HELD THAT THE DENIAL OF DEDUCTION ON THE AFORESAID GROUNDS IN ASSESSMENT YEAS 2004-05 AND 2005-06 WAS NOT JUSTIFIED. IT WAS SPECIFICALLY NOTED THAT BECAUSE IN THE FIRST TWO YEARS THE MINIMUM NUMBER OF UNITS WERE NOT LOCATED IN THE INDUSTRIAL PARK WAS NOT A VALID GROUND FOR DISALLOWING THE CLAIM ESPECIALLY WHEN IN THE ULTIMATE ANALYSIS THE INDUSTRIAL PARK WAS DEVELOPED IN ACCORDANCE WITH THE APPROVAL GRANTED BY THE CENTRAL GOVERNMENT. THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL WORTHY OF NOTICE :- 25. FROM THE REASONS ASSIGNED BY THE REVENUE AUTHORITIES FOR REJECTING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IA(4)(III) OF 15 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 THE ACT, IT IS CLEAR THAT AN ASSESSEE WHO ADOPTS THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING OF INCOME FROM DEVELOPING INDUSTRIAL PARK CAN GET DEDUCTION OF ONLY THAT PART OF THE PROFITS THAT ARE OFFERED TO TAX IN THE YEAR IN WHICH THE NOTIFICATION IS RECEIVED. HAD THE ASSESSEE IN THE PRESENT CASE FOLLOWED PROJECT COMPLETION OF METHOD OF ACCOUNTING OF INCOME FROM DEVELOPING INDUSTRIAL PARK, THE ASSESSEE WOULD HAVE GOT THE BENEFIT OF DEDUCTION OF THE ENTIRE PROFITS FROM THE DEVELOPMENT OF INDUSTRIAL PARK. IT WILL RESULT IN A SITUATION WHERE THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE (SUCH AS THE ONE IN THE PRESENT CASE) WILL DENY THE BENEFIT AVAILABLE UNDER THE LAW. THE METHOD OF ACCOUNTING IS SUCH THAT THE ASSESSEE CAN NEVER GET THE BENEFIT EVEN IN A LATER YEAR. IT IS NO DOUBT TRUE THAT THE SATISFACTION OF THE CONDITIONS FOR GRANT OF DEDUCTION AS ON THE LAST DATE OF THE PREVIOUS YEAR IS NECESSARY. IF DUE TO SUBSEQUENT EVENTS THAT TAKE PLACE AFTER THE LAST DATE OF THE PREVIOUS YEAR, CONDITIONS FOR GRANT OF DEDUCTION ARE SATISFIED, THEN THE ASSESSING OFFICER CAN TAKE COGNIZANCE OF THE SAME. THE CBDT IN INSTRUCTION NO.4/2009 DT. 30.06.2009 CLARIFIED THE POSITION WITH REGARD TO ALLOWING DEDUCTION U/S.80-18(10) OF THE ACT. U/S.80-IB(10) OF THE ACT, DEDUCTION OF 100% PROFITS DERIVED FROM DEVELOPING AND BUILDING HOUSING PROJECTS IS ALLOWED. ONE OF THE CONDITIONS TO BE SATISFIED FOR CLAIMING SUCH DEDUCTION WAS THAT THE HOUSING PROJECT SHOULD HAVE COMMENCED CONSTRUCTION ON OR AFTER 1.10.1998 AND COMPLETED THE CONSTRUCTION WITHIN 4 YEARS FROM THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THE QUESTION AROSE WHETHER THE DEDUCTION CAN BE CLAIMED BY ASSESSEES WHO FOLLOW PERCENTAGE COMPLETION METHOD OF ACCOUNTING BY SHOWING PART OF THE PROFITS OR THE DEDUCTION WOULD BE AVAILABLE ONLY IN THE YEAR OF COMPLETION OF THE PROJECT U/S.80-IB(10) OF THE ACT. THE CBDT CLARIFIED THAT DEDUCTION CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT EVERY YEAR. IT FURTHER CLARIFIED THAT IF THE CONDITION FOR COMPLETION OF THE PROJECT WITHIN THE SPECIFIED TIME LIMIT IS NOT SATISFIED, THE DEDUCTION GRANTED TO AN ASSESSEE IN EARLIER YEARS CAN BE WITHDRAWN. WE