Jaypee Infratech Ltd., Noida V. CIT, Noida

ITA 3339/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90844 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHULEKHI VERMA
• Assessee Lawyers: V K GARG; ANIL CHOPR ACA
• Keywords: Capital asset; Business income; Depreciation; Opportunity of being heard; Source of fund; Cost of acquisition; Wrong claim; Assessment record; Prejudicial to interest; Capital expenditure
• Section: 143(3); 142(1); 80HHC; 14A; 115JB; 263; 28

Judgement Text

ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D NEW DELHI BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A. NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 JAYPEE INFRATECH LTD., VS COMMISSIONER OF INCO ME TAX, SECTOR-128, NOIDA AAYKAR BHAWAN, NOIDA. A-2D, SECTOR 24, NOIDA. (PAN: AABCJ9042R) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI ANIL CHOPR A,CA & V.K. GARG, ADV. RESPONDENT BY : MS SHULEKHI VERMA, CIT DR DATE OF HEARING: 09.02.2015 DATE OF PRONOUNCEMENT: O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), NOIDA DATED 30.3.2014 FOR AY 2009-10, PAS SED U/S 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THI S APPEAL:- 1. THAT THE LEARNED CIT (LD. CIT) HAS ERRED ON FAC TS AND IN LAW IN SETTING ASIDE THE ASSESSMENT TO BE MA DE DE NOVO. 2. THAT THE ORDER OF THE LD. CIT IS UNLAWFUL AND BEYOND PERMISSIBLE JURISDICTION UNDER SECTION 263 O F THE INCOME TAX ACT (ACT). THE ORDER OF THE LEARNED ASSE SSING OFFICER (LD. AO) IS NOT AN ERRONEOUS ORDER PREJU DICIAL TO THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 2 INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTI ON 263 OF THE ACT. AS SUCH TOO THE ORDER OF THE LD. CIT IS UNLAWF UL AND IS LIABLE TO BE QUASHED. 3. THAT THE ASSESSMENT UNDER SECTION 143(3) HAS BEE N PROCESSED BY THE LD. AO AFTER DULY CONSIDERING THE MATERIAL EXPLANATIONS AND SUBMISSIONS ON RECORD INCLUDING IN CONTEXT OF APPLICABLE LAW. MERE DIFFERENCE OF VIEW BETWEEN THE VIEW OF THE LD. CIT AND THE LD. AO CANNOT FORM THE BASIS OF ACTION UNDER SECTION 263. PROVISIONS OF SECTION 263 DO NOT PERMIT SUBSTITUTION OF THE LD. CIT'S OPINION FOR THE OPINI ON OF THE LD. AO, PARTICULARLY WHEN THE VIEW OF THE LD. CIT ARE C ONTRARY TO THE RECORD, TO PRECEDENTS AND CASE LAWS IN APPELLAN TS FAVOUR AND CONTRARY TO THE PROVISIONS OF THE ACT. 4. THAT THE APPELLANT IS ENTITLED TO THE DEDUCTION UNDER SECTION 80IA(4) AS ALLOWED BY THE LD. AO IN T HE ASSESSMENT UNDER SECTION 143(3). APPELLANT IS ENTIT LED TO ITS CLAIM INTER ALIA IN VIEW OF PRECEDENTS IN FAVOUR OF THE APPELLANT. AS SUCH TOO, THE LD. CIT HAS ERRED IN IN VOKING JURISDICTION UNDER SECTION 263 AND SETTING ASIDE TH E ASSESSMENT TO BE MADE DE NOVO. MOREOVER, IT IS SETTLED LAW THA T EVEN IF TWO VIEWS ARE REASONABLY' POSSIBLE, THE VIEW FAVOURING THE APPELLANT IS TO BE ADOPTED AND FURTHER THE BENEFICI AL PROVISIONS OF DEDUCTIONS FROM TAXABLE INCOME TO PROMOTE INVEST MENT IN AND DEVELOPMENT OF INFRASTRUCTURE FACILITY ARE TO B E INTERPRETED LIBERALLY, SO AS TO ADVANCE THEIR OBJECTIVES. 5. THAT, INTER ALIA, THE APPELLANT IS ENTITLED TO DEDUCTION U/S 80IA(4) ON THE FACTS AND LAW INVOLVED AS A DEVELOPER OF THE INFRASTRUCTURE FACILITY, EVEN IF I T HAS NOT COMMENCED OPERATING AND MAINTAINING BUT IS DEVELOPI NG THE SAME, IN VIEW OF DIRECT DECISIONS IN ITS FAVOUR INC LUDING INTER ALIA REPORTED IN ACIT V. BHARAT UDYOG LTD. 118 ITO 336 WHICH FOLLOWS THE DECISION OF THE HON'BLE APEX COUR T IN K. P. VERGHESE V. ITO 131 ITR 597 (SC) AND AS HELD IN TRG INDUSTRIES (P) LTD. V. OCIT (2013) 35 TAXMANN.COM 2 53 (AMRITSAR - TRIBUNAL). 6. THAT THE LD. CIT HAS ERRONEOUSLY RELIED ON NON APPLICABLE CBDT CIRCULAR NO. 1/2006 DATED 12.1.2006 WHICH RELATES TO EFFLUENT TREATMENT AND CONVEYANCE SYSTEM AND NOT TO A TOLL ROAD OR HIGHWAY PROJECT, WHICH IS THE CASE O F THE APPELLANT. IN ANY CASE, THE SAID CIRCULAR IS NOT BI NDING ON THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 3 APPELLANT. THE LD. CIT HAS RELIED ON IRRELEVANT AND ERRONEOUS MATERIAL AND BASIS FOR PASSING THE ORDER UNDER APPE AL AND AS SUCH TOO HIS ORDER DESERVES TO BE QUASHED. 7. THAT THE LD. CIT HAS ERRED IN STATING THAT THE L D. AO HAS NOT APPLIED HIS MIND TO OTHER CLAIMS FOR EXA MPLE DEDUCTION IN RESPECT OF INTEREST ON FDS AND WHETHER DEPRECIATION WAS ADMISSIBLE EVEN WHILE THE PROJECT WAS NOT COMPLETE. THESE CLAIMS HAVE BEEN PROCESSED AND CORR ECTLY ALLOWED AFTER DUE CONSIDERATION. THERE IS NO FINAL FINDING BY THE LD. CIT THAT THESE CLAIMS ARE INCORRECT. THE AS SESSEE WAS DULY ENTITLED TO THESE CLAIMS WHICH ARE CORRECTLY A LLOWED AND AS SUCH TOO SETTING ASIDE THE ASSESSMENT TO BE MADE DE NOVO IS UNLAWFUL AND THE ORDER OF THE LD. CIT DESERVES TO B E QUASHED. 8. THAT THE ORDER OF THE LD. CIT IS BASED ON ERRON EOUS VIEWS AND NON-APPRECIATION OF THE FACTS AND LAW INV OLVED INCLUDING BINDING CASE LAW SUPPORTING THE APPELLANT WHICH INCLUDE DECISIONS OF THE HON'BLE APEX COURT AND HON 'BLE JURISDICTIONAL HIGH COURTS. INTER ALIA THE LD. CIT HAS ERRED IN NOT FOLLOWING THE RATIO OF THE DECISION IN 131 ITR 597 (SC) IN THE CASE OF K.P. VARGHEESE V. ITO WHEREIN IT WAS HE LD THAT LITERAL CONSTRUCTION THAT LEADS TO ABSURDITY, UNJUS T RESULT OR MISCHIEF IS TO BE AVOIDED. CONSTRUCTION WHICH PERMI TS ACHIEVING THE OBVIOUS INTENTION OF THE LEGISLATURE AND PROVISIONS OF RATIONAL CONSTRUCTION ARE TO BE ADOPT ED. AS SUCH TOO, THE ASSESSEE'S CLAIM UNDER SECTION 801A(4) HAS BEEN CORRECTLY ALLOWED BY THE LD. AO. THE LD. CIT HAS ER RED IN SETTING ASIDE THE ASSESSMENT. 9. THAT WITHOUT PREJUDICE, IN THE ALTERNATIVE, AS T HE APPELLANT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0IA(6), EVEN AS PER THE VIEW OF THE LD. CIT, THEN IN ANY CASE ON THE FACTS AND LAW INVOLVED, THE ASSESSEE IS ENTITLED TO RELIE F AND DEDUCTION IN THIS MATTER, BE IT UNDER 801A(4) OR 80 IA(6). SETTING ASIDE THE ASSESSMENT TO BE MADE DE NOVO IS UNLAWFUL, UNCALLED FOR AND WOULD BE MERELY AN ACADEMIC EXERCI SE IF PERMITTED. 10. THAT THE GROUNDS OF APPEAL AS HEREIN ARE WITHOU T PREJUDICE TO EACH OTHER. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 4 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME ON 30.03.2009 FOR AY 2009-10 THROUGH E-FILING ACKNOWLEDGEMENT. SUBSEQUENTLY, TH E CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND ACCORDINGLY NOTICE U/S 14 3(2) OF THE ACT WAS ISSUED ON 25.8.2010. IN RESPONSE TO THE SAID NOTICE, SENI OR VICE PRESIDENT (FINANCE) AND DGM (FINANCE) OF THE ASSESSEE COMPANY ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FURNISHED DETAILS AND REPLIES TO THE QUERIES RAISED DURING THE COURSE OF THE ASSESSMENT PROCEEDI NGS. BOOKS OF ACCOUNTS ALONG WITH RELEVANT BILLS AND VOUCHERS WERE ALSO PR ODUCED AND TEST CHECKED. THE AO NOTED THAT THE ASSESSEE CLAIMED SET OFF ON A CCOUNT OF LOSS FOR THE PRECEDING YEAR AND THE ASSESSEE HAS CLAIMED DEDUCTI ON U/S 80IA OF THE ACT ON THE GROSS TOTAL INCOME AND, THEREFORE, THE ASSESSEE DECLARED TOTAL INCOME AT NIL. THE AO OBSERVED THAT THE BOOKS OF ACCOUNTS WERE AUD ITED AND COPY OF AUDIT REPORT IN FORM 3CD WAS FURNISHED DURING THE ASSESSM ENT PROCEEDINGS AND THE ASSESSEE ALSO FURNISHED TAX DETAILS AND DOCUMENTS F ROM TIME TO TIME DURING THE ASSESSMENT PROCEEDINGS THAT HAVE BEEN LOOKED INTO A ND VERIFIED. THE AO ALSO NOTED THAT THE ASSESSEE HAS ALSO FURNISHED FORM NO. 10CCB REGARDING COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. 3.1 THE AO, AFTER HAVING GONE THROUGH AND CONSIDERING T HE REPLIES SUBMITTED BY THE ASSESSEE, INTER ALIA CONCESSION AGREEMENT A ND ASSIGNMENT AGREEMENT WITH THE TAJ EXPRESSWAY INDUSTRIAL DEVELOPMENT AU THORITY (TEA) HELD THAT THE ASSESSEE HAS FURNISHED NECESSARY DETAILS/DOCUM ENTS IN RESPECT OF ITS CLAIM OF DEDUCTION U/S 80IA OF THE ACT IN RESPECT O F ITS ELIGIBLE BUSINESS U/S ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 5 80IA(4) OF THE ACT. THE AO FINALISED THE ASSESSMEN T PROCEEDINGS WITH A FINAL CONCLUSION THAT ON THE FACTS OF THE CASE, THE ASSES SEE IS ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF THE ACT AND THEREFORE, THE ASSESSEES CL AIM OF DEDUCTION U/S 80IA OF THE ACT IS ACCEPTED. 4. SUBSEQUENTLY, THE CIT, NOIDA CALLED THE RECORD O F THE REGULAR ASSESSMENT PROCEEDINGS FOR EXAMINATION AND NOTED THAT THE REGU LAR ASSESSMENT WAS COMPLETED BY THE AO BY PASSING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT ON 30.12.2011. THE CIT, NOIDA MADE A PRIMA FACIE OPIN ION THAT THE AO NOT ONLY OVERLOOKED THE APPLICABILITY OF PROVISIONS OF SECTI ON 80IA(2), (4) AND (6) OF THE ACT BUT ALSO IGNORED THE CLARIFICATORY AND CIRCULAR NO. 1/2006 DATED 12.1.2006 ISSUED BY CBDT AND THE OTHER RELEVANT STATUTORY PRO VISIONS OF THE ACT AND THE INCOME TAX RULES 1962. THE CIT, NOIDA ISSUED A NOT ICE U/S 263 OF THE ACT TO THE ASSESSEE ON 11.3.2014. FOR THE SAKE OF CLARITY IN OUR FINDINGS AND CONCLUSION, THE NOTICE ISSUED BY CIT NOIDA U/S 263 OF THE ACT DATED 11.3.2014 IS BEING REPRODUCED AS UNDER:- F.NO. CIT/NOIDA/2013-14/7691 DATED: 11.3.2014 TO, THE PRINCIPAL OFFICER, JAYPEE INFRATECH LTD., SECTOR-128, NOIDA (UP). SUB: SHOW CAUSE NOTICE U/S 263 OF THE IT ACT,1961 I N RESPECT OF THE ASSESSMENT ORDER FOR A. Y. 2009-10 TO AFFORD TH E ASSESSEE COMPANY AN OPPORTUNITY OF BEING HEARD- ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 6 A PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSESSMEN T YEAR (HEREAFTER A. Y.) 2009-10 PASSED ON 30-12-2011 SHOW S THAT THE ASSESSEE M/S JAYPEE INFRATECH LTD., SECTOR-128, NOI DA (UP) FURNISHED ITS RETURN OF INCOME ON 30-09-2009 THROUG H E-FILING DECLARING NIL INCOME. THE ASSESSMENT RECORD SHOWS T HAT THE CASE HAS BEEN PICKED UP FOR SCRUTINY (I.E. REGULAR ASSESSMENT) THROUGH CASS (I.E. COMPUTER ASSISTED SCRUTINY SELEC TION). THE NATURE OF BUSINESS OF THE COMPANY IS REPORTED BY TH E ASSESSEE AS DEVELOPMENT, OPERATION, MAINTENANCE OF THE SIX-LANE ACCESS CONTROLLED EXPRESSWAY ALONG WITH ROAD AND ASSOCIATE D STRUCTURES & SALE/DEVELOPMENT OF LEASE HOLD LAND AL ONG THE EXPRESSWAY. 2. A PERUSAL OF FORM NO. 3CD (RULE 6G(2)) FILED FOR THIS A. Y. CERTIFIES THAT THERE IS NO CHANGE IN THE ABOVE BUSI NESS OF THE ASSESSEE COMPANY. AS REGARDS, THE METHOD OF ACCOUNT ING A/50, THERE IS NO CHANGE FROM A. Y. 2008-09 AS CERTIFIED IN THE SAID FORM. IN SCHEDULE K' REGARDING 'SIGNIFICANT ACCOUN TING POLICIES' IN A. Y. 2008- 09 UNDER THE HEADING 'REVE NUE RECOGNITION', IT IS DECLARED THAT THE COMPANY IS CA RRYING ON THE BUSINESS OF DEVELOPING A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGH WAY PROJECT. MANY OTHER CRUCIAL DOCUMENTS SUCH AS THE FOLLOWING FURTHER SHOW THAT CLAUSE (B) OF THE EXPLANATION TO SUB-SECT ION (4)(I) OF SECTION BO-IA IS THE 'INFRASTRUCTURE FACILITY' IN A SSESSEE'S CASE AND HOUSING OR RESIDENTIAL DEVELOPMENT OR SALE OF L AND ETE. IS AN INTEGRAL PART OF ASSESSEE COMPANY'S HIGHWAY PROJECT : I. (I) THE REPORT OF THE COMMISSION OF INQUIRY HEAD ED BY HON'BLE JUSTICE SIDHESWAR NARAYAN (RETD.) IN CHAPTE R XIII DESCRIBES ONE OF THE FOLLOWING OBLIGATIONS ON THE P ART OF TEA- THE CONCESSIONAIRE SHALL BE GRANTED, BY TEA, RI GHTS FOR LAND DEVELOPMENT OF 25 MILLION SQ. METERS OF LAND ALONG THE PROPOSED EXPRESSWAY FOR COMMERCIAL, AMUSEMENT, INDUSTRIAL, INSTITUTIONAL AND RESIDENTIAL DEVELOPMENT. 1I. THE FINAL REPORT IN VOLUME I ON TRAFFIC AND REV ENUE FORECAST STUDY FOR YAMUNA EXPRESSWAY IN THE STATE O F UTTAR PRADESH AT PAGE 9 UNDER THE HEADING REVENUES STATES AS UNDER: THE REVENUES FROM THE PROJECT WILL COME FROM TWO ST REAMS AS UNDER: A} FROM LAND FOR DEVELOPMENT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 7 B) FROM TOLL FROM THE USERS OF THE EXPRESSWAY REVENUES FROM LAND DEVELOPMENT LAND FOR DEVELOPMENT MEASURING ABOUT 2500 HECTARES SHALL BE MADE AVAILABLE AT 5 OR MORE LOCATIONS ALONG THE EXP RESSWAY FOR COMMERCIAL, AMUSEMENT, INDUSTRIAL, INSTITUTIONAL AN D RESIDENTIAL DEVELOPMENT. THERE CAN BE MANY ALTERNATIVE BUSINESS MODELS IN RELATION TO THE SAID LAND FOR DEVELOPMENT SOME OF S UCH BUSINESS MODELS COULD BE AS UNDER: A) TO SELL THE LAND FOR DEVELOPMENT ON 'AS IS WHERE IS BASIS' WITHOUT MAKING ANY FURTHER INVESTMENT. B) TO SELL THE LAND FOR DEVELOPMENT IN BULK AREAS A FTER PREPARING LAYOUT PLAN IDENTIFYING VARIOUS AREAS FOR VARIOUS USES AS PER APPLICABLE BYE-LAWS AND WITH LIMITED OR COMP REHENSIVE INTERNAL DEVELOPMENT SUCH AS ROADS, WATER SUPPLY, D RAINAGE, ELECTRIC SUPPLY ETC. THIS WILL REQUIRE ADDITIONAL I NVESTMENT AND ADDITIONAL PERIOD TO REALIZE THE REVENUE. C) BY SELLING FULLY DEVELOPED PLOTS FOR DIFFERENT PURPOSES AFTER COMPLETING ALL EXTERNAL AND INTERNAL DEVELOPM ENT. THIS WILL REQUIRE FURTHER ADDITIONAL INVESTMENT AND ADDI TIONAL PERIOD TO REALIZE THE REVENUE. D) BY CONSTRUCTING RESIDENTIAL/ COMMERCIAL BUILDING , INCLUDING ALL INTERNAL AND EXTERNAL DEVELOPMENTS AN D THEN SELLING IT EITHER DURING CONSTRUCTION STAGE ITSELF OR AFTER COMPLETE CONSTRUCTION. THIS WILL REQUIRE FURTHER AD DITIONAL INVESTMENT AND ADDITIONAL PERIOD TO REALIZE THE REV ENUE. III. IN ADDITION, THE ASSESSEE COMPANY HAS ITSELF SUBMITTED A NOTE ON YAMUNA EXPRESSWAY PROJECT WHICH UNDER THE H EADING LAND FOR DEVELOPMENT HAS STATED THE FOLLOWING: '6.2 THERE CAN BE MANY ALTERNATIVE BUSINESS MODELS IN RELATION TO THE SAID LAND FOR DEVELOPMENT. SOME OF SUCH BUSI NESS MODELS COULD BE AS UNDER: A) ..... B) ..... C).. .. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 8 D) BY CONSTRUCTING RESIDENTIAL/COMMERCIAL BUILDING, INCLUDING ALL INTERNAL AND EXTERNAL DEVELOPMENTS AND THEN SEL LING IT EITHER DURING CONSTRUCTION STAGE ITSELF OR AFTER COMPLETE CONSTRUCTION. THIS WILL REQUIRE FURTHER ADDITIONAL INVESTMENT AND ADDITIONAL PERIOD TO REALIZE THE REVENUE.' IV. MOST IMPORTANTLY, A CONCESSION AGREEMENT WAS E NTERED INTO BETWEEN THE TAJ EXPRESSWAY DEVELOPMENT AUTHORITY AN D JAY PRAKASH INDUSTRIES LTD. ON 07-02-2003. IN THIS AGRE EMENT THE WORD 'PROJECT' (WHICH IS ASSIGNED TO JAY PRAKASH IN DUSTRIES LTD.) IS DEFINED TO MEAN PREPARATION OF TEFR AND DP RJ DESIGN, ENGINEERING, FINANCING, PROCUREMENT, CONSTRUCTION; OPERATION, AND MAINTENANCE OF THE EXPRESSWAY AND MANAGEMENT OF LAND FOR DEVELOPMENT IN ACCORDANCE WITH THE PROVISIONS O F THIS AGREEMENT AND SHALL INCLUDE ALL WORKS RELATING TO O R IN RESPECT OF THE EXPRESSWAY AND THE LAND FOR DEVELOPMENT. FUR THER, THE AGREEMENT MENTIONS THAT THE ASSESSEE COMPANY HAS BE EN GRANTED BY TEA, RIGHTS FOR LAND DEVELOPMENT OF 25 M ILLION SQ. MTS. OF LAND ALONG THE PROPOSED EXPRESSWAY FOR COMM ERCIAL, AMUSEMENT, INDUSTRIAL, INSTITUTIONAL, AND RESIDENTI AL DEVELOPMENT. THIS WOULD, THEREFORE, SHOW THAT LAND DEVELOPMENT AND INSTITUTIONAL AND RESIDENTIAL DEVEL OPMENT ARE INTEGRAL PART OF THE HIGHWAY PROJECT UNAMBIGUOUSLY AND INDISPUTABLY ESTABLISHING THAT THE 'INFRASTRUCTURE FACILITY' OF THE ASSESSEE FALLS IN CLAUSE (B) OF THE EXPLANATION APP EARING AT THE END OF SUB-SECTION (4)(I) OF SECTION 80-IA OF THE I T ACT 1961. 3. ALL THE SUBMISSIONS OF THE ASSESSEE COMPANY FURN ISHED IN WRITING BEFORE THE A.O, HAVE BEEN CAREFULLY GONE TH ROUGH. FROM THEM IT IS, INTER ALIA, SEEN THAT THE ASSESSEE COMP ANY HAS ITSELF MADE SEVERAL STATEMENTS DURING THE ASSESSMENT PROCE EDINGS TO THE EFFECT THAT THE LAND FOR DEVELOPMENT ADMEASURIN G ABOUT 2500 HECTARES SHALL BE MADE AVAILABLE AT 5 OR MORE LOCATIONS ALONG THE EXPRESSWAY JAR COMMERCIAL, AMUSEMENT, IND USTRIAL, INSTITUTIONAL AND RESIDENTIAL DEVELOPMENTS. ON ACCO UNT OF IRREFUTABLE ADMISSION ON THE PART OF THE ASSESSEE A S TO ITS ONE OF THE AVOWED OBJECTS OF RESIDENTIAL AND INSTITUTIONAL DEVELOPMENT CONSISTING OF SALE OF PLOTS AND BUILDINGS, THESE AC TIVITIES OF HOUSING AND SALE OF LAND ETC. ARE AN INTEGRAL PART OF THE ASSESSEE'S PROPOSED HIGHWAY PROJECT. SINCE, NO CHANGE IS CERTIFIED IN THE NATURE OF BUSI NESS IN THIS ASSESSMENT YEAR THE SAME BUSINESS CONTINUES AS 'ELIGIBLE BUSINESS' IN TERMS OF SECTION 80-IA (1) AND THE BUS INESS OF THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 9 ASSESSEE COMPANY BY ITS OWN ADMISSION CONTINUES TO BE THE SAME AS STATED ABOVE AND THE 'INFRASTRUCTURE FACILI TY' THAT THE ASSESSEE HAS BEEN DEVELOPING CLEARLY FALLS UNDER CL AUSE (B) OF THE EXPLANATION APPEARING AFTER SUB-SECTION (4) (I) OF SECTION 80-IA AND NOT UNDER CLAUSE (A). 4. HOWEVER; CONTRARY TO THE ABOVE ESTABLISHED POSIT ION AS REGARDS THE NATURE OF 'INFRASTRUCTURE ACTIVITY', WH EN THE ASSESSMENT RECORDS WERE EXAMINED, A PERUSAL OF FORM NO. 10 CCB (RULE 18BBB) IN A. Y. 2009-10 SHOWED THAT THE T AX AUDITORS OF THE ASSESSEE COMPANY HAVE THOUGH REITER ATED ITS NATURE OF BUSINESS BEING THE SAME AS WHAT IS MENTIO NED AT PARA 2 & 3 ABOVE, BUT, UNDER THE HEADING 'ELIGIBLE BUSIN ESS UNDER SECTION BO-IA', THEY HAVE SPECIFIED THE 'INFRASTRUC TURE FACILITY AS ROAD INCLUDING TOLL ROAD. THE A.D. HAS FAILED TO NOTICE THIS CONTRADICTION WHILE PASSING THE ERRONEOUS ASSESSMEN T ORDER ALLOWING DEDUCTION U/S 80-IA NOT REALIZING THAT THE ASSESSEE HAS NOT BEGUN TO OPERATE THE TOLL ROAD WHICH IS A MANDA TORY CONDITION U/S 80-IA (2) OF THE IT ACT, 1961 FOR BEI NG CONSIDERED FOR DEDUCTION. WHERE IS THE QUESTION OF ALLOWING AN Y PROFITS AS DEDUCTION WHEN THERE ARE NO PROFITS IN THIS YEAR FR OM THE OPERATION OF THE TOLL ROAD? 5. IN THE ABOVE CONTEXT, HOWEVER, IF ROAD INCLUDING TOLL ROAD, AS MENTIONED AS ABOVE BY THE TAX AUDITORS IN FORM NO. 10CCB IS TO BE CONSIDERED AS THE 'INFRASTRUCTURE FACILITY' OF T HE ASSESSEE COMPANY AS PER CLAUSE (A) OF THE EXPLANATION TO SUB -SECTION (4) (I), THEN THE ASSESSEE COMPANY GETS OUT OF THE AMBI T OF SECTION 80-IA FOR THE SIMPLE REASON THAT IN ORDER TO QUALIF Y FOR DEDUCTION U/S 80-IA (2), IT HAS TO HAVE PROFITS DER IVED FROM THE OPERATION OF THE ROAD INCLUDING THE TOLL ROAD WHICH IS NOT THE CASE HERE AS ASSESSEE COMPANY'S EXPRESSWAY BECAME OPERATIONAL ONLY IN F. Y. 2012-13 AND WOULD IN THAT CASE QUALIFY FOR DEDUCTION (OF COURSE SUBJECT TO FULFILLING ALL OTHER ATTENDANT CONDITIONS UNDER THE SECTION) FOR THE FIRST TIME IN A. Y. 2013-14. THIS IS BECAUSE THE ASSESSEE COMPANY HAS NOT DEVELO PED AND BEGUN TO OPERATE THE TOLL ROAD IN A. Y. 2009-10 AND , THEREFORE, THE PROVISIONS OF SECTION 80-IA ARE NOT EVEN ATTRAC TED IN TERMS OF THE REQUIREMENT UNDER SUB- SECTION (2) OF SECTIO N 80-IA. AS AGAINST THIS POSITION OF LAW, THE ASSESSEE IN ITS L ETTER DATED 21- 12-2011 TO THE A. O. HAS CONTENDED THAT IT IS ELIGI BLE FOR DEDUCTION U/S 80-IA 4)(I) AS THE DEDUCTION IS AVAIL ABLE EVEN TO AN ENTERPRISE ONLY 'DEVELOPING' THE 'INFRASTRUCTURE FACILITY'. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 10 IRONICALLY, AS MENTIONED EARLIER, THE ASSESSING OFF ICER HAS FAILED TO NOTICE THE CONTRADICTION ON THE SAME PAGE OF FOR M NO. 10CCB MENTIONING AT S.NO. 6 THEREOF THE FOLLOWING: YAMUNA EXPRESSWAY PROJECT- DEVELOPMENT, OPERATION A ND MAINTENANCE OF NOIDA AND AGRA ALONG WITH SERVICE RO AD AND ASSOCIATED STRUCTURES AND SALE/DEVELOPMENT OF LEASE HOLD LAND ALONG THE PROPOSED EXPRESSWAY. WHEREAS AT THE S. NO. 14 (B) ON THE SAME PAGE OF FO RM NO. 10CCB THE TAX AUDITORS HAVE SPECIFIED THE 'INFRASTR UCTURE FACILITY' AS UNDER: ROAD INCLUDING TOLL ROAD HOWEVER, AS STATED EARLIER THE ASSESSEE COMPANY GET S OUT OF THE AMBIT OF SECTION 80-IA, THE MOMENT IT MENTIONS ITS 'INFRASTRUCTURE FACILITY' AS ROAD INCLUDING TOLL RO AD FOR THE REASON THAT THE TOLL ROAD HAS NOT BEGUN TO OPERATE, A CONDITION WHICH IS MANDATORY TO BE COMPLIED WITH IN TERMS OF SUB-SECTION (2) OF SECTION 80-IA. AS DEALT WITH AT PARA 2, HERE INBEFORE, THE DECLARED 'INFRASTRUCTURE FACILITY' OF THE ASSESSEE COMPANY AS PER ITS SIGNIFICANT ACCOUNTING POLICY AND AS PER THE CO NCESSION AGREEMENT BETWEEN TEA AND JPI LTD. IS CARRYING ON T HE BUSINESS OF DEVELOPING A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGH WAY PROJECT. IN FACT, IN THIS ASSESSMENT YEAR, THE ASSESSEE HAS ITS ELF MADE THE CLAIM OF DEDUCTION AGAINST THE PROFITS FROM SALE OF LAND WHICH ARE OTHERWISE NEVER ELIGIBLE FOR DEDUCTION U/S 80-I A BUT FOR THE NON-OBSTANTE PROVISION UNDER SUB-SECTION (6) WHICH IF COMPLIED WITH ENABLES THE ELIGIBLE BUSINESS TO LODGE A CLAIM FOR DEDUCTION U/S 80-IA OF THE IT ACT, 1961. THE ABOVE WOULD ABUNDANTLY CLARIFY WHY THE 'INFRAS TRUCTURE FACILITY' OF THE ASSESSEE IS NOT ROAD INCLUDING TOL L ROAD AND THE A.O. COULD HAVE CONSIDERED ITS CLAIM FOR DEDUCTION ONLY IN THE LIGHT OF ITS AVERMENT IN SEVERAL DOCUMENTS INCLUDIN G THE AGREEMENT DATED 07-02-2003 ENTERED INTO BETWEEN TEA AND JPI LTD.(DEALT WITH AT PARA 2 HEREINBEFORE) IN ADDITION TO ITS OWN ACCOUNTING POLICY THAT IT IS A HIGHWAY PROJECT INCL UDING HOUSING OR SALE/DEVELOPMENT OF LEASE HOLD LAND ALONG THE EX PRESSWAY AND ALL OTHER ACTIVITIES ARE AN INTEGRAL PART OF TH E HIGHWAY PROJECT. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 11 6. AFTER EXAMINATION OF THE ABOVE FACTS AND ISSUES FROM THE ASSESSMENT RECORDS FOR AY 2009-10, IT IS NOTICED TH AT THE AO HAS STATED AT PARA 4 OF THE ASSESSMENT ORDER THAT T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80-IA OF THE IT ACT, 196 1 AFTER GETTING A CLARIFICATION FROM THE ASSESSEE (VIDE ORDER SHEET ENTRY DATED 23-12-2011) TO THE EFFECT THAT ASSESSEE'S INCOME DU RING THE YEAR HAD COME MAINLY FROM THE SALE OF LAND TO 4 PARTIES AND THAT, DEDUCTION U/S 80-IA WAS CLAIMED IN RESPECT OF SUCH INCOME DERIVED FROM THE SALE OF LAND. THE A.O. HAS THEN PA SSED AN ERRONEOUS ORDER IN AS MUCH AS HE FAILED TO UNDERSTA ND THAT THERE ARE NO PROVISIONS U/S 80-IA WHICH ALLOW FOR D EDUCTION OF PROFITS DERIVED FROM SALE OF LAND I.E. NO DEDUCTION IS AVAILABLE U/S 80-IA IN A BUSINESS DEALING IN SALE OF PROPERTI ES. HOWEVER, WHERE SALE OF LAND; AS IS THE CASE OF THE ASSESSEE, IS AN INTEGRAL PART OF THE HIGHWAY PROJECT, IT IS THE NON-OBSTANTE PROVISIONS OF SUB-SECTION (6) OF SECTION 80-IA WHICH CARVE OUT AN EXCEPTION FOR SUCH PROFITS TO BE TRANSFERRED TO A SPECIAL RES ERVE ACCOUNT SO THAT SUCH PROFITS ARE ACTUALLY UTILIZED FOR THE HIG HWAY PROJECT ONLY, BEFORE THE EXPIRY OF THREE YEARS FOLLOWING TH E YEAR IN WHICH PROFITS WERE TRANSFERRED TO THE RESERVE ACCOU NT. FURTHER, SUCH PROFITS DO NOT QUALIFY FOR DEDUCTION U/S 80-IA (6) OF THE IT ACT, 1961 ALSO, UNLESS SUCH PROFITS ARE COMPUTED IN THE PRESCRIBED MANNER. HE HAS THUS PASSED AN ORDER WHIC H IS ERRONEOUS IN AS MUCH AS THE ACTIVITY OF SALE OF LAN D WAS AN INTEGRAL PART OF ASSESSEE'S HIGHWAY PROJECT AS MENT IONED IN SEVERAL DOCUMENTS INCLUDING IN ITS 'SIGNIFICANT ACC OUNTING POLICIES'. SINCE, THE ASSESSEE HAS NOT COMPUTED ITS PROFITS FROM THE SALE OF LAND OR OTHER ACTIVITIES (BEING AN INTE GRAL PART OF ITS HIGHWAY PROJECT) IN THE PRESCRIBED MANNER IN TERMS OF RULE 18BBE AND HAS NOT FILED FORM NO. 10CCC PRESCRIBED U NDER THAT RULE, THE PROFITS FROM SALE OF LAND WORKED OUT BY IT ARE ENTIRELY TAXABLE AND DEDUCTION IN RESPECT OF SUCH P ROFITS WITHOUT CREATION OF THE SPECIAL RESERVE IS NOT ENVISAGED UN DER SECTION 80-IA OF THE IT ACT, 1961. IT IS IRONIC THAT THE AS SESSEE COMPANY ON THE ONE HAND CONTENDS THAT ITS INFRASTRUCTURE FA CILITY IS ONLY ROAD, INCLUDING TOLL ROAD AND YET IT CLAIMS DEDUCTI ON IN RESPECT ITS PROFITS DERIVED FROM THE INFRASTRUCTURE FACILIT Y AS PER CLAUSE (B) OF THE EXPLANATION WITHOUT CREATION OF SPECIAL RESERVE AGAINST THE PROFITS DERIVED FROM THE SALE OF LAND. DESPITE, SUCH AN INCORRECT CLAIM AND ARGUMENTS PUT UP TO JUSTIFY THE SAME, THE A. O. HAS, ON ACCOUNT OF SHEER INCOMPETENCE FAILED TO UNDERSTAND THAT ONLY THE AMOUNT UTILIZED, OUT OF TH E AMOUNTS CREDITED TO THE RESERVE ACCOUNT, FOR THE PURPOSES O F THE HIGHWAY ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 12 PROJECT IS ADMISSIBLE AS DEDUCTION U/S 80-IA OF THE IT ACT, 1961 AND NO OTHER AMOUNT IS EVEN ELIGIBLE FOR DEDUCTION IN TERMS OF SECTION 80-IA (6) WHERE THE PROJECT IS INTEGRATED S UCH AS THIS PARTICULAR PROJECT. 7. BY ALLOWING AN ABSOLUTELY INCORRECT CLAIM OF DED UCTION U/S 80-IA IN A. Y. 2009-10 IN THE REGULAR ASSESSMENT MA DE BY THE A.O. U/S 143 (3) OF THE IT ACT, 1961 ON 30-12-2011 AS BROUGHT OUT IN THE FOREGOING PARAGRAPHS, HE HAS PASSED AN A SSESSMENT ORDER WHICH IS ERRONEOUS AS THE ORDER HAS COMPLETEL Y GLOSSED OVER THE PROVISIONS OF SUB-SECTION (2), (4) AND SUB -SECTION (6) OF THE IT ACT, 1961, THE LATTER READ WITH RULE 18BBE O F THE INCOME TAX RULES, 1962. THE ORDER THUS PASSED IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE AS A WRONG DEDUCTION U/S 8 0-IA HAS BEEN ALLOWED BY NOT FOLLOWING AND IMPLEMENTING THE AFOREMENTIONED PROVISIONS OF LAW, THEREBY CAUSING S UBSTANTIAL LOSS OF REVENUE. THE ASSESSEE IS, ACCORDINGLY, BEIN G AFFORDED AN OPPORTUNITY OF BEING HEARD BEFORE THE UNDERSIGNED O N 19-03- 2014 AT 11:30 AM TO ENABLE IT TO MAKE ITS WRITTEN A ND ORAL CONTENTIONS SO AS TO REBUT THE ABOVE BY WAY OF PERS ONAL APPEARANCE OR THROUGH A DULY AUTHORIZED REPRESENTAT IVE. (D. P. SEMWAL) COMMISSIONER OF INCOME TAX, NOIDA. 5. IN RESPONSE TO THE SAID NOTICE U/S 263 OF THE AC T (SUPRA) AS REPRODUCED HEREINABOVE, THE ASSESSEE SUBMITTED THE FIRST REPLY DATED 19.3.2014 AND THE JOINT MANAGING DIRECTOR AND OFFICERS OF THE ASSESSEE COMP ANY ALONG WITH ASSESSEES REPRESENTATIVE (THE AR) MADE DETAILED SUBMISSIONS, ON THE STATUTORY ASPECTS ELABORATING WRITTEN SUBMISSIONS CONCERNING THE ADMI SSIBILITY OF THE CLAIMED DEDUCTION U/S 80IA OF THE ACT APPLICABLE TO THE CAS E OF ASSESSEE COMPANY. THE ASSESSEE FILED A REPLY TO THE NOTICE OF LD. CIT NOI DA ISSUED U/S 263 OF THE ACT (SUPRA) ON 19.3.2014 AND SUPPLEMENTED THE SAME BY T HE SECOND REPLY DATED ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 13 25.3.2014 AND LASTLY IN CONTINUATION ALSO FILED THI RD REPLY ON 27.3.2014. THE LD. CIT, NOIDA REJECTED THE OBJECTIONS AND SUBMISSIONS OF THE ASSESSEE FILED OBJECTING TO THE VALIDITY AND LEGALITY OF THE NOTIC E U/S 263 OF THE ACT (SUPRA) AND PASSED THE IMPUGNED ORDER ON 30.3.2014. THE MAIN O PERATIVE PART OF THE IMPUGNED ORDER READS AS UNDER:- 14. SHRI ANIL KUMAR CHOPRA, CA, ELABORATED ON THE MERIT OF THE CASE ALSO IN THE WRITTEN SUBMISSIONS B EGINNING FROM PAGE NO. 2 TO 9 OF THE REPLY DATED 19-03-2014 AND THE SAME ARE CONTAINED IN ANNEXURE A TO THIS ORDER. AS HEARD DURING THE PROCEEDINGS AND EXPLAINED IN THE OTHER T WO WRITTEN SUBMISSIONS DATED 25-03- 2014 {ANNEXURE B} AND 27-0 3-2014 (ANNEXURE C) AND AS ALSO DEALT WITH IN THE PRECEDIN G PARAGRAPHS, THE ASSESSEE COMPANY HAS MAINLY CONTEND ED THE FOLLOWING: . (I) THE A.O. IN A.Y. 2009-10 & 2010-11 HAS ALLOW ED DEDUCTION U/S 80-IA (4)(I) READ WITH EXPLANATION (A ) AND THAT THIS IS THE CORRECT VIEW BECAUSE DEDUCTION HAS BEEN ALLOWED AFTER ENQUIRIES BY A.O. AND IT CANNOT BE SAID THAT THE VIEW ADOPTED BY THE A.O. IN A.Y. 2009-10 IN ASSESSEE'S F AVOUR IS COMPLETELY UNSUSTAINABLE. FURTHER, IN ITS LETTER DA TED 25-03- 2014 (PAGES 18 & 19), THE ASSESSEE STATES THAT IT H AD FILED A LETTER BEFORE THE A.O. DATED 28-12-2011 WHICH EXPLA INED THAT ASSESSEE'S CLAIM FOR ELIGIBILITY WAS U/S 80-IA (4) (I) IN THE CONTEXT OF 'DEVELOPING' THE 'INFRASTRUCTURE FACILIT Y', THE SAID LETTER TO THE A.O., IT IS STATED, FURTHER EXPLAINED HOW 3D-LA (2) DID NOT CAST ANY RESTRICTION ON THE ASSESSEE'S CLAI M. IN THE CONTEXT OF THIS REPLY OF THE ASSESSEE, IT IS NECESS ARY TO CLARIFY HERE THAT DEDUCTION U/S 80-IA IS NOT ADMISSIBLE IN TERMS OF SUB- SECTION (4) AS THIS SUB-SECTION ONLY MANDATES APPLI CABILITY OF SECTION 80-IA TO THE ELIGIBLE BUSINESS. DEDUCTION I S ADMISSIBLE IN TERMS OF SUB-SECTIONS (1), (2), (4), AND (6). LA TER, IN LETTER DATED 27- 03-2014, THE ASSESSEE HAS AGAIN REFERRED TO REVENUE'S INSISTENCE ON THE EXPRESSION 'BEGINS TO O PERATE' AND HAS STATED THAT SUB-SECTION 80-IA (2) IS SUBSERVIEN T TO 80-IA (4). IT IS CONTENDED THAT THE WORD LAND' USED IN 80 -IA (2) HAS TO BE READ AS 'AND/OR IN THE CONTEXT OF SECTION 80-IA (4) OR TO BE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 14 READ AS 'OR' SO AS TO AVOID UNWORKABLE, UNREASONABL E, OR ABSURD INTERPRETATION WHICH IS NOT RECONCILABLE WIT H THE REST OF THE STATUED/SECTION 3D-LA (4). THE ASSESSEE HAS ALS O REFERRED TO THE RULING IN 103 ITR 613 (ORI) (FB) WHEREIN IT HAS BEEN HELD THAT THE WORD 'AND' SHOULD BE CONSTRUED AS 'OR ' WHERE THE CONTEXT SO REQUIRES. THE ASSEESSEE HAS CITED THE RU LING IN THE CASE OF ISHWAR SINGH BINDRA 1968 AIR 1450 WHERE THE HON'BLE SUPREME COURT HELD THAT THE WORD 'AND' HAD TO BE RE AD AS 'OR'. A PERUSAL OF THE RULING OF HON'BLE ORISSA HIGH COUR T IN CIT V. GANGARAM CHAPOLIA (103 ITR 0613)(1976) TOGETHER WIT H THE OMITTED PROVISIONS OF CLAUSE (A) OF SECTION 271 (1) WOULD SHOW THAT THE DECISION TO USE 'OR' IN PLACE OF 'AND' IS RENDERED TO ENABLE THE A.O., WHEREVER HE IS SATISFIED, TO IMPOS E PENALTY IF THE RETURN IS NOT FILED WITHIN TIME 'OR' NOT FILED IN THE MANNER REQUIRED UNDER THE VARIOUS PROVISIONS. HERE IN THIS CASE IF 'AND' IS NOT READ AS 'OR' THE ASSESSEE WOULD BE LET OFF ON THE GROUND THAT BOTH THE CONDITIONS SHOULD NOT BE COMPL IED WITH TO ATTRACT THE PENALTY AND IF ONLY ONE IS COMPLIED WIT H NO PENALTY WOULD BE IMPOSABLE. THE SITUATION AND THE CONTEXT W ITH REFERENCE TO THE EXPRESSION (DEVELOPS AND BEGINS TO OPERATE' USED IN SECTION 80-IA (2) IS ENTIRELY DIFFERENT AS REPLACEMENT OF 'AND' BY 'OR' HERE WOULD NOT BE IN CONSONANCE WITH THE OTHER WORDS USED IN RESPECT OF OTHER ELIGIBLE BUSINESSES SUCH AS 'STARTS' PROVIDING TELECOMMUNICATION, 'GENERATES' P OWER OR 'COMMENCES' TRANSMISSION, ETC. THIS WOULD SHOW THAT THE LD. A.R. HAS DRAWN COMPLETELY WRONG PARALLELS. SIMILARL Y, THE PARALLEL DRAWN BY THE LD. A.R. WITH THE RULING OF H ON'BLE APEX COURT IN ISHWAR SINGH BINDRA & ORS. IS FAR MORE DIS CORDANT. THE ABOVE ARGUMENT OF THE LD. A.R. EVEN THOUGH IS N OT ACCEPTABLE BY VIRTUE OF THE SPECIFIC MERIT OF THE U SE OF THE WORD 'AND' UNDER SUB- SECTION (6) AS EXPLAINED ABOVE THA T ITS REPLACEMENT WOULD BE INCONGRUOUS AND DISCORDANT TO THE USE OF OTHER WORDS IN THE SAME SUB-SECTION IN RESPECT O F OTHER ACTIVITIES, THE FOLLOWING OBSERVATIONS OF THE HON'B LE APEX COURT IN SMT. TARULATA SHYAM V. CIT [108 ITR 345 (S C)] WOULD PUT TO REST ALL DOUBTS AND CLARIFY THAT THE E XPRESSIONS USED UNDER A TAXING STATUTE SHOULD RECEIVE A STRICT CONSTRUCTION SO THAT THE INTERPRETATION THEREFROM IS IN CONSONAN CE WITH THE AVOWED AIM AND OBJECT OF THE LEGISLATURE AND NOT SU CH AS WOULD DEFEAT THE SAME. TO US, THERE APPEARS NO JUSTIFICATION TO DEPART F ROM THE NORMAL RULE OF CONSTRUCTION ACCORDING TO WHICH THE INTENTION OF ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 15 THE LEGISLATURE IS PRIMARILY TO BE GATHERED FROM TH E WORDS USED IN STATUTE. IT WILL BE WELL TO RECALL THE WORDS O F ROWLATT J. IN CAPE BRANDY SYNDICATE V, INLAND REVENUE COMMISSIONE RS (1921) 1 KB 64 (KB) AT PAGE 71J THAT: IN A TAXING ACT ONE HAS TO LOOK MERELY AT W HAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS N9 EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED'. ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COME S WITHIN THE LETTER OF THE LAW, HE MUST BE TAXED, HOW EVER GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. (II) THE ASSESSEE HAS THEN REFERRED TO ITS LETTERS WRITTEN TO THE A.O. DATED 23-11-2011, 21-12-2011, 23-12-2011, 28-1 2-2011, AND 29-12-2011 AND CONTENDED THAT ASSESSEE'S CLAIM HAD BEEN CORRECTLY ALLOWED AFTER CONSIDERING THE CONTENTS OF ALL THESE LETTERS. IN THIS CONTEXT, IT WOULD BE PROPER TO REC ORD THAT ALL THESE LETTERS WERE DULY PERUSED FROM THE ASSESSMENT RECORD AND THEREAFTER ONLY JURISDICTION U/S 263 OF THE LT. ACT, 1961 WAS ASSUMED BY ISSUING A SHOW CAUSE ISSUED ON 11-03 -2014. REFERENCES IS ASSESSEE'S CONTENTIONS IN THE AFORESA ID LETTERS HAVE FIGURED IN THE DISCUSSION ON PRECEDING PAGES A NSWERING HOW JURISDICTION WAS ASSUMED. (III) ON PAGE 4 OF THE AFORESAID LETTER DATED 19-03 -2014, THE ASSESSEE HAS EXPLAINED THAT THROUGH THE AFOREMENTIO NED LETTERS IT WAS CLARIFIED TO THE A.O. THAT DEDUCTION WAS AVA ILABLE U/S 80-IA (4)(I) EVEN TO AN ENTERPRISE ONLY ( DEVELOPIN G THE THE' INFRASTRUCTURE FACILITY AND AS TO HOW SECTION 80-I A (4)(I) WOULD OVERRIDE 80- LA (2). WHILE ASSERTING SO, THE LD. COUNSEL SHRI CHOPRA, CA, EXPLAINED THAT A PROVISION SHOULD BE INTERPRETED IN A MANNER THAT IT SUBSERVES THE PURPO SE IT IS ENACTED FOR AND NOT IN A MANNER THAT FRUSTRATES IT. THE A.O. HAS NOT EXAMINED ASSESSEE'S CLAIM OF DEDUCTION U/S 80-I A IN TERMS OF SECTION 80-IA (2) WHEREUNDER THE QUALIFYING COND ITION REGARDING ADMISSIBILITY OF THE DEDUCTION IS PROVIDE D FOR IN RESPECT OF ASSESSEE'S CLAIMED 'INFRASTRUCTURE FACIL ITY' - A ROAD INCLUDING TOLL ROAD . THE SAID SUB-SECTION (2) OF S ECTION 80-IA MANDATES THAT THE DEDUCTION BECOMES AVAILABLE, AT T HE OPTION OF THE ASSESSEE, IN ANY 10 CONSECUTIVE ASSESSMENT Y EARS OUT OF 20 YEARS BEGINNING FROM THE YEAR IN WHICH THE ASSES SEE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 16 DEVELOPS AND BEGINS TO OPERATE THE 'INFRASTRUCTURE FACILITY'. THE ASSESSEE PICKS UP HALF THE SUB-SECTION ON THE O NE HAND TO CLAIM THAT THE DEDUCTION IS AVAILABLE TO IT IN 10 A .YS. OUT OF 20 YEARS AND ON THE OTHER STATES THAT THE OTHER HALF O F SUB-SECTION (2) IS NOT APPLICABLE TO IT. THE ASSESSEE HAS BEEN RELUCTANT TO ANSWER THE QUESTION THAT IF THIS SUB-SECTION {2} IS NOT APPLICABLE TO IT HOW IT CONTENDS THAT IT CAN AVAIL OF DEDUCTION IN 10 A.YS. OUT OF 20 YEARS MENTIONED UNDER THE OTH ER HALF OF THE SAME SUB-SECTION? STATED IN OTHER WORDS, HOW CA N THE ASSESSEE CONTEND IN THE SAME BREATH THAT THE CONDIT ION OF DEVELOPS AND BEGINS TO OPERATE THE INFRASTRUCTURE FACILITY' IS NOT APPLICABLE TO IT WHILE IT ASSERTS THAT THE DEDU CTION IS AVAILABLE TO IT IN 10 A.YS. OUT OF 20 YEARS AS THE PERIOD OF TIME FOR AVAILING THE DEDUCTION AVAILABLE UNDER THE SAME SUB- SECTION. (IV) IN ITS REPLY DATED 27-03-2014, THE ASSESSEE HA S FURTHER CONTENDED THAT THE PROFIT DERIVED BY IT IS FROM THE TOLL ROAD AND INCLUDES THE PROFIT FROM SALE/SUB LEASE ON DEVELOPM ENT OF LAND WHICH FORM INTRINSIC PART OF THE INFRASTRUCTURE FAC ILITY/TOLL ROAD. THE ASSESSEE HAS IN THE SAME PARAGRAPH MENTIO NED THAT THE HON'BLE SUPREME COURT IN THE MATTER OF NAND KIS HORE GUPTA & ORS. VS STATE OF U.P. & ORS., HAS HELD THAT THE CREATION OF THE EXPRESSWAY AND THE FIVE LAND PARCEL S ARE COMPLEMENTARY TO EACH OTHER AND THE ENTIRE PROJECT IS OF IMMENSE PUBLIC IMPORTANCE. (IV) (A) IN THE CONTEXT OF ASSESSEE'S REFERENCE TO THE ABOVE OBSERVATIONS OF THE HON'BLE APEX COURT, ONE CANNOT BE BLIND AS NOT TO SEE AND APPRECIATE THE CONVERGENCE BETWEE N THE OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THE AFOREMENTIONED CASE AND THE PROVISIONS OF SUB-SECTI ON (6) OF 80-IA, IN AS MUCH AS, THE HON'BLE APEX COURT CLARIF IES THAT DEVELOPMENT OF LAND PARCELS AND OTHER ACTIVITIES IS COMPLEMENTARY TO THE CREATION OF THE HIGHWAY PROJEC T AND THE PROVISIONS OF SUB-SECTION (6) SUBSERVE THE SAME OBJ ECTIVE BY PROVIDING FOR UTILIZATION OF THE PROFITS FROM SALE OF LAND, ETC. ONLY FOR THE HIGHWAY PROJECT. HERE ALSO IT IS NOT D IFFICULT TO DISCERN THAT THE ASSESSEE ON THE ONE HAND CONTENDS THAT THE PROVISIONS OF SUB-SECTION (6) ARE NOT APPLICABLE TO IT AND ON THE OTHER DRAWS SUPPORT FROM THE OBSERVATIONS OF THE HO N'BLE SUPREME COURT IN THE AFOREMENTIONED PIL. IT WOULD, THEREFORE, SEEM THAT ASSESSEE'S CONTRADICTORY CONTENTIONS HAVE INSTEAD ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 17 HELPED CONCLUDE THAT THE HON'BLE SUPREME COURT'S OBSERVATIONS AND THE OBJECTIVE OF THE PROVISIONS OF SUB-SECTION (6) ARE IDENTICAL. THEREFORE, THE INESCAPABLE AND L OGICAL CONCLUSION WOULD BE THAT THE ASSESSEE OUGHT TO HAVE COMPLIED WITH THE PROVISIONS OF SUB-SECTION (6) OF SECTION 8 0-IA WHICH IT HAS NOT. THE CONTENTION OF THE ASSESSEE THAT THE VO LUME OF EXPENDITURE/INVESTMENT IN THE YEAR (RS. 3,377 CRORE S) WAS FAR MORE THAN THE PROFITS EARNED DURING THE YEAR FROM T HE SALE OF LAND IS NO REASON FOR NOT COMPLYING WITH THE STATU TORY CONDITIONS OF CREATING THE SPECIAL RESERVE TO CHANN ELIZE THE PROFITS THEREFROM FOR UTILIZATION FOR THE HIGHWAY P ROJECT. THE SUB-SECTION, AS STATED EARLIER, CARVES OUT AN UMBIL ICAL RELATIONSHIP BETWEEN THE PROFITS EARNED FROM THE 'O THER ACTIVITIES' AND THEIR UTILIZATION FOR THE HIGHWAY P ROJECT ONLY, SO THAT THE PROFITS EARNED FROM THE 'OTHER ACTIVITIES' ARE NOT UTILIZED FOR FURTHER ACQUIRING OR EXPANDING HOUSING AND OTHER ACTIVITIES. (V) WITH REFERENCE TO COMPLIANCE OF SUB-SECTION (6) OF SECTION 80-IA, ASSESSEE'S CONTENTION (ON PAGE 5 OF REPLY DA TED 27-03- 2014) THAT ENTRIES IN THE BOOKS OF ACCOUNT OR MERE NOMENCLATURE ARE NOT DECISIVE TO ASCERTAIN THE TAXA BLE INCOME, THE DISCUSSION AT PARA 3 ABOVE WOULD SUFFICIENTLY B RING OUT THAT THE OBJECT OF SUB- SECTION (6) IS TO PRECLUDE ABUSE OF THE PROVISIONS BY DIVERTING THE PROFITS FROM THE 'OTHER ACTIVITIES' FOR CREATION OF OTHER BUSINESS OPPORTUNITIES AND THUS T HESE ARE ANTI-ABUSE PROVISIONS WHICH CANNOT BE BRUSHED ASIDE BY BRANDING THEM AS PROCEDURAL ASPECT OR RELATING TO E NTRIES IN BOOKS OF ACCOUNT OR MERE NOMENCLATURE ETC. ACCORDIN GLY, IT IS CONSCIOUSLY FELT THAT RELIANCE PLACED ON THE RULING S OF THE HON'BLE APEX COURT IN THE CONTEXT OF THE ANTI-ABUSE OBJECTIVE IS MISDIRECTED. (VI) THE EXTRACTS FROM EXPLANATORY MEMORANDUM TO FI NANCE BILL, 1999, 2001 AND CIRCULAR NO. 14/2001 DATED 09- 11-2011 HAVE BEEN CAREFULLY GONE THROUGH AND THESE CLARIFI CATIONS IN NO WAY DILUTE THE OPERATION THE PROVISIONS OF SUB-S ECTIONS (1), (2), (4), AND (6) OF SECTION 80-IA IN UNISON. 15. APART FROM THE ABOVE, A PERUSAL OF THE ASSESS MENT ORDER FURTHER BRINGS OUT THAT THE ASSESSEE HAS CLAIMED DE DUCTION U/S 80-IA ON INTEREST INCOME ALSO AND THE INTEREST HAS BEEN EARNED BY PARKING ITS SURPLUS FUNDS IN VARIOUS FDS IN BANK S. THE A.O. HAS NOT APPLIED THE LAW U/S 8O-IA AS ONLY INCOME DE RIVED FROM ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 18 ANY BUSINESS REFERRED TO IN SUB-SECTION (4) IS ELIG IBLE FOR DEDUCTION UNDER THAT SECTION AND NO OTHER INCOME. I N ANY CASE, INTEREST INCOME FALLS UNDER THE HEAD 'INCOME FROM O THER SOURCES' AS PER THE SETTLED LAW IN TUTICORIN ALKALI ES VS. CIT 227 ITR 172 (SE). THE A.O. HAS NOT EVEN CONSIDE RED THIS DECISION OF THE HON'BLE APEX COURT WHILE MAKING ASS ESSMENT. SIMILARLY, THE ASSESSEE HAS CLAIMED DEPRECIATION AM OUNTING TO RS. 22,67,17,792 IN THE COMPUTATION OF INCOME. THE A.O. HAS NOT EXAMINED WHETHER THIS WAS ADMISSIBLE EVEN WHILE THE HIGHWAY PROJECT WAS STILL GOING ON AND WAS YET TO B E COMPLETED. 16. THE FOREGOING DISCUSSION WOULD AMPLY BRING OUT THAT THE A.O. PASSED AN ERRONEOUS ORDER IN AS MUCH AS HE FAI LED TO APPRECIATE THE FACTS OF THE CASE, DID NOT APPLY THE CORRECT LAW TO THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE COMP ANY, DID NOT APPLY HIS MIND TO THE ASSERTIONS MADE BY THE AS SESSEE AND DID NOT EVEN COMPLY WITH CBOT'S CIRCULAR NO. 01/200 6 DATED 12-01-2006, AS A RESULT OF WHICH AN ERRONEOUS ORDER WAS PASSED BEING FULL OF ERRORS WHICH HAS LED TO LOSS O F REVENUE AND HAS THE EFFECT OF PERPETUATING LOSSES IN SUBSEQ UENT YEARS; THE ORDER , THEREFORE, SIMULTANEOUSLY BEING PREJUDI CIAL TO THE INTERESTS OF REVENUE. THE A.O. HAS NOT APPLIED HIS MIND TO OTHER CLAIMS ALSO, FOR EXAMPLE WHETHER HE SHOULD HA VE ALLOWED DEDUCTION IN RESPECT OF INTEREST ON FDS IN THE FACE OF THE RELEVANT RULING OF THE HON'BLE SUPREME COURT AND WH ETHER DEPRECIATION WAS ADMISSIBLE EVEN WHILE THE PROJECT WAS NOT COMPLETE, THEREBY, FURTHER RENDERING THE ORDER ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE ASSESS MENT THUS COMPLETED AS A RESULT OF WRONG APPRECIATION OF FACT S ON THE RECORD AND NON- APPLICATION OF MIND IS SET ASIDE, T O BE MADE DE-NOVO. THE A.D. IS, ACCORDINGLY, DIRECTED TO MAKE THE REGULAR ASSESSMENT AFRESH AFTER AFFORDING AN OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. 6. FINALLY, THE LD. CIT NOIDA HELD THAT THE AO PASS ED AN ERRONEOUS ASSESSMENT ORDER INASMUCH AS HE FAILED TO APPRECIAT E THE FACTS OF THE CASE AND DID NOT APPLY THE CORRECT LAW TO THE FACTS AND CIRC UMSTANCES OF THE CASE OF THE ASSESSEE COMPANY AND ALSO OPINED THAT THE AO DID NO T APPLY HIS MIND TO THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 19 ASSERTIONS MADE BY THE ASSESSEE AND DID NOT COMPLY WITH THE CBDT CIRCULAR NO. 01/2006 DATED 12.1.2006 AND OTHER RELEVANT PROV ISIONS OF THE ACT AND THE INCOME TAX RULES, 1962. WITH THESE OBSERVATIONS, T HE LD. CIT, NOIDA CONCLUDED THAT THE AO PASSED AN ORDER WHICH WAS ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THE CIT NOIDA SET ASIDE THE ORIGINAL ASSESSMENT ORDER AND DIRECTED THE AO TO MAKE REGULAR ASSESSMENT AFRE SH AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. BEING AGGRIEVED BY THE ABOVE IMPUGNED ORDER, THE ASSESSEE COMPANY HAS PREFERRED PRESENT APPEAL WITH THE GROUNDS AS REPRODUCED HEREINABOVE. 7. BEFORE WE PROCEED TO CONSIDER THE RIVAL SUBMISSI ONS OF BOTH THE SIDES AND TO ADJUDICATE THE CORE ISSUE INVOLVED IN THIS APPEA L, WE FIND IT APPROPRIATE TO MENTION CHRONOLOGICAL ORDER OF RELEVANT DATES OF IM PORTANT EVENTS WHICH WOULD BE REFERRED SUBSEQUENTLY DURING OUR FURTHER DELIBE RATION AND ADJUDICATION IN THIS ORDER, WHICH ARE AS FOLLOWS:- CHART SHOWING SEQUENCE OF DATES & EVENTS. (I) DATE OF FILING OF RETURN FOR A.Y 2009-10 30/9/200 9 (II) DATE OF NOTICE U/S 143(2) OF THE ACT 25/8/2010 (III) DATE OF QUERY RAISED BY THE AO (IV) DATES OF REPLIES FILED BY THE ASSESSEE 23/11/2 011, 21/12/2011, 23/12/2011 BEFORE AO, 28/12/2011& 29/12/2011 (V) DATE OF 18 PAGES OFFICE NOTE SHEET OF THE AO WHICH ADJUDICATED THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 20 QUERIES OF THE AO 29/30.12.2011 (VI) DATE OF PASSING OF ASSESSMENT ORDER 30/12/2011 (VII) DATE OF NOTICE ISSUED BY LD. CIT U/S 263 OF THE ACT 11/3/2014 (VIII) DATE OF REPLIES FILED BY THE ASSESSEE BEFORE LD. CIT, NOIDA 19/3/2014, 25/3/2014 & 27/3/2014 (IX) DATE OF THE ORDER OF THE LD. CIT 30/3/2014 8. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD, INTER ALIA, PAP ER BOOK FILED BY THE ASSESSEE SPREAD OVER 229 PAGES, GIST OF CASE LAWS RELIED UPO N BY THE APPELLANT ASSESSEE, BRIEF WRITTEN SUBMISSIONS OF THE ASSESSEE, WRITTEN SUBMISSIONS OF LD. CIT-DR AND PAPER BOOK OF CASE LAWS SPREAD OVER 22 PAGES RE LIED BY THE LD.CIT- DR. 9. FOR JUST AND PROPER ADJUDICATION OF THE CASE, WE ALSO FIND IT APPROPRIATE TO REPRODUCE BRIEF WRITTEN SUBMISSIONS MADE BY THE LD. AR, ON BEHALF OF THE ASSESSEE, WHICH READ AS UNDER: IN THE ABOVE MATTER, THE APPELLANT BEGS TO SUBMIT HEREIN BRIEF WRITTEN SUBMISSIONS. THESE ARE IN ADDI TION TO ORAL SUBMISSIONS BEING MADE, PAPER BOOK FILED AND CASE L AW GIST FILED AND RELIED UPON. THE APPELLANT IS A LISTED COMPANY THAT HAS BEEN FOR MED AS A SINGLE OBJECT COMPANY FOR CARRYING ON THE BUSINESS OF AN INFRASTRUCTURE FACILITY AS DEFINED IN SECTION 80LA OF THE INCOME TAX ACT (ACT). THE PROFITS AND GAINS DERIVED FROM T HE SAID ELIGIBLE BUSINESS ARE ENTITLED TO DEDUCTION U/S 80L A OF THE ACT BE IT U/S 80IA( 4) OR IN THE ALTERNATIVE WITHOUT PR EJUDICE U/S 80IA(6). IN ASSESSMENT FOR ASSESSMENT YEAR INVOLVED I.E. 2009- 10 IN ASSESSMENT ORDER DATED 30.12.2011 THE APPELLA NT WAS CORRECTLY ALLOWED DEDUCTION U/S 801A. THE LEARNED C IT, NOIDA (LD.CIT) HAS SET ASIDE THE ASSESSMENT ORDER T O BE MADE DE NOVO AFTER OPPORTUNITY BY LD. AO TO THE APPELLAN T VIDE HIS ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 21 ORDER DATED 30.03.2014 U/S 263 OF THE ACT. SIMILAR DEDUCTION U/S 80LA HAS BEEN ALLOWED TO THE APPELLANT VIDE ASS ESSMENT ORDER DATED 12.03.2013 IN ASSESSMENT YEAR 2010-11 I .E. IN THE NEXT YEAR. IN SHORT, THE DEDUCTION WAS HELD TO BE A LLOWABLE BY TWO SEPARATE ASSESSING OFFICERS IN TWO SEPARATE YEA RS. WHILE SETTING ASIDE THE ASSESSMENT IN THE ORDER UNDER APP EAL, THE LD. CIT HAS NOT ARRIVED AT ANY FINAL FINDING THAT THE A PPELLANT IS NOT ELIGIBLE FOR THE DEDUCTION U/S 801A. THE APPELLANT FERVENTLY BELIEVES THAT IT IS ELIGIBL E FOR DEDUCTION IN RESPECT OF THE INFRASTRUCTURE FACILITY INVOLVED U/S 801A( 4) EXPLANATION (A) IN RESPECT OF ITS INFRASTR UCTURE FACILITY BEING ROAD INCLUDING TOLL ROAD. WITHOUT PREJUDICE T O THE AFORESAID, THE APPELLANT ALSO HAS ALTERNATE CLAIMS BASED ON WHICH ITS INCOME FROM THE INFRASTRUCTURE FACILITY W OULD BE ENTIRELY ELIGIBLE FOR DEDUCTION OF 100% OF ITS PROF ITS AND GAINS DERIVED FROM ITS ELIGIBLE BUSINESS. THE ABOVE APPEA L IS AGAINST ORDER U/S 263 DATED 30.03.2014 OF LD. CIT. ORDER IS PATENTLY ERRONEOUS, UNLAWFUL AND CONTRARY TO THE FACTS AND A CCORDINGLY THE SAME IS UNSUSTAINABLE AND LIABLE TO BE QUASHED. THIS IS SEEN INTER ALIA FROM THE GROUNDS OF APPEAL FILED IN THIS CASE. THE ISSUES ON WHICH RELIEF IS SOUGHT IN THE GROUNDS OF APPEAL ARE COVERED IN THE APPELLANT'S FAVOUR BY BINDING PR ECEDENTS INCLUDING OF THE HON'BLE APEX COURT, THE HON'BLE JU RISDICTIONAL HIGH COURT AND OTHERS. REGARDING GROUNDS NO. 1,2,3 AND 4: 1. LD. CIT HAS ERRED IN SETTING ASIDE THE ASSESSMEN T TO BE MADE DE NOVO WITHOUT RECORDING A FINAL FINDING AS T O WHAT WOULD BE THE CORRECT VIEW TO BE ADOPTED FOR THE ASS ESSEE'S CLAIM U/S 801A. 2. ORDER OF LD. CIT IS UNLAWFUL AND BEYOND PERMISSI BLE JURISDICTION U/S 263 OF THE ACT. ORDER OF THE LD. A O IS NOT AN ERRONEOUS ORDER, PREJUDICIAL TO THE INTEREST OF REV ENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. 3. THE ASSESSMENT UNDER SECTION 143(3) HAS BEEN PRO CESSED BY THE LD. AO AFTER DULY CONSIDERING THE MATERIAL E XPLANATIONS AND SUBMISSIONS ON RECORD INCLUDING IN CONTEXT OF A PPLICABLE LAW. MERE DIFFERENCE OF VIEW BETWEEN THE VIEW OF TH E LD. CIT AND THE LD. AO CANNOT FORM THE BASIS OF ACTION UNDE R SECTION 263. PROVISIONS OF SECTION 263 DO NOT PERMIT SUBSTI TUTION OF THE LD. CIT'S OPINION FOR THE OPINION OF THE LD. AO, PA RTICULARLY ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 22 WHEN THE VIEWS OF THE LD. CIT ARE CONTRARY TO THE R ECORD, TO PRECEDENTS AND SE LAWS IN APPELLANT'S FAVOUR AND CO NTRARY TO THE PROVISIONS OF THE ACT. 4. THE APPELLANT IS ENTITLED TO THE DEDUCTION UNDE R SECTION 80IA( 4) AS ALLOWED BY THE LD. AO IN THE ASSESSMENT UNDER SECTION 143(3). APPELLANT IS ENTITLED TO ITS CLAIM INTER ALIA IN VIEW OF PRECEDENTS IN FAVOUR OF THE APPELLANT. AS S UCH TOO, THE LD. CIT HAS ERRED IN INVOKING JURISDICTION UNDER SE CTION 263 AND SETTING ASIDE THE ASSESSMENT TO BE MADE DE NOVO . MOREOVER, IT IS SETTLED LAW THAT EVEN IF TWO VIEWS ARE REASONABLY POSSIBLE, THE VIEW FAVOURING THE APPELLA NT IS TO BE ADOPTED AND FURTHER THE BENEFICIAL PROVISIONS OF DE DUCTIONS FROM TAXABLE INCOME TO PROMOTE INVESTMENT IN AND DEVELOPMENT OF INFRASTRUCTURE FACILITY ARE TO BE IN TERPRETED LIBERALLY, SO AS TO ADVANCE THEIR OBJECTIVES. REGARDING GROUND NO. 1 - AS SEEN FROM PAGE 28, PARA 16 OF THE LD. CIT ORDER, THE ASSESSMENT HAS BEEN MERELY S ET ASIDE TO BE MADE DE NOVO. THE LD. CIT HAS RELIED ON IRRELEVANT AND ERRONEOUS MATERIAL FOR PASSING THE ORDER UNDER APPEAL WITHOUT TAKING A FINAL DECISION IN THIS MATTER. HE HAS ALSO RELIED ON AND TAKEN AN ERRONEOUS INTERPRETATION OF NON APPLICABLE CIRCULAR 01/2006 DATED 12.1.2006 RELATING TO EFFLUENT TREATMENT AND CONVEYANCE SYSTEM AND NOT APPLICABLE TO A TOLL ROAD OR HIGHWAY PROJECT WHICH IS THE CASE OF THE APPELLANT. THE SAID CIRCULAR, IN ANY CASE, IS NOT BINDING ON THE APPELL ANT AND IN FACT SUPPORTS THE APPELLANT. SIMILARLY THE LD. CIT HAS NOT APPLIED HIS MIND TO O THER CLAIMS, FOR EXAMPLE DEDUCTION IN RESPECT OF FD INCO ME AND WHETHER DEPRECIATION WAS ADMISSIBLE. THESE CLAIMS H AVE BEEN PROCESSED AND CORRECTLY ALLOWED AFTER DUE CONSIDERA TION. THERE IS NO FINAL FINDING BY THE LD. CIT THAT THESE CLAIMS ARE INCORRECT. AS SUCH TOO SETTING ASIDE ASSESSMENT TO BE MADE DE NOVO IS UNLAWFUL. MOREOVER, THE LD. CIT HAS ALSO ER RED IN SETTING ASIDE THE ASSESSMENT BECAUSE WITHOUT PREJUD ICE, IN THE ALTERNATIVE, AS THE APPELLANT WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(6), EVEN AS PER THE VIEW OF THE LD. CIT, THEN IN ANY CASE ON THE FACTS AND LAW INVOLVED, THE ASSESSE IS ENTITLED TO RELIEF AND DEDUCTION IN THIS MATTER, BE IT UNDER 80IA( 4) OR 80IA(6). SETTING ASIDE THE ASSESSMENT TO BE M ADE DE NOVO ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 23 IN UNLAWFUL, UNCALLED FOR AND WOULD BE MERELY AN AC ADEMIC EXERCISE IF PERMITTED. UNDER SECTION 263 CIT SHOULD TAKE A FINAL DECISION AND CANNOT MERELY SET ASIDE ASSESSMENT TO BE MADE DE NOVO: 203 ITR 108 (BORN.) CIT V. GABRIEL INDIA LTD. IT WAS HELD THAT COMMISSIONER, EXERCISING POWERS UN DER SECTION 263, CANCELLED ORDER OF THE ITO OBSERVING T HAT ORDER OF ITO DID NOT CONTAIN DISCUSSION IN REGARD TO ALLOWAB ILITY OF CLAIM FOR DEDUCTION WHICH INDICATED NON-APPLICATION OF MIND AND THAT CLAIM OF ASSESSEE REQUIRED EXAMINATION AS TO WHETHER EXPENDITURE IN QUESTION WAS A REVENUE OR CAPITAL EX PENDITURE AND DIRECTED ITO TO MAKE A FRESH ASSESSMENT ON LINE S INDICATED BY HIM - WHETHER UNDER SECTION 263 SUBSTI TUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE IT O IS PERMISSIBLE - HELD, NO - WHETHER ITO'S CONCLUSION C AN BE TERMED AS ERRONEOUS SIMPLY BECAUSE COMMISSIONER DOE S NOT AGREE WITH HIS CONCLUSION - HELD, NO - WHETHER ITO' S ORDER COULD BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN H IS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION - HELD, NO - W HETHER PROVISIONS OF SECTION 263 WERE APPLICABLE TO INSTAN T CASE AND COMMISSIONER WAS JUSTIFIED IN SETTING ASIDE ASSESSM ENT ORDER - HELD, NO. IN CIT V. HOTZ INDUSTRIES LTD 49 TAXMANN.COM 267 (DEL.), IT WAS HELD THAT REMANDING MATTER FOR FRESH EXAMINATION WAS NOT PERMISSIBLE AS COMMISSIONER MUST REACH FIND ING THAT FINAL FINDING IN ASSESSMENT ORDER WAS ERRONEOUS AND INCORRECT. WE ALSO RELY ON: 12 TAXMANN.COM 118 (ALLA.) CIT V. SHIV PRASAD 171 ITR 698 (ALLA.) CIT V. GOYAL PRIVATE FAMILY S PECIFIC TRUST 297 ITR 99 (ALLA.) CIT V. MAHENDRA KUMAR BANSAL 369 ITR 14 (DEL.) GLOBUS INFOCOM LTD. V. CIT 367 ITR 377 (RAJ.) CIT V. DEEPAK REAL ESTATE DEVELOPERS (I) P. LTD. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 24 PLEASE SEE GIST OF CASE LAW FILED. REGARDING GROUNDS NO. (2), (3) AND (4) THE ASSESSMENT ORDER IS NOT ERRONEOUS AND NOT PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE M EANING OF SECTION 263. THE ASSESSMENT WAS AFTER DUE PROCESS, AFTER CONSIDERING EXPLANATIONS, FILINGS AND SUBMISSIONS O N RECORD IN CONTEXT OF APPLICABLE LAW. THE LD. CIT HAS HIMSELF NOTED THAT THE LD. AO HAS RECORDED A 17 PAGES LONG 'OFFICE NOT E' TO THE ASSESSMENT ORDER. MERE DIFFERENCE OF VIEW BETWEEN T HE LD. CIT AND LD. AO DOES NOT PERMIT ACTION U/S 263. SECTION 263 DOES NOT PERMIT SUBSTITUTION OF THE LD. CIT'S OPINION FO R THE OPINION OF THE LD. AO PARTICULARLY WHEN TWO VIEWS ARE REASO NABLY POSSIBLE AND WHEN THERE ARE PRECEDENTS AND CASE LAW S IN APPELLANT'S FAVOUR. IF TWO VIEWS ARE POSSIBLE AND T HE LD. AO HAS TAKEN ONE VIEW WITH WHICH THE LD. CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE LD. AO IS UNSUSTAINABLE. PLEASE SEE NUMEROUS CASES IN GIST OF CASE LAW FILED , IN SUPPORT OF APPELLANT'S CONTENTIONS UNDER THESE GROU NDS. BRIEF FACTS REGARDING BUSINESS OF THE ENTERPRISE COMPANY A) JAYPEE INFRATECH LIMITED IS A COMPANY INCORPORAT ED UNDER THE COMPANIES ACT, 1956. IT IS FORMED AS A SP ECIAL PURPOSE VEHICLE (SPV) ON 05/04/2007 FOR DEVELOPING, OPERATING AND MAINTAINING THE TOLL ROAD BETWEEN GRE ATER NOIDA AND AGRA ALONG WITH SERVICE ROAD AND ASSOCIAT ED STRUCTURES WITH RIGHTS TO COLLECT TOLL DURING THE C ONCESSION PERIOD AND ALSO THE RIGHTS FOR SUB LEASE/ DEVELOPME NT OF LAND AS INTEGRAL PART OF THE YAMUNA EXPRESSWAY PROJECT. B) TAJ EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY (TEA) (CONSTITUTED BY GOVERNMENT OF UTTAR PRADESH (GOUP) VIDE NOTIFICATIO N NO. 697/77-4-2001-3(N)/2001 DATED 24.04.2001 UNDER U.P. INDUSTRIAL AREA DEVELOPMENT ACT, 1976) INVITED OFFE RS FROM INTERESTED PARTIES OF NATIONAL/INTERNATIONAL STATUR E. THE OFFERS WERE INVITED BY TEA ON 14.05.2001 FOR DEVELOPMENT, OPERATION AND MAINTENANCE OF 6 LANE ACCESS CONTROLLED EXPRESS WAY. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 25 C) M/S JAIPRAKASH ASSOCIATES LTD. (FORMERLY KNOWN A S JAIPRAKASH INDUSTRIES LTD.) WAS DECLARED THE SUCCES SFUL BIDDER. THE CONCESSION PERIOD OFFERED BY IT WAS 36 YEARS. D) AS PER THE DIRECTIONS OF INQUIRY COMMISSION HEAD ED BY SHRI. SIDHESHWAR NARAYAN, JUSTICE (RETIRED) HIGH CO URT PATNA AND CALCUTTA, AND TEA, M/S JAL INCORPORATED A SPECI AL PURPOSE VEHICLE (SPV) VIZ. JAYPEE INFRATECH LIMITED FOR DEVELOPMENT, OPERATION AND MAINTENANCE OF 6 LANE AC CESS CONTROLLED EXPRESSWAY. E) AN ASSIGNMENT AGREEMENT WAS EXECUTED AMONGST JA L, JIL AND TEA FOR ASSIGNMENT OF THE CONCESSION AGREEMENT IN THE NAME OF JAYPEE INFRATECH LIMITED OIL) ON 19/10/2007 . F) OBJECTS OF JAYPEE INFRATECH LIMITED MAIN OBJECTS: TO IMPLEMENT ALL THE OBJECTS OF THE CONCESSION AGRE EMENT DATED 7/2/2003 BETWEEN JAIPRAKASH INDUSTRIES LTD. ( NOW JAIPRAKASH ASSOCIATES LTD.) AND TAJ EXPRESSWAY INDU STRIAL DEVELOPMENT AUTHORITY (TEA). G) PROJECT DETAILS I) THE CONCEPT OF THE PROJECT TAJ EXPRESSWAY WAS AN OUTCOME OF THE POLICY DECISION OF THE GOVERNMENT OF V.P. UNDER THE STATUT E CALLED V.P. INDUSTRIAL AREA DEVELOPMENT ACT, 1976 (V.P. AC T NO OF 1976). II) THE STATE GOVERNMENT, IN EXERCISE OF THE POWE R AS VESTED UNDER SECTION 3 OF THE SAID ACT, CONSTITUTED , JUST PRIOR TO LAUNCHING THE PROJECT, AN IMPLEMENTING AUTHORITY, N AMELY, 'TAJ EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY' ( IN SHORT TEA). III) THE LENGTH OF THE EXPRESSWAY CONNECTING NOID A WITH AGRA WAS ABOUT 160 KMS AND IT WAS TO PASS THRO UGH A VIRGIN AREA ALONG THE YAMUNA RIVER. IV) LAND OFFERED: TEA HAS GRANTED RIGHTS FOR LAND DEVELOPMENT OF 25 M ILLION SQ. MTRS OF LAND ON 90 YEARS LEASE ALONG THE PROPOSED 1 00 METERS ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 26 WIDE EXPRESSWAY FOR COMMERCIAL, AMUSEMENT, INDUSTRI AL, INSTITUTIONAL AND RESIDENTIAL DEVELOPMENT TO THE SP V COMPANY. TEA PROVIDED THE 'LAND FOR DEVELOPMENT' ALONG THE EXPRESSWAY AT FIVE OR MORE LOCATIONS OF WHICH ONE L OCATION WAS IN NOIDA OR GREATER NOIDA WITH AN AREA OF 5 MIL LION SQ. MTRS. THE AFORESAID LAND FOR DEVELOPMENT WAS IN ADD ITION TO THE LAND FOR CONSTRUCTION OF EXPRESSWAY AND WAS AN INTRINSIC PART OF THE INFRASTRUCTURE FACILITY PROJECT. V) CONSIDERATION FOR INFRASTRUCTURE FACILITY: CONCESSIONAIRE OIL SHALL BE ENTITLED TO COLLECT AND RETAIN THE FEE AND TOLL FROM THE USERS OF THE EXPRESSWAY FOR C ONCESSION PERIOD OF 36 YEARS AND AMOUNTS FROM RIGHTS TO FURTH ER LEASE OUT THE DEVELOPED/UNDEVELOPED LAND (AT FIVE OR MORE LOC ATIONS WITH AN AREA OF 5 MILLION SQ. MTRS. PER LAND PARCEL) TO SUB-LEASES/ END-USER. THE TOLL FEE TO BE CHARGED FROM THE CUSTOMERS WAS N OT TO EXCEED THE FEE AS MAY HAVE BEEN NOTIFIED BY GOUP (GOVERNMENT OF STATE OF UP) 'LAND FOR DEVELOPMENT' IS A CONCESSION LIKE THE TOLL FEE SINCE THE TOLL FEE ALO NE WOULD NOT HAVE BEEN ABLE TO ENSURE POSITIVE RETURN ON EQUITY ON THE PROJECT. THIS IS FURTHER SUBSTANTIATED BY: NOTICE INVITING BIDS FOR THE PROJECT, WHEREBY LAN D INCLUDING 100 METERS FOR THE EXPRESSWAY AT FIVE OR MORE LOCATIONS OF WHICH ONE LOCATION WAS TO BE IN NOIDA OR GREATER NOIDA WITH AN AREA OF 5 MILLION SQUARE METERS ALONG THE EXPRESSWAY FOR COMMERCIAL, AMUSEMENT, INDUSTRIAL, INSTITUTIONAL AND RESIDENTIAL DEVELOPMENT WAS OFFER ED ON ACQUISITION COST FOR DEVELOPMENT, OPERATION AND MAI NTENANCE OF THE SIX LANE SUPER EXPRESSWAY (THE YAMUNA EXPRES SWAY) BETWEEN NOIDA AND AGRA. OBLIGATIONS OF THE ASSESSEE AS SET FORTH UNDER TH E CONCESSION AGREEMENT. THE CONSTITUTIONAL DOCUMENTS OF THE ASSESSEE VIZ MEMORANDUM OF ASSOCIATION (MOA) THAT BARS THE COMPA NY FROM THE UNDERTAKING ANY OTHER BUSINESS EXCEPT ALL THE OBJECTS OF THE CONCESSION AGREEMENT DATED 07.02.2003. H) OBSERVATION OF SUPREME COURT JUDGMENT IN APPELL ANT'S FAVOUR: ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 27 A PUBLIC INTEREST LITIGATION WAS FILED FOR INADEQUA TE CONSIDERATION OF ACQUISITION OF LAND. THE PROJECT W AS CLEARED BY THE INQUIRY COMMISSION REPORT AND THE PIL ALSO E NDED IN FAVOUR OF THE GOVERNMENT OF U.P. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF N AND KISHORE GUPTA & ORS V. STATE OF UP & OTHERS ALSO HE LD THAT THE EXPRESSWAY IS A WORK OF IMMENSE PUBLIC IMPORTAN CE AND THE CREATION OF LAND PARCELS WOULD GIVE IMPETUS TO THE INDUSTRIAL DEVELOPMENT OF THE STATE CREATING MORE J OBS AND HELPING THE ECONOMY AND THEREBY HELPING THE GENERAL PUBLIC. I) INQUIRY COMMISSION THE INQUIRY COMMISSION WAS APPOINTED BY THE GOVERNO R OF UP BY A NOTIFICATION NO. 1889/77-4-2004-10N/2004, LUCK NOW DATED JUNE 22, 2004 TO ASCERTAIN THE FACTS AND POSI TION OF TRANSPARENCY OF THE PROJECT. FINDINGS OF THE HON'BLE COMMISSION OF INQUIRY UND ER THE CHAIRMANSHIP OF SHRI SIDHESHWAR NARAYAN, JUSTICE (R ETIRED) HIGH COURT PATNA AND CALCUTTA, WHICH STATES THAT 'CONSIDERING THE CAPITAL COST, GESTATION PERIOD AND THE UNCERTAINTIES INVOLVED IN THE REVENUE FROM TOLL COL LECTION, INFLATION ETC, IT WAS NECESSARY TO STRENGTHEN THE E CONOMIC VIABILITY OF THE PROJECT BY SOME MECHANISM AND, ACC ORDINGLY, IT WAS DECIDED TO PROVIDE 2500 HECTARES OF LAND FOR DEVELOPMENT TO THE SUCCESSFUL BIDDER ALONG THE EXPR ESSWAY'. THE COMMISSION FURTHER HELD THAT: 'THE TAJ EXPRESSWAY PROJECT BEING A LAND MARK EVENT IN THE INDUSTRIAL DEVELOPMENT OF STATE OF U.P. IS OF IMMEN SE PUBLIC UTILITY AND ALSO IN THE NATIONAL INTEREST'. J) TECHNO ECONOMIC FEASIBILITY REPORT (TEFR) AS SUBMITTED BY THE ASSESSEE TO YEA AND THE FACT THAT THE TOLL FEE HAS A 'NEGATIVE' NET PRESENT VALUE (NPV) OF THE TOL L FEE DURING THE ENTIRE CONCESSION PERIOD (REFER HALCROW REPORT AUGUST, 2013). THERE IS NO OBLIGATION UNDER THE CONCESSION AGREEME NT TO CARRY OUT HOUSING ON 'LAND FOR DEVELOPMENT'. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 28 SECTION 801A IN THE INSTANT CASE THE INFRASTRUCTURE FACILITY IS THE TOLL ROAD (160 KMS LONG SIX LANE ACCESS CONTROLLED EXPRESSWAY ) AND THE CONSIDERATION FOR DEVELOPING, OPERATING AND MAINTAI NING THE SAID INFRASTRUCTURE FACILITY, IS BY WAY OF TOLL FEE AND THROUGH THE RIGHT TO DEVELOP AND SUB-LEASE THE LAND ALONG T HE TOLL ROAD. DURING THE PERIOD COVERED BY THE RELEVANT ASSESSMEN T, THE ASSESSEE HAS BEEN RAPIDLY DEVELOPING THE SAID TOLL TOAD. SECTION 80 IA: OBJECTIVE THE PROVISIONS AS CONTAINED UNDER SECTION 80IA ARE FOR PROMOTING AND FACILITATING INVESTMENT AND DEVELOPME NT OF INFRASTRUCTURE IN THE COUNTRY AND ACCORDINGLY NEED TO BE INTERPRETED SO AS TO ADVANCE THEIR OBJECTIVE. BEING AN INFRASTRUCTURE COMPANY, THE COMPANY HAS BEEN GRANTED TAX HOLIDAY U/S 80 (IA) OF THE INCOME TAX ACT 1961. SECTION 80IA APPLIES AS PROVIDED IN CLAUSE (I) OF S UB- SECTION (4) TO ANY ENTERPRISE CARRYING ON THE BUSIN ESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRU CTURE FACILITY WHICH FULFILLS THE FOLLOWING CONDITIONS, N AMELY: A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES 28[OR BY AN AUTHORITY OR A BOARD OR A CORPORATION OR ANY OTHER BODY ESTABLISHE D OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT; B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRA L GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORI TY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPE RATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAIN TAINING A NEW INFRASTRUCTURE FACILITY; C) IT HAS STARTED OR STARTS OPERATING AND MAINTAINI NG THE INFRASTRUCTURE FACILITY ON OR AFTER 01.04.1995. IT MAY BE PERTINENT TO MENTION THAT CLAUSE (C) HERE INABOVE REQUIRES THAT THE ENTERPRISE 'HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR A FTER THE 1ST DAY OF APRIL, 1995'. THE EXPRESSION 'HAS STARTED' I NDICATES EVENTS WHICH HAVE ALREADY OCCURRED WHEREAS THE EXPR ESSION ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 29 'STARTS' INDICATES THE EVENTS WHICH WOULD OCCUR. MO REOVER 'IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY' IN CONTEXT OF THIS SECTION MEANS STARTED DEVELOPING THE INFRASTRUCTURE FACILITY, WHICH HAS D ULY BEEN DONE BY THE ASSESSEE COMPANY. APPLICABILITY OF 801A (4) IN THE CASE OF APPELLANT 801A( 4) SCOPE OF BUSINESS ACTIVITY THE WORD 'BUSINESS' IS WIDE ENOUGH TO COVER WITHIN ITS SCOPE ALL ACTIVITIES THAT ARE 'INTEGRAL' PART OF TH E BUSINESS OF TOLL ROAD DEVELOPMENT. DEDUCTION U/S 80IA (1) IS TO BE PROFITS AND GAINS D ERIVED FROM AN UNDERTAKING OR ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION 4 I.E. ELIGIBLE BUSINESS. THUS, I T IS THE INCOME FROM BUSINESS UNDERTAKING WHICH IS TO BE DEDUCTED A ND NOT ONLY THE TOLL FEE. WE REFER WITH ADVANTAGE TO THE U NDER- MENTIONED DECISIONS THAT THE INCOME FROM BUSINESS W OULD INCLUDE ALL INCOME EMANATING FROM THE SAME. PLEASE REFER GIST OF CASE LAW ATTACHED. 