ARE OF THE VIEW THAT THERE IS NO REASON WHY SIMILAR BENEFIT SHOULD NOT BE EXTENDED TO ASSESSEE CLAIMING BENEFIT U/S.80- IA(4)(III) OF THE ACT WHEN THE CONDITIONS FOR GRANT OF DEDUCTION WERE SATISFIED BY THE ASSESSEE EVEN BEFORE THE AO PASSED THE ORDER OF ASSESSMENT. THE FACTS OF THE PRESENT CASE JUSTIFY CONSIDERING THE PLEA OF THE ASSESSEE FOR GRANT OF DEDUCTION U/S.80-IA(4)(III) OF THE ACT IN RESPECT OF PROFITS DECLARED IN AY 04-05 AND 05-06 AND ALLOWING THE SAME AS ADMITTEDLY THE CONDITIONS FOR GRANT OF SUCH DEDUCTION WERE SATISFIED THOUGH AT A LATER POINT OF TIME BUT NEVERTHELESS BEFORE COMPLETION OF ASSESSMENT FOR THOSE ASSESSMENT YEARS. WE DIRECT ACCORDINGLY. THE APPEALS OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 58. THE AFORESAID DECISION OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. (SUPRA), IN OUR VIEW, FULLY COVERS THE CONTROVERSY BEFORE US. IN THE PRESENT CASE ALSO IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS DEVELOPED AND LOCATED THE MINIMUM NUMBER OF 30 INDUSTRIAL UNITS IN THE INDUSTRIAL PARK WITHIN THE PERIOD SPECIFIED IN THE SCHEME AS WELL AS THE PROVISIONS OF SECTION 80-IA(4)(III) OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT IN THE SUBSEQUENT ASSESSMENT YEARS, THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION U/S 80- IA(4)(III) OF THE ACT. IN THE INSTANT ASSESSMENT YEAR, ASSESSEE HAS OPERATIONALISED 21 INDUSTRIAL UNITS OUT OF THE MINIMUM 30 REQUIRED TO BE DEVELOPED. THE BALANCE OF THE 9 UNITS HAVE BEEN COMPLETED ON 16 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 09.05.2007 I.E. THE DATE ON WHICH ASSESSEE HAS OBTAINED THE COMPLETION CERTIFICATE FROM THE PUNE MUNICIPAL CORPORATION. HYPOTHETICALLY SPEAKING, IF THE ASSESSEE HAD NOT RECOGNIZED THE PROFITS ON THE 21 UNITS SOLD DURING THE YEAR UNDER CONSIDERATION BUT WOULD HAVE WAITED RECOGNITION OF INCOME AFTER THE COMPLETION OF THE COMPLETE 30 UNITS, THEN SUCH PROFITS WOULD HAVE BEEN OFFERED BY THE ASSESSEE TO TAX IN THE SUBSEQUENT ASSESSMENT YEAR, WHEREIN IN ANY CASE THE ASSESSING OFFICER HAS HELD THE ASSESSEE ENTITLED FOR THE DEDUCTION U/S 80-IA(4)(III) OF THE ACT. HOWEVER, ASSESSEE HAS DECLARED INCOME FROM THE SALE OF UNITS ON A PROGRESSIVE BASIS I.E. IN THE YEAR IN WHICH THE PARTICULAR INDUSTRIAL UNITS HAVE BEEN SOLD. THIS HAS LEAD TO A CONFLICT BETWEEN THE ASSESSEE AND THE REVENUE WITH REGARD TO THE ASSESSEES CLAIM FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT. THE MOOT QUESTION IS CAN THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE BE DETERMINATIVE OF ASSESSEES CLAIM FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT ESPECIALLY IN A SITUATION WHERE ASSESSEE IS OTHERWISE SAID TO HAVE COMPLIED WITH THE REQUIREMENTS OF SECTION 80-IA(4)(III) OF THE ACT READ ALONG WITH THE PROVISIONS OF THE IPS, 2008 UNDER WHICH THE INDUSTRIAL PARK OF THE ASSESSEE HAS BEEN NOTIFIED. IN-FACT, IF THE STAND OF THE REVENUE IS TO BE ACCEPTED, WHAT WOULD HAPPEN IS THAT ASSESSEES CLAIM FOR DEDUCTION U/S 80-IA(4)(III) OF THE ACT SHALL BE DENIED IN THE INSTANT YEAR AND IN THE SUBSEQUENT YEARS ALSO ASSESSEE WOULD NOT BE ABLE TO CLAIM THE BENEFIT BECAUSE THE IMPUGNED PROFITS WOULD NOT HAVE BEEN ACCOUNTED FOR BY THE ASSESSEE IN THE SUBSEQUENT YEARS. THAT WOULD MEAN THAT THE ASSESSEE WOULD NEVER GET THE BENEFIT OF SECTION 80-IA(4)(III) OF THE ACT QUA THE IMPUGNED PROFITS DERIVED FROM THE DEVELOPMENT OF THE INDUSTRIAL PARK MERELY BECAUSE OF THE METHOD OF ACCOUNTING FOLLOWED. IN-FACT, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. (SUPRA) OBSERVED THAT THE REVENUE DESERVES TO BE SATISFIED THAT THE CONDITIONS FOR GRANT OF DEDUCTION ARE FULFILLED ON THE LAST DAY OF THE PREVIOUS YEAR, SO HOWEVER, IF THE SUBSEQUENT EVENTS AFTER THE LAST DATE OF THE PREVIOUS YEAR SHOW THAT THE CONDITIONS FOR GRANT OF DEDUCTION ARE FULFILLED, THEN THE ASSESSING OFFICER OUGHT TO TAKE COGNIZANCE OF THE SAME AND ALLOW THE CLAIM OF THE ASSESSEE. FOLLOWING THE AFORESAID PARITY OF REASONING, IN OUR VIEW, IN THE PRESENT CASE TOO IT IS UNDENIABLE THAT ASSESSEE HAS COMPLIED WITH THE REQUIREMENT OF LOCATING MINIMUM OF 30 INDUSTRIAL UNITS IN THE INDUSTRIAL PARK WITHIN THE PERIOD PRESCRIBED IN THE SCHEME, AND THEREFORE ITS CLAIM FOR ASSESSMENT YEAR 2007-08 WAS UNJUSTLY DISALLOWED. 59. BEFORE PARTING, WE MAY ALSO REFER TO THE DECISION OF THE HONBLE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA) RELIED UPON BY THE REVENUE BEFORE US. THE ISSUE IN THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA) WAS THE CLAIM OF DEDUCTION U/S 80-IA(4)(III) OF THE ACT IN THE CONTEXT OF THE INDUSTRIAL PARK SCHEME, 2002. IN THE CASE BEFORE THE HONBLE THIRD MEMBER OF THE TRIBUNAL, ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF AN INDUSTRIAL PARK APPROVED UNDER THE IPS, 2002. ASSESSEE CLAIMED DEDUCTION FOR ASSESSMENT YEAR 2003-04 WHICH WAS DENIED BY THE ASSESSING OFFICER ON THE GROUND THAT AS PER THE APPROVAL UNDER THE IPS, 2002 ASSESSEE HAD TO LOCATE 30 UNITS IN THE INDUSTRIAL PARK WHILE ASSESSEE WAS ABLE TO LOCATE ONLY 6 UNITS BY 31.03.2003. THE HONBLE THIRD MEMBER OF THE TRIBUNAL HELD THAT THE DEDUCTION U/S 80-IA(4)(III) OF THE ACT COULD AVAILED BY THE ASSESSEE ONLY WHEN THE UNDERTAKING BEGINS TO OPERATE AN INDUSTRIAL 17 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 PARK AND SUCH A CONCLUSION WAS ARRIVED AT BY THE HONBLE THIRD MEMBER OF THE TRIBUNAL ON THE BASIS OF THE PROVISIONS OF SECTION 80- IA(4)(III) OF THE ACT READ WITH THE THEN APPLICABLE RULE 18C OF THE RULES. THE RELEVANT DISCUSSION IN THE ORDER OF THE HONBLE THIRD MEMBER OF THE TRIBUNAL READS AS UNDER :- 31. IN MY HUMBLE OPINION THE LEGISLATURE HAS CONSCIOUSLY USED THE EXPRESSION 'DEVELOPS AN INDUSTRIAL PARK' INSTEAD OF USING THE EXPRESSION 'UNDERTAKES TO DEVELOP AN INDUSTRIAL PARK'. WHEREVER LEGISLATURE INTENDED TO EXTEND THE BENEFIT OF DEDUCTION