317 ITR 353 (DEL.) CIT V. DHARAM PAL PREM CHAND LTD. (SLP REJECTED AGAINST DHARAM PAL PREM CH AND (SC) I N 2010 TIOL-1S-SC-IT) 300 ITR 6 (DEL.) CIT V. ELTEK SGS P. LTD. INCOME DURING THE YEAR FROM SALE OF PLOTS, BUILT UP PROPERTIES, FDRS, BANK INTEREST ETC. IS DERIVED FRO M AND FORMS AN INTRINSIC PART OF THE INFRASTRUCTURE FACILITY PR OJECT INCOME. ACCORDINGLY, ANY INCOME ARISING FROM SUCH LAND WOUL D ALSO BE REGARDED AS INCOME DERIVED FROM THE BUSINES S OF DEVELOPMENT, OPERATION AND MAINTENANCE OF THE INFRA STRUCTURE FACILITY I.E. THE TOLL ROAD AND IT IS THAT INCOME W HICH WE HAVE CLAIMED AS DEDUCTION UNDER SECTION 80IA(4) DURING T HE CAPTIONED ASSESSMENT YEAR. THE WORD 'BUSINESS' IS W IDE ENOUGH TO COVER WITHIN ITS SCOPE THE PROFITS FROM ALL ACTI VITIES THAT ARE INTEGRAL PART OF THE BUSINESS OF TOLL ROAD DEVELOP MENT. IT IS HUMBLY SUBMITTED THAT SINCE SUB-LEASE OF THE PLOTS OF LAND IS MADE PURSUANT TO THE AUTHORITY GRANTED UNDER THE CO NCESSION ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 30 AGREEMENT, THERE CAN BE NO DOUBT THAT THE SUB-LEASE INCOME IS INCOME DERIVED FROM THE 'BUSINESS' OF TOLL ROAD DEV ELOPMENT. WHERE INCOME FALLS UNDER ANYONE HEAD OF EXEMPTION [ SAY EXPLANATION (A)], IT WOULD BE FREE FROM TAX EVEN IF THE CONDITION OF ANOTHER HEAD OF EXEMPTION [SAY EXPLANATION (B)] WAS NOT SATISFIED. THE ASSESSEE COMPANY IS IN THE BUSINESS OF DEVELOPI NG, OPERATING AND MAINTAINING, 'ROAD INCLUDING TOLL ROA D', WHICH BUSINESS HAS COMMENCED ON APRIL 5, 2007. UNDOUBTEDL Y, THEREFORE, THE OPERATING AND MAINTENANCE OF SUCH RO AD WOULD START ONLY AFTER APRIL 1, 1995. ACCORDINGLY, IT IS SUBMITTED THAT THE CONDITION LAID DOWN IN CLAUSE (C) OF SUB-SECTIO N 4(I) OF THE SECTION 80LA IS SATISFIED IN THE ASSESSEE COMPANY'S CASE AND ACCORDINGLY, THE DEDUCTION UNDER SECTION 80LA OUGHT TO BE ALLOWED TO THE ASSESSEE COMPANY. AS SEEN FROM ORDER OF LD. CIT ITSELF, ASSESSMENT OR DER, OFFICE NOTE TO ASSESSMENT ORDER AND PAPER BOOK, THE ISSUES REGARDING 80LA AND ITS ADMISSIBILITY WAS INTENSIVEL Y PROCESSED, ENQUIRED INTO AND CONSIDERED BY THE LD. AO WHO AFTE R DUE CONSIDERATION CORRECTLY ALLOWED THE CLAIM. ON MERE DIFFERENCE OF VIEW, LD. CIT CANNOT SUBSTITUTE HIS VIEW FOR VIE W OF AO. THE VIEW OF THE LD. AO IS CORRECT IN LAW AND FACTS AND EVEN IF TWO VIEWS BE POSSIBLE EVEN THEN REVISION U/S 263 IS NOT PERMISSIBLE. THE VIEW OF LD. AO IS NOT AN UNSUSTAINABLE OR UNDIS PUTEDLY, PATENTLY ERRONEOUS VIEW. RATHER IT IS THE VIEW OF T HE LD. CIT WHICH IS INCORRECT AND CONTRARY TO BINDING JUDGMENT S. THE CLAIM WAS ALLOWED BY TWO ASSESSING OFFICERS IN TWO ASSESSMENTS I.E. A.Y. 2009-10 AND 2010-11. BOTH OF WHOM ALLOWED DEDUCTION U/S 80IA(4)(I) READ WITH EXPLANAT ION (A). THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE U/S 263 ARE SUPPORTED BY DECISIONS OF THE APEX COURT, DECIS IONS OF THE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS, AS SEEN FROM GIST OF CASE LAW FILED. JURISDICTIONAL HIGH COURT D ECISIONS ARE REPORTED IN PAGE 3 OF ANNEXURE-A TO CIT ORDER: 297 ITR 99 (ALL.) CIT V. MAHENDRA KUMAR BANSAL 171 ITR 698 (ALL.) CIT V. GOYAL PRIVATE FAMILY SPEC IFIC TRUST 12 TAXMANN.COM 118 (ALIA.) CIT V. SHIV PRASAD ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 31 WE HAVE RESPECTFULLY AND HUMBLY EXPLAINED AT LENGTH THAT OUR CASE IS COVERED BY SECTION 80IA(4)(I) AS R EAD WITH EXPLANATION (A). WE HAVE ALSO EXPLAINED AT LENGTH A S TO HOW WE FALL UNDER EXPLANATION (A) TO THE SAID 80IA( 4)( I). WE HAVE FURTHER EXPLAINED AND SUBMITTED THAT WE ARE AN INFR ASTRUCTURE FACILITY UNDER THE SAID EXPLANATION (A) AS A ROAD I NCLUDING TOLL ROAD AND THAT ACCORDINGLY WE FALL IN THE DEFINITION OF INFRASTRUCTURE FACILITY AS DEFINED IN THE SAID EXPL ANATION. THE DEVELOPMENT RIGHTS OF LAND AND INCOME THEREFROM ARE AN INTEGRAL AND INTRINSIC PART OF CONSIDERATION TO US IN RESPECT OF INFRASTRUCTURE FACILITY INVOLVED BEING TOLL ROAD. T HE LIMITS OF SECTION 80IA(6) APPLY TO INFRASTRUCTURE FACILITIES THAT FALL IN THE DEFINITION OF HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PR OJECT AS DEFINED IN THE SAID EXPLANATION (B) AND NOT TO INFR ASTRUCTURE FACILITY REFERRED IN THE SAID EXPLANATION (A). THE DEDUCTION PROVIDED U/S 80IA(4)(I) IS THE RELEVA NT DEDUCTION FOR INFRASTRUCTURE FACILITY AS IN OUR CAS E. THERE IS NO RESTRICTION IN OUR CASE U/S 80IA(6). THE LIMITS AND REQUIREMENTS OF 80IA(6) APPLY TO HIGHWAY PROJECT AS DEFINED IN THE SAID EXPLANATION (B) AND NOT TO ROAD INCLUDING TOLL ROAD INCLUDING INTRINSIC LAND AS CONSIDERATION FOR THAT INFRASTRUCTURE FACILITY PROJECT AS DEFINED IN SAID EXPLANATION (A) . ACCORDINGLY, THE REQUIREMENTS OF 80IA(6) ARE NOT APPLICABLE TO U S. HOWEVER, KINDLY NOTE THAT IN THE ALTERNATIVE WITHOUT PREJUDI CE TO OUR CONTENTION THAT WE ARE ELIGIBLE UNDER 80IA(4) AS RE AD WITH EXPLANATION (A), WE HAVE MADE AN ALTERNATE CLAIM U/ S 80IA(6) AS IF OUR PROJECT IS NOT ELIGIBLE UNDER SAID EXPLAN ATION (A] IT IS THEN ELIGIBLE UNDER SAID EXPLANATION (B). REGARDING REFERENCE TO ACCOUNTING NOTE TO BALANCE S HEET IN EARLIER FINANCIAL YEAR 2007-08 WHEN NO CLAIM FOR DEDUCTION WAS MADE U/S 80IA, THE SAME HAS BEEN CLARIFIED FULL Y INCLUDING INTER ALIA ON PAGE-6 OF ANNEXURE A TO LD. CIT ORDER . PLEASE NOTE THAT PAPER BOOK-PAGE 79, TAX AUDIT REPORT STAT ES BUSINESS OF THE COMPANY AS FOLLOWS 'THE COMPANY IS ENGAGED IN DEVELOPMENT, OPERATION AND MAINTENANCE OF THE SI X-LANE ACCESS CONTROLLED EXPRESSWAY ALONG WITH SERVICE ROA D AND ASSOCIATED STRUCTURES & SALE I DEVELOPMENT OF LEASE HOLD LAND ALONG THE PROPOSED EXPRESSWAY'. PAPER BOOK- PAGE 85 FOR A.Y. 2009-10 80LA AUDITOR'S REPORT, FORM 10CCB STAT ES BUSINESS AS FOLLOWS 'YAMUNA EXPRESSWAY PROJECT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 32 DEVELOPMENT, OPERATION AND MAINTENANCE OF THE SIX-L ANE ACCESS CONTROLLED EXPRESSWAY BETWEEN NOIDA AND AGRA ALONG WITH SERVICE ROAD AND ASSOCIATED STRUCTURES AND SALE/DEVELOPMENT OF LEASEHOLD LAND ALONG THE PROPOS ED EXPRESSWAY'. LACK OF JURISDICTION AND UNLAWFUL ORDER UNDER SECTI ON 263 FURTHER REGARDING LACK OF JURISDICTION U/S 263 AND UNLAWFUL ORDER U/S 263, IT IS SUBMITTED AS UNDER: THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR IN DUSTRIAL CO. LTD. VS. CIT (243 ITR 83) HAS HELD THAT A BARE READING OF SECTION 263 MAKES IT CLEAR THAT THE PRE-REQUISITE T O EXERCISE OF JURISDICTION BY THE COMMISSIONER IS THAT THE ORDER OF THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED WITH TWIN CONDITIONS, NAMELY (I) THE ORDER SOUGHT TO BE REVIS ED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERE STS OF THE REVENUE. FURTHER, THE SUPREME COURT HAS HELD THAT WHEN AN IT O ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMI SSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT WHERE T HERE HAS BEEN A DETAILED APPLICATION OF MIND BY THE AO D URING THE ASSESSMENT PROCEEDINGS, AFTER WHICH A VIEW HAS BEEN FORMED BY HIM, THE SAID VIEW CANNOT BE SAID TO BE ERRONEOU S OR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND BE R EVISED BY INVOKING THE PROVISIONS OF SECTION 263. THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS . CIT (243 ITR 83) HAS HELD THAT THE PROVISIONS OF SECTION 263 CAN BE INVOKED, INTER ALIA, WHERE THE ORDER PASSED IS WITH OUT APPLICATION OF MIND. HOWEVER, IN THE PRESENT CASE, IT IS ABUNDANTLY CLEAR THAT THE DEDUCTION HAS BEEN ALLOWE D TO US BY THE AO AFTER PROPER APPLICATION OF MIND. IN THIS REGARD, ATTENTION IS ALSO INVITED TO THE DE CISION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ARVIN D JEWELLERS (259 ITR 502) WHEREIN IT IS HELD THAT WHERE MATERIA L WAS ON ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 33 RECORD AND SAID MATERIAL WAS CONSIDERED BY ITO AND A PARTICULAR VIEW WAS TAKEN, MERE FACT THAT DIFFERENT VIEW COULD BE TAKEN, SHOULD NOT HAVE BEEN BASIS FOR AN ACTION U/S. 263. ATTENTION IS ALSO INVITED TO ANOTHER DECISION OF TH E DELHI HIGH COURT IN CIT VS. HONDA SIEL POWER PRODUCTS LTD . (194 TAXMAN 175). IN THAT CASE, THE ASSESSING OFFICER HA D ALLOWED DEDUCTION UNDER SECTIONS 80HHC AND 80-LB. THE COMMISSIONER, WHILE EXERCISING HIS POWERS UNDER SEC TION 263, HELD THAT THE ASSESSMENT ORDERS PASSED BY THE ASSES SING OFFICER WERE ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF THE REVENUE INASMUCH AS THE ASSESSING OFFICER HAD NOT A PPLIED THE PROVISIONS OF SECTION 80-IB(13)/80-IA(9) AND HAD WR ONGLY CALCULATED THE DEDUCTION UNDER SECTION 80HHC WITHOU T REDUCING THE CLAIM ALREADY ALLOWED AS DEDUCTION TO THE EXTENT OF SUCH PROFITS AND GAINS UNDER SECTION 80-LB FROM THE PROFITS AND GAINS COMPUTED FOR ALLOWING SUCH DEDUCTION. HOW EVER, ON APPEAL, THE HIGH COURT HELD AS UNDER: 'WHEN A REGULAR ASSESSMENT IS MADE UNDER SECTION 14 3(3), A PRESUMPTION CAN BE RAISED THAT THE ORDER HAS BEEN P ASSED UPON AN APPLICATION OF MIND. NO DOUBT, THIS PRESUMP TION IS REBUTTABLE, BUT THERE MUST BE SOME MATERIAL TO INDI CATE THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND. IN THE INSTANT CASE, THERE WAS NO MATERIAL TO INDICATE THAT THE ASSESSIN G OFFICER HAD NOT APPLIED HIS MIND TO THE PROVISIONS OF SECTI ON80-IB(13), READ WITH SECTION 80-IA (9). THE PRESUMPTION THAT T HE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) BY THE ASSESSING OFFICER HAD BEEN PASSED UPON AN APPLICATION OF MIND , HAD NOT BEEN REBUTTED BY THE REVENUE. NO ADDITIONAL FACTS W ERE NECESSARY BEFORE THE ASSESSING OFFICER FOR THE PURP OSE OF CONSTRUING THE PROVISIONS OF SECTION 80-IB(13), REA D WITH SECTION 80-IA(9]. IT WAS ONLY A LEGAL CONSIDERATION AS TO WHETHER THE DEDUCTION UNDER SECTION BOHHC WAS TO BE COMPUTED AFTER REDUCING THE AMOUNT OF DEDUCTION UND ER SECTION 80-IB FROM THE PROFITS AND GAINS. THERE WAS NO DOUBT THAT THE ASSESSING OFFICER HAD ALLOWED THE DEDUCTIO N UNDER SECTION BOHHC WITHOUT REDUCING THE AMOUNT OF DEDUCT ION ALLOWED UNDER SECTION BO-IB FROM THE PROFITS AND GA INS. HE DID NOT SAY SO IN SO MANY WORDS, BUT THAT WAS THE E ND RESULT OF HIS ASSESSMENT ORDER. IT COULD NOT BE SAID THAT THE ASSESSING OFFICER HAD FAILED TO MAKE ANY ENQUIRY BECAUSE NO F URTHER ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 34 ENQUIRY WAS NECESSARY AND ALL THE FACTS WERE BEFORE THE ASSESSING OFFICER'. (UNDERLINED FOR EMPHASIS) FURTHER, IN (IT VS. HONDA SIEL POWER PRODUCTS LTD. (194 TAXMAN 175) (DEL), IT IS HELD THAT IN CASES WHERE T HE ASSESSING OFFICER ADOPTS ONE OF THE COURSES PERMISS IBLE, IN LAW, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESS ING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, THE COMMISSION ER CANNOT EXERCISE HIS POWERS UNDER SECTION 263 TO DIFFER WIT H THE VIEW OF THE ASSESSING OFFICER, EVEN IF THERE HAS BEEN A LOS S OF REVENUE. ON EACH OF THE ISSUES RAISED BY THE LD. CIT, THE AO HAS MADE DETAILED ENQUIRIES AND AFTER PROPER APPLICATIO N OF MIND HAD PASSED THE ASSESSMENT ORDER. IT IS FURTHER SUBM ITTED THAT IN THE CAPTIONED ASSESSMENT YEAR, THE AO HAS RIGHTLY A LLOWED US DEDUCTION U/S. 80IA( 4) FOR THE PROFITS DERIVED FRO M SALE OF LAND AND OTHER INCOME SINCE THE SAME ARE PROFITS AND GAI NS DERIVED FROM THE BUSINESS OF DEVELOPING, OPERATING OR MAINT AINING AN INFRASTRUCTURE FACILITY I.E. A ROAD INCLUDING TOLL ROAD. IT IS HUMBLY SUBMITTED THAT AS IS CLEAR FROM THE ACTIVITI ES CARRIED OUT BY US AS ALSO THE CONCESSION AGREEMENT, THE LAN D RECEIVED FOR SALE AND/OR DEVELOPMENT UNDER THE CONCESSION AG REEMENT IS IN FACT A PART OF THE COMPENSATION RECEIVED BY U S FOR DEVELOPING, OPERATING AND MAINTAINING THE TOLL ROAD . INDEED, WITHOUT THE REVENUE FROM SAID LAND, THE TOLL ROAD P ROJECT WOULD NOT BE VIABLE, SINCE THE MERE COLLECTION OF THE TOL L FROM SUCH ROAD, WOULD NOT EVEN MEET THE COST OF CONSTRUCTION OF THE TOLL ROAD. THE DETAILED SUBMISSION IN THIS REGARD HAS BE EN MADE IN THE SUBSEQUENT PART OF THIS LETTER AND ALSO BORNE O UT BY SUBMISSIONS MADE DURING ASSESSMENT PROCEEDINGS. ACCORDINGLY, IT IS SUBMITTED THAT, EVEN ON MERITS, THE PROFITS DERIVED BY US FROM SALE OF LAND IS A PROFIT DERIVED FROM OUR BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING T HE TOLL ROAD AND ACCORDINGLY, THE DEDUCTION ALLOWED TO US B Y THE AO U/S. 80IA(4) IS NEITHER ERRONEOUS NOR PREJUDICIAL T O THE INTEREST OF THE REVENUE. THE HON'BLE GAUHATI HIGH COURT HAS IN CASE OF BONGAIGAON REFINERY AND PETROCHEMICALS LTD. VS. UNI ON OF INDIA AND OTHERS (287 ITR 120) STATED THAT ERROR IN THE ORDER OF THE ASSESSING OFFICER AND RESULTANT PREJUDICE TO THE INTEREST OF THE REVENUE ARE TWIN FACTORS TO CO-EXIST FOR CON FERRING ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 35 AUTHORITY ON THE COMMISSIONER TO INVOKE POWERS UNDE R SECTION 263. ENTERTAINMENT OF A VIEW DIFFERENT FROM THE ONE ADOPTED BY THE ASSESSING OFFICER, IF PLAUSIBLE WOULD NOT CLOTH E THE COMMISSIONER WITH THE POWER TO INTERFERE. IN CIT V. GABRIEL INDIA LIMITED 203 ITR 108 (BOM.), IT WAS HELD IF AN ITO ACTING IN ACCORDANCE WITH LAW MA KES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS E RRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HI M, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. TH IS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JU DGMENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE OR DER. ALSO, THE SUPREME COURT IN CIT V. MAX INDIA LTD. (295 ITR 282) HAS HELD THAT SINCE DIFFERENT VIEWS EXISTED ON DAY WHEN THE COMMISSIONER PASSED HIS ORDER AND MOREOVER MECHANIC S OF SECTION HAVE BECOME SO COMPLICATED OVER YEARS THAT TWO VIEWS WERE INHERENTLY POSSIBLE. WHERE TWO VIEWS ARE POSSI BLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO REVENUE. ON THE FACTS AND LAW INVOLVED, THE VIEWS AND ORDER OF THE LD. CIT ARE ERRONEOUS AND NOT SUSTAINABLE. THIS IS ALSO AS PER GIST OF CASE LAW REFERRED TO HEREIN CLEARLY SUP PORTING THE APPELLANT. THE LD. CIT'S RELIANCE ON THE DECISION I N SMT. TARULATA SHYAM V. CIT 108 ITR 345 (SC) IN FACT THE DECISION SUPPORTS THE APPELLANT AS IT SAYS THE INTERPRETATIO N OF TAXING STATUTES SHOULD BE IN CONSONANCE WITH THE AVOWED AI M AND OBJECT OF THE LEGISLATURE WHICH IS THE INTERPRETATI ON BEING SOUGHT BY THE APPELLANT FOR GRANT OF ALLOWANCE AND FOR REMOVAL OF ANY DOUBTS. THE LD. CIT HAS ALSO NOT BEEN ABLE T O PROPERLY REBUT OR DISTINGUISH MUCH BINDING CASE LAW RELIED B Y THE APPELLANT. MOREOVER, IT IS WELL KNOWN DECISION LIKE IN THE K.P. VERGHESE V. ITO 131 ITR 597 (SE) WHICH GOVERNS INTERPRETATION OF STATUTE IN INDIA WHEREIN IT WAS H ELD THAT A STATUTORY PROVISION MUST BE SO CONSTRUED THAT ABSUR DITY AND MISCHIEF MAY BE AVOIDED SO AS TO ACHIEVE OBVIOUS IN TENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION . BENEFICIAL TAX DEDUCTION PROVISIONS TO BE INTERPRET ED LIBERALLY THE BENEFICIAL TAX DEDUCTION PROVISIONS PROVIDED BY SECTION 80IA ARE TO PROMOTE INVESTMENT IN AND DEVELOPMENT OF ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 36 INFRASTRUCTURE FACILITY. ACCORDINGLY THEY ARE TO BE INTERPRETED LIBERALLY SO AS TO ADVANCE THEIR OBJECTIVES . (A) 196 ITR 188 (SE) BAJAJ TEMPO LTD. V. CIT INTERACTIVE OF STATUTES-TAXING STATUTE-INCENTIVE FO R GROWTH AND DEVELOPMENT- PROVISION INTERPRETED LIBER ALLY- RESTRICTION ON EXEMPTION- TO BE CONSTRUED SO AS TO ADVANCE OBJECTIVE AND NOT FRUSTRATE IT. (B) 2371TR 662 (MAD.) CIT V. SALEM TEXTILES LTD. INTERPRETATION OF TAXING STATUTES-LIBERAL CONSTRUCT ION OF BENEFICIAL PROVISIONS. THE PROVISIONS OF SECTION 33 OF THE ACT HAVE TO BE CONSTRUED PURPOSEFULLY AND BENEFICIALLY TO ACHIEVE THE OBJECT BEHIND SECTION 33 OF THE ACT AND IT CANNOT BE CONST RUED IN A RESTRICTED OR MECHANICAL MANNER. THE PROVISION SHOU LD BE CONSTRUED WITH COMMON SENSE SO THAT UNNECESSARY DIF FICULTIES ARE NOT CREATED AGAINST THE ASSESSEE IN CLAIMING DE VELOPMENT REBATE. (C) 342 ITR 366 (KAR.) CLT V. J. PALEMAR KRISHNA (D) 236 ITR 130 (ALLAH.) CLTV. LAXMI METAL INDUSTRI ES (E) 248 ITR 94 (J&K) CIT V. JAMMU AND KASHMIR TOUR ISM DEVELOPMENT CORPORATION IT IS A SETTLED LAW THAT IN TAXING STATUTE, IF TWO REASONABLE VIEWS ARE POSSIBLE, THEN THE VIEW FAVOURING THE ASSESSEE IS TO BE ADOPTED : INTER ALIA IN THE FOLLOWING, IT HAS BEEN HELD THAT IN INTERPRETATION OF TAXING STATUTE, MEANING OF WORDS AND PHRASES HAS TO BE SEEN AS UNDERSTOOD IN COMMON PARLANCE IN COMMERCIAL CIRCLES I.E. THE MEANING THAT PEOPLE CON VERSANT WITH THE SUBJECT MATTER WOULD ATTRIBUTE TO IT. 144 ITR 225 (SC) CIT V. MAHINDRA AND MAHINDRA LTD . OUR CASE IS ALSO CLEARLY SUPPORTED BY THE DECISION OF THE SUPREME COURT IN 231 ITR 814 (SC) KERALA STATE CO-O PERATIVE MARKETING FEDERATION LTD. V. CIT WHEREIN IT WAS HEL D THAT THE CORRECT WAY OF READING THE DIFFERENT HEADS OF EXEMP TION ENUMERATED IN THE SECTION WOULD BE TO TREAT EACH AS A SEPARATE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 37 AND DISTINCT HEAD OF EXEMPTION. WHENEVER A QUESTION ARISES AS TO WHETHER ANY PARTICULAR CATEGORY OF AN INCOME OF A CO- OPERATIVE SOCIETY IS EXEMPT FROM TAX WHAT HAS TO BE SEEN IS WHETHER THE INCOME FELL WITHIN ANY OF THE SEVERAL H EADS OF EXEMPTION. IF IT FELL WITHIN ANY ONE HEAD OF EXEMPT ION, IT WOULD BE FREE FROM TAX NOTWITHSTANDING THAT THE CONDITION S OF ANOTHER HEAD OF EXEMPTION ARE NOT SATISFIED AND SUCH INCOME IS NOT FREE FROM TAX UNDER THAT HEAD OF EXEMPTION. A WORD ACQUIRES MEANING ONLY WITH REFERENCE TO ITS TEXT AND CONTEXT. PLEASE NOTE THAT IT IS ALSO SETTLED LAW THAT SPECIF IC PROVISIONS WOULD OVERRIDE GENERAL PROVISIONS. TOLL ROADS WOULD GENERALLY BE HIGHWAYS WHICH ARE TOLL ROAD. IN CONTEXT OF THE SPECIAL TERMS, AS IN THE CONCESSION INVOLVED RE LATING TO RIGHT OF THE ASSESSEE TO GATHER TOLL AND TO DEVELOP , OPERATE AND MAINTAIN THE FACILITY AS TOLL ROAD, THE INFRASTRUCT URE FACILITY OF THE ASSESSEE FALLS IN DEFINITION OF TOLL ROAD. WE A GAIN RELY ON THE SAID DECISION IN 231 ITR 814 (SC) THAT WHERE IN COME FALLS UNDER ANYONE HEAD OF EXEMPTION [SAID CLAUSE (A)], I T WOULD BE FREE FROM TAX EVEN IF THE CONDITION OF ANOTHER HEAD OF EXEMPTION [SAID CLAUSE (B)] WAS NOT SATISFIED. THE ASSESSEE HAS INVESTED OVER RS. 11,000 CRORES IN ITS TOLL ROAD PROJECT. THE ASSESSEE'S INVESTMENT IN THE TOLL ROAD PROJECT UPTO 31.3.2011 AGGREGATES TO RS. 10,159 CRO RES. A CERTIFICATE WAS FILED IN THIS REGARD FROM M/S. R. N AGPAL ASSOCIATES, CHARTERED ACCOUNTANT AND STATUTORY AUDI TOR OF THE ASSESSEE. THE OVERALL UTILIZATION AND INVESTMENT IN THE PROJECT FAR EXCEEDS THE INCOME OF THE YEAR AND AS SUCH EVEN THE ALTERNATE CLAIM U/S 80IA(6) WOULD BE ELIGIBLE TO TH E APPELLANT. GROUND NO. 5 'THAT, INTER ALIA, THE APPELLANT IS EN TITLED TO DEDUCTION U/S 80IA(4) ON THE FACTS AND LAW INVOLVED AS A DEVELOPER OF THE INFRASTRUCTURE FACILITY, EVEN IF I T HAS NOT COMMENCED OPERATING AND MAINTAINING BUT IT IS DEVEL OPING THE SAME, IN VIEW OF DIRECT DECISIONS IN ITS FAVOUR INC LUDING INTER ALIA REPORTED IN ACIT V. BHARAT UDYOG LTD. 118 ITD 336 WHICH FOLLOWS THE DECISION OF THE HON'BLE APEX COUR T IN K. P. VERGHESE V. ITO 131 ITR 597 (SC) AND AS HELD IN TRG INDUSTRIES (P) LTD. V. DCIT (2013) 35 TAXMANN.COM 2 53 (AMRITSAR- TRIBUNAL)'. THIS ISSUE IS COVERED BY BIN DING JUDGMENTS IN APPELLANT'S FAVOUR. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 38 THE APPELLANT ALSO RESPECTFULLY RELIES ON SUBMISSIO NS IN ANNEXURE- BAND C TO LD. CIT ORDER. PLEASE SEE GIST OF CASE LAW ATTACHED ON THIS GROUND ON WHICH WE RELY. MOREO VER, IT IS HUMBLY SUBMITTED THAT THERE IS NO REQUIREMENT AT UN DER SECTION 80IA( 4) THAT THE DEDUCTION WOULD BE AVAILABLE ONLY AFTER THE ASSESSEE HAS BEGUN THE OPERATION OF THE INFRASTRUCT URE FACILITY. IF THAT WAS THE CASE, THEN THE DEDUCTION AVAILABLE UNDER SECTION 80IA( 4) TO ENTERPRISES THAT ARE ONLY INTO 'DEVELOP MENT' OF INFRASTRUCTURE FACILITY WOULD NEVER BE ALLOWED TO T HEM. SECTION 80IA(2) SUBSERVIENT TO SECTION 80IA( 4) SECTION 80IA(2) IS SUBSERVIENT TO 80IA( 4) AND IS TO BE SEEN IN CONTEXT OF 80IA( 4). SECTION 80IA(2) READS 'THE DEDUCTION SPECIFIED IN SUB- SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAK ING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRA STRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERV ICE OR DEVELOPS AN INDUSTRIAL PARK 23[OR DEVELOPS 24[***J A SPECIAL ECONOMIC ZONE REFERRED TO IN CLAUSE (III) OF SUB-SE CTION (4)J OR GENERATES POWER OR COMMENCES TRANSMISSION OR DISTRI BUTION OF POWER 25[OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTR IBUTION LINES.' (UNDERLINING OURS) WITH REFERENCE TO OUR VARIOUS EARLIER SUBMISSIONS A ND FURTHER TO THE SAME, IT IS ONCE AGAIN SUBMITTED THA T 80IA(2) IS SUBSERVIENT TO 80IA(4) AND IS TO BE SEEN IN CONTEXT OF 80IA(4). THE WORD 'AND' AS UNDERLINED ABOVE IN 80IA(2) HAS T O BE READ AS 'AND / OR' IN CONTEXT OF 80IA(4) OR TO BE READ A S 'OR' SO AS TO AVOID UNWORKABLE, UNREASONABLE OR ABSURD INTERPRETA TION WHICH IS NOT RECONCILABLE WITH THE REST OF THE STAT UTE/SECTION 80IA(4). AS SUBMITTED EARLIER, SECTION 80IA( 4) PERMITS DEDU CTION TO: 80IA(4) (I) (I) ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 39 DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRU CTURE FACILITY WHICH FULFILLS ALL THE FOLLOWING CONDITION S, NAMELY.-' (UNDERLINING OURS) WHEN AND IN CONTEXT OF 80IA(2) AS AFORESAID INCLUDE S OR AND IS TO BE READ AS AND / OR THAT WOULD FURTHER MA KE IT CLEAR THAT AN ENTERPRISE 'DEVELOPING' AN INFRASTRUCTURE F ACILITY IS ENTITLED TO THE SAID DEDUCTION. WHEN 'AND' IS READ AS 'OR' IT WOULD MAKE THE PROVISIONS OF SECTION 80IA(4)(I) AND 80IA(2) HARMONIOUS, WORKABLE AND BE IN ACCORDANCE WITH THE TEXT, CONTEXT AND OBJECT OF THE PROVISIONS. IN 103 ITR 613 (ORI) (FB) IT HAS BEEN HELD THAT THE WORD 'AND' SHOULD BE CONSTRUED AS 'OR' WHERE THE CONTEXT SO REQUIRES. IN THE CASE OF ISWHAR SINGH BINDRA 1968 AIR 1450, T HE HON'BLE SUPREME COURT HELD IN CONTEXT OF INTERPRETA TION OF STATUTE IN THAT CASE, THAT THE WORD 'AND' HAD TO BE READ AS 'OR'. COPY OF THE SAID DECISION IS ATTACHED. THE HON'BLE APEX COURT QUOTED FROM STROUD'S JUDICIAL DICTIONARY, 3RD ED TO STATE THAT SOMETIME 'AND' BY FORCE OF CONTENTS, READS AS 'OR'. THEY ALSO QUOTED MAXWELL ON INTERPRETATION OF STATUTE, 11TH E D THAT TO CARRY OUT THE INTENTION OF THE LEGISLATURE, IT IS O CCASIONALLY FOUND NECESSARY TO READ 'OR' OR 'AND' ONE FOR THE O THER. KINDLY ALSO SEE OUR SUBMISSIONS AS CONTAINED IN ANNEXURES TO LD. CIT ORDER INCLUDING PARTICULARLY A NNEXURE- C. GROUND NO. 6 'THAT THE LD. CIT HAS ERRONEOUSLY RELIED ON NON APPLICABLE CBDT CIRCULAR NO. 1/2006 DATED 12.1.2006 WHICH RELATES TO EFFLUENT TREATMENT AND CONVEYANCE SYSTEM AND NOT TO A TOLL ROAD OR HIGHWAY PROJECT, WHICH IS THE CASE O F THE APPELLANT. IN ANY CASE, THE SAID CIRCULAR IS NOT BI NDING ON THE APPELLANT. THE LD. CIT HAS RELIED ON IRRELEVANT AND ERRONEOUS MATERIAL AND BASIS FOR PASSING THE ORDER UNDER APPE AL AND AS SUCH TOO HIS ORDER DESERVES TO BE QUASHED'. THE SAID CIRCULAR RELATES TO EFFLUENT TREATMENT AND CONVEYANCE SYSTEM AND NOT TO TOLL ROAD OR HIGHWAY P ROJECT. IT IS NOT BINDING ON APPELLANT. IT IN FACT SUPPORTS AP PELLANT BY SAYING THAT THE DEDUCTION IS AVAILABLE EVEN TO AN E NTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING ANY INFRASTR UCTURE FACILITY. THE PURPOSE OF THE CIRCULAR WAS TO CLARIF Y AVAILABILITY OF THE DEDUCTION TO EFFLUENT TREATMENT AND CONVEYAN CE SYSTEM. THERE IS NOTHING IN THE CIRCULAR WHICH SAYS THAT TH E BENEFIT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 40 WOULD NOT BE AVAILABLE TO AN ENTERPRISE DEVELOPING ANY INFRASTRUCTURE FACILITY. THE USE OF THE WORD 'AND' IN PASSING THAT 'THE DEDUCTION IS AVAILABLE FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF TWENTY ASSESSMENT YEARS BEGINNING FROM THE YEAR IN WHICH THE ENTERPRISE DEVELOPS AND BEGINS TO OPER ATE ANY INFRASTRUCTURE FACILITY' IN THE CIRCULAR HAS TO BE UNDERSTOOD AS AFORESAID IN CONTEXT IN WHICH USED TO MEAN (AND/OR) FOR EFFLUENT TREATMENT AND CONVEYANCE SYSTEM. GROUND NO. 7 ' THAT THE LD. CIT HAS ERRED IN STATING THAT THE LD. AO HAS NOT APPLIED HIS MIND TO OTHER CLAIMS FOR EXAMPLE DEDUCTION IN RESPECT OF INTEREST ON FDS AND WHETHER DEPRECIATION WAS ADMISSIBLE EVEN WHILE THE PROJECT WAS NOT COMPLETE. THESE CLAIMS HAVE BEEN PROCESSED AND CORR ECTLY ALLOWED AFTER DUE CONSIDERATION. THERE IS NO FINAL FINDING BY THE LD. CIT THAT THESE CLAIMS ARE INCORRECT. THE AS SESSEE WAS DULY ENTITLED TO THESE CLAIMS WHICH ARE CORRECTLY A LLOWED AND AS SUCH TOO SETTING ASIDE THE ASSESSMENT TO BE MADE DE NOVO IS UNLAWFUL AND THE ORDER OF THE LD. CIT DESERVES TO B E QUASHED'. HERE TOO, THESE ARE SOME OBSERVATIONS OF THE LD. CI T AND NO FINAL FINDING AGAINST THE APPELLANT AS TO HOW THE V IEW OF THE LD. AO WAS UNSUSTAINABLE. THE DEPRECIATION RELATES TO B USINESS BEING CARRIED ON WHICH INCOME HAS EARNED. IT IS ON ASSETS USED FOR THE BUSINESS AND THE INTEREST INVOLVED EMANATES FROM THE BUSINESS OF INFRASTRUCTURE FACILITY FOR THE SINGLE OBJECT COMPANY. DECISION IN TUTICORIN MENTIONED BY LD. CIT RELATES TO INTEREST INCOME DURING PRE- COMMENCEMENT OF BUSINES S PERIOD. THE APPELLANT'S BUSINESS HAS COMMENCED AND BUSINESS INCOME HAS BEEN EARNED AND ASSESSED CORRECTLY FOR INTEREST INCOME. IN LOK HOLDINGS - 308 IT 356 (BOM) - BUSINESS INCOME ASSESSED IN RESPECT OF BANK INTEREST FOR AN ASSESSE E ENGAGED IN CONSTRUCTION BUSINESS. THIS WAS FOR SURPLUS MONEY W ITH BANK IN COURSE OF THE BUSINESS. TUTICORIN DISTINGUISHED AS ABOVE IN THIS CASE. 10. FURTHER, WE ALSO FIND IT JUST AND PROPER TO REP RODUCE REPLY AND SUBMISSIONS OF THE LD. DR ON BEHALF OF THE REVENUE WHICH READ A S UNDER: - ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 41 SECTION 80-IA(1) GRANTS DEDUCTION IN RESPECT OF A NY PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM AN Y BUSINESS REFERRED TO IN SUB-SECTION (4) THEREOF. UNDER SUB-SECTION (2), THE DEDUCTION IS ADMISSIBL E FOR A PERIOD OF TEN CONSECUTIVE YEARS OUT OF 20 YEARS BEG INNING WITH THE YEAR IN WHICH THE UNDERTAKING DEVELOPS AND BEGI NS TO OPERATE THE INFRASTRUCTURAL FACILITY REFERRED IN CL AUSES (A), (B) AND (C) TO EXPLANATION TO SUB-SECTION (4). AS PER SUB-SECTION (2A), THE ADMISSIBLE DEDUCTION IS 100% OF THE PROFITS AND GAINS OF ELIGIBLE BUSINESS FOR FIRST FIVE ASSESSMENT YEARS, 'COMMENCING AT ANY TIME DURING T HE PERIOD AS SPECIFIED IN SUB-SECTION (2)' I.E., FROM THE YEA R IN WHICH 'THE UNDERTAKING OR ENTERPRISE DEVELOPS AND BEGINS TO OP ERATE ANY INFRASTRUCTURAL FACILITY' AND THEREAFTER, 30% OF PR OFITS AND GAINS FOR THE FURTHER PERIOD OF FIVE YEARS. AS PER CLAUSE (C) OF SUB SECTION( 4), THE START O F THE OPERATION AND MAINTENANCE OF A INFRASTRUCTURE PROJE CT IS AN ESSENTIAL PRE REQUISITE FOR THE ELIGIBILITY FOR DED UCTION. THE CLAUSE (A) OF THE EXPLANATION TO SUB-SECTION (4) COVERS INFRASTRUCTURAL FACILITY BEING ' A ROAD INCL UDING A TOLL ROAD, A BRIDGE OR A RAIL SYSTEM' WHEREAS CLAUSE (B) THEREOF REFERS TO' A HIGHWAY PROJECT INCLUDING HOUSING OR O THER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PR OJECT'. SUB-SECTION (6) STATES THAT NOTWITHSTANDING ANYTH ING CONTAINED IN SUB-SECTION (4), WHERE HOUSING AND OTH ER ACTIVITIES ARE AN INTEGRAL PART OF THE HIGHWAY PROJ ECT AND THE PROFITS OF WHICH ARE COMPUTED ON SUCH BASIS AND MAN NER AS MAY BE PRESCRIBED, 'SUCH PROFIT SHALL NOT BE LIABLE TO TAX WHERE THE PROFIT HAS BEEN TRANSFERRED TO A SPECIAL RESERV E ACCOUNT AND THE SAME IS ACTUALLY UTILIZED FOR THE HIGHWAY P ROJECT. .. BEFORE THE EXPIRY OF THREE YEARS ... '. THE BASIS AND MANNER IN WHICH THE PROFITS OF HOU SING AND OTHER ACTIVITIES ARE TO BE COMPUTED FOR THE PURPOSE S OF SUB- SECTION (6) ARE SPECIFIED IN RULE 18BBE WHICH MANDA TES MAINTENANCE OF SEPARATE ACCOUNTS FOR THE ACTIVITIES OF HOUSING AND OTHER ACTIVITIES AND SUBMISSION OF A CERTIFICAT E SPECIFYING THE AMOUNT CREDITED TO THE RESERVE ACCOUNT AND THE AMOUNT UTILIZED DURING THE RELEVANT PREVIOUS YEAR FOR THE HIGHWAY PROJECT. THE CERTIFICATE IS TO BE FURNISHED IN FORM 10CCC ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 42 WHICH IS TO BE REQUIRED TO BE SUBMITTED ALONG WITH THE RETURN OF INCOME. FROM THE ABOVE, IT IS APPARENT THAT IN RESPECT OF AN ASSESSEE CLAIMING TO BE ENGAGED IN BUILDING AND INFRASTRUCTURAL FACILITY IN THE NATURE OF A HIGHWAY PROJECT INCLUDING HOUSING AND OTHER ACTIVITIES BEING AN INT EGRAL PART OF THE HIGHWAY PROJECT, THE PROFITS ARISING FROM HOUSI NG AND OTHER ACTIVITIES WOULD BE EXEMPT FROM TAX UNDER SUB-SECTI ON (6) WHEREAS THE PROFITS ARISING EXCLUSIVELY FROM HIGHWA Y PROJECT WOULD BE ADMISSIBLE FOR DEDUCTION UNDER SUB-SECTION (1) READ WITH SUB-SECTION (2) AND (2A). ANY RELAXATION OF THE PROVISIONS OF CHAPTER VI-A (INCLUDING THE PRESCRIBED RULES THERETO) IS GOVERNE D BY SECTION 119(2)(C) OF THE ACT WHICH MANDATES ONLY THE BOARD IN THE EVENT THAT IT FINDS IT DESIRABLE OR EXPEDIENT TO AV OID GENUINE HARDSHIP IN ANY CASE, TO DO SO SUBJECT TO THE CONDI TION THAT THE DEFAULT (IN COMPLIANCE FOR WHICH THE RELAXATION IS SOUGHT) WAS DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSE SSEE AND IT HAS COMPLIED WITH SUCH REQUIREMENT BEFORE THE COMPL ETION OF THE ASSESSMENT. FURTHER, EVERY SUCH ORDER IS TO BE LAID BEFORE EACH HOUSE OF PARLIAMENT. THE ASSESSEE HAS BEGUN TO OPERATE THE INFRASTRUCT URAL FACILITY W.E.F. 09.08.2012 AND HENCE PRIOR TO THIS DATE IT HAD ONLY PROFITS WHICH ARE ATTRIBUTABLE TO SALE OF LAND , TRANSFERRED TO IT IN TERMS OF CONCESSIONAIRE AGREEMENT. THEREFO RE, IN RESPECT OF PROFITS EXCLUSIVELY FROM THE HIGHWAY PRO JECT, THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECT ION 80-1A ONLY W.E.F ASSESSMENT YEAR 2013-14. THE CASE OF THE ASSESSEE SQUARELY FALLS WITHIN CL AUSE (B) OF EXPLANATION TO SUB-SECTION (4) AND THEREFORE, TH E ASSESSEE WOULD BE ELIGIBLE FOR EXEMPTION IN RESPECT OF PROFI TS FROM HOUSING AND OTHER ACTIVITIES WHOLLY UNDER SUB-SECTI ON (6) OF SECTION 80LA OF THE ACT. THE FAILURE OF THE AO TO E XAMINE THE CLAIM OF THE ASSESSEE WITH REFERENCE TO THE APPLICA BLE PROVISIONS OF THE ACT I.E. CLAUSE (B) OF THE EXPLAN ATION TO SUB SECTION (4) READ WITH SUBSECTION (6) OF SECTION 801 A INDISPUTABLY WAS AN ERROR ON THE PART OF THE AO AND RESULTANTLY, THE ASSESSMENT ORDER BECAME ERRONEOUS. WITHOUT PREJUDICE TO THE CONTENTION THAT THE CLAI M OF THE ASSESSEE IS SQUARELY COVERED UNDER SUB-SECTION (6) OF SECTION ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 43 80LA OF THE ACT, EVEN IF THE ARGUMENT OF THE ASSESS EE THAT ITS CASE FALLS UNDER SUB SECTION (4) THEREOF IS ACCEPTE D, IT IS UNDENIABLE THAT THE ASSESSEE HAS ENTERED INTO AN AG REEMENT WITH THE STATE GOVERNMENT FOR 'DEVELOPING, OPERATIN G AND MAINTAINING A NEW INFRASTRUCTURE FACILITY AND THERE FORE ITS ACTIVITY SQUARELY FALLS WITHIN (III) OF CLAUSE (B) OF SUB SECTION (4) OF SECTION 801A. SINCE SUB SECTION (2) OF SECTI ON 801A CATEGORICALLY STATES THAT THE DEDUCTION WILL BE ADM ISSIBLE 'BEGINNING FROM THE YEAR IN WHICH THE UNDER TAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRA STRUCTURE FACILITY' NO DEDUCTION FOR INCOME GENERATED BY ACTI VITIES OF SUCH INFRASTRUCTURE FACILITY AND/OR ANY ALLIED ACTI VITY WOULD BE ELIGIBLE FOR DEDUCTION IN ANY YEAR PRIOR TO THE BEG INNING OF OPERATIONS OF THE INFRASTRUCTURAL FACILITY. FURTHER SUCH SECTION 4 STATES THAT THE DEDUCTION WOULD BE ADMISSIBLE TO THE ENTERPRISE WHICH, INTER ALIA, 'HAS STARTED OR START S OPERATING AND MAINTAINING THE INFRASTRUCTURAL FACILITY ON OR AFTER 1ST DAY OF APRIL, 1995.' THUS THE DEDUCTION TO THE ASSESSEE WHICH HAS ENTERED INTO AN AGREEMENT FOR DEVELOPING, OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILITY, UNDER THE P ROVISIONS OF SUB SECTION (4), WOULD BE ADMISSIBLE ONLY FROM THE YEAR THE OPERATION OF THE FACILITY BEGINS. THE A.O. HAD RAISED THIS ISSUE IN THE ASSESSMENT PROCEEDINGS. IN RESPONSE, THE ASSESSEE ADVANCED TWI N ARGUMENTS. FIRSTLY, IT REFERRED TO THE WORDINGS OF CLAUSE (C) OF SUBSECTION (4) 'IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY'. THE ASSES EE HAS TRIED TO INTERPRET THE EXPRESSION 'STARTS' TO COVER FUTUR E EVENTS. THE ASSESSEE DELIBERATELY OMITS REFERENCE TO THE PHRASE 'AFTER 1ST APRIL, 1995' WHICH OCCURS IN THE SAID CLAUSE(C). CL EARLY, THE WORD 'STARTED' IS INTENDED TO COVER CASES WHERE THE OPERATION AND MAINTENANCE HAS COMMENCED PRIOR TO 114/1995 AND THE WORK 'STARTS IS INTENDED TO COVER CASES WHERE THE COMMENCEMENT IS AFTER 114/95. CLAUSE (C) SPECIFIES ONE OF THE CONDITIONS OF ELIGIBILITY OF DEDUCTION AND ONLY CLA RIFIES THAT PROJECTS WHICH HAS STARTED OPERATION AND MAINTENANC E PRIOR TO THE SPECIFIED DATE OR AFTER THE SPECIFIED DATE WILL BE ELIGIBLE FOR THE DEDUCTION. THE SAID CLAUSE IN NO WAY CAN OR IS INTENDED TO OVERRIDE THE STIPULATION IN SUB SECTION (2) WHICH M ANDATES AVAILING OF DEDUCTION, IN CASES OF ELIGIBLE PROJECT S, ONLY FROM THE BEGINNING OF THE OPERATION OF THE FACILITY. IN FACT THE WORDING OF CLAUSE OF SUB SECTION (4) REITERATES T HE CONDITION ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 44 OF SUB SECTION (2) IN AS MUCH AS IT MAKES THE START OF THE OPERATION AND MAINTENANCE OF A INFRASTRUCTURE FACIL ITY, A PRE REQUISITE FOR THE GRANT OF DEDUCTION. IT MAY BE REL EVANT TO MENTION THAT THE DEDUCTION U/S 801A TO INFRASTRUCTU RE FACILITY WAS FOR THE FIRST TIME INTRODUCED IN THE STATUTE, S UB SECTION (4A) OF SECTION 80LA AS IT STOOD PRIOR TO 114/1999, W.E. F. A.Y. 1996- 97 (I.E.LST APRIL, 1995) AND CLAUSE (C) BRINGS INTO THE AMBIT OF ELIGIBILITY PROJECTS WHICH HAS STARTED BEFORE THIS DATE AND ALSO SUBSEQUENT TO THIS DATE. THE SECOND ARGUMENT TAKEN IS THAT THE DEDUCTION U/S 801A(4 )(I) IS ADMISSIBLE ALSO TO AN UNDERTAKING WHICH ONLY DEVELOPS THE INFRASTRUCTURE FACILITY BUT DOES NOT OPERATE IT. THEREFORE THE ADMISSIBILITY CANNOT BE R ECKONED WITH REFERENCE TO THE COMMENCEMENT OF OPERATION. THIS AR GUMENT IS UN-ACCEPTABLE FOR THE REASON THAT THE UNDENIABLY, C ASE OF THE ASSESSEE IS ONE IN WHICH IT HAS ENTERED INTO AN AGR EEMENT FOR DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRU CTURE FACILITY A DISTINCT CATEGORY OF ELIGIBLE PROJECT SP ECIFICALLY COVERED UNDER SUB CLAUSE (III) OF CLAUSE ( C) OF SU B SECTION 4. ASSESSEE HAS NOT ENTERED INTO AN AGREEMENT ONLY FOR DEVELOPING OF AN INFRASTRUCTURE FACILITY ENVISAGED IN SUB CLAUSE (I) OF CLAUSE (C) OF SUB SECTION (4). IN CASE OF TH E ASSESSEE, THE UNAMBIGUOUS PROVISION OF THE STATUTE IS THAT THE DE DUCTION WOULD BE ADMISSIBLE ONLY ON THE COMMENCEMENT OF THE OPERATION. THE AO, IN ACCEPTING THE SAID ARGUMENT O F THE ASSESSEE, WAS INDISPUTABLY IN ERROR IN RENDERING TH E CONSEQUENTIAL ASSESSMENT ORDER ERRONEOUS. WITHOUT PREJUDICE TO THE CONTENTION MADE IN THE P RECEDING POINT, THE QUESTION THAT THE DEVELOPER OF AN INFRAS TRUCTURAL FACILITY, WHO IS AN ELIGIBLE ENTITY, WILL NOT BE AB LE TO CLAIM THE SAME SINCE IT DOES NOT OPERATE THE FACILITY AND HEN CE COULD NOT HAVE COMMENCED OPERATION, POINTS TO AN APPARENT AMB IGUITY IN LAW. FIRSTLY, NO SUCH AMBIGUITY ARISES IN THE PR ESENT CASE WHERE THE ASSESSEE HAS NOT ENTERED INTO AN AGREEMEN T, IN TERMS OF SUB CLAUSE (B) OF SUB SECTION (4), ONLY FOR DEVE LOPMENT OF THE INFRASTRUCTURE FACILITY BUT FOR THE DEVELOPMENT, OP ERATION AND MAINTENANCE OF THE FACILITY. THE AO IN ACCEPTING TH E CONTENTION OF THE ASSESSEE HAS TAKEN INTO CONSIDERA TION AN AMBIGUITY THAT NEVER EXISTED IN THE CASE AND HAD NO RELEVANCE TO THE CASE AND WAS THEREFORE CLEARLY IN ERROR. SEC ONDLY, ACTUALLY THERE IS NO AMBIGUITY. THERE CAN BE AN INS TANCE WHERE AN ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH THE CENTRE/STATE GOVT./STATUTORY AUTHORITY ONLY FOR DEV ELOPMENT OF ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 45 THE INFRASTRUCTURE FACILITY BUT THEREAFTER TRANSFER S SUCH FACILITY TO ANOTHER ENTITY OR THE CENTRE/STATE GOVT/STATUTOR Y AUTHORITY AND IN CONSIDERATION THEREOF, IS ENTITLED TO THE RE VERSE STREAM ARISING TO THE TRANSFEROR ENTITY, EITHER WHOLLY OR PARTIALLY, FOR A SPECIFIED TIME PERIOD. THE STATUTE PROVIDES THAT IN SUCH CASES ALSO, THE DEDUCTION WOULD BE ADMISSIBLE TO THE DEVE LOPER. THIS INTERPRETATION IS SUPPORTED BY THE PROVISO TO CLAUS E (C) OF SUB SECTION 4 WHICH ENVISAGES TRANSFER OF AN INFRASTRUC TURE FACILITY FROM A DEVELOPER TO ANOTHER ENTERPRISE FOR OPERATIO N AND MAINTENANCE. AS REGARDS THE PROVISIONS OF SUB SECTION (6), THE ASSESSEE HAS ADMITTEDLY NOT CREATED ANY SPECIAL RESERVE. NEI THER HAS IT MAINTAINED SEPARATE ACCOUNTS FOR HOUSING AND OTHER ACTIVITIES NOR HAS IT FURNISHED FORM 10CCC DURING EITHER WITH RETURN OF INCOME OR DURING THE ASSESSMENT PROCEEDINGS. ACCEPT ANCE OF THE CLAIM OF DEDUCTION BY THE AO WITHOUT ENSURING T HE FULFILLMENT OF THE AFORESAID STATUTORY PRESCRIPTION APPLICABLE TO THE CASE OF THE ASSESSEE, OR EVEN WITHOUT SEEKING A RESPONSE FROM THE ASSESSEE IN RESPECT OF SUCH FAILURE UNDOUB TEDLY WAS AN ERROR ON THE PART OF THE AO AND THE CONSEQUENTIA L ORDER GRANTING THE DEDUCTION SQUARELY FALLS IN THE CATEGO RY OF AN ERRONEOUS ORDER, CONTEMPLATED IN SECTION 263 OF THE ACT. THAT THE FILING OF FORM NO. 10CCC, CREATION OF A SPECIAL RESERVE AND UTILISATION OF SUCH RESERVE ARE MANDATO RY CONDITIONALITIES FOR AVAILING OF DEDUCTION U/S 80IA (6) OF THE ACT, BEING THE STATUTORY PROVISION UNDER WHICH THE CLAIM OF THE ASSESSEE APPROPRIATELY FALLS, HAS BEEN ACCEPTED BY THE ASSESSEE COMPANY IN AS MUCH AS IN ITS ANNUAL ACCOUNT FOR THE F.Y. 2013-14, NOTE NO. 26 STATES THAT ' ACCORDINGLY, IN COMPLIANCE OF THE PROVISIONS CONTAINED THEREIN, A 'SPECIAL RES ERVE' AGGREGATING RS. 2800,69,052 (F.Y.2008-09 RS. 255,36 ,26,035; F.Y. 2009-10 RS. 362,48,77,424; F.Y. 2010-11 RS. 1168,12,74,807 & F.Y. 2011-12 RS. 1014,71,29,786) H AS BEEN CREATED DURING THE YEAR FOR THE RESPECTIVE YEARS. S INCE THE SAID SUM HAS BEEN UTILISED BY THE COMPANY FOR DEVELOPMEN T OF THE INFRASTRUCTURE FACILITY (THE YAMUNA EXPRESSWAY) DUR ING THE RESPECTIVE YEARS AN AGGREGATE AMOUNT OF RS. 2800,69 ,08,052 ... HAS BEEN TRANSFERRED FROM 'SPECIAL RESERVE ACCOUNT TO 'SPECIAL RESERVE UTILISATION ACCOUNT' DURING THE YEAR, FOR T HE RESPECTIVE YEARS'. THUS, THE ASSESSEE ITSELF ACKNOWLEDGES THAT THE CONDITIONALITIES SPECIFIED IN 80IA(6) IS APPLICABLE TO ITS CASE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 46 AND REQUIRES TO BE FULFILLED FOR THE GRANT OF DEDUC TION IN RESPECT OF AN INFRASTRUCTURE FACILITY BEING A HIGHW AY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTE GRAL PART OF THE HIGHWAY PROJECT. THE DENIAL OF CLAIM FOR DEDUCTION BY THE ASSESSIN G OFFICER IN THE PROCEEDINGS UNDER SECTION 143(3) FOR A.Y.2011- 12 WAS BASED ON IDENTICAL GROUNDS AND HAS BEEN UPHE LD AS SUCH BY THE CIT (APPEALS) IN THE APPELLATE ORDER FO R A.Y.2011- 12 DATED 12.01.2015, NOTWITHSTANDING THAT DURING TH E COURSE OF THE APPELLATE PROCEEDINGS FORM NO. 10CCC FOR THAT Y EAR AND HAD ALSO FILED A COPY OF ITS ANNUAL ACCOUNT FOR F.Y . 