TO AN UNDERTAKING WHICH HAS TO MERELY COMMENCE ITS ACTIVITY, WITHOUT COMPLETING MINIMUM STIPULATED PHASE, IT WAS SPECIFIED IN THE RELEVANT PROVISIONS. FOR EXAMPLE, IN SECTION 80IC(2) IT WAS STATED THAT IF AN UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING IT BECOMES AN ELIGIBLE UNDERTAKING. ON THE CONTRARY, SECTION 80IA OF THE ACT SPECIFIES THAT AN ASSESSEE SHALL BE ELIGIBLE TO CLAIM DEDUCTION 'IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION'. AS STATED EARLIER, SUB-CLAUSE (2) THEREOF USED THE EXPRESSION 'DEVELOPS' INSTEAD OF THE EXPRESSION 'TO DEVELOP'. SECTION 80IA (4) (III) (WHICH WAS REFERRED TO IN SECTION 80IA(2)4 SPECIFIES THAT AN UNDERTAKING WHICH DEVELOPS AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE GOVERNMENT IS ELIGIBLE FOR DEDUCTION. IT IS RELEVANT TO NOTICE HERE THAT IN SECTION 80(4) (III) LEGISLATURE HAS NOT USED THE EXPRESSION SUCH AS 'AN UNDERTAKING WHICH BEGINS TO DEVELOP'. RULE 18C OF THE I.T. RULES PRESCRIBES THE PROCEDURE TO BE FOLLOWED BY AN INDUSTRIAL PARK TO AVAIL THE BENEFITS UNDER SECTION 80IA(4)(III) OF THE ACT. RULE 18C, AS IT EXISTED AT THE RELEVANT POINT OF TIME, READS AS UNDER : '18C, ELIGIBILITY OF INDUSTRIAL PARK AND SPECIAL ECONOMIC ZONES FOR BENEFITS UNDER SECTION 80-IA(4)(III) - (1) THE UNDERTAKING SHALL BEGIN TO OPERATE AN INDUSTRIAL PARK DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 1997, AND. ERODING ON THE 31 SI DAY OF MARCH, 2002. (1A) THE UNDERTAKING SHALL BEGIN TO DEVELOP OR DEVELOP AND OPERATE OR MAINTAIN AND OPERATE A SPECIAL ECONOMIC ZONE ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 2001 AND ENDING ON 31 ST DAY OF MARCH, 2006. (2) THE UNDERTAKING SHALL BE DULY APPROVED BY THE MINISTRY OF COMMERCE AND INDUSTRY IN THE CENTRAL GOVERNMENT UNDER THE SCHEME FOR INDUSTRIAL PARK OR SPECIAL ECONOMIC ZONES NOTIFIED BY THAT MINISTRY. (3) THE UNDERTAKING SHALL CONTINUE TO FULFILL THE CONDITIONS ENVISAGED IN THE SCHEME. (4) ON APPROVAL UNDER SUB-RULE (2), THE CENTRAL BOARD OF DIRECT TAXES, SHALL NOTIFY INDUSTRIAL PARKS FOR BENEFITS UNDER SECTION 80- IA.' 31.1 AS COULD BE NOTICED FROM THE AFOREMENTIONED RULE, IN ORDER TO AVAIL BENEFIT UNDER SECTION 80IA, AN INDUSTRIAL PARK HAS TO BEGIN ITS OPERATIONS WHICH CAN ONLY BE A SUBSEQUENT EVENT I.E., AFTER IT HAS DEVELOPED TO AN EXTENT WHERE IT FULFILLS THE MINIMUM CRITERIA TO BE TREATED AS AN INDUSTRIAL PARK. HOWEVER, SUB-RULE (1A), WHICH REFERS TO AN UNDERTAKING SET UP IN A SPECIAL ECONOMIC ZONE, USED THE EXPRESSION 'SHALL BEGIN TO DEVELOP'; IF THE INTENTION WAS TO GIVE THE SAME TREATMENT TO AN UNDERTAKING WHICH DEVELOPS AN 18 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 INDUSTRIAL PARK, THE SAME COULD HAVE BEEN MENTIONED IN SUB-RULE (1) OR IT COULD HAVE BEEN INCLUDED IN SUB-RULE (1A). RULE MAKING AUTHORITY, IN EXERCISE OF ITS DELEGATED LEGISLATION, APPEARS TO HAVE CONSCIOUSLY MAINTAINED A DISTINCTION BETWEEN AN INDUSTRIAL PARK AND AN UNDERTAKING SET UP IN A SPECIAL ECONOMIC ZONE WHEREBY AN INDUSTRIAL PARK GETS ELIGIBILITY TO CLAIM DEDUCTION ONLY AFTER IT BEGINS TO OPERATE THE PARK AND NOT BEFORE. DURING THE DEVELOPMENTAL STAGE, PARTICULARLY WHEN THE MINIMUM DEVELOPMENT IS NOT ACHIEVED, IT CANNOT BE SAID THAT IF: WAS OPERATING AN INDUSTRIAL PARK SINCE THE SCHEME, TO WHICH A REFERENCE IS MADE IN THE SUBSEQUENT PARAGRAPHS, IMPOSES MINIMUM CONDITIONS TO BE FULFILLED TO BE CONSIDERED AS AN INDUSTRIAL PARK. IN THE INSTANT CASE, ASSESSEE HAS CONSTRUCTED ONLY SIX UNITS AND AT THIS STAGE IT IS DIFFICULT TO HOLD THAT THE ASSESSEE HAS FULFILLED THE STIPULATED CONDITION OF NOT ONLY CONSTRUCTION OF SPECIFIED UNITS BUT ALSO ALLOCATION OF FLOOR AREA TO DIFFERENT ENTREPRENEURS AS PER THE SCHEME. RULE 18C WAS AMENDED W.E.F. 8.1.2008 WHEREBY AN UNDERTAKING WHICH BEGINS TO DEVELOP AN INDUSTRIAL PARK ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 2006 AND ENDING ON 31 ST DAY OF MARCH, 2011 WAS MADE ELIGIBLE TO CLAIM DEDUCTION. ADMITTEDLY, IT IS NOT THE ASSESSEES CASE THAT IT HAS COMMENCED THE PROCESS OF DEVELOPMENT AFTER 1 ST DAY OF APRIL, 2006 AND THUS SUBSEQUENT RULE HAS NOT APPLICATION TO THE INSTANT CASE. 60. THE AFORESAID DISCUSSION WOULD SHOW THAT THE HONBLE THIRD MEMBER WAS GUIDED BY THE THEN RELEVANT PROVISIONS OF RULE 18C OF THE RULES WHICH HAVE SINCE BEEN AMENDED QUA THE ASSESSMENT YEAR BEFORE US. IN THE PREVIOUSLY WORDED RULE 18C OF THE RULES, THE WORDINGS WERE THAT THE UNDERTAKING SHALL BEGIN TO OPERATE AN INDUSTRIAL PARK .. HOWEVER, THE RULE 18C(1) OF THE RULES, WHICH HAS SINCE BEEN AMENDED AND WHICH IS RELEVANT FOR THE YEAR UNDER CONSIDERATION READS TO SAY THAT UNDERTAKING SHALL BEGIN TO DEVELOP, DEVELOP AND OPERATE OR MAINTAIN AND OPERATE AN INDUSTRIAL PARK. THIS DISTINCTION HAS BEEN NOTICED BY THE HONBLE THIRD MEMBER HIMSELF IN THE ABOVE DISCUSSION. RULE 18C OF THE RULES PROVIDES THE ELIGIBILITY OF INDUSTRIAL PARKS FOR THE BENEFITS U/S 80- IA(4)(III) OF THE ACT AND EVEN AN UNDERTAKING WHICH BEGINS TO DEVELOP IS ALSO ELIGIBLE FOR THE CLAIM OF DEDUCTION PROVIDED THAT IT TAKES PLACE DURING THE PERIOD BEGINNING ON 01.04.2006 AND BEFORE 31.03.2009 AND FULFILLS THE CONDITIONS ENVISAGED IN THE IPS, 2008. THE AFORESAID ASPECT FULLY COVERS THE CONTROVERSY BEFORE US EVEN IF IT IS ASSUMED THAT THE OBJECTION OF THE ASSESSING OFFICER OF LOCATING 30 UNITS IS REQUIRED TO BE SEEN AS ON 31.03.2007 ALSO. UNDENIABLY, ASSESSEE HAS OPERATIONALIZED 21 INDUSTRIAL UNITS IN THE INSTANT ASSESSMENT YEAR WHICH SIGNIFIES THAT ITS ACTIVITIES ARE COVERED WITHIN THE EXPRESSION BEGIN TO DEVELOP CONTAINED IN RULE 18C(1) OF THE RULES. THEREFORE, THE DECISION OF THE THIRD MEMBER IN THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA) DOES NOT HELP THE CASE OF THE REVENUE QUA THE INSTANT ASSESSEE. MOREOVER, THE CLAIM BEFORE THE HONBLE THIRD MEMBER WAS WITH RESPECT TO AN INDUSTRIAL PARK WHICH WAS APPROVED UNDER THE INDUSTRIAL PARK SCHEME, 2002 WHEREAS ASSESSEES CASE IS COVERED BY THE INDUSTRIAL PARK SCHEME, 2008. 