2013-14, WHEREIN, AS REFERRED TO ABOVE, A SPECIAL RESERVE HA D BEEN CREATED, PURPORTEDLY IN COMPLIANCE WITH SUB-SECTION (6) OF SECTION 801A. IT IS SIGNIFICANT THAT THE ASSESSEE I TSELF HAS SUBMITTED BEFORE THE ASSESSING OFFICER FORM NO. 10C CC FOR THE A.Y. 2009-10 DURING SET ASIDE ORDER IN RESPECT OF WHICH THE REVISIONARY ORDER HAS BEEN PASSED. THE PLEA OF THE ASSESSEE THAT BY CREATING A SPECI AL RESERVE MUCH AFTER THE RELEVANT PREVIOUS YEAR AND E VEN THE ASSESSMENT PROCEEDINGS FOR BOTH A.YS. 2009-10 AND 2 011-12, THAT IT HAS COMPLIED WITH THE PROVISIONS OF SECTION 80-IA(6) IN SPIRIT IS FALLACIOUS IN AS MUCH AS FIRSTLY, THE SUB STANTIVE PROVISIONS OF THE STATUTE, WHICH GRANTS A VESTED RI GHT EITHER TO THE REVENUE OUGHT TO THE ASSESSEE, CANNOT BE IGNORE D AND SECONDLY THAT THE CIRCUMSTANCES UNDER WHICH THE PRO VISIONS OF CHAPTER VI-A CAN BE RELAXED HAS BEEN PROVIDED FOR I N THE STATUTE ITSELF IN SECTION 119(2)( C) OF THE ACT. TH E ASSESSEE'S ACTION OF CREATING SPECIAL RESERVE POST FACTO AFTER THE CONCLUSION OF ASSESSMENT PROCEEDINGS AND FURNISHING A CERTIFICATE OF FORM 10CCC DATED 15.11.2014 IS IRREL EVANT FOR DETERMINING THE ELIGIBILITY OF THE DEDUCTION . A PROPOSAL FOR ACTION UNDER SECTION 263 OF THE AC T FOR A.Y. 2010-11 HAS BEEN SUBMITTED BY THE ASSESSING OF FICER AND JOINT COMMISSIONER OF INCOME TAX CONCERNED VIDE THE IR LETTERS DATED 21.08.2014 AND 25.08.2014 TO THE COMMISSIONER OF INCOME TAX AND THE SHOW CAUSE NOTICE FOR THE YEAR H AS BEEN ISSUED ON 19.01.2015 . THE ORDER UNDER SECTION 263 FOR A.Y. 2009-10 DATE D 30.03.2014 CATEGORICALLY STATES THAT 'THE INESCAPAB LE AND LOGICAL CONCLUSIONS WOULD BE THAT THE ASSESSEE OUGH T TO HAVE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 47 COMPLIED WITH PROVISIONS OF SUB-SECTION (6) OF SECT ION 80- IA WHICH IT HAS NOT'. FURTHER, THE CIT HAS ALSO NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80LA ON INTEREST INCOME FROM FDS MADE BY DEPLOYING ITS SURPLUS FUNDS AND TH E SAME HAS BEEN ERRONEOUSLY ACCEPTED BY THE A.O. IN THIS C ONTEXT, REFERENCE IS INVITED TO THE DECISION OF THE ITAT CH ANDIGARH BENCH A IN THE CASE OF VODAFONE ESSAR LTD., (2013) 153 TTJ (CHD) 451, WHEREIN AN IDENTICAL ISSUE HAD BEEN OVER LOOKED BY THE AO AND THE CIT HAD INVOKED THE POWERS AVAILABLE U/S 263 OF THE ACT. IT WAS HELD THAT THE AO HAD FAILED TO M AKE PROPER INVESTIGATION INTO THE ELIGIBILITY OF THE ASSESSEE IN RELATION TO THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT BOTH ON THE BUSINESS PROFITS, INTEREST INCOME AND OTHER INCOME RECEIVED DURING THE YEAR. THE ORDER PASSED BY THE AO WAS AN ERRONEOUS O RDER AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT WAS V ALIDLY EXERCISED. MOREOVER, THE ASSESSEE HAS CLAIMED DEPRE CIATION AMOUNTING TO RS 22.67 CRORES AND HAD BEEN GRANTED B Y THE ASSESSING OFFICER EVEN WHILE THE HIGHWAY PROJECT HA D NOT BEEN COMPLETED. THE ORDER OF THE ASSESSING OFFICER, WHIC H ALLOWED THE DEDUCTION UNDER SECTION 80-IA AND THE DEPRECIAT ION, WAS PATENTLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND WAS, WITHOUT AN IOTA OF DOUBT, LIABLE F OR THE EXERCISE OF REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (243 I TR 83), THE HON'BLE SUPREME COURT HELD THAT AND INCORR ECT APPLICATION OF LAW OR ORDERS PASSED WITHOUT APPLICA TION OF MIND, WOULD RENDER IT AS ERRONEOUS. THE JURISDICTIO NAL HIGH COURT IN THE CASE OF JAGDISH KUMAR GULATI (269 ITR 71) .HELD THAT IF THE AO FAILS TO MAKE PROPER INQUIRY, THE OR DER WOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN THE CASE OF BHAGWAN DAS (272 ITR 367), THE ALLAHABAD HIGH CO URT REITERATED THE PRINCIPLE THAT GRANT OF EXEMPTION TO AN ASSESSEE, WITHOUT ANY DISCUSSION AND WITHOUT ANY APPLICATION OF MIND, WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF RE VENUE. IN THE CASE OF TARA DEVI AGARWAL (88 ITR 323), IT WAS HELD THAT WHERE THE AO FAILS TO MAKE INQUIRIES WHICH ARE CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE SUCH ORDER WOULD BE R ENDERED ERRONEOUS. MERELY MAKING SOME QUERIES WITHOUT ADDRE SSING THE BASIC ISSUES INVOLVED WOULD AMOUNT TO NON APPLICATI ON OF MIND ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 48 AS HAS BEEN HELD BY THE GUWAHATI HIGH COURT IN THE CASE OF PARASMAL JAIN (249 CTR 534). 11. THE LD. AR BRIEFLY REITERATED HIS WRITTEN SUBMI SSIONS AND ARGUMENTS BEFORE US AND CONTENDED THAT THE AO TOOK A REASONAB LE AND SUSTAINABLE VIEW WHILE GRANTING DEDUCTION U/S 80IA(4) OF THE ACT. L D. CIT-DR ALSO CONTENDED AND TOOK US THROUGH HER WRITTEN SUBMISSIONS AS REPR ODUCED HEREINABOVE AND SUBMITTED THAT THE AO ALLOWED DEDUCTION TO THE ASSE SSEE WITHOUT ANY VALID REASON AND KEEPING ASIDE THE RELEVANT PROVISIONS OF THE ACT AND IT RULES 1962 AND CBDT CIRCULAR NO. 1/2006 DATED 12.1.2006. THE LD. CIT DR MAINLY HARPING ON THE FACTUAL AND LEGAL CONTENTION THAT TH E ASSESSEE IS IN THE BUSINESS OF DEVELOPMENT OF A HIGHWAY PROJECT INCLUDING HOUSING AND OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT AND DEFINED IN CLAUSE (B) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT. LD. CIT-DR FURTH ER CONTENDED THAT THE INCOME FROM SALE OR SUB LEASE & LAND IS NOT AN INCOME FROM THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT BUSINESS, HENCE, DEDUCTI ON THEREON IS NOT ALLOWABLE U/S 80IA(4) OF THE ACT. 12. LD. CIT DR DRAWING OUR ATTENTION TO THE IMPUGNE D NOTICE ISSUED TO THE ASSESSEE AND THE IMPUGNED ORDER PASSED U/S 263 OF T HE ACT, REVISING THE ASSESSMENT ORDER, SUBMITTED THAT THE BUSINESS OF IN FRASTRUCTURE FACILITY DEVELOPMENT WAS NOT STARTED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME ACTUALLY BECAME OPERATIONAL ON 9.4.2012 WHEN THE PROJECT WAS ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 49 INAUGURATED AND HENCE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION ON THE INCOME FROM SUCH ACTIVITY WHICH IS NOT A PART OF INFRASTRU CTURE FACILITY DEVELOPMENT BUSINESS. LD. CIT-DR FURTHER POINTED OUT THAT IF F OR THE SAKE OF ARGUMENT IT IS ACCEPTED THAT THE INCOME OF THE ASSESSEE IS ENTITLE D FOR DEDUCTION, THEN AGAIN THE SAME CANNOT BE ALLOWED FOR THE ASSESSEE WAS THE ASS ESSEE HAS NOT COMPLIED WITH THE MANDATORY PROVISIONS OF SUB-SECTION (6) OF SECT ION 80IA OF THE ACT AND RULE 18BBE OF IT RULES, PRESCRIBES THE MANNER IN WHICH T HE PROFITS OF HOUSING AND OTHER ACTIVITIES ARE TO BE COMPUTED FOR THE PURPOSE OF SUB-SECTION (6) WHICH MANDATES MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS FOR THE ACTIVITIES OF HOUSING AND OTHER ACTIVITIES AND SUBMISSION OF A CE RTIFICATE SPECIFYING THE AMOUNT CREDITED TO THE RESERVE ACCOUNT AND THE AMOU NT UTILIZED DURING THE RELEVANT PREVIOUS YEAR FOR THE HIGHWAY IN FORM NO. 10CCC ALONG WITH RETURN OF INCOME. 13. LD. CIT DR VEHEMENTLY CONTENDED THAT THE ASSESS EE IS NOT ENTITLED FOR DEDUCTION U/S 80IA(4) OF THE ACT ON THE PROFITS AND GAINS EARNED FROM SALE/SUB LEASE OF LAND DURING THE FINANCIAL PERIOD UNDER CON SIDERATION AS FIRST, THIS ACTIVITY IS OUT OF AMBIT OF INFRASTRUCTURE FACILITY DEVELOPMENT, SECONDLY, THE ASSESSEE DID NOT COMMENCE ITS BUSINESS OPERATIONS D URING THE FINANCIAL YEAR UNDER CONSIDERATION AND THIRDLY, THE ASSESSEE DID N OT COMPLY WITH THE MANDATORY PROVISIONS OF SUB-SECTION (6) OF SECTION 80IA OF TH E ACT AND RULE 18BBE OF IT RULES, 1962. THEREFORE, THE ASSESSMENT ORDER HAS B EEN PASSED GRATING DEDUCTION ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 50 U/S 80IA OF THE ACT, WITHOUT APPLICATION OF MIND, W ITHOUT ANALYSING THE FACTS OF THE CASE IN THE LIGHT OF RELEVANT PROVISIONS OF THE ACT, RELEVANT IT RULES AND CBDT CIRCULAR 1/2006 DATED 121.1.2012, WHICH IS NOT IN ACCORDANCE WITH LAW AND UNSUSTAINABLE, HENCE, THE LD. CIT RIGHTLY INVOK ED PROVISIONS OF THE SECTION 263 OF THE ACT BY ISSUING NOTICE AND BY PASSING IMP UGNED ORDER SETTING ASIDE THE ASSESSMENT ORDER TO BE MADE DE NOVO. LD. CIT D R ALSO POINTED OUT THAT AS EXTRACTS FROM ASSESSEES ANNUAL REPORT/ACCOUNT FOR AY 2013-14 AND CERTIFICATE OF AUDITOR IN FORM 10CCC DATED 15.11.2014 (PAPER BO OK OF THE REVENUE/SUBMISSIONS OF CASE LAWS PAGE 13 TO 19) SHO WS THAT THE ASSESSEE TRIED TO PATCH UP DEFICIENCY IN STATUTORY COMPLIANCE OF S UB SECTION (6) AND THE IT RULE 18BBC OF INCOME TAX RULES. 14. THE LD. AR PLACED A BRIEF REJOINDER TO AFORESAI D CONTENTIONS OF THE REVENUE AND SUBMITTED THAT AS PER STIPULATIONS, TER MS AND CONDITIONS OF THE CONCESSION AGREEMENT BETWEEN THE ASSESSEE AND THE T EA, THE ASSESSEE ASSIGNED WORK OF DEVELOPMENT OF EXPRESSWAY AND NOT A HIGHWAY . THE LD. AR FURTHER CONTENDED THAT THE MAIN OBJECT OF WORK ASSIGNED TO THE ASSESSEE WAS TO DEVELOP 6 LANE EXPRESSWAY WITH CONTROLLED ACCESS AND EXIT P OINTS FOR FAST MOVING TRAFFIC AND THE USERS OF EXPRESSWAY HAS TO PAY A TOLL AT TO LL PLAZAS SITUATED AT ENTRY OR ACCESS POINTS AND THEREFORE THE ASSESSEE HAS TO DEV ELOP A TOLL ROAD CONNECTING NOIDA TO AGRA. THE LD. AR, REPEATING HIS WRITTEN S UBMISSIONS, ALSO SUBMITTED THAT, SINCE THE ASSESSEE WAS UNDER OBLIGATION TO PA Y COST OF LAND ACQUISITION PLUS ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 51 RS. 100/- PER HECTARE PER ANNUM LEASE RENT ON LAND FOR CONSTRUCTION AND DEVELOPMENT OF EXPRESSWAY, IN ADDITION TO BEARING C OST OF CONSTRUCTION OF EXPRESSWAY AND DEVELOPMENT OF LAND, THEREFORE, THE PROJECT COULD NOT BE VIABLE UNLESS THE ABSOLUTE RIGHTS ON THE LAND FOR DEVELOPM ENT ARE GIVEN TO THE ASSESSEE AS THE ONLY TOLL REVENUE WAS NOT SUFFICIENT EVEN TO MEET COST OF CONSTRUCTION AND DEVELOPMENT. 15. THE LD. AR POINTED OUT THAT ASSESSEES BUSINESS COMMENCED FROM THE DATE OF ITS INCORPORATION I.E. 5.4.2007 AS PRIOR TO INCO RPORATION, THE BID OF HOLDING COMPANY WAS ACCEPTED AND THE TEA ALLOWED THE SUCCES SFUL BIDDER TO CREATE A SPECIAL PURPOSE VEHICLE (SPV) COMPANY IN ORDER TO I MPLEMENT THE PROJECT SUCCESSFULLY, HENCE, WHEN THE BUSINESS OF DEVELOPME NT OF INFRASTRUCTURE FACILITY WAS STARTED DURING THE FINANCIAL YEAR UNDER CONSIDE RATION, THEN THE INCOME EARNED FROM SALE/SUB LEASE OF LAND FOR DEVELOPMENT IS AN INCOME OF FIRST DEGREE BUSINESS OPERATIONS AND HENCE, THE SAME IS ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF THE ACT. THE LD. AR ALSO CONTENDED THAT SINCE THE ASESSEE HAS DEVELOPED TOLL ROAD AND OPTED TO AVAIL DEDUCTION U/S 80IA(4) OF TH E ACT FOR AY 2009-10, THEREFORE, THE ASSESSEE ALSO COMPLIED WITH THE PROV ISIONS OF RULE 18BBB OF THE INCOME TAX RULES, 1962 AND ALSO SUBMITTED CERTIFICA TE IN FORM NO. 10CCB. 16. THE LD. AR HAS ALSO DRAWN OUR ATTENTION TOWARDS PAPER BOOK PAGE PAGE 228 AND 229 AND SUBMITTED THAT THE ASSESSEE ALSO CO MPLIED WITH PROVISIONS OF SUB-SECTION (6) OF SECTION 80IA OF THE AC T AND RUL E 18BBC OF INCOME TAX ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 52 RULES 1962 ONLY SUPPORT THIS FACT THAT ASSESSEE IS A SINCERE AND HONEST TAXPAYER AND TO FULFIL REQUIREMENTS OF THE ALTERNATE CLAIM O F THE ASSESSEE WHICH DOES NOT MEAN THAT THE ASSESSEE CONCEDES THAT ITS CLAIM FALL S UNDER CLAUSE (B) OF EXPLANATION 80IA(4)(I) OF THE ACT. 17. MAIN CONTROVERSY REVOLVES AROUND THE FACT THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT ON THE BASIS THAT AS PER CONCESSION AGREEMENT BETWEEN THE TEA AND THE ASSESSEE COMPANY, THE ASSES SEE DEVELOPS INFRASTRUCTURAL FACILITY AS PER CLAUSE (A) OF EXP LANATION TO SECTION 80IA(4)(I) WHICH WAS GRANTED BY THE AO AND SUBSEQUENTLY, THE L D. CIT, NOIDA ISSUED NOTICE U/S 263 OF THE ACT ON THE CONTENTION THAT TH E CLAIM OF THE ASSESSEE DOES NOT FALL IN CLAUSE (A) OF EXPLANATION TO SECTION 80 IA(4)(I) OF THE ACT AND THE AO PASSED AN ASSESSMENT ORDER WHICH WAS NOT ONLY ERRON EOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE AND HE REJECTED THE OBJ ECTIONS AND SUBMISSIONS OF THE ASSESSEE COMPANY AND DIRECTED THE AO TO FRAME AFRES H DE NOVO ASSESSMENT BY PASSING THE IMPUGNED ORDER. 18. WHEN COMPUTATION OF INCOME AND AUDIT REPORT FIL ED ALONG WITH RETURN OF INCOME, QUERIES OF THE AO, REPLIES OF THE ASSESSEE DATED 23.11.2011, 21.12.2011, 23.12.2011, 28.12.2011 AND 29.12.2011 F ILED DURING ASSESSMENT PROCEEDINGS, OFFICE NOTE DATED 29/30.12.2011 OF THE AO, ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, NOTICE ISSUED B Y LD. CIT NOIDA U/S 263 OF THE ACT (SUPRA), WRITTEN SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE OBJECTING TO THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 53 PROCEEDINGS U/S 263 OF THE ACT DATED 19.3.2014, 25. 3.2014 AND 27.3.2014, IMPUGNED ORDER, RIVAL WRITTEN SUBMISSIONS AND CONTE NTIONS OF BOTH THE SIDES (AS REPRODUCED HEREINABOVE) PLACED BEFORE US AND THE RA TIO OF THE CASE LAWS RELIED BY BOTH THE PARTIES AND SPECIALLY, GROUNDS RAISED B Y THE ASSESSEE BEFORE US IN THIS APPEAL ARE KEPT IN CLOSE JUXTAPOSITION, SIDE B Y SIDE, THE FOLLOWING PRIME ISSUES EMERGE FOR OUR CONSIDERATION FOR PROPER ADJU DICATION OF THE PRESENT APPEAL: (I) WHETHER IN VIEW OF CONCESSION AGREEMENT AND ALLIED DOCUMENTS, THE ASSESSEE CLAIM FALLS U/S 80IA(4)(I) EXPLANATION CLAUSE (A) OR (B) AND WHETHER THE ASSESSEE IS DEVELOPING A ROAD (INCL UDING TOLL ROAD) OR HIGHWAY? (II) WHETHER IN THE BACKGROUND OF CONCESSION AGREEMENT A ND JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NAND KI SHORE GUPTA VS STATE OF UP, THE AO WAS CORRECT IN TREATING THE SUBJECT YEAR AS FALLING IN THE ELIGIBLE PERIOD U/S 80IA(2) OF THE A CT IN THE LIGHT OF THE FACT THAT THE ASSESSEE DID COMMENCE THE DEVELOP MENT OF THE INFRASTRUCTURE FACILITY SINCE 5.4.2007 AND WAS ACTI VELY DEVELOPING THE INFRASTRUCTURE FACILITY DURING THE ASSESSMENT Y EAR UNDER CONSIDERATION? ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 54 (III) WHETHER THE AO TOOK A PLAUSIBLE REASONABLE AND SUS TAINABLE VIEW BY ALLOWING THE ASSESSEE CLAIMED DEDUCTION UNDER CL AUSE (A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT? (IV) WHETHER THE ASSESSMENT ORDER QUESTIONED AND ALLEGED BY THE LD. CIT, IS UNSUSTAINABLE AND NOT IN ACCORDANCE WITH LA W AND HAS BEEN PASSED WITHOUT APPLICATION OF MIND, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, SPECIALLY IN THE LIGHT O F THE PROVISIONS OF SECTION 80IA(4) R/W ITS SUB-SECTIONS (2) & (6) AND OTHER RELEVANT PROVISIONS OF THE ACT AND THE INCOME TAX RULES, 196 2. (V) WHETHER THE CIT NOIDA WAS IN ERROR BY INVOKING PROV ISIONS OF SECTION 263 OF THE ACT IN THE PECULIAR FACTS AND CI RCUMSTANCES OF THE PRESENT CASE, SPECIALLY WHEN HE HAS NOT DECISIV ELY CONCLUDED THE ISSUE I.E. WHETHER THE ASSESSEE IS DEVELOPING A TOLL ROAD OR A HIGHWAY PROJECT AND LEFT IT MIDWAY WITHOUT ANY DECI SIVE CONCLUSION/DIRECTION? (VI) WHETHER THE LD. CIT EXERCISED ITS POWERS U/S 263 OF THE ACT IN REVISING THE ASSESSMENT ORDER ON THE ISSUE OF ALLOW ABILITY OF DEDUCTION U/S 80IA(4) OF THE ACT ON INTEREST EARNED FROM FDR AND WITHOUT SHOW CAUSING THE ASSESSEE IN THE NOTICE U/S 263 OF THE ACT &ON THE ISSUE OF ALLOWABILITY OF DEPRECIATION AND, THEREFORE, THE SAME IS NOT VALID AND VOID AB INITIO ON THESE ISSUE S. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 55 19. IN ORDER TO DECIDE ABOVE PRIME ISSUES, WE DEEM IT APPROPRIATE TO REPRODUCE RELEVANT PROVISION OF THE CONCESSION AGRE EMENT FOR EFFECTIVE AND PROPER ADJUDICATION OF THE CASE WHICH READ AS UNDER :- THE PROVISIONS OF SECTION 80IA(1)(2), (4) AND (6): DEDUCTION IN 'RESPECT OF PROFITS AND GAINS FROM' IN DUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTU RE DEVELOPMENT, ETC. [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE IN CLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN E NTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) ( SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGI BLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL IN COME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.] (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY T EN CONSECUTIVE ASSESSMENT YEARS OUT OF FITEEEN YEARS B EGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTER PRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE F ACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVEL OPS AN INDUSTRIAL PARK (OR DEVELOPS A SPECIAL ECONOMIC ZON E) RENDERED TO IN CLAUSE (III) OF SUB-SECTION (4) OR G ENERATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OR POWER (OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTRIBUTION LINES. (3) XXXXXX (4) THIS SECTION APPLIES TO- (I) ANY ENTERPRISE CARRYING ON THE BUSINESS L[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 2[ OR BY AN AUTHORITY OR A BOARD ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 56 OR A CORPORATION OR ANY OTHER BODY ESTABLISHED OR C ONSTITUTED UNDER ANY CENTRAL OR STATE ACT.] (5) XXXXXXX (6) THE AMOUNT OF DEDUCTION IN THE CASE OF THE BUS INESS OF A SHIP SHALL BE THIRTY PER CENT OF THE PROFITS AND GA INS DERIVED FROM SUCH SHIP FOR A PERIOD OF TEN CONSECUTIVE ASSE SSMENT YEARS INCLUDING THE INITIAL ASSESSMENT YEAR PROVIDE D THAT THE SHIP - (I) IS OWNED BY AN INDIAN COMPANY AND IS WHOLLY USE D FOR THE PURPOSES OF THE BUSINESS CARRIED ON BY IT ; (II) WAS NOT, PREVIOUS TO THE DATE OF ITS ACQUISITI ON BY THE INDIAN COMPANY, OWNED OR USED IN INDIAN TERRITORIAL WATERS BY A PERSON RESIDENT IN INDIA; AND (III) IS BROUGHT INTO USE BY THE INDIAN COMPANY AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL , 1991 AND ENDING ON THE 31 ST DAY OF MARCH, 1995. 20. FIRST OF ALL, WE MAY POINT OUT THAT THE NUCLEUS OF THE ACTIVITIES AND BUSINESS OF THE ASSESSEE IS THE CONCESSION AGREEMEN T (HEREINAFTER AGREEMENT) EXECUTED ON 7.2.2003 BETWEEN THE TAJ EXPRESSWAY IND USTRIAL DEVELOPMENT AUTHORITY (IN SHORT TEA) A STATUTORY BODY CONSTI TUTED UNDER U.P INDUSTRIAL DEVELOPMENT ACT, 1976, AND THE ASSESSEE COMPANY. T HE RELEVANT PROVISIONS OF THIS AGREEMENT READ AS UNDER:- OBJECTS OF THE AGREEMENT (ASSESSEES PAPER BOOK AT PAGE 100) A. THE GOVERNMENT OF UP HAS SET UP TEA FOR ANCHORING DEVELOPMENT OF TAJ EXPRESS WAY PROJECT, W HICH, INTERALIA, INCLUDES CONSTRUCTION OF SIX LANE, 160 K M LONG SUPER EXPRESSWAY WITH SERVICE ROADS AND ASSOCIATED FACILI TIES CONNECTING NOIDA AND AGRA, PASSING THROUGH A VIRGIN AREA ALONG THE YAMUNA RIVER. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 57 B. TEA HAS INVITED BIDS FOR DEVELOPMENT OF A TECHN O ECONOMIC FEASIBILITY REPORT (TEFR) AND DETAILED PRO JECT REPORT (OPR), ARRANGEMENT OF FINANCE, CONSTRUCTION AND OPERATION OF THE SAID EXPRESSWAY SUBJECT TO AND ON THE TERMS AND CONDITIONS CONTAINED IN THE NOTICE INVITING OFF ERS AND THE COMPANY HAD ALSO SUBMITTED A BID ON THE DUE DATE I. E. 18.01.2003. C. AFTER EVALUATION OF THE BIDS SO RECEIVED, TEA A CCEPTED THE BID OF THE COMPANY AND ISSUED LETTER OF ACCEPTANCE NO. TEA/341/2003 DATED 23.01.2003 TO THE COMPANY (ANNEX URE-A). D. THE COMPANY INFORMED TEA VIDE ITS LETTER NO. JIL /302 DATED 23.01.2003 (ANNEXURE - B) THAT: A. IT OPTS TO TAKE UP THE PROJECT EXCLUSIVELY BY I TSELF WITHOUT ANY EQUITY PARTICIPATION BY TEA; AND B. IT OPTS FOR 'SCHEDULE FOR LAND RELEASE' AS PER OPTION-II SPECIFIED IN NOTICE INVITING OFFER, TO DEVELOP THE PROJECT IN THREE PHASES. E. TEA AND THE COMPANY HAVE MUTUALLY AGREED ON THE TERMS AND CONDITIONS OF THE CONCESSION AGREEMENT TO BE EX ECUTED BETWEEN THE PARTIES. CHAPTER - II SCOPE OF WORK 2.1 THE WORK SHALL INCLUDE PREPARATION OF TE FR AND DETAILED PROJECT REPORT (DPR), ARRANGEMENT OF FIN ANCES, DESIGN, ENGINEERING, CONSTRUCTION AND OPERATION OF SIX-LANE EXPRESSWAY ALONGWITH SERVICE ROADS AND ASSOCIATED S TRUCTURES AS PER REQUIREMENT, BETWEEN NOIDA AND AGRA IN UTTAR PRADESH, INDIA EXCEPT THE CONSTRUCTION OF EXPRESSWA Y BETWEEN NOIDA AND GREATER NOIDA, WHICH IS ALREADY UNDER EXE CUTION JOINTLY BY NOIDA AND GNIDA AND SHALL BE COMPLETED I N ALL RESPECTS, OPERATED AND MAINTAINED JOINTLY BY NOIDA AND GNIDA AT ITS OWN COST TILL THE START OF THE CONCESS ION PERIOD. THIS ROAD WOULD HAVE PROVISION FOR EXPANSION TO 8-L ANE IN FUTURE BASED ON TRAFFIC VOLUME. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 58 2.2 THE SCOPE OF WORK ALSO INCLUDES OPERATION A ND MAINTENANCE OF THE EXPRESSWAY, INCLUDING COLLECTION AND RETENTION OF FEES DURING THE TERM OF THE CONCESSION PERIOD. 2.3 THE EXPRESSWAY SHALL BE DEVELOPED IN FOLLOWI NG 3 PHASES :- PHASE 1 : EXPRESSWAY STRETCH BETWEEN GREATER NOIDA AND THE PROPOSED TAJ INTERNATIONAL AIRPORT. PHASE 2 : EXPRESSWAY STRETCH BETWEEN THE PROPOSED T AJ INTERNATIONAL AIRPORT AND AN INTERMEDIATE DESTINATI ON BETWEEN THE PROPOSED TAJ INTERNATIONAL AIRPORT AND AGRA AS MAY BE MUTUALLY AGREED BETWEEN THE PARTIES. PHASE 3: EXPRESSWAY STRETCH BETWEEN THE AFORESAID INTERMEDIATE DESTINATION AND AGRA. CHAPTER III GRANT OF CONCESSION 3.1 SUBJECT TO AND ON THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT, TEA HEREBY UNDERTAKES TO CAUSE G OUP TO GRANT TO THE CONCESSIONAIRE AND THE CONCESSIONAIRE HEREBY ACCEPTS THE CONCESSION FOR A PERIOD OF THIRTY SIX Y EARS COMMENCING FROM THE COD INCLUDING THE EXCLUSIVE RIG HT, LICENSE AND AUTHORITY DURING THE SUBSISTENCE OF THI S AGREEMENT TO IMPLEMENT THE PROJECT. 3.2 SUBJECT TO AND ON THE TERMS AND CONDITI ONS SET FORTH IN THIS AGREEMENT, THE CONCESSION HEREBY GRAN TED SHALL OBLIGE THE CONCESSIONAIRE TO UNDERTAKE THE FOLLOWIN G IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, T HE APPLICABLE LAWS AND THE APPLICABLE PERMITS. I TO DEVELOP, DESIGN, ENGINEER, FINANCE, PROCUR E AND CONSTRUCT THE EXPRESSWAY WITHIN THE CONSTRUCTION P ERIOD; II UPON COMPLETION OF THE EXPRESSWAY AND DUR ING THE CONCESSION PERIOD TO MANAGE, OPERATE & MAINTAIN TH E EXPRESSWAY AND REGULATE THE USE THEREOF BY THIRD PA RTIES; ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 59 III DEMAND, MANAGE AND COLLECT APPROPRIATE FEES FROM VEHICLES AND PERSONS LIABLE TO PAYMENT OF FEES FOR USING THE EXPRESSWAY OR ANY PART THEREOF AND REFUSE ENTRY OF ANY VEHICLE TO THE EXPRESSWAY IF THE DUE FEES IS NOT PAID; IV PERFORM AND FULFIL ALL OF THE CONCESSIONAIRE S OBLIGATIONS UNDER THIS AGREEMENT; V BEAR AND PAY ALL EXPENSES, COSTS AND CHARGE S INCURRED IN THE FULFILMENT OF ALL THE CONCESSIONAIRES OBLIGATI ONS UNDER THIS AGREEMENT. 3.3 THE CONCESSIONAIRE SHALL BE GRANTED, BY TE A, RIGHTS FOR LAND DEVELOPMENT OF 25 MILLION SQ. MTRS OF LAND ALO NG THE PROPOSED EXPRESSWAY FOR COMMERCIAL, AMUSEMENT, INDU STRIAL, INSTITUTIONAL AND RESIDENTIAL DEVELOPMENT. THE LAND FOR THE PURPOSE OF DEVELOPMENT SHALL BE PROVIDED BY TEA ALO NG THE EXPRESSWAY AT FIVE OR MORE LOCATIONS OF WHICH ONE L OCATION SHALL BE IN NOIDA OR GREATER NOIDA WITH AN AREA OF 5 MILLION SQ. MTRS. THE AFORESAID LAND FOR DEVELOPMENT SHALL BE IN ADDITION TO THE LAND FOR CONSTRUCTION OF EXPRESSWAY . 3.4 THE EXPRESSWAY BETWEEN NOIDA TOLL BRIDGE AND GREATER NOIDA (ABOUT 25 KMS) HAS ALREADY BEEN CONST RUCTED AND OPENED FOR GENERAL PUBLIC BY GOUP. IN CONSIDERA TION OF CAPITAL COST OF THIS EXPRESSWAY BETWEEN NOIDA AND G REATER NOIDA, THE TEA SHALL GRANT LEAVE AND LICENSE TO THE CONCESSIONAIRE TO USE IT FOR CONCESSION DURING THE CONCESSION PERIOD. THE CAPITAL COST OF THIS ALREADY CONSTRUCTE D NOIDA GREATER NOIDA EXPRESSWAY SHALL BE TREATED AS INTERE ST FREE LOAN TO THE CONCESSIONAIRE, WHICH SHALL BE REPAID B Y THE CONCESSIONAIRE TO TEA IN 15 EQUAL YEARLY INSTALMENT S STARTING FROM 11 TH YEAR OF THE CONCESSION PERIOD. 3.5 THE CONCESSIONAIRE SHALL SUBMIT TEFR / DPR WITHIN 2 YEARS OF SIGNING THE CONCESSION AGREEMENT. 3.6 THE CONCESSION PERIOD SHALL COMMENCE ON COD AND SHALL END ON THE DATE OF EXPIRY OF PERIOD OF 36 (TH IRTY SIX) YEARS PLUS ANY EXTENSIONS THERETO PROVIDED IN ACCORDANCE WITH THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 60 PROVISIONS OF THIS AGREEMENT. HOWEVER IN CASE COD I S NOT ACHIEVED WITHIN 7 (SEVEN) YEARS OR SUCH EXTENDED PE RIOD AS MAY BE APPROVED BY TEA, AFTER SIGNING OF THIS AGREE MENT SOLELY ON ACCOUNT OF CONCESSIONAIRES DEFAULT, THE C ONCESSION PERIOD SHALL BE REDUCED BY THE PERIOD OF DELAY IN A CHIEVING THE COD. 3.7 CONCESSIONAIRE SHALL BE ENTITLED TO COLL ECT AND RETAIN THE FEE FROM THE USERS OF THE EXPRESSWAY BETWEEN NO IDA AND GREATER NOIDA DURING THE TERMS OF THE CONCESSION AG REEMENT. 3.8 THE ALIGNMENT OF THE EXPRESSWAY BETWEEN G REATER NOIDA AND AGRA SHALL BE FINALISED BY THE CONCESSION AIRE IN CONSULTATION WITH TEA. CHAPTER IV LAND 4.1 LAND FOR CONSTRUCTION OF EXPRESSWAY SHALL BE PROVIDED BY TEA TO THE CONCESSIONAIRE, GENERALLY IN A WIDTH OF 100 METERS ALONG THE ALIGNMENT OF THE EXPRESSWAY WITH A DDITIONAL LAND WIDTH, WHERE REQUIRED, FOR DEVELOPING OTHER FA CILITIES LIKE TOLL PLAZAS ETC., ON FOLLOWING TERMS & CONDITIONS. A. THE LAND FOR CONSTRUCTION OF EXPRESSWAY SHAL L BE RELEASED AS PER FOLLOWING 3 STAGES: STAGE 1 - LAND FOR PHASE 1 OF EXPRESSWAY W ITHIN 6 (SIX) MONTHS OF FINALISATION OF ALIGNMENT OF THE EXPRESSW AY STAGE 2 - LAND FOR PHASE 2 OF EXPRESSWAY WITHI N 12 (TWELVE) MONTHS OF FINALISATION OF ALIGNMENT OF THE EXPRESSWAY STAGE 3 - LAND FOR PHASE 3 OF EXPRESSWAY W ITHIN 18 (EIGHTEEN) MONTHS OF FINALISATION OF ALIGNMENT OF T HE EXPRESSWAY B. THE LAND SHALL BE LEASED FOR A PERIOD STAR TING FROM THE DATE OF TRANSFER TILL THE END OF THE CONCESSION PER IOD THROUGH SUCH LEASE DEED AS MAY BE MUTUALLY AGREED BETWEEN T HE PARTIES. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 61 C. THE LAND SHALL BE FREE FROM ENCUMBRANCES. D. THE SOLE PREMIUM OF THE TRANSFERRED LAND SHA LL BE EQUIVALENT TO THE ACQUISITION COST PLUS A LEASE REN T OF RS. 100.00 (RUPEES ONE HUNDRED) ONLY PER HECTARE PER YE AR. THE ACQUISITION COST SHALL BE THE ACTUAL COMPENSATION P AID TO THE LAND OWNERS WITHOUT ANY ADDITIONAL CHARGE AND SHALL BE PAYABLE BY THE CONCESSIONAIRE AS PER APPLICABLE RUL ES. THE LEASE RENT SHALL BE PAYABLE ANNUALLY. 4.2 THE LAND FOR DEVELOPMENT SHALL BE RELEASED AS PER FOLLOWING 3 STAGES : STAGE 1 : 10% LAND (250 HECTARE) FOR DEVELOPMENT WOULD BE MADE AVAILABLE AFTER CONCESSIONAIRE MAKES FINANC IAL ARRANGEMENTS FOR PHASE 1 TO THE SATISFACTION OF T EA. STAGE 2 : 10% LAND (250 HECTARE) FOR DEVELOPMENT WOULD BE MADE AVAILABLE WITHIN 6 (SIX) MONTHS OF STAGE 1, PROVIDED THE CONCESSIONAIRE - FINALISES THE DPR / TEFR STUDY - COMMENCES CONSTRUCTION OF PHASE 1 - MAKES FINANCIAL ARRANGEMENT FOR PHASE 2 TO THE SA TISFACTION OF TEA STAGE 3 : BALANCE 80% LAND (2000 HECTARE) FO R DEVELOPMENT WOULD BE MADE AVAILABLE WITHIN 12 (TWEL VE) MONTHS OF STAGE -1, PROVIDED TEA ACCEPTS THE DPR / TEFR STUDY PREPARED CONCESSIONAIRE. - TEA IS SATISFIED WITH THE PHYSICAL PROGRESS OF PHAS E 1 AND PHASE 2 - CONCESSIONAIRE MAKES FINANCIAL ARRANGEMENT FOR PHAS E -3 TO THE SATISFACTION OF TEA. FOR THE PURPOSE OF SATISFACTION OF TEA IN RESPECT O F FINANCIAL ARRANGEMENT AS AFORESAID, THE CONCESSIONAIRE SHALL SUBMIT PHASING OF ESTIMATED EXPENDITURE, SOURCE OF FUNDS I NCLUDING OWN FUNDS AND COPIES OF COMMUNICATION FROM THE LEND ERS IN ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 62 CASE OF DEBT BY WAY OF TERM LOAN, NCD OR ANY OTHER INSTRUMENT SHOWING THEIR INTENTION FOR PROVIDING THE DEBT. 4.3 LAND FOR DEVELOPMENT SHALL BE TRANSFERRED BY TEA TO THE CONCESSIONAIRE FREE FROM ALL ENCUMBRANCES ON FO LLOWING TERMS & CONDITIONS : A. IT SHALL BE ON LEASE FOR A PERIOD OF 90 (NI NETY) YEARS FROM THE DATE OF TRANSFER THROUGH SUCH LEASE DEEDS AS MA Y BE MUTUALLY AGREED BETWEEN THE PARTIES. B. THE LAND TO BE TRANSFERRED SHALL BE AS PE R THE REQUEST AND CHOICE OF THE CONCESSIONAIRE SUBJECT TO AVAILAB ILITY, IN SUCH A MANNER THAT THE CONCESSIONAIRE IS ENTITLED T O ACHIEVE 150 FLOOR AREA RATIO (FAR) ON SUCH LAND. IF DUE TO LOCAL BYELAWS OR OTHER STATUTORY PROVISIONS, IT SHALL NOT BE POSSIBLE TO ACHIEVE 150 FAR, THEN TEA SHALL EVOLVE SUITABLE MECHANISM, AS MAY BE MUTUALLY AGREED BETWEEN THE TE A AND THE CONCESSIONAIRE, SO AS TO ENABLE THE CONCESSIONA IRE TO ACHIEVE 150 FAR. C. THE SOLE PREMIUM OF THE TRANSFERRED LAND SHA LL BE EQUIVALENT TO THE ACQUISITION COST PLUS A LEASE REN T OF RS. 100.00 (RUPEES ONE HUNDRED) ONLY PER HECTARE PER YE AR. THE ACQUISITION COST SHALL BE THE ACTUAL COMPENSATION P AID TO THE LAND OWNERS WITHOUT ANY ADDITIONAL CHARGE AND SHAL L BE PAYABLE BY THE CONCESSIONAIRE AS PER APPLICABLE RUL ES. THE RENT SHALL BE PAYABLE ANNUALLY FOR 90 (NINETY) YEAR S FROM THE DATE OF TRANSFER OF LAND. D. THE CONCESSIONAIRE SHALL BE ENTITLED T O FURTHER SUB- LEASE DEVELOPED / UNDEVELOPED LAND TO SUB-LESSEES / END-USERS IN ITS SOLE DISCRETION WITHOUT ANY FURTHER CONSENT OR APPROVAL OR PAYMENT OF ANY CHARGES / FEE ETC. TO TEA OR ANY OTHER RELEVANT AUTHORITY. E. AFTER SUB-LEASE OF PART OF THE LAND BY THE C ONCESSIONAIRE, THE SAME CAN BE TRANSFERRED / ASSIGNED WITHOUT REQU IRING ANY CONSENT OR APPROVAL OF OR PAYMENT OF ANY ADDITIONAL CHARGES, TRANSFER FEE, PREMIUMS ETC. TO TEA OR TO ANY OTHER RELEVANT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 63 AUTHORITY AND/OR THERE CAN BE SUBSEQUENT MULTIPLE S UB-LEASES OF THE LAND IN SMALLER PARTS. THE LEASE RENT OF THE RESPECTIVE SUB-LEASED PORTION OF LAND SHALL BE PAID BY THE SUB -LESSEES / TRANSFEREES TO TEA DIRECTLY ON PRO-RATA BASIS @ RS. 100.00 (RUPEES ONE HUNDRED) PER HECTARE PER YEAR. THE CONCESSIONAIRE SHALL BE REQUIRED TO PAY LEASE RENT TO TEA FOR THE PORTION OF LAND REMAINING IN ITS POSSESSION AFT ER SUB-LEASE, ON PRO-RATA BASIS AT THE AFORESAID PRESCRIBED RATE. TOTAL LEASE RENT PAID BY THE CONCESSIONAIRE AND VARIOUS SUB-LES SEES / TRANSFEREES SHALL BE RS. 100.00 (RUPEES ONE HUNDRED ) PER HECTARE PER YEAR. F. EACH SUB-LEASE AND/OR TRANSFER SHALL AFTE R THE EXECUTION THEREOF BE NOTIFIED BY THE TRANSFEROR OR THE TRANSF EREE OR THE SUB-LESSOR/SUB-LEASSEE TO TEA AND TILL SUCH TIME IT IS SO NOTIFIED THE TRANSFEROR/SUB-LESSOR SHALL REMAIN JOI NTLY AND SEVERALLY LIABLE ALONGWITH THE TRANSFEREE / SUB-LES SEE FOR PAYMENT OF LEASE RENT TO TEA. G. THE CONCESSIONAIRE MAY MAKE A REQUEST TO TEA TO EXECUTE THE LEASE DEED DIRECTLY IN FAVOUR OF CONCES SIONAIRES SUBSIDIARIES, ASSIGNS, TRANSFEREES ETC. IN RESPECT OF ANY PORTION OF THE LAND ON THE SAME TERMS AND CONDITIONS AS MEN TIONED ABOVE, AND ON RECEIPT OF SUCH REQUEST TEA SHALL EXE CUTE THE LEASE DEED IN RESPECT OF SUCH PORTION OF LAND DIREC TLY IN FAVOUR OF SUCH SUBSIDIARIES, ASSIGNS AND TRANSFEREES. H. IN CASE TEA AND THE CONCESSIONAIRE CON SIDER IT APPROPRIATE, TRIPARTITE AGREEMENT FOR SUB-LEASE DEE D MAY BE EXECUTED BETWEEN THE TEA, CONCESSIONAIRE AND THE SU B-LESSEE. 