61. THEREFORE, CONSIDERING THE AMENDMENT OF RULE 18C OF THE RULES MADE W.E.F. 01.08.2008 WHERE AN UNDERTAKING BEGINS TO DEVELOP AN INDUSTRIAL PARK IS ALSO ELIGIBLE FOR THE DEDUCTION SO LONG AS THE DEVELOPMENT IS OTHERWISE COMPLETE WITHIN THE PERIOD 19 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 SPECIFIED IN THE SCHEME AS WELL AS IT FULFILLS THE CONDITIONS ENVISAGED IN THE SCHEME. THE DECISION IN THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA) WENT AGAINST THE ASSESSEE BECAUSE AT THE RELEVANT POINT OF TIME RULE 18C OF THE RULES MANDATED THAT THE DEDUCTION WAS AVAILABLE TO THE ASSESSEE WHEN THE ASSESSEE BEGAN TO OPERATE AN INDUSTRIAL PARK WHEREAS IN THE SUBSEQUENTLY AMENDED RULE 18C OF THE RULES, WHICH IS APPLICABLE TO THE CASE BEFORE US, IT IS DIFFERENTLY WORDED. THE AFORESAID DIFFERENCE HAS ALSO BEEN APPRECIATED BY THE HONBLE THIRD MEMBER IN ITS DECISION IN THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA). THEREFORE, IN OUR VIEW, THERE IS NO JUSTIFICATION FOR THE DENIAL OF DEDUCTION NU/S 80-IA(4)(III) OF THE ACT IN THE INSTANT ASSESSMENT YEAR WITH REGARD TO THE PROFITS EARNED BY THE ASSESSEE FROM INDUSTRIAL PARK GIGA SPACE OF RS.33,59,56,749/-. 62. IN THE RESULT, ON THIS ASPECT WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION MADE U/S 80-IA(4)(III) OF THE ACT OF RS.33,59,56,749/-. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 68. SINCE THE ORDER OF THE CIT(A) ON THIS ISSUE IS IN CONSONANCE WITH THE ISSUE DECIDED BY THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, WE DO NOT FIND ANY INFIRMITY IN HIS DETAILED ORDER ON THIS ISSUE. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, THE RELEVANT GROUNDS RAISED BY THE REVENUE ON THIS ISSUE ARE DISMISSED . 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 13. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.3055/PUN/2017 FOR ADJUDICATION IN THE FOLLOWING PARAGRAPHS. ITA NO.3055/PUN/2017 BY ASSESSEE 14. THE ASSESSEE FILED THE REVISED GROUNDS AND THE SAME ARE EXTRACTED AS UNDER :- 20 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION OF RS.48,52,836/- TO ASSESSEE'S TOTAL INCOME BEING INTEREST ON INCOME TAX REFUNDS EVEN THOUGH SUCH INTEREST WAS NEVER RECEIVED BY THE ASSESSEE. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT SUCH INTEREST IS ONLY PROVISIONAL AND CAN BE REDUCED IN SUBSEQUENT PROCEEDINGS 3) THE ADDITION AS ABOVE BE DELETED AND THE ASSESSEE'S TOTAL INCOME BE REDUCED TO THAT EXTENT 4) SUCH OTHER ORDERS BE PASSED AS DEEMED FIT AND PROPER 5) THE APPELLANT PRAYS FOR LEAVE TO ADD TO, MODIFY OR AMEND HIS GROUNDS OF APPEAL AND LEAD EVIDENCE. 15. FROM THE ABOVE EXTRACTED REVISED GROUNDS BY THE ASSESSEE, IT IS EVIDENT THAT THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE TAXABILITY OF THE INTEREST RECEIVED ON INCOME-TAX REFUND AMOUNTING TO RS.48,52,836/-. 16. BRIEFLY STATED THE RELEVANT FACTS ON THIS ISSUE INCLUDE THAT THE ASSESSEE RECEIVED INTEREST OF RS.42,44,638/- FOR THE ASSESSMENT YEAR 2005-06, RS.5,14,940/- FOR THE ASSESSMENT YEAR 2010-11, AND RS.93,258/- FOR THE ASSESSMENT YEAR 2012-13 RESPECTIVELY. THESE AMOUNTS WERE NOT OFFERED IN THE YEAR UNDER CONSIDERATION THOUGH THE REFUND WAS RECEIVED WITH INTEREST. THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BEING INTEREST RECEIVED ON THE INCOME- TAX REFUND. IN FACT, REFUNDS WERE NOT ACTUALLY RECEIVED BY THE ASSESSEE BUT THE SAME WAS ADJUSTED AGAINST THE DEMAND OUTSTANDING FOR OTHER ASSESSMENT YEARS. AS PER THE ASSESSEE, THE SAID AMOUNT OF INTEREST NEEDS NOT TO BE TAXED IN THE YEAR UNDER CONSIDERATION. AS THE SAME IS ONLY A PROFESSIONAL INTEREST INCOME DETERMINED BY THE REVENUE. IT IS PROFESSIONAL REASON THAT THE SUBJECT MATTER OF LITIGATION AND THE ASSESSED 21 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 INCOME CHANGES FROM TIME TO TIME DUE TO CHANGES OF DECISION IN LITIGATION. THE CIT(A) EXAMINED THE ABOVE CONTENTION OF THE ASSESSEE AND HELD THAT THE SAID ARGUMENT OF THE ASSESSEE IS UNTENABLE IN LAW. 17. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US WITH THE ABOVE EXTRACTED GROUNDS. 18. BEFORE US, ON THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE OF DECISION OF THE CIT(A) WITH REFERENCE TO THE SAID UNTENABLE IN LAW, LD. COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THERE IS REQUIREMENT OF A SPEAKING ORDER AT THE END OF CIT(A) ON THIS ISSUE.. THE FACTS WITH CHANGE OF DECISION OF THE INCOME TAX AUTHORITIES AS WELL AS JUDICIAL FORUM, THE INTEREST AMOUNT KEEP CHANGING AND FROM THAT POINT OF VIEW IT IS NOT PROPER TO OFFER THE SAID INTEREST INCOME TO TAX AS THE SAME IS CRYSTALLIZED INCOME. 19. ON HEARING BOTH THE SIDES, WE FIND THE ARGUMENT MADE BY THE LD. COUNSEL FOR THE ASSESSEE IS FAIR AND REASONABLE ON THIS ISSUE. ON PERUSAL OF THE SAID PARA 8.2 OF THE ORDER OF THE CIT(A), WE FIND THE CIT(A) SIMPLY DISMISSED THE ARGUMENT OF THE ASSESSEE BY JUST SAYING THAT THIS ARGUMENT IS UNTENABLE IN LAW . NOW, THE LD. COUNSEL FOR THE ASSESSEE REQUESTED THAT THE ISSUE RAISED IN THE PRESENT APPEAL OF ASSESSEE SHOULD BE REMANDED TO THE FILE OF THE CIT(A) FOR WANT OF A SPEAKING ORDER. THEREFORE, THE CIT(A) IS DIRECTED TO PASS A SPEAKING ORDER UNDER THE PROVISIONS OF SECTION 250 OF THE ACT GIVING APPROPRIATE REASONS ON THIS ISSUE IN ACCORDANCE WITH LAW. THUS, THE RELEVANT GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. 22 ITA NO.3004/PUN/2017 ITA NO.3055/PUN/2017 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 21. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 19 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 19 TH SEPTEMBER, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-11, PUNE. 4. THE PR.CIT, CENTRAL, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.