4.4 THE CONCESSIONAIRE SHALL BE FREE TO DEC IDE THE PURPOSE FOR WHICH TRANSFERRED LAND WILL BE USED I.E . FOR COMMERCIAL, AMUSEMENT, INDUSTRIAL, INSTITUTIONAL, R ESIDENTIAL ETC. AND ALSO FOR THE AREA OF LAND TO BE ALLOCATED FOR DIFFERENT USES. THE CONCESSIONAIRE SHALL ALSO BE FREE TO DECI DE WHETHER THE SUB-LEASED LAND SHALL BE IN THE FORM OF PLOTS OR CONSTRUCTED PROPERTIES. NO PERMISSION OF TEA SHALL BE REQUIRED EITHER FOR THE LAND USE OR FOR TRANSFER OF LEASEHOLD / ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 64 SUB-LEASING / MULTIPLE SUB-LEASING OF LAND. THE LAN D USE SHALL HOWEVER BE AS PER APPLICABLE MASTER PLAN AND OTHER REGULATIONS. 4.5 THE RIGHTS OF THE SUB-LESSEES / END-USERS S HALL NOT BE AFFECTED BY TERMINATION OF THIS AGREEMENT, OR EXPIR Y OF CONCESSION PERIOD AND SUBSEQUENT RENEWALS SHALL BE GRANTED BY TEA WITHOUT ANY ADDITIONAL COST TO TRANSFEREES / SUB-LESSEES / END-USERS, STANDARD TERMS AND CONDITIONS NOTWITHS TANDING. THE CONCESSIONAIRE / SUB-LESSEES / END-USERS SHALL FOLLOW THE STATUTORY LAWS / BYELAWS ETC. FOR THE LAND USE. 4.6 IF THE LAND IS NOT MADE AVAILABLE BY TEA TO THE CONCESSIONAIRE AT STAGES 1, 2 & 3 ACCORDING TO THE SCHEDULE MENTIONED IN CLAUSE 4.1 AND 4.2 ABOVE FOR ANY REASO N OTHER THAN ATTRIBUTABLE TO THE CONCESSIONAIRE, TEA, AT IT S DISCRETION, SHALL EITHER REIMBURSE TO THE CONCESSIONAIRE THE AD DITIONAL COST AND LOSS OF REVENUE OCCASIONED TO THE CONCESSI ONAIRE ON ACCOUNT OF THE SAID DELAY OR THE CONCESSIONAIRE SHA LL BE COMPENSATED BY SUITABLY EXTENDING THE CONCESSION PE RIOD. 21. IN VIEW OF ABOVE AGREEMENT, THE ASSESSEE WAS UN DER OBLIGATION TO DO WORK AS MENTIONED IN PARA 2.1 OF CHAPTER II AND I N TURN, CONCESSION WAS GRANTED BY THE TEA TO THE ASSESSEE AS MENTIONED IN CHAPTER III, THE LAND FOR CONSTRUCTION OF EXPRESSWAY AND LAND FOR DEVELOPMENT WAS PROVIDED TO THE ASSESSEE AND THE SAME WAS RELEASED BY THE TEA, AS P ER TERMS OF 4.1 AND 4.2, RESPECTIVELY, OF CHAPTER IV OF THE AGREEMENT. AS P ER ABOVE PROVISIONS AND TERMS OF THE AGREEMENT, THE TEA HAS TO PROVIDE LAND FOR EXPRESSWAY AND LAND FOR DEVELOPMENT TO THE ASSESSEE ON COST OF ACQUISIT ION PLUS A LEASE RENT OF RS.100/- PER HECTARE PER YEAR. THE ASSESSEE WAS UN DER OBLIGATION TO CONSTRUCT EXPRESSWAY BETWEEN AGRA AND NOIDA IN U.P. AND CONCE SSION AS MENTIONED IN ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 65 CHAPTER-III WAS GRANTED TO THE ASSESSEE. FROM VIGI LANT PERUSAL OF THE CONCESSION AGREEMENT, WE NOTE THAT THE ASSESSEE, IN TURN, WAS GIVEN THE RIGHT TO COLLECT TOLL FEES FROM EXPRESSWAY USERS AND ALSO GRANTED RIGHT T O DECIDE THE DISBURSEMENT AND PURPOSE OF LAND GIVEN FOR DEVELOPMENT AND THE R IGHTS TO USE THE LAND AS ITS OWN OR TO SUB-LEASE THE SAME TO A THIRD PARTY IN AC CORDANCE WITH URBAN DEVELOPMENT POLICY AND APPLICABLE RULES OF THE GOVE RNMENT OF UP. 22. LD. AR HAS ALSO DRAWN OUR ATTENTION TOWARDS OBS ERVATIONS OF THE HONBLE SUPREME COURT IN THE JUDGMENT OF NANDKISHORE GUPTA VS STATE OF UP IN CIVIL APPEAL NO. 7468 OF 2010 DATED 8.9.2010 IN PARA 30 & 34 AND SUBMITTED THAT THE PROJECT COMMISSIONED BY THE ASSESSEE WAS OF IMMENSE PUBLIC IMPORTANCE AND THE IMPLEMENTATION OF THE SAID PROJECT RESULTED INT O EXISTENCE OF FIVE DEVELOPED PARCELS/CENTRES IN THE STATE FOR THE USE OF CITIZEN S AND CREATION OF THESE FIVE PARCELS WAS ALSO INSURING THE MAXIMUM UTILISATION O F THE EXPRESSWAY. THE LD. AR ALSO SUBMITTED THAT THE CREATION OF THE EXPRESSW AY AND FIVE LAND PARCELS WAS COMPLIMENTARY TO EACH OTHER AND CAN BE VIEWED AS IM PORTANT PARTS OF INTEGRAL SCHEME. THE RELEVANT OBSERVATIONS OF HONBLE APEX COURT READ AS FOLLOWS:- THE EXPRESSWAY IS A WORK OF IMMENSE PUBLIC IMPORTA NCE. THE STATE GAINS ADVANTAGES FROM THE CONSTRUCTION OF AN EXPRESSWAY AND SO DOES THE GENERAL PUBLIC. CREATION OF A CORRIDOR FOR FAST MOVING TRAFFIC RESULTING INTO CUR TAILING THE TRAVELING TIME, AS ALSO THE TRANSPORT OF THE GOODS, WOULD BE SOME FACTORS WHICH SPEAK IN FAVOUR OF THE PROJECT BEING FOR THE PUBLIC PURPOSE. MUCH WAS STATED ABOUT THE 25 MILLION SQUAR E METERS OF LAND BEING ACQUIRED FOR THE FIVE PARCELS OF LAND. I N FACT, IN OUR OPINION, AS HAS RIGHTLY BEEN COMMENTED UPON BY THE HIGH COURT, ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 66 THE CREATION OF THE FIVE ZONES FOR INDUSTRY, RESIDE NCE, AMUSEMENT ETC., WOULD BE COMPLIMENTARY TO THE CREATION OF THE EXPRESSWAY. IT CANNOT BE FORGOTTEN THAT THE CREATION OF LAND PA RCELS WOULD GIVE IMPETUS TO THE INDUSTRIAL DEVELOPMENT OF THE S TATE CREATING MORE JOBS AND HELPING THE ECONOMY AND THEREBY HELPI NG THE GENERAL PUBLIC. THERE CAN BE NO DOUBT THAT THE IMPL EMENTATION OF THE PROJECT WOULD RESULT IN COMING INTO EXISTENCE O F FIVE DEVELOPED PARCELS/CENTERS IN THE STATE FOR THE USE OF THE CITIZENS. THERE SHALL, THUS, BE THE PLANNED DEVELOPMENT OF TH IS OTHERWISE INDUSTRIALLY BACKWARD AREA. THE CREATION OF THESE F IVE PARCELS WILL CERTAINLY HELP THE MAXIMUM UTILIZATION OF THE EXPRESSWAY AND THE EXISTENCE 3 OF AN EXPRESSWAY FOR THE FAST M OVING TRAFFIC WOULD HELP THE INDUSTRIAL CULTURE CREATED IN THE FI VE PARCELS. THUS, BOTH WILL BE COMPLIMENTARY TO EACH OTHER AND CAN BE VIEWED AS PARTS OF AN INTEGRAL SCHEME. THEREFORE, I T CANNOT BE SAID THAT IT IS NOT A PUBLIC PURPOSE. .................. (LAST PAR T OF PARA 30) WE HAVE ALREADY CONSIDERED THIS QUESTION THAT IN TH E PRESENT CASE, THERE IS NOTHING TO INDICATE THAT THE ACQUISITION IS FOR THE COMPANY I.E. FOR JAIPRAKASH INDUSTRIES LTD. IT IS ONLY, THEREFORE, THAT WE ARE AT PAINS TO POINT OUT THAT T HE GOVERNMENT WAS ONLY USING THE COMPANY FOR IMPLEMENTING ITS POL ICY. (LAST PART OF PARA 34) 23. HENCE, IN VIEW OF ABOVE OBSERVATIONS OF HONBLE APEX COURT IN PARA 30, WE MAY SAFELY INFER THAT THE LAND FOR DEVELOPMENT O F THE EXPRESSWAY AND DEVELOPMENT OF FIVE LAND PARCELS FOR INDUSTRIAL, CO MMERCIAL, AMUSEMENT AND RESIDENTIAL PURPOSES WAS ALLOTTED TO THE ASSESSEE U NDER CONCESSION AGREEMENT. THE WORK OF THE DEVELOPMENT OF THE EXPRESSWAY AND D EVELOPMENT OF THE LAND ARE INTEGRAL AND INSEPARABLE PART OF THE PROJECT/SC HEME. WE MAY ALSO POINT OUT THAT THE LAND FOR DEVELOPMENT WAS NOT ALLOTTED ONLY FOR RESIDENTIAL/HOUSING PURPOSE BUT ALSO FOR THE PURPOSE OF INDUSTRIAL, COM MERCIAL AND AMUSEMENT ETC., HENCE THE CONCESSION AGREEMENT WAS INTENDED TO USE THE ASSESSEE COMPANY FOR ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 67 IMPLEMENTATION OF THE DEVELOPMENT POLICY OF U.P. GO VERNMENT AS OBSERVED BY HONBLE APEX COURT IN LAST OPERATIVE PART OF PARA 3 4 OF THE JUDGMENT IN THE CASE OF NAND KISHORE GUPTA (SUPRA). 24. THE LD. DR VEHEMENTLY CONTENDED THAT AS PER LAN GUAGE USED BY THE LEGISLATURE IN SUB-SECTION (2) TO SECTION 80IA OF T HE ACT AND THE SIMILAR LANGUAGE WHICH WAS AGAIN USED BY THE CBDT IN CIRCULAR NO. 1/ 2006 STIPULATES THAT THE ASSESSEE WILL BE ENTITLED FOR EXEMPTION U/S 80IA(4) (I) OF THE ACT ONLY WHEN THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE INFRASTRU CTURE FACILITY, MEANS THE EXEMPTION IS NOT AVAILABLE WHEN THE ENTERPRISE ONLY DEVELOPS INFRASTRUCTURE FACILITY BECAUSE THE WORD AND USED BY THE LEGISLA TURE IN SUB-SECTION (1) AND CBDT CIRCULAR (SUPRA) BETWEEN THE WORD DEVELOPS A ND BEGINS TO OPERATE BETWEEN THE WORD DEVELOPS AND BEGINS TO OPERATE REQUIRES BOTH THE CONDITIONS TO BE FULFILLED SIMULTANEOUSLY AND THE A SSESSEE HAS BEGUN TO OPERATE THE INFRASTRUCTURE FACILITY ONLY WHEN THE TOLL ROAD WAS ACTUALLY INAUGURATED BY THE HONBLE CHIEF MINISTER OF UP ON 9.8.2012, WHICH IS RELATED TO FY 2012-13 PERTAINING TO AY 2014-15, THEN EXEMPTION IS NOT ALL OWABLE FOR AY 2009-10 I.E. THE ASSESSMENT YEAR UNDER APPEAL. 25. LD. AR REPLIED THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IA(4) OF THE ACT ON THE FACT AND LAW INVOLVED AND RELEVANT TO TH E ISSUE AS A DEVELOPER OF THE INFRASTRUCTURE FACILITY, EVEN IF IT HAS NOT COMMENC ED OPERATING AND MAINTAINING BUT IT IS DEVELOPING THE SAME. PLACING RELIANCE ON THE DECISIONS OF HONBLE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 68 SUPREME COURT IN THE CASE OF K.P. VERGESE VS ITO 13 1 ITR 597 (SC), T HE ORDER OF ITAT MUMBAI IN THE CASE OF ACIT VS BHARAT UDYOG LTD . 118 ITD 336 (MUMBAI TRIBUNAL) AND ON THE ORDER OF ITAT-AMRITSAR IN THE CASE OF TRG INDUSTRIES (P) LTD. VS DCIT (2013) 35 TAXMAN.CO M 253 (AMRITSAR TRIBUNAL) SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE RATIO OF THESE JUDGMENTS AND ORDERS. 26. LD. AR REITERATING ITS ARGUMENT SUBMITTED BEF ORE THE LD. CIT NOIDA AND RELYING ON WRITTEN SUBMISSIONS DATED 19.3.2014, 25. 3.2014 AND 27.3.2014 (ANNEXED TO ORDER OF CIT AS ANNEXURE A, B & C) PLAC ED BEFORE THE LD. CIT DURING PROCEEDINGS U/S 263 OF THE ACT, SUBMITTED TH AT THERE IS NO REQUIREMENT U/S 80IA(4) THAT THE DEDUCTION WOULD BE AVAILABLE ONLY AFTER THE ASSESSEE HAS BEGUN THE OPERATION OF THE INFRASTRUCTURE FACILITY. LD. AR STRENUOUSLY CONTENDED THAT IT IS A WELL ACCEPTED PROPOSITION THAT THE TAXING STAT UTES AND PROVISIONS CONFERRING BENEFIT FOR THE ASSESSEE SHOULD BE GIVEN AN INTERPR ETATION WHICH ENABLES THE ASSESSEE TO SECURE BENEFIT AND IT SHOULD BE SO INTE RPRETED AND THE WORDS USED THEREIN SHOULD BE ASSIGNED SUCH MEANING AS WOULD EN ABLE THE ASSESSEE TO SECURE THE BENEFIT AND DEDUCTION INTENDED TO BE GIVEN BY T HE LEGISLATURE TO THE ASSESSEE. LD. AR ALSO CONTENDED THAT IF THE MEANING ADOPTED B Y THE REVENUE AND THE LD. CIT IS ACCEPTED, THAT DEDUCTION U/S 80IA(4)(I) OF T HE ACT WOULD BE AVAILABLE ONLY AFTER ASSESSEE HAS BEGUN THE OPERATION OF THE INFRASTRUCTURE FACILITY THEN THE DEDUCTION U/S 80IA(4) WOULD BE AVAILABLE ONLY AFTER COMPLETION OF PROJECT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 69 WHICH IS OBVIOUSLY SPREAD OVER SEVERAL YEARS AND EX EMPTION TO THOSE ENTERPRISES, WHICH ARE INVOLVED ONLY INTO THE DEVE LOPMENT OF INFRASTRUCTURE FACILITY, WOULD NEVER BE AVAILABLE AND THIS INTERPR ETATION WOULD DEFEAT AND FRUSTRATE THE VERY PURPOSE OF THE BENEFICIAL TAXATI ON LEGISLATION. 27. LD. AR FURTHER SUBMITTED THAT SECTION 80IA(2) A ND IS TO BE SEEN IN THE CONTEXT OF SECTION 80IA(4) AND THE WORDS USED IN SU B-SECTION (2) VIZ. DEVELOPS AND BEGINS TO OPERATE HAS TO BE READ AND INTERPRET ED IN THE CONTEXT OF INTENTION AND SPIRIT OF SECTION 80IA(4) AND THE WORDS AND IN SECTION 80IA(2) MAY BE READ OR USED AS OR AS TO AVOID UNWORKABLE, UNREASONABLE OR ABSURD INTERPRETATION WHICH IS NOT RECONCILABLE WITH THE I NTENTION AND LITERAL MEANING OF SUB-SECTION (4). LD. AR PLACING RELIANCE ON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF ISHWAR SINGH BINDRA VS STATE OF UP 1968 AIR 1450 (SC) AND DECISION OF FULL BENCH OF HONBLE ORISSA HIGH COURT IN THE CASE OF CIT VS GANGARAM CHAPOLIA (1976) 103 ITR 613 (ORISSA -FB) , SUBMITTED THAT THE CONJUNCTIVE AND IN SUB-SECTION (2) OF SECTIO N 80IA OF THE ACT BETWEEN DEVELOPS AND BEGINS TO OPERATE AND SHOULD BE CO NSTRUED AS OR TO SAVE THE VERY PURPOSE OF THE BENEFICIAL PROVISIONS OF SECTIO N 80IA OF THE ACT AND CBDT CIRCULAR 1/2006 (SUPRA). LD. AR ALSO POINTED OUT T HAT THE ALLEGATION OF NON- COMPLIANCE OF CBDT CIRCULAR (SUPRA) HAS NOT BEEN ME NTIONED IN THE NOTICE U/S 263 OF THE ACT AND THE SAME CANNOT BE USED FOR REVI SING THE ASSESSMENT ORDER. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 70 28. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS OF BOTH THE SIDES, FIRSTLY WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE LD. AR THAT THE ALLEGATION OF NON-COMPLIANCE OF THE CBDT CIRCULAR NO. 1/2006 ( SUPRA) HAS NOT BEEN MENTIONED BY THE LD. CIT NOIDA IN THE NOTICE ISSUED TO THE ASSESSEE U/S 263 OF THE ACT (SUPRA). SECONDLY, THE CONSTRUCTION OF LAN GUAGE AND WORDS USED BY THE LEGISLATURE IN SUB-SECTION (2) OF SECTION 80IA OF T HE ACT AND USED BY THE CBDT IN CIRCULAR NO. 1/2006 (SUPRA) ARE SIMILAR VIZ. DE VELOPS AND BEGINS TO OPERATE. THE HEADING GIVEN BY THE LEGISLATION TO SECTION 80I A OF THE ACT READS AS DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM IN DUSTRIAL UNDERTAKING OR ENTERPRISE ENGAGED IN INFRASTRUCTURE DEVELOPMENT ET C. WHICH, TO OUR HUMBLE UNDERSTANDING, EXPRESS THE INTENTION OF THE LEGISLA TURE THAT THE EXEMPTION THEREIN SECTION 80IA OF THE ACT IS AVAILABLE FOR THE UNDERT AKINGS OR ENTERPRISE WHICH ARE ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPME NT ETC. MEANING THEREBY INFRASTRUCTURE DEVELOPMENT IS PARAMOUNT CONSIDERATI ON FOR GRANT OF EXEMPTION U/S 80IA OF THE ACT. IF THE LITERAL MEANING IS GIV EN TO THE CONJUNCTIVE WORD AND BETWEEN DEVELOPS AND BEGINS TO OPERATE TH EN THE ENTERPRISE WOULD BE ENTITLED TO EXEMPTION ONLY WHEN THE ENTERPRISE DEVE LOPS AND BEGINS TO OPERATE INFRASTRUCTURE FACILITY ON OR AFTER 1.4.1995, AS RE QUIRED BY CONDITION (C) OF SECTION 80IA(4)(I) OF THE ACT. 29. UNDER SAID INTERPRETATION AS GIVEN BY THE REVEN UE AUTHORITIES, THE ENTERPRISE WOULD BE ENTITLED FOR EXEMPTION U/S 80IA (4) OF THE ACT ONLY AFTER ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 71 COMPLETION OF THE PROJECT EVEN IF DEVELOPMENT TAKES MORE THAN ONE YEAR TO START OPERATIONS AND THEN ONLY THE INCOME DERIVED FROM OP ERATING AND MAINTAINING OF INFRASTRUCTURE FACILITY WOULD BE ELIGIBLE FOR EXEMP TION AND ENTERPRISES ENGAGED IN DEVELOPMENT ACTIVITIES WOULD NEVER BE ENTITLED F OR EXEMPTION. OBVIOUSLY, THIS CANNOT BE AN INTENTION OF LEGISLATURE AND CBDT CIRCULAR (SUPRA) WHILE FRAMING THE PROVISION OF SECTION 80IA OF THE ACT AN D ISSUING CIRCULAR NO. 1/2006 (SUPRA) RESPECTIVELY. 30. AT THIS JUNCTURE, WE RESPECTFULLY TAKE COGNIZAN CE OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P. VERGHESE (SUPRA) AND DECISION OF FULL BENCH OF HONBLE ORISSA HIGH COURT IN THE CASE OF GANGARAM CHOPALIA (SUPRA) AND DECISION OF HONBLE JAMMU & KASHMIR HIG H COURT IN THE CASE OF CIT VS J&KTDC (2001) 248 ITR 94 (J&K), AS RELIED BY THE LD. AR. IN THE CASE OF K.P. VARGHESE V ITO (SUPRA), THE APEX COURT HELD THAT THE INTERPRETATION OF A STATUTE BEING AN EXERCISE IN THE ASCERTAINMENT OF M EANING, EVERYTHING WHICH IS LOGICALLY RELEVANT SHOULD BE ADMISSIBLE. THE RELEV ANT PART OF THE DECISION READS AS UNDER:- A STATUTORY PROVISION MUST BE SO CONSTRUED, IF POS SIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED. WHERE T HE PLAIN LITERAL INTERPRETATION OF A STATUTORY PROVISION PRO DUCES A MANIFESTLY ABSURD AND UNJUST RESULT WHICH COULD NEV ER HAVE BEEN INTENDED BY THE LEGISLATURE, THE COURT MAY MODIFY T HE LANGUAGE USED BY THE LEGISLATURE OR EVEN DO SOME VIOLENCE TO IT, SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AN D PRODUCE A RATIONAL CONSTRUCTION. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 72 SPEECHES MADE BY THE MEMBERS OF THE LEGISLATURE ON THE FLOOR OF THE HOUSE WHEN THE BILL IS BEING DEBATED ARE INA DMISSIBLE FOR THE PURPOSE OF INTERPRETING THE STATUTORY PROVISION BUT THE SPEECH MADE BY THE MOVER OF THE BILL EXPLAINING THE REASON FOR ITS INTRODUCTION CAN CERTAINLY BE REFERRED TO FOR THE P URPOSE OF ASCERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED BY THE LEGISLATION AND THE OBJECT AND PURPOSE FOR WHICH THE LEGISLATIO N IS ENACTED. THIS IS IN ACCORD WITH THE RECENT TREND IN JURISTIC THOUGHT NOT ONLY IN WESTERN COUNTRIES BUT ALSO IN INDIA, THAT THE IN TERPRETATION OF A STATUTE BEING AN EXERCISE IN THE ASCERTAINMENT OF M EANING, EVERYTHING WHICH IS LOGICALLY RELEVANT SHOULD BE AD MISSIBLE. 31. LD. AR PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. VS CIT (1992) 196 ITR 188 (SC), THE LD. AR SUBMITTED THAT IF PROVISION FOR CHECKING ABUSE IS F OUND TO HAVE RESULTED INTO NULLIFYING THE VERY PURPOSE OF ITS ENACTMENT THEN T HE PROVISIONS OF TAXING STATUTES SHOULD BE INTERPRETED LIBERALLY SO AS TO A DVANCE THE OBJECTIVE OF THE PROVISIONS AND NOT FRUSTRATE IT. LD. AR HAS FURTHE R DRAWN OUR ATTENTION TOWARDS DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ABG HEAVY INDUSTRIES LTD. (2010) 322 ITR 323 (BOMBAY) AND SUBMITTED THAT AFTER CONSIDERING THE RATIO OF THE DECISION OF HONBLE AP EX COURT IN THE CASE OF BAJAJ TEMPO LTD. (SUPRA) IT WAS ALSO HELD THAT AN ASSESSE E DID NOT HAVE TO DEVELOP THE ENTIRE PART OF ELIGIBLE BUSINESS OR ACTIVITY IN ORD ER TO QUALIFY FOR A DEDUCTION U/S 80IA OF THE ACT. 32. LD. DR CONTENDED THAT THE TOLL WAS INAUGURATED ON 9.8.2012 (RELEVANT TO AY 2013-14). HENCE, LITERAL MEANING DOES NOT ALLOW TO GRANT EXEMPTION U/S 80IA OF THE ACT FROM AY 2009-10. LD. AR PLACING RE JOINDER SUBMITTED THAT THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 73 ASSESSEE STARTED ITS OPERATION FROM 5.4.2007. HENC E INCOME EARNED FROM THE ACTIVITIES WHICH ARE INEXTRICABLY LINKED WITH THE M AIN OBJECT AND SCOPE OF WORK, COMMENCEMENT OF BUSINESS OPERATION ARE ELIGIBLE FOR EXEMPTION U/S 80IA OF THE ACT. FIRSTLY, WE NOTE THAT HONBLE APEX COURT LAID A BASIC PRINCIPLE FOR INTERPRETATION OF BENEFICIAL TAXATION STATUTES IN T HE CASE OF BAJAJ TEMPO LTD. (SUPRA) WHICH READS AS FOLLOWS:- A PROVISION IN A TAXING STATUTE GRANTING INCENTIVE S FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUE D LIBERALLY; AND SINCE A PROVISION FOR PROMOTING ECON OMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRIC TION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO FRUSTRATE IT. BY THE COURT: IF A PROVISION FOR CHECKING ABUSE I S FOUND TO HAVE RESULTED IN NULLIFYING THE VERY PURPOSE OF ITS ENACTMENT AND THE LEGISLATURE INTERVENES, THEN IT CAN BE ASSU MED THAT THE LEGISLATURE, HAVING BEEN SATISFIED OF THE FAILURE O F THE PURPOSE FOR WHICH THE PROVISION WAS INSERTED, PROCEEDED TO CURE THE DEFECT BY SUITABLY AMENDING THE PROVISION OR REMOVI NG IT. 33. IN THE DECISION OF ABG HEAVY INDUSTRIES (SUPRA) THE HONBLE BOMBAY HIGH COURT REFERRING TO THE RATIO OF THE DECISION O F HONBLE APEX COURT IN THE CASE OF BAJAJ TEMPO (SUPRA) HELD THE ASSESSEE DID N OT HAVE TO DEVELOP THE ENTIRE PORT/PROJECT INTO TO QUALIFY FOR A DEDUCTION U/S 80 IA OF THE ACT. THEIR LORDSHIPS FURTHER HELD THAT THE PARLIAMENT DID NOT LEGISLATE A CONDITION IMPOSSIBLE OF COMPLIANCE. THE RELEVANT OPERATIVE PART OF THIS OR DER READS AS FOLLOWS:- 19 . THE OBLIGATIONS WHICH HAVE BEEN ASSUMED BY TH E ASSESSEE UNDER THE TERMS OF THE CONTRACT ARE OBLIGA TIONS INVOLVING THE DEVELOPMENT OF AN INFRASTRUCTURE FACI LITY. SECTION 80-IA OF THE ACT ESSENTIALLY CONTEMPLATED DEDUCTION IN A ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 74 SITUATION WHERE AN ENTERPRISE CARRIED ON THE BUSINE SS DEVELOPING, MAINTAINING AND OPERATING AN INFRASTRUC TURE FACILITY. A PORT WAS DEFINED TO BE INCLUDED WITHIN THE PURVIEW OF THE EXPRESSION 'INFRASTRUCTURE FACILITY'. THE OB LIGATIONS WHICH THE ASSESSEE ASSUMED UNDER THE TERMS OF THE C ONTRACT WERE NOT MERELY FOR SUPPLY AND INSTALLATION OF THE CRANES, BUT INVOLVED A CONTINUOUS OBLIGATION RIGHT FROM THE SUP PLY OF THE CRANES TO THE INSTALLATION, TESTING, COMMISSIONING, OPERATION AND MAINTENANCE OF THE CRANES FOR A TERM OF TEN YEA RS AFTER WHICH THE CRANES WERE TO VEST IN JNPT FREE OF COST. AN ASSESSEE DID NOT HAVE TO DEVELOP THE ENTIRE PORT IN ORDER TO QUALIFY FOR A DEDUCTION UNDER SECTION 80-IA. PARLIAMENT DID NOT L EGISLATE A CONDITION IMPOSSIBLE OF COMPLIANCE. A PORT IS DEFIN ED TO BE AN INFRASTRUCTURE FACILITY AND THE CIRCULAR OF THE BOA RD CLARIFIED THAT A STRUCTURE FOR LOADING, UNLOADING, STORAGE, ETC., AT A PORT WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80-IA. TH E CONDITION OF A CERTIFICATE FROM THE PORT AUTHORITY WAS FULFIL LED AND JNPT CERTIFIED THAT THE FACILITY PROVIDED BY THE ASSESSE E WAS AN INTEGRAL PART OF THE PORT. THE ASSESSEE DEVELOPED T HE FACILITY ON A BOLT BASIS UNDER THE CONTRACT WITH JNPT. ON THE FULFILMENT OF THE LEASE OF TEN YEARS, THERE WAS A VESTING IN T HE JNPT FREE OF COST. 34. THEREFORE, IN VIEW OF RATIO LAID DOWN BY HONBL E APEX COURT IN THE CASE OF BAJAJ TEMPO (SUPRA) AND BY HONBLE BOMBAY HIGH C OURT IN THE CASE OF ABG HEAVY INDUSTRIES (SUPRA), WE RESPECTFULLY NOTE THAT A PROVISION IN TAXING STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELO PMENT SHOULD BE CONSTRUED LIBERALLY AND SINCE A PROVISION FOR PROMOTING ECONO MIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRICTION ON IT ALSO H AS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO F RUSTRATE IT OR TO DEFEAT ITS PURPOSE. WE FURTHER RESPECTFULLY NOTE THE RATIO OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRI ES (SUPRA) WHEREIN IT WAS CATEGORICALLY HELD THAT THE ASSESSEE DID NOT HA VE TO DEVELOP THE ENTIRE PORT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 75 OR PROJECT IN ORDER TO QUALIFY FOR EXEMPTION U/S 80 IA OF THE ACT AND THAT SHOULD NOT BE AN INTENTION AND EXPECTATION OF LEGISLATURE TO LEGISLATE A CONDITION IMPOSSIBLE OF COMPLIANCE. 35. TURNING TO THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE, WE NOTE THE LD. AR HAS CONTENDED THAT AT THE INSTANCE OF THE AO, TH E ASSESSEE SUBMITTED VARIOUS REPLIES TO THE QUERIES OF THE AO INCLUDING REPLY DA TED 28.12.2011(PB PAGE 187 TO 193) WHEREIN IT WAS SUBMITTED THAT AS PER REQUIR EMENT OF SECTION 80IA(4)(I) OF THE ACT THE ASSESSEE COMPANY IS A SPECIAL PURPOS E VEHICLE (SVP) COMPANY INCORPORATED AND REGISTERED IN INDIA AND IT HAS ENT ERED INTO A CONCESSION AGREEMENT WITH A STATUTORY BODY I.E. TAJ EXPRESSWAY AND INDUSTRIAL DEVELOPMENT AUTHORITY (TEA) CONSTITUTED UNDER THE U P INDUSTRIAL DEVELOPMENT ACT, 1976 AND HAS ALSO STARTED ITS OPER ATION FROM APRIL 5, 2007, THEREFORE, THE CONDITION LAID DOWN IN CLAUSE (C) IS WHOLLY SATISFIED. LD. AR FURTHER POINTED OUT THAT U/S 80-IA (4)(I) OF THE AC T, DEDUCTION IS AVAILABLE EVEN TO AN ENTERPRISE ONLY DEVELOPING THE INFRASTRUCTURE FACILITY. LD. AR FURTHER EXPLAINED THAT AN ENTERPRISE NOT OPERATING AND MAIN TAINING THE INFRASTRUCTURE FACILITY BUT ONLY DEVELOPING THE SAME IS ALSO ELIGI BLE FOR EXEMPTION U/S 80IA OF THE ACT. THE LD. AR ALSO POINTED OUT THAT IF A VIE W IS TAKEN THAT AS PER CLAUSE (C) OF SECTION 80IA(4)(I) OF THE ACT, THE DEDUCTION IS AVAILABLE ONLY AFTER THE ENTERPRISE STARTS OPERATING AND MAINTAINING THE I NFRASTRUCTURE FACILITY, THE ENTERPRISE ONLY DEVELOPING SUCH INFRASTRUCTURE FACI LITY WOULD NEVER BE ELIGIBLE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 76 FOR ANY DEDUCTION UNDER THIS SECTION, BECAUSE AFTER COMPLETION OF ONLY DEVELOPMENT OF INFRASTRUCTURE FACILITY, SUCH AN ENT ERPRISE WOULD NEVER OPERATE AND MAINTAIN THE INFRASTRUCTURE FACILITY. 36. LD. AR, REITERATING ITS EARLIER ARGUMENTS SUBM ITTED THAT IT IS A WELL SETTLED POSITION THAT THE BENEFICIARY PROVISIONS IN THE TAX ATION STATUTES SHOULD BE INTERPRETED IN SUCH A MANNER SO IT SUBSERVES THE PU RPOSE FOR WHICH IT IS ENACTED AND DOES NOT FRUSTRATE THE OBJECT BEHIND THE STATUT E AND ITS PURPOSE. ACCORDINGLY, LD. AR SUBMITTED THAT IN ORDER TO FULF IL THE PURPOSE OF SECTION 80IA(4)(I) I.E. TO MAKE EVEN INCOME FROM DEVELOPMEN T OF INFRASTRUCTURE FACILITY ELIGIBLE FOR DEDUCTION U/S 80-IA(4)(I) OF THE ACT, CLAUSE (C) OF THE SAME PROVISION OF THE ACT SHOULD BE READ AS HAS STARTED OR STARTS DEVELOPING OR OPERATING OR MAINTAINING OR DEVELOPING, OPERATING A ND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST DAY OF APRIL 1995. 37. LD. AR STRENUOUSLY CONTENDED THAT IF CLAUSE (C) IS INTERPRETED IN THE MANNER AS ADOPTED BY THE LD. CIT, THE IT WOULD BE I NTERPRETED TO COVER THE CASES ONLY RELATING TO OPERATION AND MAINTENANCE OF THE I NFRASTRUCTURE FACILITY, THE ENTIRE REASON AND PURPOSE FOR AMENDING SECTION 80IA (4)(I) TO SEPARATELY ALLOW DEDUCTION FOR DEVELOPMENT OF INFRASTRUCTURE FACILIT Y WOULD LOSE ITS PURPOSE. 38. HAVING HEARD ARGUMENTS OF BOTH THE SIDES AND A FTER HAVING GONE THROUGH RELEVANT MATERIAL PLACED ON RECORD, WRITTEN SUBMISS IONS, GIST OF CASE LAWS RELIED BY BOTH THE PARTIES, WE NOTE THAT THE MAIN CONTROVE RSY IN THIS CASE IS MAINLY THAT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 77 THE ASSESSEE IS CLAIMING THAT AS PER OBJECTS OF THE COMPANY, CONCESSION AGREEMENT AND MAIN ACTIVITIES OF THE COMPANY, THE C OMPANY DEVELOPED A TOLL ROAD BETWEEN NOIDA AND AGRA AND HIS CLAIM FOR DEDUC TION FALLS ON FOUR CORNERS WITHIN THE AMBIT OF CLAUSE (A) OF EXPLANATION TO SE CTION 80IA(4)(I) OF THE ACT. PER CONTRA, THE MAIN CONTENTION OF THE LD. CIT, NOI DA IS THAT THE ASSESSEE DEVELOPED A HIGHWAY PROJECT WHICH WAS INAUGURATED ON 9.8.2012 BY HONBLE CHIEF MINISTER, GOVERNMENT OF UP WHICH FALLS UNDER CLAUSE (B) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT AND SAID PERIOD IS RELATED TO FINANCIAL YEAR 2012- 13 PERTAINED TO AY 2013-14 AND SINCE THE PROJECT OF THE ASSESSEE HAD NOT STARTED ITS OPERATION IN THE PERIOD RELATED TO AY 2009-10, THEREFORE, THE AO WRONGLY ALLOWED THE CLAIM OF THE ASSESSEE. 39. LD. AR SUBMITTED THAT THE ASSESSEE COMPANY WAS INCORPORATED UNDER THE COMPANIES ACT 1956 AS A SPECIAL PURPOSE VEHICLE (SP V) ON 5.4.2007 FOR DEVELOPING, OPERATING AND MAINTAINING THE TOLL ROAD BETWEEN NOIDA AND AGRA ALONG WITH SERVICE ROAD AND ASSOCIATED STRUCTURES W ITH RIGHTS TO COLLECT TOLL DURING THE CONCESSION PERIOD AND ALSO GIVEN RIGHTS FOR SUB-LEASE/DEVELOPMENT OF LAND AS AN INTEGRAL PART OF EXPRESSWAY PROJECT. LD . AR FURTHER SUBMITTED THAT TAJ EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY (TE A) WAS CONSTITUTED BY GOVERNMENT OF UP VIDE NOTIFICATION NO. 697/77-4-200 1-03(N)/2001 DATED 24.04.2001 UNDER UP INDUSTRIAL AREA DEVELOPMENT ACT 1976 WHICH INVITED OFFERS FROM INTERESTED PARTIES OF NATIONAL AND INTE RNATIONAL STATURE ON 14.5.2001 ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 78 FOR DEVELOPMENT/OPERATION AND MAINTENANCE OF SIX LA NE ACCESS CONTROLLED EXPRESSWAY. 40. LD. AR FURTHER SUBMITTED THAT M/S JAIPRAKASH A SSOCIATES LTD. (JAL) (FORMERLY KNOWN AS JAIPRAKASH INDUSTRIES LTD.) WAS DECLARED THE SUCCESSFUL BIDDER AS THE CONCESSION PERIOD OFFERED BY IT WAS L OWEST I.E. 36 YEARS. LD. AR FURTHER SUBMITTED THAT AS PER THE DIRECTIONS OF INQ UIRY COMMISSION HEADED BY THE FORMER HONBLE JUDGE OF HIGH COURT OF PATNA AND CALCUTTA, THE TEA AND THE JAL INCORPORATED SPECIAL PURPOSE VEHICLE (SPV) VIZ. JAYPEE INFRATECH LIMITED THE ASSESSEE COMPANY, FOR DEVELOPMENT OPERATION AND MAINTENANCE OF 6 LANE ACCESS CONTROLLED EXPRESSWAY BY WAY OF EXECUTION OF AN ASSIGNMENT AGREEMENT FOR THE PURPOSE OF ASSIGNING THE ASSIGNME NT OF THE CONCESSION AGREEMENT IN THE NAME OF ASSESSEE COMPANY I.E. JAYP EE INFRATECH LIMITED (JIL) ON 19/10/2007. THE LD. AR ALSO POINTED OUT THAT TO IMPLEMENT ALL THE OBJECTS OF THE CONCESSION AGREEMENT DATED 7/2/2003 BETWEEN JAI PRAKASH INDUSTRIES LTD. (NOW JAIPRAKASH ASSOCIATES LTD.) AND TAJ EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY (TEA), THE ASSESSEE COMPANY WAS FORMED AS A SPECIAL PURPSOE VEHICLE (SVP) ON 5.4.2007 AND AFTER INCORPORATION OF ASSESSEE COMPANY, THE SAID ASSIGNMENT AGREEMENT (SUPRA) WAS ALSO EXECUTE D ON 19/10/2007. 41. ELABORATING OBJECTS AND PROJECT DETAILS, THE LD . AR SUBMITTED THAT THE CONCEPT OF THE TAJ EXPRESSWAY PROJECT WAS AN OUTCO ME OF THE POLICY DECISION OF THE GOVERNMENT OF U.P. UNDER THE STATUTE CALLED U.P. INDUSTRIAL AREA ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 79 DEVELOPMENT ACT, 1976 (U.P. ACT NO OF 1976) AND IN EXERCISE OF THE POWER AS VESTED UNDER SECTION 3 OF THE SAID ACT, THE GOVERN MENT OF UP CONSTITUTED AN IMPLEMENTING AUTHORITY NAMELY, 'TAJ EXPRESSWAY INDU STRIAL DEVELOPMENT AUTHORITY' (TEA) JUST PRIOR TO LAUNCHING THE PROJE CT VIZ. THE EXPRESSWAY CONNECTING NOIDA WITH AGRA WAS ABOUT 160 KMS OF LEN GTH AND IT WAS TO PASS THROUGH THE VIRGIN AREA OF UP STATE ALONG THE YAMUN A RIVER. 42. LD. AR FURTHER SUBMITTED THAT THE TEA HAS GRANT ED RIGHTS OF LAND DEVELOPMENT OFN25 MILLION SQ. MTRS LAND PROVIDED T O THE ASSESSEE ON LEASE FOR THE PERIOD OF 90 YEARS, ALONG THE PROPOSED 100 MET ERS WIDE EXPRESSWAY FOR COMMERCIAL, AMUSEMENT, INDUSTRIAL, INSTITUTIONAL AN D RESIDENTIAL DEVELOPMENT. LD. AR POINTED OUT THAT THE TEA PROVIDED THE 'LAND FOR DEVELOPMENT' ALONG THE EXPRESSWAY AT FIVE OR MORE LOCATIONS OF WHICH ONE L OCATION WAS IN NOIDA OR GREATER NOIDA WITH AN AREA OF 5 MILLION SQ. MTRS. T HE AFORESAID LAND FOR DEVELOPMENT WAS IN ADDITION TO THE LAND FOR CONSTRU CTION OF EXPRESSWAY AND WAS AN INTEGRAL AND INSEPARABLE PART OF THE INFRAST RUCTURE FACILITY PROJECT. LD. AR ALSO CONTENDED THAT THE LAND FOR EXPRESSWAY AND LAN D FOR DEVELOPMENT WAS MADE AVAILABLE BY THE TEA FOR THE ASSESSEE COMPANY AT TH E CONSIDERATION OF COST OF ACQUISITION PLUS RS.100 PER HECTARE PER YEAR LEASE RENT AND THE ASSESSEE COMPANY WAS NOT GIVEN ANY TITLE RIGHT ON THE LAND U SED FOR EXPRESSWAY WHICH WAS AGREED BETWEEN THE PARTIES OF THE AGREEMENT TO BE RETURNED AFTER EXPIRY OF CONCESSION PERIOD OF 36 YEARS. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 80 43. LD. AR ELABORATING THE CONSIDERATION FOR INFRAS TRUCTURE FACILITY SUBMITTED THAT THE ASSESSEE COMPANY WAS ENTITLED TO COLLECT A ND RETAIN THE FEE OR TOLL FROM THE USERS OF THE EXPRESSWAY FOR CONCESSION PERIOD O F 36 YEARS AND AMOUNTS FROM THE RIGHTS TO FURTHER LEASE OUT THE DEVELOPED/ UNDEVELOPED LAND (AT FIVE OR MORE LOCATIONS WITH AN AREA OF 5 MILLION SQ. MTRS. PER LAND PARCEL) TO SUB- LEASES/END-USER OUT OF THE LAND PROVIDED BY THE TEA TO THE ASSESSEE. LD. AR FURTHER SUBMITTED THAT THE TOLL FEE TO BE CHARGED F ROM THE CUSTOMERS WAS NOT TO EXCEED THE FEE AS MAY HAVE BEEN NOTIFIED BY GOVERNM ENT OF UP. LD. AR STRONGLY POINTED OUT THAT THE 'LAND FOR DEVELOPMENT ' IS ACTUALLY A CONSIDERATION LIKE THE TOLL FEE SINCE THE TOLL FEE ALONE WOULD NO T HAVE BEEN ABLE TO ENSURE POSITIVE RETURN ON EQUITY ON THE PROJECT. 44. LD. COUNSEL HAS ALSO DRAWN OUR ATTENTION TOWARD S DECISION OF HONBLE SUPREME COURT OF INDIA DATED 8.9.2010 IN CIVIL APP EAL NO. 7468 OF 2010 NAND KISHORE GUPTA & OTHERS VS STATE OF UP WITH OTHER CIVIL APPEALS AND SUBMITTED THAT A PUBLIC INTEREST LITIGATION WAS FIL ED WITH AN ALLEGATION OF INADEQUATE CONSIDERATION OF ACQUISITION OF LAND WHI CH WAS DISMISSED BY HONBLE SUPREME COURT BY HOLDING THAT THE EXPRESSWAY IS A W ORK OF IMMENSE PUBLIC IMPORTANCE AND CREATION OF LAND PARCELS BY WAY OF L AND DEVELOPMENT ALONG WITH EXPRESSWAY WOULD GIVE IMPETUS TO THE INDUSTRIAL DEV ELOPMENT OF THE STATE CREATING MORE JOBS AND HELPING THE STATE ECONOMY AN D THEREBY HELPING THE GENERAL PUBLIC. LD. AR HAS FURTHER DRAWN OUR ATTEN TION TOWARDS FINDINGS OF THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 81 INQUIRY COMMISSION HEADED BY HONBLE FORMER HIGH CO URT JUDGE, AND SUBMITTED THAT INQUIRY COMMISSION ALSO HELD THAT IT WAS NECESSARY TO STRENGTHEN ECONOMIC VIABILITY OF THE PROJECT BY SOME MECHANISM AND, THEREFORE, IT WAS DECIDED TO PROVIDE 2500 HECTARE OF LAND FOR DEVELOP MENT TO THE SUCCESSFUL BIDDER ALONG WITH THE PROPOSED EXPRESSWAY. LD. AR ALSO ADDED THAT THE INQUIRY COMMISSION HELD THAT THE TAJ EXPRESSWAY, BEING A LA NDMARK EVENT IN THE INDUSTRIAL DEVELOPMENT OF STATE OF UP, IS OF IMMENS E PUBLIC UTILITY AND ALSO IN THE NATIONAL INTEREST. LD. AR SPECIALLY POINTED OU T THAT THERE IS NO OBLIGATION ON THE ASSESSEE COMPANY UNDER THE CONCESSION AGREEMENT TO CARRY OUT HOUSING ACTIVITIES ON THE LAND FOR DEVELOPMENT WHICH IS A N ARROW AREA AND LAND FOR DEVELOPMENT WAS GIVEN ALONG THE PROPOSED THE 100 ME TRE EXPRESSWAY, FOR INDUSTRIAL, COMMERCIAL, INSTITUTIONAL, AMUSEMENT AN D RESIDENTIAL DEVELOPMENT TO THE ASSESSEE COMPANY. 45. LD. AR ALSO AGAIN TOOK US TO THE PROVISIONS OF SECTION 80-IA OF THE ACT AND SUBMITTED THAT THE DEDUCTION U/S 80IA(1) IS TO BE GIVEN ON PROFITS AND GAINS DERIVED FROM AN UNDERTAKING OR ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB- SECTION 4 I.E. ELIGIBLE BUSINESS AND THE WORD BUSI NESS IS WIDE ENOUGH TO COVER WITHIN ITS SCOPE ALL ACTIVITIES THAT ARE INTEGRAL PART OF THE BUSINESS OF TOLL ROAD DEVELOPMENT. LD. AR ALSO SUBMITTED THAT IT WAS THE INCOME FROM BUSINESS UNDERTAKING WHICH IS TO BE DEDUCTED AND NOT ONLY TH E INCOME OR REVENUE FROM TOLL FEE. PLACING RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 82 DHARAM PAL PREM CHAND LTD. 317 ITR 353 (DEL.) AND A NOTHER DECISION IN THE CASE OF CIT V. ELTEK SGS P. LTD. 300 ITR 6 (D EL.) SUBMITTED THAT THE TERM INCOME FROM BUSINESS WOULD INCLUDE ALL INCOM E EMANATING FROM THE SAME. 46. LD. AR TURNING TO THE FACTS OF THE PRESENT CASE SUBMITTED THAT ANY INCOME ARISING FROM SUCH LAND, ALLOTTED TO THE ASSESSEE FO R DEVELOPMENT, WOULD ALSO BE REGARDED AS INCOME DERIVED FROM THE BUSINESS OF DEV ELOPMENT, OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY I.E. THE TOLL ROAD AND IT IS THAT INCOME WHICH THE ASSESSEE COMPANY HAS CLAIMED AS DEDUCTION UNDER CLAUSE (A) OF EXPLANATION TO SECTION 801A(4)(I) OF THE ACT, DURIN G THE ASSESSMENT YEAR UNDER CONSIDERATION. LD. AR ALSO SUBMITTED THAT THE WORD 'BUSINESS' IS WIDE ENOUGH TO COVER WITHIN ITS SCOPE THE PROFITS FROM ALL ACTIVIT IES THAT ARE INTEGRAL PART OF THE BUSINESS OF TOLL ROAD DEVELOPMENT WHICH OBVIOUSLY F ALLS UNDER CLAUSE (A) OF EXPLANATION TO SECTION 80IA(4) OF THE ACT AND THE S AME WOULD BE EXEMPT FROM TAX. LD. AR HAS FURTHER POINTED THAT THE ASSESSEE C OMPANY IS IN THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING ROAD INCLUDI NG TOLL ROAD WHICH WAS COMMENCED ON 5.4.2007, THEREFORE, THE CONDITIONS LA ID DOWN IN CLAUSE (C) OF SUB-SECTION 4(I) OF SECTION 801A IS SATISFIED IN T HE PRESENT CASE AND ACCORDINGLY, THE DEDUCTION UNDER SECTION 801A OUGHT TO BE ALLOWE D TO THE ASSESSEE COMPANY AND THE VIEW TAKEN BY THE AO WHILE GRANTING EXEMPTI ON TO THE ASSESSEE IS A ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 83 PLAUSIBLE AND REASONABLE VIEW WHICH CANNOT BE SAID TO BE A VIEW ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE AND UNSUSTAI NABLE IN LAW. 47. LD. AR REITERATING ITS WRITTEN SUBMISSIONS VEHE MENTLY CONTENDED THAT CASE OF THE ASSESSEE IS COVERED BY SECTION 80IA(4)( I) R/W CLAUSE (A) OF EXPLANATION THERETO, AS WE ARE DEVELOPING, MAINTAIN ING AND OPERATING INFRASTRUCTURE FACILITY AS DEFINED IN THE SAID EXPL ANATION (A) AS ROAD INCLUDING TOLL ROAD. LD. AR ELABORATING THE FINANCIAL RIGHT S AND OBLIGATIONS ON THE ASSESSEE COMPANY SUBMITTED THAT THE DEVELOPMENT RIG HTS ON THE LAND AND INCOME THEREFROM ARE INTEGRAL AND INSEPARABLE PART OF THE CONSIDERATION TO THE ASSESSEE COMPANY IN RESPECT OF FACILITY INVOLVED BEING TOLL ROAD THE RIDER CREATED IN SECTION 80IA(6) APPLY TO THE INFRASTRUCTURE FACILIT Y ENTITY THAT FALL IN THE DEFINITION OF HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT AS DEFINED IN CLAUSE (B) OF EXPLANATION TO SECTION 80IA(6) OF THE ACT. LD. AR VEHEMENTLY CONT ENDED THAT THE RESTRICTION IMPOSED BY THE LEGISLATURE U/S 80IA(6) IS NOT APPLI CABLE TO THE ASSESSEE COMPANY AND THE LIMITS AND REQUIREMENT IN THE SAID SECTION APPLY TO HIGHWAY PROJECT AS DEFINED IN CLAUSE (B) OF EXPLANATION TO SECTION 80I A(4)(I) OF THE ACT AND NOT TO THE ROAD INCLUDING TOLL ROAD AS MENTIONED IN CLA USE(A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT, INCLUDING INTEGRAL A ND INSEPARABLE PART OF THE DEVELOPMENT RIGHTS AND INCOME THEREFROM ON THE LAND GIVEN TO THE ASSESSEE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 84 COMPANY FOR DEVELOPMENT AS MAJOR PART OF CONSIDERAT ION FOR THE INFRASTRUCTURE FACILITY PROJECT. 48. LD. AR ALSO SUBMITTED THAT THE ASSESSEE COMPANY IS ELIGIBLE FOR EXEMPTION UNDER CLAUSE (A) OF EXPLANATION 80IA(4)(I ) OF THE ACT, THE ASSESSEE COMPANY, WITHOUT PREJUDICE TO THE AFORESAID CONTENT IONS, HAVE ALSO MADE AN ALTERNATIVE CLAIM U/S 80IA(6) OF THE ACT, THAT IF I T IS CONCLUDED THAT THE ASSESSEE COMPANY IS NOT ELIGIBLE FOR EXEMPTION UNDER CLAUSE (A) OF EXPLANATION, THEN THE ASSESSEE COMPANY MAY BE CONSIDERED ELIGIBLE UNDER C LAUSE (B) OF EXPLANATION TO SECTION 80IA(4) OF THE ACT. LD. AR FURTHER POINTED OUT ASSESSEES PAPER BOOK PAGE NO. 79 AND TAX AUDIT REPORTS AND SUBMITTED THA T THE BUSINESS OF THE ASSESSEE COMPANY IS THAT THE ASSESSEE COMPANY IS ENGAGED IN DEVELOPMENT, OPERATION AND MAINTENANCE OF SIX LANE ACCESS CONTROLLED EXPRESSWA Y ALONG WITH SERVICE ROAD AND ASSOCIATED STRUCTURES AND SALE/DEVELOPMENT OF L EASEHOLD LAND PROVIDED BY TEA FOR DEVELOPMENT ALONG THE PROPOSED EXPRESSWAY. LD. AR HAS ALSO DRAWN OUR ATTENTION TO ASSESSEES PAPER BOOK PAGE NO. 85 AND SUBMITTED THAT AS PER AUDITORS REPORT, FORM NO. 10CCB FOR AY 2009-10, TH E ASSESSEE COMPANYS BUSINESS WAS DEVELOPMENT, OPERATION AND MAINTENANCE OF SIX LANE ACCESS CONTROLLED EXPRESSWAY BETWEEN NOIDA AND AGRA ALONG WITH SERVICE ROAD AND ASSOCIATED STRUCTURES AND SALE/DEVELOPMENT OR LEASE HOLD LAND ALONG WITH THE PROPOSED EXPRESSWAY. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 85 49. PRECISELY, THE CONTENTIONS OF THE APPELLANT COM PANY ARE THAT THE ASSESSEE HAS ENTERED INTO A CONTRACT WITH TEA FOR DEVELOPMEN T OF A EXPRESSWAY AND DEVELOPMENT OF 25 MILLION SQ MTR LAND ADJACENT TO E XPRESSWAY WHICH IS A TOLL ROAD AS THE ASSESSEE WAS GRANTED RIGHT TO COLLECT TOLL/ FEE FROM THE USERS OF EXPRESSWAY, THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER CLAUSE (A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT. IT I S ALSO THE CONTENTION OF THE ASSESSEE COMPANY THAT THE ASSESSEE IS IN THE BUSINE SS OF DEVELOPING, OPERATING AND MAINTAINING ROAD INCLUDING TOLL ROAD, FOR WHI CH THE BUSINESS HAS COMMENCED ON 5.4.2007, THEREFORE, THE OPERATION AND MAINTENANCE OF SUCH ROAD HAD STARTED AFTER 1.4.1995, ACCORDINGLY, THE CONDIT ION LAID DOWN IN CLAUSE (C) OF SUB-SECTION 4(I) OF SECTION 80IA OF THE ACT IS SATI SFIED IN THE ASSESSEES CASE AND EXEMPTION UNDER CLAUSE (A) OF EXPLANATION TO SECTIO N 80IA(4)(I) OF THE ACT WAS RIGHTLY ALLOWED TO THE ASSESSEE. 50. THE PRECISE REPLY AND CONTENTIONS OF THE REVENU E IS THAT THE ASSESSEES BUSINESS ACTIVITIES FALL UNDER CLAUSE (B) OF EXPLAN ATION TO SECTION 80IA(4)(I) OF THE ACT I.E. A HIGHWAY PROJECT INCLUDING HOUSING O R OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT. THE LD. CIT DR FURTHER CONTENDED THAT SINCE THE ASSESSEE COMPANY HAS NOT COMMENCED BUSINE SS OPERATIONS DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE HAS BEGUN TO OPERATE INFRASTRUCTURE FACILITY W.E.F. 9.8.2012, WHEN THE EXPRESSWAY WAS I NAUGURATED, HENCE, PRIOR TO THIS DATE, THE ASSESSEE HAD EARNED ONLY PROFITS WHI CH ARE ATTRIBUTABLE TO SALE OF ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 86 LAND WHICH WAS TRANSFERRED TO IT IN THE TERMS OF CO NCESSION AGREEMENT, THEREFORE, THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION U/S 80 IA ONLY W.E.F. AY 2013-14. ON THIS ISSUE, IT WAS ALSO CONTENDED BY THE LD. CIT DR THAT IN RESPECT OF AN ASSESSEE CLAIMING TO BE ENGAGED IN BUILDING INFRAST RUCTURE FACILITY IN THE NATURE OF A HIGHWAY PROJECT INCLUDING HOUSING AND OTHER AC TIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT, THE PROFITS ARISING FR OM HOUSING AND OTHER ACTIVITIES WOULD BE EXEMPT FROM TAX UNDER SUB-SECTION (6) OF T HE SECTION 80IA. FURTHER, THE MANNER IN WHICH THE PROFITS OF HOUSING AND OTHE R ACTIVITIES ARE TO BE COMPUTED FOR THE PURPOSE OF SUB-SECTION (6) ARE SPE CIFIED IN RULE 18BBE OF THE IT RULES, 1962 WHICH MANDATES THE MAINTENANCE OF SE PARATE BOOKS OF ACCOUNTS FOR THE ACTIVITIES OF HOUSING AND OTHER ACTIVITIES AND ALSO REQUIRES THE SUBMISSION OF A CERTIFICATE SPECIFYING THE AMOUNT SO CREDITED TO THE RESERVE ACCOUNT AND THE AMOUNT UTILIZED DURING THE RELEVANT PREVIOUS YEAR F OR HIGHWAY PROJECT AND IT WAS ALSO REQUIRED THAT SUCH CERTIFICATE IS TO BE FURNIS HED IN FORM 10CCC WHICH SHOULD BE SUBMITTED ALONG WITH RETURN OF INCOME. 51. LD. AR ALSO PLACED A REJOINDER TO THE ABOVE SUB MISSIONS OF THE LD. CIT DR THAT THE CONCESSION AGREEMENT WAS EXECUTED FOR D EVELOPMENT OF EXPRESSWAY AND DEVELOPMENT OF ROAD. LD. AR HAS FURTHER DRAWN OUR ATTENTION TOWARDS ASSESSEES PAPER BOOK PAGE 180 TO 184 AND SUBMITTED THAT IT WAS CLARIFIED BEFORE THE AO THAT IN CONSIDERATION OF THE ASSESSEE, IN AG REEING TO DEVELOP, DESIGN, ENGINEER, FINANCE, PROCURE AND CONSTRUCT TOLL ROAD, THE ASSESSEE HAS BEEN GRANTED ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 87 RIGHT FOR LAND DEVELOPMENT OF 25 MILLION SQ MTR OF LAND IN ADDITION TO THE RIGHT TO COLLECT TOLL FEE AND THE REVENUE/PROFITS GENERATE D FROM SUB-LEASING OF THE PLOTS/LAND EARNED BY THE ASSESSEE COMPANY OR THE IN COME DERIVED FROM THE BUSINESS OF DEVELOPMENT OF ROAD ALSO COVERS WITH IN ITS SCOPE THE PROFITS FROM ALL ACTIVITIES THAT ARE INTEGRAL PART OF THE BUSINE SS OF THE ROAD DEVELOPMENT. LD. AR ALSO INVITED OUR ATTENTION TOWARDS FORM NO. 10CC B R/W AUDITORS CERTIFICATE UNDER RULE 18BBB THAT THE ASSESSEE IS CERTIFIED TO BE ENGAGED IN DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILI TY WHICH IS CERTIFIED TO BE ROAD INCLUDING TOLL ROAD. 52. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, WE NOTE THAT FIRSTLY IT WOULD BE JUST AND PROPER TO CONSIDER THE MEANING O F THE HIGHWAY, EXPRESSWAY, TOLL, TOLL GATE, TOLL PLAZA AND ROAD INCLUDING TOLL ROAD WHICH ARE BEING REPEATEDLY USED BY BOTH THE SIDES D URING ARGUMENTS. WE MAY POINT OUT THAT THESE WORDS HAVE NOT BEEN DEFINED IN INCOME TAX ACT AND NEITHER THE LD. AR NOR LD. CIT-DR HAS PLACED ANY REFERENCE OF MEANING TO THE ABOVE STATED TERMS. THEREFORE, WE ARE COMPELLED TO REFER AVAILABLE DICTIONARIES TO PROPERLY UNDERSTAND THE APPROPRIATE MEANING OF THE SE TERMS/WORDS FOR PROPER ADJUDICATION OF ACTUAL ASPECTS OF THIS CASE, WHICH READ AS UNDER:- (A) HIGHWAY - A PUBLIC ROAD THAT EVERYONE HAS RIGHT TO USE (REF. CHAMBERLAIN DICTIONARY, FIRST INDIAN EDITION 2001 A T PAGE 635) ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 88 - A PUBLIC ROAD ESPECIALLY AN IMPORTANT ROAD THAT JO INS CITIES OR TOWNS TOGETHER (REF. CAMBRIDGE DICTIONARY, LOW PRICE EDITION 1996 AT PAGE 669) (B) EXPRESSWAY - A MAJOR ROAD FOR FAST MOVING TRAFFIC, ESPEC IALLY WITH THREE LANE PER CARRIAGEWAY AND LIMITED ACCESS AND EXIT POINTS ( REF. CHAMBERLAIN DICTIONARY, FIRST INDIAN EDITION 2 001 AT PAGE 462 & 892.) - A WIDE ROAD BUILT FOR FAST MOVING TRAFFIC TRAVELLI NG LONG DISTANCES WITH A LIMITED NUMBER OF POINTS AT WHICH DRIVERS CAN ENTER AND LEAVE IT. (REF. CAMBRIDGE DICTIONARY , LOW PRICE EDITION 1996 AT PAGE 485) (C) TOLL - A CHARGE PAYABLE TO USE OF A BRIDGE OR ROAD (REF. CONCISE OXFORD DICTIONARY, AT PAGE 1507) (D) TOLL GATE - A BARRIER ACROSS A ROAD WHERE A CHA RGE MUST BE PAID TO PROCEED FURTHER ( REF. CONCISE OXFORD DICTIONARY, EDITION AT PAGE 1507). - A GATE AT THE START OF A ROAD OR A BRIDGE AT WHICH YOU PAY AN AMOUNT OF MONEY IN ORDER TO USE THE ROAD OR BRIDGE. ( CAMBRIDGE DICTIONARY, LOW PRICE EDITION 1996 AT PAG E 1533) (E) TOLL PLAZA - A ROW OF TOLL BOOTHS ON A TOLL ROAD ( REF. CONCISE OXFORD DICTIONARY EDITION AT PAGE 1507) ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 89 (F) IT IS PERTINENT TO NOTE THAT TOLL PLAZA HAS ALSO BEEN DEFINED AT PAGE 9 OF THE CONCESSION AGREEMENT AS STRUCTURES AND BARRI ERS ERECTED ON THE EXPRESSWAY. FOR THE PURPOSE OF REGULATING THE ENT RY/EXIT OF VEHICLES IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT . THE WORD TOLLING CONTRACT HAS BEEN ALSO DEFINED AT PAGE 9 OF THE AGREEMENT AS THE CONTRACT, IF ANY, ENTERED INTO BY THE CONCESSIO NAIRE I.E. ASSESSEE WITH TOLLING CONTRACTOR FOR OPERATION OF TOLL PLAZ AS, INCLUDING COLLECTION OF FEES FOR AND ON HALF OF THE CONCESSIO NAIRE. 53. IN VIEW OF ABOVE REFERRED DEFINITIONS, IN OUR H UMBLE UNDERSTANDING, A HIGHWAY IS A PUBLIC ROAD THAT EVERYONE HAS RIGHT TO USE; AN EXPRESSWAY IS MAJOR ROAD FOR FAST MOVING TRAFFIC WITH THREE LANE PER CARRIAGE WAY, MEANING THEREBY BOTH WAY SIX LANE, WITH CONTROLLED LIMITED ACCESS AND EXIT POINTS; WHEREAS A TOLL IS A FEE OR CHARGE PAYABLE TO USE OF A ROAD OR BRIDGE; TOLLGATE IS A GATE AT THE START OF A ROAD OR BRIDGE AT WHICH USER PAYS AN AMOUNT OF MONEY (TOLL). FOR THE USE OF ROAD OR BRIDGE; AND TOLL P LAZA IS A ROW OF TOLL BOOTHS ON A TOLL ROAD. 54. TURNING TO THE FACTS OF THE PRESENT CASE, WE MA Y NOTE THAT IN THE CONCESSIONAIRE AGREEMENT THE WORDS, HIGHWAY AND TOLL ROAD HAVE NOT BEEN USED AND THE WORD EXPRESSWAY HAS BEEN USED SEVERA L TIMES WHICH HAS BEEN DEFINED AT PAGE 6 OF THE AGREEMENT AS THE ACCESS CO NTROLLED 6-LANE EXPRESSWAY BETWEEN NOIDA AND AGRA WITH SERVICE ROADS AND ASSOC IATED FACILITIES AND ON THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 90 SAME PAGE 6 OF THE AGREEMENT THE WORD FEES HAS AL SO BEEN DEFINED AS FEES MEANS THE CHARGES LEVIED ON AND PAYABLE FOR VEHICLE S USING THE EXPRESSWAY IN ACCORDANCE WITH THE FEES AS MAY BE SETTLED UNDER TH IS AGREEMENT. THE CUMULATIVE MEANING OF THESE WORDS USED IN DEFINITIO NS AND OTHER STIPULATIONS OF THE AGREEMENT MAKE IT VIVID THAT THERE WAS A CONTRA CT BETWEEN ASSESSEE COMPANY AND THE TEA FOR DEVELOPING, OPERATING AND MAINTAINI NG A SIX LANE CONTROLLED ACCESS EXPRESSWAY WITH LIMITED ACCESS AND EXIT POIN TS BETWEEN NOIDA AND AGRA AND A FEES/TOLL WAS PAYABLE TO ASSESSEE COMPANY FOR VEHICLES USING THE EXPRESSWAY AT TOLL PLAZAS I.E. AT ROW OF TOLL BOOTH S ON TOLL ROAD. 55. LD. DR PLACING RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF ISHIKAWAIJIMA HARIMA HEAVY INDUSTRIES LTD. VS DIT, MUMBAI (2007) 288 ITR 408 (SC) SUBMITTED THAT THE OBJECT OF THE CONTRACT IN QUESTI ON MAY BE INFERRED FROM THE STIPULATION AND TERMS AND CONDITIONS OF THE CONTRACT AND AS PER INTENTION OF THE PARTIES TO THE CONTRACT , ANY OTHER MEANING OR INTENTION CAN NOT BE GIVEN TO THE CONTRACT AND THE AGREEMENT (SUPRA) BETWEEN THE ASSESSEE COMPANY AND TEA IS INTENDED TO DEVELOP, OPERATE AND MAINTAIN A TOLL ROAD, THEREFORE, THE AO TOOK A REASONABLE AND PLAUSIBLE V IEW IN ALLOWING EXEMPTION U/S 80IA(4) OF THE ACT. 56. THE RELEVANT OPERATIVE PART OF DECISION OF HON BLE SUPREME COURT IN THE CASE OF ISHIKAWAIJIMA HARIMA HEAVY INDUSTRIES LTD. (SUPRA) READS THUS:- ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 91 IN CONSTRUCTING A CONTRACT, THE TERMS AND CONDITIO NS THEREOF ARE TO BE READ AS A WHOLE. A CONTRACT MUST BE CONSTRUED KEEPING IN VIEW THE INTENTION OF THE PARTIES. NO D OUBT, THE APPLICABILITY OF THE TAX LAWS WOULD DEPEND UPON THE NATURE OF THE CONTRACT, BUT THE SAME SHOULD NOT BE CONSTRUED KEEP ING IN VIEW THE TAXING PROVISIONS. 57. ON THE BASIS OF FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE BUSINESS ACTIVITIES OF THE ASSESSEE COMPAN Y FALL WITHIN THE AMBIT OF CLAUSE (A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT. WE DECLINE TO AGREE WITH THE LD. CIT-DR THAT THE ASSESSEE IS ENGAGED IN THE DEVELOPMENT OF INFRASTRUCTURE FACILITY OF A HIGHWAY INCLUDING HOU SING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT. 58. ALTHOUGH THE LD. AR HAS ALSO PLACED AN ALTERNAT IVE CLAIM U/S 80IA(6) BUT IN VIEW OF OUR OBSERVATIONS AND FINDINGS, AS SET OU T ABOVE, THE ALTERNATIVE SAID CLAIM OF THE ASSESSEE AND OBJECTIONS OF LD. CIT DR ABOUT NON-COMPLIANCE OF REQUIREMENT OF SUB-SECTION (6) OF SECTION 80IA OF T HE ACT BECOMES ACADEMIC AND INFRUCTUOUS AND WE REFRAIN OURSELVES TO DELIBER ATE FURTHER ON THE ALTERNATE CLAIM OF THE ASSESSEE AS WELL AS LEGAL OBJECTIONS O F LD. CIT DR. 59. NOW REACHING TO NEXT ISSUE THAT WHETHER THE ASS ESSEE COMPANY IS ELIGIBLE FOR EXEMPTION U/S 80IA(4)(I) OF THE ACT FOR ITS INC OME FROM SALE/SUB-LEASE OF LAND FOR ASSESSMENT YEAR UNDER CONSIDERATION VIZ. 2 009-10, LD. DR, AT THE VERY BEGINNING, SUBMITTED THAT THE AO GRANTED EXEMPTION UNDER CLAUSE (A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT NOT ON LY IN AY 2009-10 BUT THE SAME DEDUCTION UNDER SIMILAR SET OF FACTS AND CIRCU MSTANCES WAS ALSO GRANTED TO ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 92 THE ASSESSEE FOR AY 2010-11. LD. AR PLACING RELIAN CE ON THE DECISION OF HONBLE SUPREME COURT/HIGH COURT IN THE CASE OF ISH IKA (SUPRA) SUBMITTED THAT THE MEANING AND OBJECT OF A CONTRACT CAN ONLY BE UN DERSTOOD BY THE CONTENTS OF CONTRACT AND THE INTENTION AND PURPOSE OF THE CONTR ACTING PARTIES AND NO AUTHORITY INCLUDING TAXING AUTHORITIES ARE ALLOWED TO INTERPRET THE CONTRACT IN ARBITRARY MANNER WHICH GOES BEYOND THE CONTENTS OF THE CONTRACT AND INTENTION OF THE CONTRACTING PARTIES. 60. LD. AR FURTHER CONTENDED THAT THE ASSESSEE COMP ANY ENTERED INTO ANY CONCESSION AGREEMENT WITH TEA FOR DEVELOPMENT OF AN EXPRESSWAY BETWEEN NOIDA AND AGRA AND ASSESSEE WAS GIVEN A RIGHT TO CO LLECT TOLL/FEES FROM THE USERS OF EXPRESSWAY, HENCE, EXPRESSWAY WAS ACTUALLY A TOL L ROAD. LD. AR FURTHER POINTED OUT THAT THE ASSESSEE COMPANY, IN ADDITION TO COLLECTION OF TOLL RIGHT, WAS ALSO GRANTED 25 MILLION SQ. METER LAND FOR DEVELOP MENT ON COST OF ACQUISITION PLUS LEASE PREMIUM OF RS. 100/- PER HECTARE PER ANN UM AND IN TURN THE ASSESSEE COMPANY WAS UNDER OBLIGATION TO DEVELOP, DESIGN, EN GINEER, FRAME, PROCURE AND CONSTRUCT TOLL ROAD AND HENCE, THE INCOME FROM SALE /DEVELOPMENT OF LAND WAS INDEED INCOME DERIVED FROM BUSINESS OF DEVELOPMEN T OF ROAD AND WOULD BE ELIGIBLE FOR DEDUCTION. 61. LD. AR, REITERATING ASSESSEES ARGUMENTS AND SU BMISSIONS BEFORE AO VIDE LETTER DATED 21.12.2011, SUBMITTED THAT THE CONSIDE RATION FOR DEVELOPING, OPERATING AND MAINTAINING THE SAID INFRASTRUCTURE F ACILITY IS PROVIDED, INTER ALIA, ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 93 BY WAY OF RIGHT TO DEVELOP AND SUB LEASE THE ADJOIN ING LAND ALLOTTED TO ASSESSEE IS EVIDENT FROM CONCESSION AGREEMENT EXECUTED BETWE EN ASSESSEE AND THE TEA AND RELEVANT EXTRACTS, CONDITIONS AND CLAUSES CLEAR LY DEMONSTRATE THAT THE ASSESSEE WAS UNDER OBLIGATION OF DEVELOPMENT, OPERA TION AND MAINTENANCE OF THE EXPRESSWAY AND DEVELOPMENT OF 25 MILLION SQ. ME TRE LAND ALONG THE PROPOSED EXPRESSWAY FOR COMMERCIAL, INDUSTRIAL, INS TITUTIONAL, AMUSEMENT AND RESIDENTIAL DEVELOPMENT. IT WAS ALSO EXPLAINED THA T AS PER CONCESSION AGREEMENT, THE ASSESSEE COMPANY WAS UNDER OBLIGATIO N TO PAY COST OF ACQUISITION PLUS LEASE RENT OF RS.100/- PER HECTARE PER ANNUM FOR THE LAND PROPOSED TO BE USED FOR CONSTRUCTION OF EXPRESSWAY AND ALSO FOR THE 25 MILLION SQUARE METER LAND FOR DEVELOPMENT ALONG THE PROPOSE D EXPRESSWAY AT FIVE OR MORE LOCATIONS. LD. AR FURTHER EXPLAINED THAT THE ASSESSEE WAS NOT GRANTED ANY TITLE OVER THE EXPRESSWAY AND LAND USED FOR CONSTRU CTION OF EXPRESSWAY EXCEPT RIGHT TO COLLECT TOLL/FEES AS PRESCRIBED BY GOVT. O F UP FROM TIME TO TIME ONLY DURING CONCESSION PERIOD OF 36 YEARS AND ASSESSEE W AS GRANTED LAND FOR DEVELOPMENT WITH RIGHT TO FURTHER SUB-LEASE DEVELOP ED OR UNDEVELOPED LAND TO SUB LESSEES OR LAND USERS. 62. LD. DR HAS FURTHER DRAWN OUR ATTENTION TOWARDS CHAPTER IV OF CONCESSION AGREEMENT CLAUSES 4.3(D), 4.4 AND 4.5 AND SUBMITTED THAT THE OBJECT OF THE INFRASTRUCTURE SCHEME CAN BE SEEN FROM THE GLOBAL T ENDER NOTICE INVITING OFFERS TO SHOW THAT THE INFRASTRUCTURE FACILITY AS ENVISAG ED WAS ROAD INCLUDING TOLL ROAD ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 94 ALONG WITH DEVELOPMENT OF INFRASTRUCTURE FOR COMMER CIAL, INDUSTRIAL, AMUSEMENT, RESIDENTIAL AND INSTITUTIONAL DEVELOPMEN T. FURTHER, THE LAND WAS TO BE OFFERED ON ACQUISITION COST ON LEASE FOR 90 YEAR S BY THE TEA AND THE DEVELOPMENT OF THE SAID LAND AND WORKS THEREON WAS A MEANS FOR COMPENSATION AND CONSIDERATION TO THE INFRASTRUCTURE DEVELOPER I .E. THE ASSESSEE IN VIEW OF THE SAME. IT WAS AN OBLIGATION ON THE ASSESSEE TOWARDS THE OBJECTIVE OF THE INFRASTRUCTURE DEVELOPMENT AND AS SOURCE OF FUNDS F OR MEETING THE INVESTMENT INVOLVED IN THE PROJECT. LD. AR VEHEMENTLY CONTEND ED THAT IN VIEW OF ABOVE FACTS, THE REVENUE/PROFITS GENERATED FROM SUB-LEASI NG OF PLOTS/LAND EARNED BY THE ASSESSEE ARE DEFINITELY AN INCOME DERIVED FROM THE BUSINESS OF DEVELOPMENT OF ROAD AND WOULD BE ELIGIBLE FOR DEDUCTION. LD. A R POINTED OUT THAT THE DEVELOPMENT OF LAND WAS AN INTEGRAL AND INSEPARABLE PART OF THE BUSINESS OF ROAD DEVELOPMENT DUE TO ITS INEXTRICABLE PROXIMITY WITH FINANCIAL VIABILITY OF THE PROJECT AND THE WORD BUSINESS IS WIDE ENOUGH TO C OVER WITHIN ITS SCOPE THE PROFITS FROM ALL ACTIVITIES THAT ARE INTEGRAL PART OF ROAD DEVELOPMENT. TO SUPPORT ASSESSEES CLAIM, LD. AR ALSO POINTED OUT THAT SINC E SUB-LEASE OF PLOTS IS MADE PURSUANT TO THE RIGHTS GRANTED UNDER THE CONCESSION AGREEMENT, THEREFORE, THE INCOME EARNED FROM SUB-LEASE OF LAND PLOTS IS THE I NCOME DERIVED FROM BUSINESS OF ROAD DEVELOPMENT AND HENCE, THE SAME ELIGIBLE FOR EXEMPTION U/S 80IA(4)(I) OF THE ACT BECAUSE THE ASSESSEE STARTED ITS BUSINESS OPERATIONS FROM 5.4.2007 ONWARDS. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 95 63. LD. AR HAS AGAIN DRAWN OUR ATTENTION TOWARDS SU BMISSIONS OF THE ASSESSEE DATED 23.12.2011 BEFORE THE AO AND SUBMITT ED THAT THE INCOME FROM SUB-LEASE OF LAND FOR DEVELOPMENT IS INCOME DERIVED FROM THE BUSINESS OF INFRASTRUCTURE FACILITY. LD. AR FURTHER ILLUSTRAT ED THAT IN CASE THE ASSESSEE HAD RECEIVED A SUM OF MONEY AS CONSIDERATION FROM THE S TATE GOVERNMENT, THEN UNDISPUTEDLY THE SAID SUM OF MONEY WOULD BE INCOME FROM THE BUSINESS OF INFRASTRUCTURE FACILITY AND IF INSTEAD OF A SUM OF MONEY, THE ASSESSEE HAS BEEN ALLOTTED LAND FOR DEVELOPMENT WITH RELATED RIGHTS A ND OBLIGATIONS, THEN OBVIOUSLY THE INCOME ON SUB-LEASE OF THE LAND IS JUST A SUM O F MONEY IN KIND ON ITS REALISATION AND IS INCOME FROM THE BUSINESS OF SAID INFRASTRUCTURE FACILITY. LD. AQR FURTHER CONTENDED THAT THE SAID INCOME FROM SUB LEASE OF LAND HAS BEEN UTILIZED FOR DEVELOPING THE INFRASTRUCTURE FACILITY AND SAME WAS ACTUALLY UTILIZED DURING THE RELEVANT FINANCIAL YEAR FOR INFRASTRUCTU RE FACILITY PROJECT AND THE OVERALL COST/CAPITAL EXPENDITURE WAS FOR EXCEEDING FROM THE INCOME DERIVED THEREFROM AND AS SUCH THERE WAS NO TAXABLE INCOME. 64. LD. CIT DR REPLIED IN HER WRITTEN SUBMISSIONS T HAT THE CLAUSE (B) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT REFERS TO A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTE GRAL PART OF THE HIGHWAY PROJECT IS APPLICABLE TO THE EXTANT CASE AND SO SU B SECTION (6) STATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION ( 4) OF SECTION 80IA OF THE ACT, WHERE HOUSING AND OTHER ACTIVITIES ARE INTEGRA L PART OF THE HIGHWAY PROJECT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 96 AND THE PROFITS OF WHICH ARE COMPUTED ON SUCH BASIS AND MANNER IN WHICH THE PROFITS OF HOUSING AND OTHER ACTIVITIES ARE TO BE C OMPUTED FOR THE PURPOSE OF SUB- SECTION (6), ARE SPECIFIED IN RULE 10BBE. THE SAID RULE MANDATES MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS FOR THE ACTIVITIES OF HOUSING AND OTHER ALLIED ACTIVITIES AND FURTHER SUBMISSION OF AN AUDITORS C ERTIFICATE IN FORM 10CCC IS REQUIRED CERTIFYING THAT THE AMOUNT OF INCOME WAS C REDITED TO RESERVE ACCOUNT AND THE SAID AMOUNT WAS UTILIZED DURING THE RELEVAN T PREVIOUS YEAR FOR THE HIGHWAY PROJECT. LD. CIT DR STRENUOUSLY CONTENDED THAT WHEN IT IS APPARENT FROM THE CONCESSION AGREEMENT AND OTHER RELEVANT FA CTS THAT IN RESPECT OF AN ASSESSEE CLAIMING TO BE ENGAGED IN BUILDING AND INF RASTRUCTURAL FACILITY IN THE NATURE OF A HIGHWAY PROJECT INCLUDING HOUSING AND OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT, THE PROFITS A RISING FROM HOUSING AND OTHER ACTIVITIES WOULD BE EXEMPT FROM TAX UNDER SUB-SECTI ON (6) OF SECTION 80IA OF THE ACT WHEREAS THE PROFITS ARISING EXCLUSIVELY FROM HI GHWAY PROJECT WOULD BE ADMISSIBLE FOR DEDUCTION U/S 80IA(I) R/W SUB-SECTIO N (2) AND (2A) AND SINCE THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOU NTS, HAS NOT TRANSFERRED THE AMOUNT OF PROFIT FROM HOUSING AND OTHER ACTIVITIES TO A SPECIAL RESERVE AND ALSO HAS NOT SUBMITTED A REQUIRED CERTIFICATE IN FORM NO . 10CCC TO CERTIFY THE FACT THAT THE AMOUNT OF RESERVE HAS BEEN ACTUALLY UTILIZ ED FOR THE HIGHWAY PROJECT DURING RELEVANT PREVIOUS YEAR, THEREFORE, THE ASSES SEE IS NOT ELIGIBLE FOR EXEMPTION U/S 80IA OF THE ACT FOR INCOME DERIVED DU RING THE YEAR UNDER CONSIDERATION. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 97 65. LD. CIT DR ALSO CONTENDED THAT THE ASSESSEE HAS BEGUN TO OPERATE THE INFRASTRUCTURE FACILITY W.E.F. 9.8.2012 WHEN THE EX PRESSWAY WAS INAUGURATED BY THE HONBLE CHIEF MINISTER OF UP AND HENCE PRIOR TO THIS DATE, IT HAD ONLY EARNED PROFITS FROM SALE OR SUB LEASE OF LAND WHICH WAS ADMITTEDLY TRANSFERRED TO THE ASSESSEE UNDER TERMS OF THE CONCESSION AGREEMEN T AND THEREFORE THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION/EXEMPTION U/S 80IA OF THE ACT ONLY W.E.F. AY 2013-14 (RELEVANT TO FY 2012-13). 66. LD. CIT DR ALSO SUBMITTED THAT WITHOUT PREJUDIC E TO THE CONTENTION THAT THE CLAIM OF THE ASSESSEE IS SQUARELY COVERED UNDER SUB-SECTION (6) OF SECTION 80IA OF THE ACT, EVEN IF THE ARGUMENT OF THE ASSESS EE THAT THE CLAIM OF THE ASSESSEE FALLS UNDER SUB-SECTION (4) THEREOF IS ACC EPTED, AND WHEN THE ASSESSEE ENTERED INTO AN AGREEMENT WITH THE STATE GOVERNMENT OF UP FOR DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACI LITY AND THEREFORE ITS BUSINESS ACTIVITIES SQUARELY FALLS WITHIN CLAUSE (B) OF EXPL ANATION TO SECTION 80IA(4)(I) F/W CLAUSE (III) OF THE ACT AND SINCE SUB-SECTION ( 2) OF SECTION 80IA CATEGORICALLY STATES THAT THE DEDUCTION WILL BE ADMISSIBLE BEGIN NING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGI NS TO OPERATE ANY INFRASTRUCTURE FACILITY NO DEDUCTION FOR INCOME GE NERATED BY ACTIVITIES OF SUCH INFRASTRUCTURE FACILITY AND/OR ANY ALLIED ACTIVITY WOULD BE ELIGIBLE FOR DEDUCTION IN ANY YEAR PRIOR TO THE BEGINNING OF OPERATIONS OF THE INFRASTRUCTURE FACILITY. LD. CIT DR ALSO POINTED OUT THAT AS PER SUB-CLAUSE (C) OF CLAUSE (I) OF SUB- ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 98 SECTION (4) OF SECTION 80IA OF THE ACT, THE DEDUCTI ON WOULD BE ADMISSIBLE TO THE ENTERPRISE WHICH HAS STARTED OR STARTS OPERATING A ND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST DAY OF APRIL, 1995 AND THEREFORE, THE DEDUCTION TO THE ASSESSEE WHICH HAS ENTERED INTO AN AGREEMENT FOR DEVELOPING, OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILIT Y, UNDER PROVISIONS OF SECTION 80IA(4) OF THE ACT WOULD BE ADMISSIBLE ONLY FROM TH E YEAR IN WHICH THE OPERATION OF FACILITY BEGINS. 67. LD. CIT DR PRESSING ITS WRITTEN SUBMISSIONS, FU RTHER ARGUED THAT IN RESPONSE TO QUERY RAISED BY THE AO, THE ASSESSEE AD VANCED TWIN ARGUMENTS, FIRSTLY, REFERRING TO THE WORDS AND LANGUAGE OF CLA USE (C) OF SUB SECTION (4) IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY THE ASSESSEE SUBMITTED THAT THE EXPRESSION STARTS COV ERS FUTURE EVENTS AND THE ASSESSEE DELIBERATELY OMITTED TO REFER THE LAST PAR T OF CLAUSE (C) I.E. AFTER 1 ST APRIL 1995. LD. CIT-DR HAS DRAWN OUR ATTENTION TOWARDS PAGE 4 OF HER WRITTEN SUBMISSIONS AND SUBMITTED THAT THE WORD STARTED I S INTENDED TO COVER CASES WHERE THE OPERATION AND MAINTENANCE HAS COMMENCED P RIOR TO 1.4.1995 AND WORD STARTS IS INTENDED TO COVER CASES WHERE THE COMMENCEMENT IS AFTER 1.4.1995. LD. CIT DR FURTHER POINTED OUT THAT CLAU SE (C) SPECIFIES ONE OF THE MANDATORY CONDITIONS OF ELIGIBILITY OF DEDUCTION A ND ONLY CLARIFIES THAT THE PROJECTS WHICH HAVE STARTED OPERATION AND MAINTENAN CE PRIOR TO THE SPECIFIED DATE OR AFTER THE SPECIFIED DATE WILL BE ELIGIBLE F OR DEDUCTION AND CLAUSE ( C), IN ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 99 NO WAY CAN OR IS INTENDED TO OVERRIDE THE STIPULATI ON IN SUB-SECTION (2) WHICH MANDATES AVAILING OF DEDUCTION, IN THE CASES OF ELI GIBLE PROJECTS, ONLY FROM THE BEGINNING OF THE OPERATION FACILITY. LD. CIT DR AL SO POINTED OUT THAT THE WORDING OF CLAUSE ( C) OF SUB SECTION (4) REITERATE S THE CONDITION OF SUB SECTION (2) INASMUCH AS IT MAKES THE START OF THE OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITY, A PREREQUISITE FOR THE GRA NT OF DEDUCTION. 68. LD. CIT DR FURTHER DRAWING OUR ATTENTION TOWARD S HER WRITTEN ARGUMENTS SUBMITTED THAT THE ASSESSEE RAISED SECOND ARGUMENT BEFORE THE AO THAT THE DEDUCTION U/S 80IA(4)(I) IS ADMISSIBLE ALSO TO AN U NDERTAKING WHICH ONLY DEVELOPS THE INFRASTRUCTURE FACILITY BUT DOES NOT O PERATE IT, THEREFORE, THE ADMISSIBILITY CANNOT BE RECKONED WITH REFERENCE TO THE COMMENCEMENT OF OPERATION. LD. CIT DR VEHEMENTLY CONTENDED THAT TH IS ARGUMENT OF THE ASSESSEE IS NOT ACCEPTABLE BECAUSE THE CASE OF THE ASSESSEE IS ONE IN WHICH IT HAS ENTERED INTO AN AGREEMENT FOR DEVELOPING, OPERATING AND MAINTAINING INFRASTRUCTURE FACILITY A DISTINCT CATEGORY OF ELIG IBLE PROJECT SPECIFICALLY COVERED UNDER SUB-CLAUSE (III) OF CLAUSE (C) OF SECTION 80I A(4) OF THE ACT AND THE ASSESSEE HAS NOT ENTERED INTO AN AGREEMENT ONLY FOR DEVELOPING OF INFRASTRUCTURE FACILITY AS ENVISAGED IN SUB-CLAUSE (I) OF CLAUSE ( C) OF SUB-SECTION (4) AND AS PER PROVISIONS OF THE ACT, THE EXEMPTION/DEDUCTION WOUL D BE ADMISSIBLE ONLY ON THE COMMENCEMENT OF THE OPERATION. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 100 69. LD. CIT DR ALSO TRIED TO LEAD US TO INTERPRET T HE RELEVANT PROVISIONS OF THE ACT AND SUBMITTED THAT THE CONTENTION OF THE ASSESS EE IS NOT ACCEPTABLE THAT THE DEVELOPMENT OF INFRASTRUCTURE FACILITY WOULD NOT BE ELIGIBLE FOR EXEMPTION IF THE COMMENCEMENT OF OPERATION OF INFRASTRUCTURE FACILIT Y IS ACCEPTED AS PRE- REQUISITE FOR EXEMPTION AS THE ASSESSEE HAS NOT ENT ERED INTO AN AGREEMENT ONLY FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY BUT FOR DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITY. LD. CIT DR ALSO SUBMITTED THAT THERE CAN BE AN INSTANCE WHERE AN ASSESSEE HAS ENTERED INTO A N AGREEMENT WITH CENTRE/STATE GOVT./STATUTORY AUTHORITY ONLY FOR DEV ELOPMENT OF INFRASTRUCTURE FACILITY AND AFTER COMPLETION OF DEVELOPMENT, THE D EVELOPER ASSESSEE TRANSFERS SUCH FACILITY TO ANOTHER ENTITY AND IN CONSIDERATIO N THEREOF, RECEIVES CONSIDERATION AND EARNS PROFITS, THEN TRANSFEROR IS ENTITLED TO DEDUCTION ARISING TO IT I.E. TRANSFEROR ENTITY AND FOR THIS SITUATION, T HE STATUTE OF THE ACT PROVIDES THAT IN SUCH CASES ALSO, THE DEDUCTION WOULD BE AVAILABL E TO THE DEVELOPER AND THEREFORE A PROVISION HAS BEEN PROVIDED TO CLAUSE ( C) OF SUB-SECTION 4 OF SECTION 80IA OF THE ACT. 70. LD. AR PLACING REJOINDER TO THE ABOVE LEGAL CON TENTIONS OF THE REVENUE, SUBMITTED THAT THE LANGUAGE USED IN CLAUSE (C) IS HAS STARTED OR STARTS. THE EXPRESSION HAS STARTED INDICATES THE EVENTS WHICH HAVE ALREADY OCCURRED WHEREAS THE EXPRESSION STARTS INDICATES THE EVENT S WHICH WOULD OCCUR AND SINCE THE ASSESSEE IS IN THE BUSINESS OF DEVELOPING , OPERATING AND MAINTAINING ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 101 ROAD INCLUDING TOLL ROAD WHICH BUSINESS HAS COMME NCED ON 5.4.2007, THEREFORE, THE CONDITION LAID DOWN IN CLAUSE (C) OF SUB-SECTION 80IA(4)(I) IS WHOLLY SATISFIED. LD. AR, REITERATING HIS ARGUMENT S BEFORE THE AO, SUBMITTED THAT DEDUCTION IS AVAILABLE EVEN TO AN ENTERPRISE O NLY DEVELOPING THE INFRASTRUCTURE FACILITY, MEANING THEREBY AN ENTERP RISE NOT OPERATING AND MAINTAING THE INFRASTRUCTURE FACILITY BUT ONLY DEVE LOPING THE SAME IS ALSO ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. LD. AR ALSO CONTENDED THAT IF A VIEW IS TAKEN THAT AS PER CLAUSE (C) OF SECTION 80IA(4)( I) THE DEDUCTION IS AVAILABLE ONLY AFTER THE ENTERPRISE STARTS OPERATING AND MAI NTAINING THE INFRASTRUCTURE FACILITY, THE ENTERPRISE ONLY DEVELOPING SUCH INFRA STRUCTURE FACILITY WOULD NEVER BE ELIGIBLE FOR ANY DEDUCTION UNDER THIS SECTION, B ECAUSE SUCH AN ENTERPRISE WOULD NEVER OPERATE OR MAINTAINING THE INFRASTRUC TURE FACILITY. LD. AR REPEATED HIS EARLIER ARGUMENTS AND SUBMITTED THAT I T IS A SETTLED LEGAL PREPOSITION THAT A PROVISIONS SHOULD BE INTERPRETED IN SUCH A M ANNER SO THAT IT SUBSERVES THE PURPOSE FOR WHICH IT IS ENACTED AND DOES NOT FRUSTR ATE THE SAME. 71. IN OUR HUMBLE UNDERSTANDING, STATUTORY PROVISIO N SHOULD BE INTERPRETED IN THE LIGHT OF INTENTION OF LEGISLATION, HEADING GIVE N TO THE PROVISION, LANGUAGE USED THEREIN AND THE CONTEXT IN WHICH THE PARTICULA R PROVISO OF THE ACT REQUIRES INTERPRETATION. THE HEADING GIVEN BY LEGISLATURE T O SECTION 80IA OF THE ACT READS AS UNDER:- ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 102 DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKING OR ENTERPRISES ENGAGED IN IN FRASTRUCTURE DEVELOPMENT ETC. 72. MEANING THEREBY THE PROVISIONS OF SECTION 80IA OF THE ACT IS RELATED TO THE DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT ETC. WE FURTHER NOTE TH AT AS PER LANGUAGE USED THEREIN SUB-SECTION (1) GRANTS DEDUCTION IN RESPECT OF ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB- SECTION (4) THEREOF, UNDER SUB-SECTION (2) THE ADMI SSIBLE DEDUCTION IS 100% OF THE PROFITS AND GAINS OF ELIGIBLE BUSINESS FOR TEN (10) CONSECUTIVE ASSESSMENT YEARS (AY) OUT OF TWENTY (20) AYS BEGINNING WITH TH E AY IN WHICH SUCH UNDERTAKING OR ENTERPRISE DEVELOPS AND BEGINS TO OP ERATE ANY INFRASTRUCTURE FACILITY REFERRED IN CLAUSE (III) OF SUB-SECTION (4 ). 73. WE MAY FURTHER NOTE THAT SUB-SECTION (4)(I) R/W CLAUSE (A) AND (B) ARE RELATED TO DEDUCTION IN RESPECT OF THE ENTERPRISE C ARRYING ON BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFI LS THE FOLLOWING CONDITIONS:- (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY CONSORTIUM OF SUCH COMPANIES; (B) IT HAS ENTERED INTO AN AGREEMENT WITH CENTRAL GOVER NMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY STATUTORY BO DY FOR (I) ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 103 DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACI LITY. (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST DAY OF APRIL, 1995. AS PER PROVISO TO SUB-CLAUSE (C) ABOVE IN CASE OF TRANSFER OF INFRASTRUCTURE FAC ILITY OR AFTER 1.4.1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTUR E FACILITY OR TRANSFEROR ENTERPRISE TO ANOTHER ENTERPRISE I.E. TR ANSFEREE ENTERPRISE SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT W ERE THE ENTERPRISE TO WHICH THIS CLAUSE (C) APPLIES AND THE DEDUCTION FOR M PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FO R THE REMAINING OR UNEXPIRED PERIOD. THE ABOVE NOTED MEANING OF AFORE SAID PROVISIONS IS APPARENT FROM THE LANGUAGE USED THEREIN. 74. NOW IF WE CONSIDER THE OBJECT OF LEGISLATION, T HEN AS WE HAVE NOTED EARLIER THAT AS PER THE HEADING GIVEN TO THE PROVISION OF S ECTION 80IA OF THE ACT, THE OBJECT OF LEGISLATION IS TO PROVIDE DEDUCTION TO TH E ENTERPRISES WHICH ARE ENGAGED IN INFRASTRUCTURE DEVELOPMENT ETC. IT MEANS THAT T HE INFRASTRUCTURE DEVELOPMENT IS THE MAIN OBJECT OF THIS PROVISION TO ENCOURAGE E NTREPRENEURS TO PUT THEIR RESOURCES AND ENDEAVOURS TOWARDS INFRASTRUCTURE DEV ELOPMENT. IN SUB-SECTION (2) THE WORDS DEVELOPS AND BEGINS TO OPERATE ANY I NFRASTRUCTURE FACILITY HAVE BEEN USED. WE ALSO NOTE THAT EXPLAINING THE FIRST AND SECOND CONDITION OR ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 104 ELIGIBILITY OF DEDUCTION IS PRESCRIBED IN CLAUSES ( A) AND (B) TO SUB-SECTION (4)(I) OF THE ACT. 75. NOTICEABLY, SUB-SECTION (4)(I) MANDATES THAT AN Y ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPMENT OR (II) OPERATING A ND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY NEW INFRA STRUCTURE FACILITY WILL BE ENTITLED FOR DEDUCTION EXPLAINING THE THIRD CONDITI ON FOR ELIGIBILITY OF DEDUCTION WHEREAS IN CLAUSE (C) TO SUB-SECTION (4)(I) IT HAS BEEN PRESCRIBED THAT THE ENTERPRISE WOULD BE ELIGIBLE FOR DEDUCTION WHEN IT STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST DAY OF APRIL 1995. 76. BEFORE GOING FURTHER TO INTERPRET THIRD CONDITI ON PRESCRIBED IN CLAUSE (C) OF SUB-SECTION (4)(I) AS PER OUR HUMBLE UNDERSTANDI NG, WE NOTE THAT THE DEVELOPMENT IS A CONTINUOUS PROCESS WHICH STARTS FR OM THE DATE OF COMMENCEMENT OF BUSINESS AND BEGINNING OF THE DEVEL OPMENT ACTIVITIES AND COMES TO AN END WHEN DEVELOPMENT WORK CONCLUDES AND THEREAFTER OPERATION AND MAINTENANCE THERETO IS STARTED. WHEN THE INTEN TION OF LEGISLATION IS THAT THE ENTREPRENEURS SHOULD BE ENCOURAGED AND PROMOTED TOW ARDS INFRASTRUCTURE DEVELOPMENT ETC., THEN IT IS A POSITIVE INFERENCE T HAT THE LEGISLATION INTENDED TO GRANT DEDUCTION FOR THE ENTERPRISES WHICH ONLY DEVE LOPS OR WHICH OPERATES AND MAINTAINS OR WHICH DEVELOPS, OPERATE AND MAINTAIN I NFRASTRUCTURE FACILITY. OUR AFORESAID VIEW ALSO FINDS SUPPORT FROM PROVISO TO S UB CLAUSE (C) TO SECTION 80IA (4)(I) OF THE ACT, WHEREIN IT IS ALSO PROVIDED THAT IF DEVELOPER OF AN INFRASTRUCTURE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 105 FACILITY TRANSFERS THE SAME, THEN THE TRANSFEREE EN TERPRISE WOULD ALSO BE ELIGIBLE FOR DEDUCTION AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE (C) APPLIES I.E. TRANSFEROR ENTERPRISE, MEANING THEREBY THE ENTERPRI SE WHICH ONLY DEVELOPS INFRASTRUCTURE FACILITY IS ELIGIBLE FOR DEDUCTION A ND IN CASE DEVELOPER TRANSFERS THE FACILITY FOR OPERATION OR MAINTENANCE TO ANOTHE R ENTERPRISE THEN THE TRANSFEREE WOULD ALSO BE ELIGIBLE TO DEDUCTION FOR THE REMAINI NG OR UNEXPIRED PERIOD AS PER SUB SECTION (2) OR OTHER RELEVANT PROVISIONS OF THE ACT. HENCE, IN VIEW OF ABOVE DISCUSSION, WE MAY POINT OUT THAT THE LEGISLATION H AS CATEGORICALLY ADOPTED THE DATE OF 1 ST DAY OF APRIL 1995 FOR MANDATORY STARTING OR COMMEN CEMENT DATE OF INFRASTRUCTURE FACILITY DEVELOPMENT AND THE ENTERPR ISES WHICH STARTED DEVELOPING OR STARTS OPERATING AND MAINTAINING INFRASTRUCTURE FACILITY ON OR AFTER 1STR DAY OF APRIL, 1995 ARE HELD TO BE ELIGIBLE FOR DEDUCTION U /S 80IA(4)(I) OF THE ACT. 77. WE MAY FURTHER OBSERVE THAT THE ELABORATE MEANI NG OF COLLECTIVE AND CUMULATIVE READING OF SUB SECTION (2) AND (4)(I) MA NDATES THREE PRE-CONDITIONS IN CLAUSE (I) OF SUB-SECTION (4) VIZ. (A), (B) AND (C) AND IT IS REQUIRED FOR THE ENTERPRISE WHICH CLAIM DEDUCTION THAT ALL THREE CON DITIONS SHOULD BE FULFILLED SIMULTANEOUSLY. IF THE INTENTION OF LEGISLATION WA S THE DEDUCTION WOULD BE ALLOWED ONLY TO THE ENTERPRISE WHO DEVELOPS AND BEG INS TO OPERATE AND MAINTAIN INFRASTRUCTURE FACILITY THEN IT WAS NOT REQUIRED TO SEGREGATE OR MANDATE THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MA INTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING AS STIPULATED IN SUB SECT ION (4)(I) AND CONDITION (A) ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 106 AND (B) THERETO. THIS INTERPRETATION ALSO FINDS SU PPORT FROM PROVISO TO SUB- CLAUSE (C) I.E. THIRD CONDITION WHEREIN THE TRANSFE REE OF INFRASTRUCTURE FACILITY IS ALSO HELD TO BE ELIGIBLE IN THE SAME MANNER IN WHIC H THE TRANSFEROR WHICH DEVELOPED SUCH INFRASTRUCTURE FACILITY, IS ELIGIBLE FOR THE REMAINING OR UNEXPIRED PERIOD OF DEDUCTION. IN THIS SITUATION, WE MAY SAF ELY INFER OR DRAW A CONCLUSION THAT THE INTENTION OF THE LEGISLATION IS TO GRANT D EDUCTION NOT ONLY TO AN ENTERPRISE WHICH DEVELOPS, OPERATES AND MAINTAINS BUT ALSO TO AN ENTERPRISE WHICH ONLY DEVELOP INFRASTRUCTURE FACILITY. WE, THEREFORE, DE CLINE TO ACCEPTANCE INTERPRETATION OF SECTION 80IA OF THE ACT AS GIVEN BY LD. CIT DR IN HER WRITTEN SUBMISSIONS PLACED BEFORE US DURING ARGUMENTS. 78. WE FURTHER CONSIDER THE CONTENTION OF THE LD. A R THAT THE COMPANY STARTED AND BEGAN TO OPERATE ITS BUSINESS ACTIVITIES FROM 5 .4.2007 AND IRRESPECTIVE OF THE FACT THAT THE INFRASTRUCTURE FACILITY WAS FORMALLY INAUGURATED BY THE HONBLE CHIEF MINISTER OF UP GOVERNMENT ON 9.8.2012, THE AS SESSEE IS ELIGIBLE FOR DEDUCTION W.E.F. AY 2009-10 (RELEVANT TO FINANCIAL YEAR 2008-09) AND ONWARDS AS AND WHEN BUSINESS ACTIVITIES OF DEVELOPING INFRA STRUCTURE HAS BEGUN, THEN INCOME DERIVED FROM BUSINESS WOULD BE CERTAINLY ELI GIBLE FOR DEDUCTION. LD. AR HAS ALSO CONTENDED THAT THE ACTIVITY OF SUB LEAS E OR SALE OF LAND FOR DEVELOPMENT, WHICH WAS RECEIVED BY THE ASSESSEE AS A MAJOR PART OF CONSIDERATION OF PROJECT, IS AN INTEGRAL AND INSEPA RABLE PART OF MAIN BUSINESS ACTIVITY OF DEVELOPMENT OF INFRASTRUCTURE FACILITY, THEREFORE, INCOME/PROFITS ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 107 DERIVED DURING AY 2009-10 FROM SUB-LEASE OF LAND AR E THE FIRST DEGREE OPERATIONAL PROFITS OF THE BUSINESS WHICH IS ELIGIB LE FOR DEDUCTION U/S 80IA(4)(I) READ WITH EXPLANATION (A) THERETO. 79. SINCE WE HAVE ALREADY HELD THAT THE ASSESSEE CO MPANY IS IN THE BUSINESS OF DEVELOPMENT OF ROAD INCLUDING TOLL ROAD INFRA STRUCTURE FACILITY AND THE ENTERPRISES WHICH ONLY DEVELOPS INFRASTRUCTURE FACI LITY ARE ELIGIBLE FOR DEDUCTION U/S 80IA(4)(I) OF THE ACT FROM THE DATE WHEN IT BE GINS TO OPERATE ITS BUSINESS ACTIVITY OF DEVELOPMENT OF INFRASTRUCTURE FACILITY. LD. CIT DR COULD NOT DEMOLISH THESE CONTENTIONS OF THE ASSESSEE INCLUDIN G THE CONTENTION THAT THE BUSINESS OPERATIONS OF ELIGIBLE ENTERPRISES VISUALI SES THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. WHEN DEVELOPMENT ACTIVITI ES COME TO AN END OR COMPLETED AND SUCH ACTIVITY BEGINS TO FACILITATE TH E INTENDED USERS, THE ACT OF OPERATION AND MAINTENANCE STARTS ONLY AFTER CREATIO N OF ENTIRE OR PART DEVELOPMENT OF INFRASTRUCTURE FACILITY AS PER REQUI REMENT. FURTHER, THE DEVELOPMENT WORK MAY SPREAD OVER YEARS WHICH FALLS UNDER SEVERAL ASSESSMENT PERIOD/YEARS AND IF THE BENEFICIARY IS EXPECTED TO COMPLETE THE PROJECT OR COMPLETION OF PROJECT IS CONSIDERED TO BE A PRE-CON DITION FOR DEDUCTION, THEN THE ELIGIBLE DEVELOPING ENTERPRISE WILL HAVE TO WAIT TI LL COMPLETION OF THE ENTIRE PROJECT DURING WHOLE DEVELOPMENT PERIOD, WHICH MAY HAVE SPREAD OVER SEVERAL YEARS, FOR WANT OF THIS IMPRACTICAL CONDITION. IN THIS SITUATION, THE ELIGIBLE ENTERPRISE WOULD BECOME ELIGIBLE ONLY IN THE LAST Y EAR OF DEVELOPMENT WHEREIN ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 108 DEVELOPMENT WORK ENDS AND INFRASTRUCTURE FACILITY B EGINS TO OPERATE, THIS CERTAINLY CAN NOT BE AN INTENTION OF THE BENEFICIAL TAXATION LEGISLATION. 80. WE FURTHER DECLINE TO ACCEPT THE CONTENTION OF LD. CIT, NOIDA AND LD. CIT DR THAT SINCE THE ASSESSEE HAS NOT MAINTAINED SEPAR ATE BOOKS OF ACCOUNTS AND HAS NOT CREATED A RESERVE AS REQUIRED IN RULE 18BBC AND HAS NOT FIELD REQUIRED UTILIZATION CERTIFICATE IN FORM 10CCC, THEREFORE, T HE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IA(4)(I) OF THE ACT AS THE SALE OF LAND OR OTHER ACTIVITIES BEING INTEGRAL PART OF ITS HIGHWAY PROJECT BECAUSE SINCE BY EARLIER PART OF THIS ORDER, WE HAVE HELD THAT THE ASSESSEE IS IN THE BUSINESS O F DEVELOPMENT OF INFRASTRUCTURE FACILITY OF ROAD INCLUDING TOLL ROA D AND THE ASSESSEE ACTIVITIES FALL WITHIN THE AMBIT OF CLAUSE (A) OF EXPLANATION TO SUB-SECTION (4)(I) OF SECTION 80IA OF THE ACT AND ALLEGATIONS AND CONCLUSION OF L D. CIT, NOIDA ARE CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE ACT. 81. IN VIEW OF FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE BENEFICIAL TAXATION PROVISIONS DESERVE A LIBERAL IN TERPRETATION WHICH ACTUALLY SUBSERVE THE VERY PURPOSE AND OBJECT OF THE LEGISLA TION AND DOES NOT DEFEAT OR FRUSTRATE THE SAME AS HAS BEEN HELD IN SEVERAL DECI SIONS AND ORDERS OF HONBLE SUPREME COURT AND HIGH COURT INCLUDING DECISION IN THE CASE OF HONBLE APEX COURT IN THE CASE OF CIT VS VATIKA TOWNSHIP LTD. 36 7 ITR 466 (SC) . 82. A PLETHORA OF JUDGMENTS OF HONBLE SUPREME COUR T AND VARIOUS HONBLE HIGH COURTS HAVE FIRMLY LAID DOWN THE RULE THAT A P ROVISION FOR DEDUCTION, ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 109 EXEMPTION, INCENTIVES, BENEFITS AND RELIEF SHOULD B E INTERPRETED LIBERALLY, REASONABLY AND IN FAVOUR OF THE ASSESSEE AS OBSERVE D BY THE HONBLE APEX COURT IN THE JUDGEMENT IN THE CASE OF CIT VS. SOUTH ARCOT CITY 176 ITR 117 AT PAGE 119 (SC). IN THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAHINDRA 144 ITR 225 AT PAGE 239 (SC) IT WAS FURTHER HELD THAT THE BENEFICIAL TAXATION PROVISIONS SHOULD BE SO CONSTRUED AS TO EF FECTUATE THE OBJECT OF THE LEGISLATURE AND NOT TO DEFEAT IT . 83. THE HONBLE SUPREME COURT IN THE JUDGMENT IN THE CASE OF PRABHAKAR P.R. VS. CIT 284 ITR 549 (SC) HELD THAT ALTHOUGH THE EXEMPTION PROVISIONS ARE TO BE CONSTRUED STRICTLY AS REGARDS THE APPLICABILITY THEREOF TO THE CASE OF THE ASSESSEE BUT ONCE IT IS FOUND THAT THE SAME IS APPLICABLE, THE SAME ARE REQUIRED TO BE INTERPRETED LIBERALLY. AS PER RATIO THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF AGS TIBER VS. CIT 233 ITR 207 (MADRAS), THE INTERPRETATION OF BENEFICIAL TAXING STATUE SHO ULD BE LIBERAL BUT LOGICAL. SUBSEQUENTLY, THE HONBLE SUPREME COURT IN THE JUDGMENT IN THE CASE OF MYSORE MINERALS VS. CIT 239 ITR 775 (SC) AL SO HELD THAT THE BENEFICIAL PROVISION SHOULD BE ASSIGNED SUCH MEANIN G AS IT WOULD ENABLE THE ASSESSEE TO SECURE BENEFIT INTENDED TO BE GIVEN BY THE LEGISLATURE TO THE ASSESSEE. 84. WE ARE SINCERELY CONSCIOUS ABOUT OUR LIMITS THA T WE CANNOT AMEND, ALTER OR MODIFY THE STATUTORY PROVISION IN ANY MANNER AND ALSO IT WOULD NOT BE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 110 REASONABLE OR PERMISSIBLE FOR THE COURT TO REWRITE THE SECTION OR SUBSTITUTE THE WORDS OF ITS OWN FOR THE ACTUAL WORDS USED BY THE L EGISLATURE IN THE NAME OF GIVING EFFECT TO THE REPOSED OR SUPPOSED UNDERLYING OBJECT OF THE STATUE AS OBSERVED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. BUDHIR AJA VS. 204 ITR 412(SC) . AT THE SAME TIME, WE RESPECTFULLY TAKE GUIDANCE F ROM THE RECENT JUDGMENT OF THE FULL BENCH OF HONBLE SUPREM E COURT IN THE CASE OF CIT VS. VATIKA TOWNSHIP LTD. 3 (SUPRA) WHEREIN, SPEAKIN G FOR THE CONSTITUTION BENCH OF APEX COURT, THEIR LORDSHIP HELD AS FOLLOWS AT PA GE 494): TO ATTAIN WELFARE STATE IS OUR CONSTITUTIONAL GOAL AS WELL, ENSHRINED AS ONE OF ITS BASIC FEATURES, WHICH RUNS THROUGH OUR CONSTITUTION. IT IS FOR THIS REASON, SPECIFIC PROVI SIONS ARE MADE IN THE CONSTITUTION, EMPOWERING THE LEGISLATURE TO MAK E LAWS FOR LEVY OF TAXES, INCLUDING THE INCOME-TAX. THE RATIONALE BEHIND COLLECTION OF TAXES IS THAT REVENUE GENERATED THEREFROM SHALL BE SPENT BY THE GOVERNMENTS ON VARIOUS DEVELOPMENTAL AND WELFARE SC HEMES, AMONG OTHERS. AT THE SAME TIME, IT IS ALSO MANDATED THAT THERE CA NNOT BE IMPOSITION OF ANY TAX WITHOUT THE AUTHORITY OF LAW. SUCH A LAW HAS TO BE UNAMBIGUOUS AND SHOULD PRESCRIBE THE LIABILITY T O PAY TAXES IN CLEAR TERMS. IF THE CONCEPTIBLE TO TWO INTERPRETATI ONS, THE INTERPRETATION WHICH FAVOURS THE SUB-ESTABLISHED PR INCIPLE OF STATUTORY INTERPRETATION, TO HELP FINDING OUT AS TO WHETHER PARTICULAR CATEGORY OF ASSESSEE ARE TO PAY A PARTICULAR TAX OR NOT. NO DOUBT, WITH THE APPLICATION OF THIS PRINCIPLE, COURTS MAKE ENDEAVOUR TO FIND OUT THE INTENTION OF THE LEGISLATURE. AT THE SAME T IME, THIS VERY PRINCIPLE IS BASED ON FAIRNESSDOCTRINE AS IT LAYS DOWN THAT IF IT IS NOT VERY LEVIED TO A PARTICULAR CLASS OF PERSONS OR NOT, THE SUBJECT SHOULD NOT BE FASTENED WITH ANY LIABILITY TO PAY TA X. THIS PRINCIPLE ALSO ACTS AS A BALANCING FACTOR BETWEEN THE TWO JUR ISPRUDENTIAL THEORIES OF JUSTICE LIBERTARIAN THEORY ON THE ONE HAND AND KANTIAN THEORY ALONG WITH EGALITARIAN THEORY PROPOU NDED BY JOHN RAWLS ON THE OTHER HAND. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 111 TAX LAWS ARE CLEARLY IN DEROGATION OF PERSONAL RIG HTS AND PROPERTY INTERESTS AND ARE, THEREFORE, SUBJECT TO S TRICT CONSTRUCTION, AND ANY AMBIGUITY MUST BE RESOLVED AGAINST IMPOSITI ON OF THE TAX. 85. IN THE SHADOW OF ABOVE CONSIDERATE VIEW IF WE A NALYSE THE FACTS OF THE PRESENT CASE, THEN WE HAVE TO HOLD THAT THE AO TOOK A REASONABLE AND PLAUSIBLE VIEW THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S 80IA(4)(I) READ WITH CLAUSE (A) OF EXPLANATION THERETO. SUB-SECTION (2) ALSO C LARIFIES THAT THE DEDUCTION SHALL BE AT THE OPTION OF THE ASSESSEE AND THE ASSESSEE I S ELIGIBLE FOR DEDUCTION ON THE INCOME EARNED FROM SUB-LEASE/SALE OF LAND WHICH WAS PROVIDED BY THE TEA TO THE ASSESSEE WITH AN ABSOLUTE RIGHT TO USE IT, UNDI SPUTEDLY THE ASSESSEE COMPANY HAS STARTED ITS BUSINESS OF DEVELOPING THE INFRASTR UCTURE FACILITY W.E.F. 5.4.2007 AND THE SAME WAS CONTINUING DURING RELEVANT PERIOD PERTAINING TO RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION I.E. AY 2009-10 , AND IF ASSESSEE WANTS TO AVAIL ITS LEGAL OPTION TO CLAIM DEDUCTION U/S 80IA( 4)(I) OF THE ACT, THEN THE ASSESSEE CANNOT BE DENIED FOR THE SAME BY FOLLOWING A HYPER TECHNICAL APPROACH WHICH IS CONTRARY TO LETTER AND SPIRIT OF THE BENEF ICIAL TAXATION LEGISLATION. ACCORDINGLY, ISSUE NO. (I), (II) AND (III), AS SET OUT BY US, ARE DECIDED IN FAVOUR OF THE ASSESSEE. VALIDITY OF THE ACTION U/S 263 OF THE ACT. 86. ON THE QUESTION (IV) & (V) AND (VI) AS SET OUT ABOVE BY US, REGARDING EXAMINATION OF VALIDITY OF ISSUANCE OF NOTICE, ASSU MPTION OF JURISDICTION AND PASSING OF IMPUGNED ORDER U/S 263 OF THE ACT, THE L D. AR PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F MALABAR INDUSTRIES CO. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 112 LTD. VS. CIT (SUPRA) SUBMITTED THAT AS PER 263 OF THE ACT IT IS CLEAR T HAT THE PRE REQUISITE TO EXERCISE OF JURISDICTION BY THE COMMIS SIONER IS THAT THE ORDER OF THE AO, IN QUESTION, IS ERRONEOUS IN SO FAR AS IT IS PR EJUDICIAL TO THE INTEREST OF THE REVENUE AND THE COMMISSIONER HAS TO BE SATISFIED WI TH TWIN CONDITIONS, NAMELY, (I) THE ORDER SOUGHT TO BE REVISED IS ERRONEOUS; AN D (II) PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. AR, FURTHER SUBMITTED THAT WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UN LESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW AND THE SAME IS FOUND TO BE PASSED WITHOUT APPLICATION OF MIND. 87. FURTHER, PLACING RELIANCE ON THE DECISION OF TH E HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. ARVIND JEWELLERS (SUPR A) SUBMITTED THAT WHERE THE RELEVANT MATERIAL WAS ON RECORD WHICH WAS DULY CONS IDERED BY THE AO AND A REASONABLE AND SUSTAINABLE VIEW WAS TAKEN THEN MERE LY BECAUSE DIFFERENT VIEW CAN BE TAKEN, SHOULD NOT HAVE BEEN THE BASIS FOR IN VOKING THE REVISIONARY POWERS UNDER THE SECTION 263 OF THE ACT. THE LD. AR, FURTHER CONTENDED THAT WHEN A REGULAR ASSESSMENT IS MADE U/S 143(3) OF THE ACT, A PRESUMPTION MUST BE DRAWN THAT THE ORDER HAS BEEN PASSED UPON AN APPLIC ATION OF MIND AND THE COMMISSIONER HAS TO REBUT SUCH PRESUMPTION WITH THE SUPPORT OF SOME COGENT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 113 MATERIAL TO SHOW THAT THE AO HAD NOT APPLIED HIS MI ND WHILE PASSING THE ASSESSMENT ORDER. TO SUPPORT THIS PREPOSITION, THE LD. AR HAS RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. HONDA SIEL POWER PRODUCTS LTD. (SUPRA) AND ALSO CONTENDED THAT WHERE THE AO ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW OR WHERE TWO VIEW S ARE POSSIBLE AND THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS THEN THE COMMIS SIONER CANNOT EXERCISE HIS POWERS UNDER SECTION 263 OF THE ACT TO DIFFER WITH THE VIEW TAKEN BY THE AO, EVEN IF THERE HAS BEEN A LOSS OF REVENUE. 88. THE LD. AR HAS FURTHER DRAWN OUR ATTENTION TOWA RDS ASSESSEES PAPER BOOK FROM PAGE 93 TO 196 AND SUBMITTED THAT THE AO HAS MADE DETAILED ENQUIRIES AND AFTER PROPER APPLICATION OF MIND, HAS PASSED ASSESSMENT ORDER U/S 143(3) OF THE ACT. THE LD. AR FURTHER CONTENDED THA T THE AO HAS RIGHTLY ALLOWED DEDUCTION U/S 80 IA (4) OF THE ACT FOR THE PROFITS DERIVED FROM THE SALE OF LAND AND OTHER INCOME SINCE THE SAME ARE PROFITS AND GAINS DERIVED FROM THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING O F AN INFRASTRUCTURE FACILITY I.E. A ROAD INCLUDING TOLL ROAD AND FROM THE MAIN B USINESS ACTIVITIES CARRIED OUT BY THE ASSESSEE DURING THE PERIOD UNDER CONSIDERATI ON. THE LD. AR, ALSO POINTED OUT THAT THE LAND FOR DEVELOPMENT WHICH WAS RECEIVE D BY THE ASSESSEE UNDER CONCESSION AGREEMENT, WAS, IN FACT, AN IMPORTANT PA RT OF CONSIDERATION RECEIVED BY THE ASSESSEE FOR DEVELOPING, OPERATING AND MAINT AINING THE TOLL ROAD AND WITHOUT EARNING THE REVENUE FROM SAID LAND, THE TOL L ROAD PROJECT WOULD NOT BE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 114 VIABLE BECAUSE ONLY COLLECTION OF THE TOLL FROM SUC H ROAD WOULD NOT EVEN MEET THE COST OF CONSTRUCTION OF TOLL ROAD. THE LD. AR S TRENUOUSLY CONTENDED THAT AFORESAID FACTS WERE SUBMITTED BEFORE THE AO REPLYI NG TO THE QUERIES OF THE AO DURING ASSESSMENT PROCEEDING THROUGH VIDE REPLIES D ATED 23.11.2011, 21.12.2011, 23.12.2011, 28.12.2011 & 29.12.2011 AND THE AO ADJUDICATED HIS QUERIES AFTER CONSIDERING THE EXPLANATION, REPLIES AND DOCUMENTS BY WAY OF PASSING A NOTE SHEET ENTRY CONSISTING OF 18 PAGES. HENCE, THE AO HAD MADE A DETAILED INQUIRY ABOUT THE CLAIM OF DEDUCTION U/S 8 0 IA (4) OF THE ACT BEFORE ALLOWING THE SAME TO THE ASSESSEE. FURTHER, STRESSI NG UPON THE ABOVE FACTS, THE LD. AR, ALSO CONTENDED THAT IN THE LIGHT OF ABOVE E XERCISE AND DETAILED ENQUIRY CONDUCTED BY THE AO PRIOR TO ALLOWING THE DEDUCTION TO THE ASSESSEE, THE LD. CIT, NOIDA WAS NOT CORRECT IN HOLDING THAT THE AO P ASSED ASSESSMENT ORDER WITHOUT MAKING PROPER ENQUIRY AND WITHOUT APPLICATI ON OF MIND AND THE SAME WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. 89. PLACING RELIANCE ON THE DECISION OF HONBLE GAU HATI HIGH COURT IN THE CASE OF BONGAIGAON REFINERY AND PETRO CHEMICALS LTD . VS. UNION OF INDIA (SUPRA) , THE LD. AR CONTENDED THAT THE ERROR IN THE ORDER OF THE ASSESSING OFFICER AND RESULTANT PREJUDICE TO THE INTEREST OF REVENUE ARE TWIN FACTORS TO CO- EXIST FOR CONFERRING AUTHORITY ON THE COMMISSIONER TO INVOKE POWERS U/S 263 OF THE ACT. MERELY ENTERTAINING A DIFFERENT VIEW FROM THE ONE ADOPTED BY THE AO, WHICH IS PLAUSIBLE AND REASONABLE, WOULD NOT CLOTHE THE COMMISSIONER WITH ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 115 POWER TO REVISE OR INTERFERE U/S 263 OF THE ACT. FU RTHER, PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. GABRIEL INDIA LTD. (SUPRA), THE LD. AR PRESSED INTO SERVICE ANOTHER PROPOSITIO N THAT IF THE AO, WHILE FRAMING ASSESSMENT IN ACCORDANCE WITH LAW, MA KES CERTAIN ASSESSMENT, THEN THE SAME CANNOT BE BRANDED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW, BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, I.E. THE COMMISSIONER, THE ORDER SHOULD HAVE BEEN WRITTEN MO RE ELABORATELY, AS THE SECTION 263 OF THE ACT DOES NOT ALLOW SUBSTITUTION OF THE ORDER OF THE AO FOR THAT OF THE COMMISSIONER. ON BEHALF OF THE ASSESSEE, REL IANCE WAS ALSO PLACED ON THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD. (SUPRA) WHEREIN IT WAS HELD THAT SINCE DIFFERENT VIEWS EXI STED ON THE DAY WHEN THE COMMISSIONER PASSED THE ORDER AND THE MECHANICS OF THAT SECTION HAD BECOME SO COMPLICATED OVER THE YEARS, THE SUBSE QUENT AMENDMENT OF SECTION 80 HHC OF THE ACT, EVEN THOUGH RETROSPECTIV E, WOULD NOT BE ATTRACTED. IN THIS CASE HONBLE APEX COURT, REFERRING AND REIT ERATING THE RATIO LAID DOWN IN ITS EARLIER ORDER IN THE CASE OF MALABAR INDUSTRIES LTD. (SUPRA), HAS HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN O NE VIEW IN THE ASSESSMENT ORDER WITH WHICH THE COMMISSIONER DOES NOT AGREE, T HEN THE SAME CANNOT BE TERMED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE IN TEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 116 90. THE LD. AR, VEHEMENTLY CONTENDED THAT A PLETHOR A OF JUDGMENTS OF HONBLE SUPREME COURT AND HONBLE VARIOUS HIGH COUR TS HAVE FIRMLY LAID DOWN THE RULE THAT A PROVISION FOR DEDUCTION, EXEMP TION OR RELIEF SHOULD BE INTERPRETED LIBERALLY AND REASONABLY IN FAVOUR OF T HE ASSESSEE AND THESE PROVISIONS SHOULD BE SO CONSTRUED AS TO ACHIEVE THE OBJECT OF THE BENEFICIARY TAXATION LEGISLATION AND NOT TO FRUSTRATE THE SAME. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASES OF C IT VS. SOUTH ARCOT SOCIETY 176 ITR (SC) AND CIT VS. MAHINDRA 144 ITR 225 AT PA GE 239 (SC) . 91. THE LD. AR HAS ALSO DRAWN OUR ATTENTION TOWARD S RECENT DECISIONS/ JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DLF LTD. (2013) 350 ITR 555 (DELHI), DECISION OF HONBLE ANDHRA PRA DESH HIGH COURT IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT. LTD. (2013) 354 ITR 35(AP) AND DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V S. J.L. MORRISON (INDIA) LTD. (2014) 366 ITR 593 (CAL.) AND SUBMITTED THAT THERE SHOULD BE AN ESSENTIAL ELEMENT OF UNSUSTAINABILITY IN THE ORDER OF THE A O, AND NOT MERE PREJUDICIAL TO THE INTEREST OF THE REVENUE OR A MERE ERRONEOUS VIE W, WHICH CAN BE REVISED U/S 263 OF THE ACT. 92. THE LD. AR, ALSO FORWARDED A PREPOSITION BY DR AWING OUR ATTENTION TOWARDS RECENT DECISION OF HONBLE HIGH COURT OF DE LHI IN THE CASE OF GLOBUS INFOCUM LTD. VS. CIT 369 ITR 14 (DELHI) AND SUBMITTED THAT UNDER SECTION 263 OF THE ACT, THE COMMISSIONER SHOULD TAKE A FINAL DE CISION AND NOT MERELY SET ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 117 ASIDE THE ASSESSMENT ORDER TO BE MADE AFRESH DE NOV O AND REMANDING THE MATTER FOR FRESH EXAMINATION IS NOT PERMISSIBLE AS THE COM MISSIONER MUST REACH TO A CONCLUSION AND FINDING THAT FINAL FINDING IN ASSESS MENT ORDER WAS ERRONEOUS AND INCORRECT. THE LD. AR ALSO REITERATED HIS ARGUMENTS AND LASTLY CONTENDED THAT IN VIEW OF SEVERAL DECISIONS ON THIS ISSUE INCLUDING D ECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. (SUPRA) , DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. NIRMA CHEMICALS WORKS P. LTD. 309 ITR 67 (GUJARAT), DECISION OF THE HONB LE GAUHATI HIGH COURT IN THE CASE OF BONGAIGAON REFINARY (SUPRA) AND DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DIPAK MIT TAL 324 ITR 411 (P & H ) SUBMITTED THAT JURISDICTION CANNOT BE INVOKED U/S 2 63 OF THE ACT WHERE TWO VIEWS ARE POSSIBLE AND MERELY BECAUSE THE CIT IS N OT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER DOES NOT ALLOW THE COMMISSIONER TO AVAIL VALID JURISDICTION TO REVISE THE ORDER. 93. TO ABOVE SUBMISSIONS OF THE LD AR, ON BEHALF OF THE REVENUE, THE LD. CIT- DR, DRAWING OUR ATTENTION TOWARDS LAST PAGE 7 & 8 OF HER WRITTEN SUBMISSIONS (AS REPRODUCED HEREINABOVE), CONTENDED THAT THE LD. CIT IN HIS ORDER CATEGORICALLY STATES THAT THE INESCAPABLE AN D LOGICAL CONCLUSIONS WOULD BE THAT THE ASSESSEE OUGHT TO HAVE COMPLIED WITH THE P ROVISIONS OF SUB SECTION (6) OF SECTION 80IA WHICH IT HAS NOT AND THE LD. CIT A LSO NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA OF THE ACT ON INTER EST INCOME ON FDS MADE BY ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 118 DEPLOYING ITS SURPLUS FUNDS IN THE BANK AND THE SAM E HAS BEEN ERRONEOUSLY ACCEPTED BY THE AO. THE LD. CIT- DR, REFERRING TO T HE DECISION OF ITAT CHANDIGARH BENCH A IN THE CASE OF VODAPHONE ESSA R LTD. (2013) 153 TTJ (CHD) 451, CONTENDED THAT WHERE, IN A GIVEN SITUAT ION, AN IDENTICAL ISSUE HAD BEEN OVERLOOKED BY THE AO AND THE CIT HAD INVOKED T HE POWERS AVAILABLE U/S 263 OF THE ACT, IT WAS HELD THE AO HAD FAILED TO MA KE PROPER INVESTIGATION INTO THE ELIGIBILITY OF THE ASSESSEE IN VIOLATION TO TH E CLAIM OF DEDUCTION U/S 80 IA OF THE ACT ON THE BUSINESS PROFITS, INTEREST AND OTHER INCOME RECEIVED DURING THE YEAR, THEREFORE, THE ORDER OF THE AO WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST AT THE REVENUE AND THE TRIBUNAL UPHELD THE ORDER OF THE CIT U/S 263 OF THE ACT. 94. THE LD. CIT-DR ALSO POINTED OUT THAT THE ASSESS EE HAD CLAIMED DEPRECIATION AMOUNTING TO RS. 22.97 CRORES AND HAD BEEN GRANTED BY THE AO EVEN WHILE THE HIGHWAY PROJECT HAD NOT BEEN COMPLET ED, THEREFORE LD. CIT RIGHTLY HELD THAT THE ASSESSMENT ORDER WAS PATENTLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT DR PARTED WITH THE ARGUMENT ON THIS ISSUE WITH A FINAL SUBMISSION THAT THE LD. CIT WAS QUITE JUDICIOUS AND CORRECT IN HOLDING THAT THE AO PASSED AN ERRONEOUS ORDER INASM UCH AS HE FAILED TO APPRECIATE THE FACTS OF THE CASE, DID NOT APPLY THE CORRECT LAW TO THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE COMPANY, DID NOT APPL Y HIS MIND TO THE ASSERTIONS MADE BY THE ASSESSEE AND DID NOT EVEN COMPLY WITH T HE CBDT CIRCULAR NO. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 119 1/2006 DATED 12.1.2006 AND THUS, DUE TO THESE REA SONS, ORDER PASSED BY THE AO U/S 143(3) OF THE ACT WAS ERRONEOUS AND ALSO HAS TH E EFFECT OF PERPETUATING LOSSES IN THE SUBSEQUENT YEARS, THEREFORE, THE SAME WAS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. 95. THE LD. AR PLACED BRIEF REJOINDER TO THE ABOVE SUBMISSIONS AND CONTENTIONS OF THE LD. CIT-DR AND POINTED OUT THAT THE AO MADE SUFFICIENT AND REQUIRED ENQUIRY ABOUT CLAIM OF THE ASSESSEE AS THE AO RAISED SEVERAL QUERIES DURING ASSESSMENT PROCEEDINGS AND THE ASSESSEE SUBM ITTED DETAILED REPLIES SUPPORTED BY VARIOUS DOCUMENTS AND EVIDENCE TO SHOW THAT THE CLAIM OF THE ASSESSEE IS SUSTAINABLE AND FURTHER, THE AO ADJUDIC ATED THE QUERIES BY PASSING A DETAILED NOTE SHEET VIDE DATED 30.12.2011 AND THERE FORE, IT CANNOT SAID THAT THE AO DID NOT MAKE ADEQUATE, PROPER AND REQUIRED ENQUI RY WHILE ALLOWING THE CLAIM OF THE ASSESSEE. THE LD. AR ALSO POINTED OUT THAT THE AO TOOK A REASONABLE AND PLAUSIBLE VIEW WHICH CANNOT BE HELD AS UNSUSTAINABLE BY ANY STRETCH OF IMAGINATION. THE LD. AR FINALLY SUBMITTE D THAT THE LD. CIT DID NOT CONCLUSIVELY HOLD THAT THE ORDER OF THE AO IS NOT S USTAINABLE AND THE LD. CIT IS NOT EMPOWERED TO SET ASIDE THE ASSESSMENT ORDER, WI THOUT ANY CONCLUSION, FOR FRESH ADJUDICATION WITHOUT ANY LEGAL CAUSE OR BASIS , HENCE, IMPUGNED ORDER IS NOT VALID AND JUSTIFIED. 96. ON VIGILANT AND CAREFUL READING OF SECTION 263 OF THE ACT WE MAY NOTE THAT THERE ARE FOUR MAIN STAGES OF THE POWER OF REV ISION GRANTED TO THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 120 COMMISSIONER UNDER SUPERVISORY JURISDICTION. FIRSTL Y, THE COMMISSIONER HAS POWER TO CALL AND EXAMINE ASSESSMENT RECORDS AND FO R THAT THE COMMISSIONER DOES NOT NEED TO SHOW ANY REASON AS ITS PART OF ADM INISTRATIVE CONTROL TO CALL FOR RECORDS OF ANY PROCEEDING UNDER THE ACT, AND EXAMIN E THE SAME. SECONDLY, THE COMMISSIONER CAN ALSO CONSIDER THAT ANY ORDER PASSE D UNDER THE ACT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE AND FOR THIS PURPOSE, HAVING REGARD TO THE STIPULATION AND FABRI C OF LANGUAGE OF SECTION 263 OF THE ACT IT IS VIVID THAT THE COMMISSIONER MAY EX ERCISE HIS POWERS BY CALLING AND EXAMINING THE RECORDS IN THE MANNER AS INDICATE D ABOVE AND AT THIS STAGE OF CONSIDERATION OF THE APPEARANCE OF INTENDED ASSESSE E OR HIS REPRESENTATIVE IS NOT REQUIRED AND THEREFORE, THERE IS NO QUESTION OR SIT UATION FOR THE ASSESSEE TO APPEAR, OBJECT AND MAKING ANY SUBMISSIONS BEFORE TH E COMMISSIONER. WE ALSO NOTE THAT AT THIS STAGE AFTER CALLING FOR AND EXAMI NING THE RECORDS, IF THE COMMISSIONER REACHES TO A PRIME FACIE CONCLUSION TH AT THE ASSESSMENT ORDER IS ERRONEOUS AND IN SO FAR IT IS PREJUDICIAL TO THE I NTEREST OF THE REVENUE, THEN THE THIRD STAGE OF SECTION 263 OF THE ACT COMES. 97. IN OUR HUMBLE UNDERSTANDING OF THIS PROVISION, AFORESAID TWO STAGES ARE PURELY ADMINISTRATIVE AND THE PROCEEDING OF THE THI RD STAGE IS QUASI-JUDICIAL AND THE SAME REQUIRES THE COMMISSIONER TO DISCHARGE HIS DUTIES AS PER LETTER AND SPIRIT OF THE SECTION 263 OF THE ACT, WHICH READS A S UNDER :- ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 121 (1) THE COMMISSIONER MAY CALL FOR AND EXAMI NE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEE MS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIF YING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECT ING A FRESH ASSESSMENT. [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT I S HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN ORDER PASSED [ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988] BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSI STANT COMMISSIONER [OR DEPUTY COMMISSIONER] OR THE INCOME-TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE [JOINT] COMMISSIONE R UNDER SECTION 144A ; (II) AN ORDER MADE BY THE [JOINT] COMMISSION ER IN EXERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMM ISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) RECORD [SHALL INCLUDE AND SHALL BE DEE MED ALWAYS TO HAVE INCLUDED] ALL RECORDS RELATING TO ANY PROCEEDING UN DER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISS IONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB -SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER O F ANY APPEAL [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1 988], THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EX TEND [AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SUCH MA TTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL.] [(2) NO ORDER SHALL BE MADE UNDER SUB-SECTI ON (1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL Y EAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED.] (3) NOTWITHSTANDING ANYTHING CONTAINED IN S UB-SECTION (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSE QUENCE OF, OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAIN ED IN AN ORDER OF THE APPELLATE TRIBUNAL, [NATIONAL TAX TRIBUNAL,] TH E HIGH COURT OR THE SUPREME COURT. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 122 EXPLANATION.IN COMPUTING THE PERIOD OF L IMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVI NG AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEED ING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 98 . IN THE LIGHT OF LANGUAGE STIPULATIONS USED BY THE L EGISLATURE IN SECTION 263 OF THE ACT, AT THIRD STAGE THE COMMISSIONER MAY, AF TER GIVING AN OPPORTUNITY BEING HEARD FOR THE ASSESSEE AND AFTER MAKING SUCH ENQUIRY, AS HE DEEMS NECESSARY, PASS SUCH ORDER AS PER FACTS AND CIRCUMS TANCES OF THE CASE INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING THE AO FOR FRESH ASSESSMENT. MEANING THEREBY, THAT THE COMMISSIONER MUST GIVE AN OPPORTUNITY OF BEING HEAR D ON THE ISSUES RAISED BY THE COMMISSIONER IN THE NOTICE U/S 263 OF THE ACT A ND IT ALSO CONFERS ON THE COMMISSIONER THE POWERS TO ISSUE SHOW CAUSE TO THE ASSESSEE AND TO MAKE SUCH ENQUIRY, AS REQUIRED UNDER THE FACTUM AND ALLEGATIO NS AGAINST THE ASSESSEE AND REPLY AND OBJECTIONS THERETO SUBMITTED BY THE ASSES SEE, AS THE COMMISSIONER DEEMS NECESSARY. THE FOURTH STAGE U/S 263 OF THE AC T PROVIDES THAT IN THE ORDER THE COMMISSIONER IS EMPOWERED TO ENHANCE OR MODIFY THE ASSESSMENT AND IF SITUATION REQUIRES HE IS ALSO EMPOWERED TO PASS AN ORDER CANCELLING THE ASSESSMENT TO DIRECT THE AO FOR FRAMING OF AFRESH A SSESSMENT. 99. IN THE LIGHT OF ABOVE STAGES EMERGED FROM THE LANG UAGE USED IN SECTION 263 OF THE ACT AND THE PROPOSITION & RATIO OF THE D ECISIONS RELIED BY BOTH THE PARTIES, WE PROCEED TO EXAMINE THE VALIDITY OF ASSU MPTION OF JURISDICTION. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 123 100. ON CAREFUL CONSIDERATION OF AFORESAID RIVAL CO NTENTIONS OF BOTH THE SIDES, AT THE VERY OUTSET, WE FIND IT APPROPRIATE TO GO TH ROUGH THE PAPER BOOK FILED BY THE ASSESSEE WHEREIN THE AO HAS RAISED SEVERAL QUER IES BY WAY OF NOTE SHEET ENTRIES AND LETTER DATED 16.12.2011, 21.12.2011, 23 .12.2011 AND 28.12.2011 RESPECTIVELY (PAPER BOOK PAGE 93-94). WE FURTHER N OTE THAT THE ASSESSEE SUBMITTED VARIOUS RELEVANT DOCUMENTS, INTER ALIA, CONCESSION AGREEMENT, ASSIGNMENT AGREEMENT ALONG WITH ITS FIRST REPLY DAT ED 23.11.2011, SECOND REPLY ON 21.12.2011, THIRD REPLY ON 23.12.2011, FOURTH RE PLY ON 28.12.2011 AND LAST REPLY ON 29.12.2011 REGARDING ITS CLAIM OF DEDUCTIO N U/S 80 IA (4) OF THE ACT. IT IS ALSO PERTINENT TO NOTE THAT THE AO ADJUDICATED T HE ISSUE OF QUERIES AND REPLIES IN REGARD TO SAID CLAIM BY PASSING A DETAILED NOTE SHEET ENTRY SPREAD OVER 18 PAGES, WHICH WE ARE MAKING PART OF THIS ORDER, AS A NNEXURE A, FOR SAKE OF PROPER AND JUST APPRECIATION OF ASSESSMENT PROCEEDI NGS, SAID NOTE SHEET ENTRY CLEARLY SHOWS THE DELIBERATIONS BETWEEN THE AO AND THE ASSESSEE COMPANY ON THE SAID ISSUE AND ADJUDICATION BY THE AO SUPPORTIN G THE ALLOWABILITY OF THE CLAIM OF DEDUCTION TO THE ASSESSEE COMPANY. 101. WE MAY FURTHER NOTE THAT BY THE EARLIER PART OF THIS ORDER, WE HAVE HELD THAT THE ASSESSEE COMPANY IS INTO THE BUSINESS OF D EVELOPMENT OF INFRASTRUCTURE FACILITY I.E. WHICH IS A TOLL ROAD AS PER ITS OPERA TIONAL FEATURES AND CONTROLLED AND CHARGEABLE ACCESS AND EXIT AND THE ASSESSES CLAIM UNDER CLAUSE (A) OF EXPLANATION TO SECTION 80IA (4) (I) OF THE ACT IS J USTIFIABLE AND PLAUSIBLE AS PER ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 124 RELEVANT PROVISIONS OF THE ACT IN THE LIGHT OF THE CHARACTER, FACTS AND CIRCUMSTANCES OF THE BUSINESS OF THE ASSESSEE. HENC E, WE ARE OF THE CONSIDERED OPINION THAT THE PREPOSITIONS OF TWO VIEWS IS NOT A PPLICABLE TO THE PRESENT CASE AND EVEN IF VIEW POSED BY THE LD. CIT IS ANALYSED T HEN WE NOTE THAT THE LD. CIT HIMSELF HAS NOT CONCLUSIVELY DECIDED THAT THE ASSES SEES CLAIM OF DEDUCTION FALLS UNDER AMBIT OF CLAUSE (B) OF EXPLANATION TO SECTION 80IA (4) (I) OF THE ACT. 102. IN THE CASE OF CIT VS. GABRIEL INDIA LTD. (SUP RA), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE POWER U/S 263 (1) OF T HE ACT IS IN THE NATURE OF SUPERVISORY JURISDICTION AND CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION SUBSECTION (1) OF SECTION 263 OF THE ACT VIZ. (I) THE ORDER SHOULD BE ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SPEAKING FOR HONBLE BOMBAY HIGH COURT, THEIR LORDS HIPS HELD THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN A CCORDANCE WITH LAW AND IF THE AO, ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASS ESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM (LD. CIT), THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THEIR LORDSHIPS FURTHER WENT ON TO HOLD THAT THERE MUST BE SOME PRI MA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY ELIGIBLE HA S NOT BEEN IMPOSED. 103. IN THE PRESENT CASE, THE AO HAS RAISED A NUMBE R OF QUERIES REGARDING THE CLAIM OF THE ASSESSEE U/S 80IA (4) OF THE ACT WHICH WERE REPLIED BY THE ASSESSEE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 125 THROUGH DETAILED SUBMISSIONS SUPPORTED BY RELEVANT DOCUMENTS AND OTHER EVIDENCE COUPLED WITH SEVERAL LEGAL PROPOSITIONS AN D DECISIONS. IT IS ALSO PERTINENT TO NOTE THAT THE AO HAS PASSED A DETAILED ORDER / NOTE SHEET ENTRY (ENCLOSED HERE WITH THIS ORDER AS ANNEXURE A FOR SAKE OF CLARITY AND BREVITY) WHILE DEALING AND ADJUDICATION THE ISSUE OF ALLOWAB ILITY OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80 IA (4) OF THE ACT. WE MAY RESPECTFULLY TAKE NOTE OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. (SUPRA) AND HOLD THAT THE ORDER OF THE AO CANNOT BE HELD AS ERRONEOUS MERELY BECAUSE, ACCORDING TO THE LD. COMMISSIONER, THE ORD ER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY IN SO MANY WORDS FOR INVOKING SUPE RVISORY PROVISIONS U/S 263 OF THE ACT. THERE MUST BE SOME PRIMA FACIE MATERIA L ON THE RECORD TO SHOW THAT THE ORDER IS UNSUSTAINABLE IN LAW AND THE TAX WHICH WAS LEGALLY ELIGIBLE HAS NOT BEEN IMPOSED. 104. THE RATIO OF THE JUDGMENTS OF HONBLE DELHI HI GH COURT RELIED BY THE LD. CIT-DR IN THE CASES OF GEEVEE ENTERPRISES VS. CIT 9 9 ITR 375 (DELHI) AND IN THE CASE OF DUGGAL F. CO. VS. CIT 220 ITR 456 (DELH I) IS THAT THE ORDER OF THE AO BECOMES ERRONEOUS BECAUSE SUCH AN ENQUIRY HAD NO T BEEN MADE AND NOT BECAUSE THERE WAS ANYTHING WRONG WITH THE ASSESSMEN T ORDER IF ALL THE FACTS STATED THEREIN WERE ASSUMED TO BE CORRECT. THE LD. CIT- DR HAS ALSO PLACED RELIANCE, TO SUPPORT IMPUGNED ORDER, ON THE JUDGMEN TS OF HONBLE SUPREME CORUT IN THE CASES OF MALABAR INDUSTRIES CO. LTD. V S. CIT 243 ITR 83 (SC) AND ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 126 SMT. TARA DEVI AGGARWAL VS. CIT (1973) 88 ITR 323 ( SC) AND SUBMITTED THAT THE INCORRECT APPLICATION LAW AND IGNORANCE OF BIND ING BOARD CIRCULAR OR ORDER PASSED WITHOUT APPLICATION OF MIND WOULD RENDER IT ERRONEOUS. 105. FURTHERMORE, THE LD. CIT-DR PLACING RELIANCE O N THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN T HE CASE OF JAGDISH KUMAR GULATI VS. CIT (2004) 269 ITR 71 (ALL.) SUBMITTED THAT IN THE ASSESSMENT ORDER PASSED VS. 143(3) OF THE ACT IT IS EXPECTED THAT TH E AO WILL MAKE A DETAILED ENQUIRY TO FIND OUT CORRECT INCOME OF THE ASSESSEE AND NOT TO ACCEPT FACTS PLACED BY THE ASSESSEE ON THEIR FACE VALUE. THE LD. AR, PO INTED OUT THIS IS A CASE OF AN ASSESSEE WHO WAS THE OWNER OF A NUMBER OF PROPERTIE S AND THE ORDER WAS HELD BE ERRONEOUS AND PREJUDICIAL TO THE INDIRECT OF THE REVENUE BY HOLDING THAT THE AO COULD NOT FIND OUT THE CORRECT INCOME FROM THE H OUSE PROPERTY AND HE ALSO FAILED TO INVESTIGATE THE INVESTMENTS MADE BY THE A SSESSEE IN CONSTRUCTION OF A PARTICULAR HOUSE PROPERTY. THE LD. AR VEHEMENTLY CO NTENDED THAT THE PRESENT CASE IS THAT WHEREIN PROPER, DETAILED AND ADEQUATE ENQUIRY HAS BEEN MADE. 106. THE LD. CIT-DR HAS ALSO PRESSED THE RATIO OF T HE JUDGMENTS AS HONBLE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BHAGWANDAS (2005) 272 ITR 367 (ALL.) AND SUBMITTED THAT IF IT IS FOUND THAT THERE WAS N O DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE QUESTION AS T O WHETHER THE AMOUNT OF INCOME SHOWN BY THE ASSESSEE WHICH WAS BEING CLAIME D TO BE EXEMPT, HAD ACTUALLY BEEN EARNED BY THE ASSESSEE OR NOT THEN TH E COMMISSIONER HAD RIGHTLY ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 127 INITIATED THE ASSESSMENT PROCEEDINGS U/S 263 OF THE ACT AS THE EXEMPTION HAS BEEN GRANTED BY THE AO WITHOUT ANY DISCUSSION AND W ITHOUT APPLICATION OF MIND. THE LD. AR, POINTED OUT THAT THE FACTS OF THE PRESENT CASE ARE NOT SIMILAR TO THE CASE OF BHAGWAN DAS (SUPRA) AS THERE ARE DET AILED QUERIES OF THE AO AND DETAILED REPLIED BY THE ASSESSEE FOLLOWED BY DETAIL ED NOTE SHEET ENTRY ADJUDICATION HENCE, PRESENT CASE IS NOT CASE WHEREI N AS ENQUIRY HAS BEEN MADE OR THE CLAIM OF THE ASSESSEE IS ALLOWED WITHOUT ANY DISCUSSIONS AND WITHOUT APPLICATION OF MIND. 107. THE LD. CIT-DR ALSO POINTED OUT THAT THE LD. C IT HAS RIGHTLY FOLLOWED JUDGMENT OF ITAT CHANDIGARH IN THE CASE OF VODAPHON E ESSAR LTD. VS. CIT (SUPRA), AS NO ENQUIRY OR INVESTIGATION WAS MADE BY THE AO WHILE CONSIDERING THE ADMISSIBILITY OF CLAIM OF DEDUCTION VS. 80IA OF THE ACT IN THE HAND OF ASSESSEE AND IN THE PRESENT CASE ALSO THE AO, WHILE ADJUDICATING THE CLAIM OF DEDUCTION VS. 80IA (4) OF THE ASSESSEE, HAS NOT MAD E ANY INQUIRY OR INVESTIGATION AND AN IDENTICAL ISSUE HAD BEEN OVER LOOKED BY THE AO AND IN THESE SET OF FACTS AND CIRCUMSTANCES IT WAS HELD TH AT THE AO HAD FAILED TO MAKE PROPER INVESTIGATION INTO THE ELIGIBILITY OF THE AS SESSEE IN RELATION TO CLAIM DEDUCTION VS. 80IA OF THE ACT. THE LD. AR, ALSO CON TENDED THAT THE CASE OF VODAPHONE (SUPRA) IS THE CASE OF NO ENQUIRY AND IN THE PRESENT CASE THERE IS DETAILED ENQUIRY, HENCE, FACTS OF THE PRESENT CASE ARE NOT SIMILAR. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 128 108. ON THOUGHTFUL PERUSAL AND CONSIDERATION OF THE JUDGMENTS RELIED BY LD. CIT-DR, WE NOTE THAT THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES (SUPRA) AND DUGGAL & CO. (SUPRA ) ARE PERTAINING TO THE SITUATION WHEN THERE WAS NO ENQUIRY ABOUT THE ISSUE S RAISED BY THE LD. CIT AND THE AO FAILED TO MAKE ANY ENQUIRY REGARDING CLAIMS AND DETAILS SUBMITTED BY THE ASSESSEE AND AS SUCH THERE WAS NO ENQUIRY BY TH E AO AND THE DETAILS AND CLAIMS FILED ALONG WITH THE RETURN OF THE ASSESSEE WERE ACCEPTED WITHOUT MAKING ANY ENQUIRY. THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES CO. LTD. (SUPRA) ARE ALSO RELATED TO A S ITUATION WHERE THE AO HAD ACCEPTED THE ENTRY IN STATEMENT OF ACCOUNT FILED BY THE ASSESSEE IN ABSENCE OF ANY SUPPORTING MATERIALS WITHOUT MAKING ANY ENQUIRY . FURTHERMORE, THE HONBLE APEX COURT, IN THE CASE OF SMT. TARADEVI AGARWAL (S UPRA) HELD THAT WHERE AN INCOME HAS NOT BEEN EARNED AND IS NOT ASSESSABLE , MERELY BECAUSE THE ASSESSEE WANTS IT TO BE ASSESSED IN HIS OR HER HANDS IN ORDE R TO ASSIST SOMEONE ELSE WHO WOULD HAVE BEEN ASSESSED TO A LARGER AMOUNT, AN ASS ESSMENT SO MADE CAN CERTAINLY BE ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF THE REVENUE. 109. THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH CO URT OF ALLAHABAD IN THE CASE OF JAGDISH KUMAR GULATI, (SUPRA) AS RELIED BY THE LD. CIT-DR, IS THE CASE OF A PROPERTY OWNER WHEREIN THE ASSESSING OFFICER C OULD NOT FIND OUT THE CORRECT INCOME FROM HOUSE PROPERTY AND ALSO FAILED TO INVES TIGATE INVESTMENT MADE BY THE ASSESSEE IN CONSTRUCTION OF A PROPERTY AND THE FACTS AND DETAILS OF THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 129 ASSESSEE WERE ACCEPTED BY THE AO ON FACE VALUE, HEN CE, IT WAS HELD THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. FURTHER, FROM THE ANOTHER JUDGMENT OF HONBLE HIGH COURT OF ALLAH ABAD, AS RELIED BY LD. CIT-DR, IN THE CASE OF BHAGWANDAS (SUPRA) WE NOTE T HAT THE ORDER OF THE COMMISSIONER PASSED U/S 263 OF THE ACT WAS UPHELD I N A PECULIAR SITUATION WHEREIN THE ASSESSING OFFICER PASSED AN ORDER WITHO UT ANY DISCUSSION AND WITHOUT APPLICATION OF MIND AND THERE WAS NO DISCUS SION REGARDING THE QUESTION AS TO WHETHER THE AMOUNT OF INCOME SHOWN BY THE ASS ESSEE WHICH WAS CLAIMED BEING EXEMPT HAD ACTUALLY BEEN EARNED BY HIM OR NOT . IT IS ALSO PERTINENT TO NOTE THAT THE ORDER OF ITAT, AMRITSAR IN THE CASE OF VOD APHONE (SUPRA) IS ALSO A CASE OF NO ENQUIRY WHEREIN THE AO FINALIZED THE ASSESS MENT WITHOUT PLACING ANY DOCUMENT ON RECORD AS TO WHEN THE BUSINESS OF THE A SSESSEE HAD COMMENCED, AND NO ENQUIRY OR INVESTIGATION WAS MADE BY THE AO WHILE CONSIDERING THE ELIGIBILITY OF THE CLAIM OF DEDUCTION U/S 80IA OF T HE ACT IN THE HANDS OF THE ASSESSEE. 110. IN VIEW OF RATIOS LAID DOWN BY THE JUDGMENTS, AS RELIED BY THE LD. CIT- DR AND HAVING GONE THROUGH THE FACTS OF THESE CASES , AT THE OUTSET, WE SINCERELY NOTE THAT JUDGMENTS ARE THE LIGHT HOUSES IN THE PAT H OF ADJUDICATION OF TAXATION APPEALS BUT WE RESPECTFULLY OBSERVE THAT THE BENEFI T OF THE RATIO OF THE SAME IS NOT AVAILABLE TO THE REVENUE AS THE PRESENT CASE IS NEITHER A CASE OF NO ENQUIRY NOR IS A CASE WHERE THE AO, FAILED TO MAKE NECESSARY ENQUIRY AND THE ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 130 ASSESSMENT ORDER WAS PASSED WITHOUT ANY DISCUSSION OR ENQUIRY AND THE AO ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT APPLICATI ON OF MIND AND THUS, WE RESPECTFULLY HOLD THAT THE BENEFIT OF THE RATIO OF THESE ORDERS/ JUDGMENTS ARE NOT AVAILABLE FOR THE REVENUE IN THE PRESENT APPEAL AS THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE FROM T HE FACTS OF THESE CASES AND INSTANT CASE IS NOT A CASE WHEREIN THE AO PASSED AS SESSMENT ORDER WITHOUT ANY ENQUIRY, WITHOUT APPLICATION OF MIND AND THE AO FAI LED TO MAKE PROPER ENQUIRY. 111. TURNING TO PROPOSITIONS AND RATIO OF THE JUDGM ENTS, AS RELIED BY THE ASSESSEE, AT THE COST OF REPETITION, WE NOTE THAT A S PER LAND MARK DECISION OF HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIA L CO. LTD. (SUPRA), PREREQUISITE FOR EXERCISE OF JURISDICTION U/S 263 OF THE ACT IS SATISFACTION OF THE AO BY TWIN CONDITIONS NAMELY (I) THE ORDER OF THE A O SOUGHT TO BE REVISED IS ERRONEOUS AND (II) IT IS PREJUDICIAL TO THE INTERES T OF THE REVENUE. IT WAS FURTHER HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE AO H AS ADOPTED ONE OF THE TWO VIEWS THEN THE ASSESSMENT ORDER IS NOT ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE MERELY BECAUSE THE LD. COMMISSIONER IS N OT AGREE TO THE VIEW ADOPTED BY THE AO. THE SAME VIEW HAS BEEN REITERATE D BY HONBLE APEX COURT IN THE CASE OF CIT VS. MAX INDIA LTD. (SUPRA) AND B Y HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. NEW DELHI TELEVISION L TD. (SUPRA). 112. AT THIS POINT, THE LD. AR HAS ALSO PRESSED IN TO SERVICE THE RATIO OF THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DLF LTD. (2013) ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 131 350 ITR 555 (DELHI) AND SUBMITTED THAT IT IS NOT MERE PREJUDICE TO THE REVENUE OR A MERE ERRONEOUS VIEW WHICH CAN BE REVISED U/S 2 63 OF THE ACT BUT ALSO THERE SHOULD BE THE ELEMENT OF UNSUSTAINABILITY IN THE ORDER OF THE ASSESSING OFFICER, WHICH EMPOWERS THE COMMISSIONER TO ISSUE NOTICE AND TO PROCEED TO PASS AN APPROPRIATE ORDER. ON CAREFUL READING OF THE SAME W E NOTE THAT HONBLE HIGH COURT HAS HELD AS UNDER (AT PAGE 562) : IN THIS CASE, THE RECORD REVEALS THAT THE ASSESSIN G OFFICER HAD ISSUED NOTICE, AND HELD PROCEEDINGS ON SEVERAL DATES (OF HEARING) BEFORE PROCEEDING TO FRAME THE ASSESSMENT. HE ADDED NEARLY RS. 2 CRORES TO THE INCOME AT THAT TIME. THE COMMISSIONER TOOK THE VIEW THAT THE ASSESSMENT ORDE R DISCLOSED AN ERROR, IN THAT THE DEDUCTION UNDER SECTION14 A H AD NOT BEEN MADE. NOW, WHILE THE STATUTORY DIRECTION TO THE ASS ESSING OFFICER TO CALCULATE, PROPORTIONATELY, THE EXPENDIT URE WHICH AN ASSESSEE MAY INCUR TO OBTAIN THE DIVIDEND INCOME, F OR PURPOSES OF DISALLOWANCE, CANNOT BE LOST SIGHT OF, EQUALLY, SUCH A REQUIREMENT HAS TO BE VIEWED IN THE CONTEXT AND CIR CUMSTANCES OF EACH GIVEN CASE. IN THE PRESENT CASE, IT WAS REP EATEDLY EMPHASIZED THAT THE ASSESSEES DIVIDEND INCOME WAS CONFINED TO WHAT IT RECEIVED FROM INVESTMENT MADE IN A SISTER C ONCERN, AND THAT ONLY ONE DIVIDEND WARRANT WAS RECEIVED. THESE FACTS, IN THE OPINION OF THIS COURT, WERE MATERIAL, AND HAD BEEN GIVEN WEIGHTAGE BY THE TRIBUNAL IN ITS IMPUGNED ORDER. TH ERE IS NO DISPUTE THAT THE INVESTMENT TO THE SISTER CONCERN, WAS NOT QUESTIONED; EVEN THE COMMISSIONER HAS NOT SOUGHT TO UNDERMINE THIS ASPECT. EQUALLY, THERE IS NO MATERIA L TO SAY THAT APART FROM THAT SINGLE DIVIDEND WARRANT, ANY OTHER DIVIDEND INCOME WAS RECEIVED. FURTHERMORE, THERE IS NOTHING ON RECORD TO SAY THAT THE ASSESSEE HAD TO EXPEND EFFORT, OR S PECIALLY ALLOCATE RESOURCES TO KEEP TRACK OF ITS INVESTMENTS , ESPECIALLY DIVIDEND YIELDING ONES. IN THESE CIRCUMSTANCES, IT CAN BE SAID THAT WHETHER THE DEDUCTION UNDER SECTION 14A WAS WA RRANTED, WAS A DEBATABLE FACT. IN ANY EVENT, EVEN IF IT WERE NOT DEBATABLE, THE ERROR BY THE ASSESSING OFFICER IS NOT UNSUSTAI NABLE. POSSIBLY HE COULD HAVE TAKEN ANOTHER VIEW; YET, THA T HE DID NOT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 132 DO SO, WOULD NOT RENDER HIS OPINION AN UNSUSTAINABL E ONE, WARRANTING EXERCISE OF SECTION 263. 113. THE LD. AR HAS ALSO PLACED RELIANCE ON THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ARVIND JEWELLERS (SUPRA) WHEREIN IT WAS HELD THUS : HELD, THAT THE FINDING OF FACT BY THE TRIBUNAL WAS THAT THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF THE NOTICES ISSUED UND ER SECTION 142(1) AS WELL AS SECTION 143(2) OF THE ACT AND AFT ER CONSIDERING THE MATERIAL AND EXPLANATIONS, THE INCOME-TAX OFFIC ER HAD COME TO A DEFINITE CONCLUSION. SINCE THE MATERIAL WAS TH ERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERED BY THE INCOME- TAX OFFICER AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW CAN BE TAKEN SHOULD NOT BE THE BASIS FOR AN AC TION UNDER SECTION 263. THE ORDER OF REVISION WAS NOT JUSTIFIE D. HENCE, AS PER THE PREPOSITION AND RATIO LAID DOWN B Y HONBLE GUJARAT HIGH COURT IS THAT WHEN THE ASSESSEE HAD PRODUCED RELEVA NT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF NOTICES U/S 143(2) AND 142(1) OF THE ACT AND AFTER CONSIDERING THE MATERIAL AND EXPLANATIONS, THE AO H AD COME TO A DEFINITE CONCLUSION. THEIR LORDSHIP FURTHER HELD THAT IN THI S SITUATION, SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSI DERED BY THE AO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT A DIF FERENT VIEW CAN BE TAKEN SHOULD NOT BE THE BASIS FOR A VALID ACTION U/S 263 OF THE ACT AND THEREFORE, DISMISSING THE APPEAL OF THE REVENUE THE HONBLE HI GH COURT HELD THAT THE ORDER U/S 263 OF THE ACT WAS NOT JUSTIFIED AND VALID. 114. THE LD. AR ALSO SOUGHT SUPPORT FROM PREPOSITI ON LAID BY HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN THE JUDGM ENT PASSED IN THE CASE OF ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 133 CIT VS. SHIV PRASAD (2011) 12 TAXMANN. COM 118 (ALL .) AND SUBMITTED THAT THE PROCEEDINGS U/S 263 OF THE ACT CAN ONLY BE TAKEN IN CASE IF THE ASSESSMENT ORDER IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE AND IF ONE CONDITION DOES NOT EXIST THE REVISIONAL POWERS U/S 263 CAN NOT BE EXERCISED. THE LD. AR FURTHER SUBMITTED THAT AS PER RATIO OF THE J UDGMENT OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. GOYAL PRI VATE FAMILY SPECIFIC TRUST (1988) 171 ITR 698 (ALL.) IN ABSENCE OF SPECIFIC FINDINGS THAT THE ASSESSMEN T ORDER WAS ERRONEOUS THE CANCELLATION OF ASSESSMENT WAS NOT JUSTIFIED. 115. THE LD. AR FURTHER, PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. MAHENDRA KUMAR BANSAL (2008) 297 ITR 99 (ALL.) VEHEMENTLY CONTENDED THAT MERELY BECAUSE THE ASSESSING OFFICER HAD NOT WRITTEN A LENGTHY ORDER, WITHOUT BRINGING ON RECORD, SPECIFIC INSTANCES IT WOULD NOT ESTABLISH THAT THE ASSESSMENT ORDER PASSED U/S 143(3)/148 OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THIS CASE, THEIR LORDSHIP FURTHER HELD THAT EVEN THOUGH, IN THE ASSESSMENT ORDER, THERE WAS NO MENTION THAT THE DE TAILED ENQUIRY HAD BEEN MADE NOR ANY EVIDENCE HAD BEEN DISCUSSED, YET THE RETURNED INCOME WAS ACCEPTED EVEN THEN THE ORDER WAS NOT ERRONEOUS AND COULD NOT BE REVISED U/S 263 OF THE ACT. 116. ON BEHALF OF THE ASSESSEE, IT WAS ALSO CONT ENDED THAT THE COMMISSIONER, INSTEAD OF COMMENTING UPON OR GIVING A FINAL FINDIN G, SIMPLY OBSERVED THAT IT ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 134 WAS POSSIBLE TO TAKE ANOTHER VIEW THEN THE WORD PO SSIBLE WOULD INDICATE THAT THERE WAS NO FINDING OR ADJUDICATION BY THE COMMISS IONER AND HIS OBSERVATIONS WERE BASED ON MERE SUSPICION AND UNCERTAIN. THE LD . AR ALSO DRAWN OUR ATTENTION TO THE RECENT DECISION OF HONBLE HIGH CO URT DELHI IN THE CASE OF GLOBUS INFOCOM LTD. VS. CIT (SUPRA) WHEREIN IT WAS HELD THUS : THUS, IN CASES OF WRONG OPINION OR FINDING ON MER ITS, THE CIT HAS TOCOME TO THE CONCLUSION AND HIMSELF DECIDE THA T THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQU IRED AND NECESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PA SSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE E RRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MAT TER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RE CORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUI RY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CIT AN D HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND E STABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVEST IGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN TH E SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOU S AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRES H DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT T HE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF T HE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSIN G OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND D ECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIREC TED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. 17. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CIT WHILE EXERCISING JURISDICTION UNDER SECTION 263 OF THE AC T AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 135 TO THE INTEREST OF REVENUE, EXERCISE OF JURISDICTIO N UNDER THE SAID SECTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGE D INADEQUATE INVESTIGATION, IT WILL BE DIFFICULT TO HOLD THAT T HE ORDER OF THE ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTI NG VERIFICATION/INQUIRY. THE ORDER OF THE ASSESSING OF FICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE ORDER IS ERRONEOUS. AN ORD ER OF REMIT CANNOT BE PASSED BY THE CIT TO ASK THE ASSESSING OF FICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMIS SIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND REC ORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRON EOUS BECAUSE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFTER RECORDING REASO NS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDI TION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT TH E ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTIC E THAT THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY T HE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WAS P ASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT [SEE CIT VS. SHREE MANJUNATH ESWARE PACKING PRODUCTS, 231 ITR 53 (SC)]. NOTHING BARS/PR OHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. 18. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX, (2000) 243 ITR 83 (SC), HAD OBSERVED THAT THE PHRASE PREJUDICIAL TO THE IN TEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJU DICIAL TO THE INTEREST OF REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD AD OPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESULTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSE SSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT MAY NOT AGREE; TH E SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFI CER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE IN LAW AND, THEREFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHO W THAT PREJUDICE IS CAUSED TO THE INTEREST OF THE REVENUE. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 136 117. THE LD. AR ALSO TOOK US THROUGH THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. DEEPAK REAL STATE DEVELOPERS (I) P. LTD. (2014) 367 ITR 377 (RAJ. ) AND SUBMITTED THAT WHERE THE COMMISSIONER DID NEITHER REJECT THE DOCUMENTS OR RECORDS TO BE IRREL EVANT, NOR LACKING IN THEIR PROBATIVE WORTH AND HE SIMPLY REMANDED THE MATTER T O THE ASSESSING OFFICER OBSERVING THAT THESE OUGHT OUT TO HAVE BEEN LAID BE FORE THE AO AND SHOULD BE EXAMINED AT THE TIME OF ASSESSMENT THEN IT WAS HELD THAT THE ORDER OF REVISION U/S 263 OF THE ACT WAS NOT VALID. 118. CONTINUING WITH ARGUMENTS ON THE VALIDITY O F ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT, THE LD. AR ALSO BROUGHT TO OUR NOTICE THE RECENT DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. HOTZ INDUSTRIES LTD. (2014) 49 TAXMANN. COM.267 (DELHI ) AND CONTENDED THAT ONCE INQUIRIES WERE CONDUCTED AND A DECISION WAS RECORDED BY THE AO, IT CANNOT BE SAID THAT IT WAS A CASE OF NO INQUIRY AND THE COMMISSIONER MUST RE ACH TO A FINDING THAT THE FINDING RECORDED BY THE AO WAS ERRONEOUS, NOT BECAU SE NO INQUIRIES WERE CONDUCTED, BUT BECAUSE FINAL CONCLUSION IN THE ASSE SSMENT ORDER WAS WRONG AND UNTENABLE OR UNSUSTAINABLE IN LAW. THE RELEVANT OPE RATIVE PARA OF THIS ORDER IS READS AS FOLLOWS : COMMISSIONER IN THE ORDER UNDER SECTION 263 DID NOT GO INTO THE SAID QUESTION ON MERITS, BUT OBSERVED THAT THE ASS ESSING OFFICER IT APPEARS AD NOT CAUSED ANY INQUIRIES OR INVESTIG ATION, BUT ACCEPTED THE CONTENTION OF THE ASSESSEE. COMMISSIO NER OBSERVED, THEREFORE, MEANINGFUL INQUIRY SHOULD BE CONDUCTED . THIS DOES ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 137 NOT MEET THE REQUIREMENT THAT THE DECISION OF THE A SSESSING OFFICER SHOULD BE ERRONEOUS. ONCE INQUIRIES WERE CO NDUCTED AND A DECISION WAS REACHED BY THE ASSESSING OFFICER, IT CANNOT BE SAID THAT IT WAS A CASE OF NO INQUIRY. IN SUCH CASE S, THE COMMISSIONER MUST REACH A FINDING THAT THE FINDING OF THE ASSESSING OFFICER WAS ERRONEOUS, NOT BECAUSE NO INQ UIRIES WERE CONDUCTED, BUT BECAUSE THE FINAL FINDING WAS WRONG AND UNTENABLE. 119. AT THIS JUNCTURE, WE FURTHER FIND IT APPROPRIA TE TO ADDRESS RIVAL LEGAL CONTENTIONS OF BOTH THE SIDES ON THE ISSUE OF REVIS ION OF ASSESSMENT ORDER ON OTHER TWO ISSUES VIZ. ALLOWBILITY OF DEDUCTION ON T HE INCOME EARNED BY THE ASSESSEE FROM INTEREST ON FIXED DEPOSITS OF SURPLUS FUNDS WITH BANKS AND ALLOWABILITY OF DEPRECIATION AS MENTIONED IN PARA 1 5 OF THE IMPUGNED ORDER (AS REPRODUCED HEREINABOVE) OF THE LD. CIT, NOIDA. FIRS TLY, THE LD. AR POINTED OUT THAT THESE TWO ISSUES WERE NOT MENTIONED BY THE LD. CIT IN THE NOTICE U/S 263 OF THE ACT, HENCE, REVISION ON THESE TWO ISSUES IS NOT PERMISSIBLE FOR THE COMMISSIONER U/S 263 OF THE ACT. THE LD. CIT-DR POI NTED OUT THAT THE ASSESSEE HAS NOT TAKEN THIS GROUND, HENCE, THE SAME CANNOT B E ENTERTAINED. THE LD. AR, VEHEMENTLY CONTENDED THAT IN ALL THE GROUNDS RAISED BY THE ASSESSEE SPECIALLY IN GROUNDS NO. 1 THE ASSESSEE HAS CHALLENGED THE VALID ITY OF ASSUMPTION OF JURISDICTION TO ISSUE NOTICE AND TO REVISE ASSESSME NT ORDER U/S 263 OF THE ACT WHICH OBVIOUSLY COVERS VALIDITY OF REVISION ON THES E ISSUES ALSO, HENCE, THE ASSESSEE HAS RIGHT TO ELABORATE ITS CONTENTIONS AND ALLEGE THE IMPUGNED ORDER WITH THIS ALLEGATION. ON CAREFUL CONSIDERATION OF A BOVE SUBMISSIONS WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE, IN ITS GROUND S OF APPEAL, HAS CHALLENGED, ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 138 INTER ALIA, VALIDITY OF THE NOTICE, ASSUMPTION OF J URISDICTION AND IMPUGNED ORDER PASSED U/S 263 OF THE ACT, HENCE, THE ASSESSEE HAS LEGAL RIGHT TO QUESTION THE VALIDITY OF REVISIONAL ACTION OF THE OF THE LD. CIT IN THE IMPUGNED ORDER ON ALL FOUR CORNERS SPECIALLY UNDER GROUND NO. 7 AND OTHER GROUNDS RAISED BEFORE US. GROUND NO. 7 120. THE LD. AR HAS DRAWN OUR ATTENTION TO PARA 15 OF THE IMPUGNED ORDER, AS REPRODUCED HEREINABOVE IN PARA 4 OF THIS ORDER AND VEHEMENTLY CONTENDED THAT THE CIT NOIDA HAS DISPUTED ONLY SOLE ISSUE PERTAINI NG TO ALLOWABILITY OF ASSESSEES CLAIM UNDER CLAUSE (A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT AND IN THE NOTICE DATED 11.3.2014 ISSUED U/S 263 OF THE ACT (SUPRA) BUT IN THE FINAL IMPUGNED ORDER PASSED U/S 263 OF THE ACT DATE D 30.3.2014, THE CIT NOIDA HAS ALSO DISPUTED AND REVISED TWO MORE ISSUES IN PA RA 15 OF THE IMPUGNED ORDER VIZ. ISSUE OF INTEREST EARNED BY THE ASSESSEE BY PA RKING ITS SURPLUS FUNDS IN VARIOUS FIXED DEPOSITS ACCOUNTS IN THE BANK AND ISS UE OF CLAIM OF DEPRECIATION ON THE PROJECT WHICH WAS YET TO BE COMPLETED IN ADD ITION TO THE MAIN ISSUE WHICH IS NOT PERMISSIBLE. TO SUPPORT ABOVE CONTENT ION, THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS G.K. KABRA (1995) 211 ITR 336 (AP) AND DE ICISON OF ITAT DELHI IN THE CASE OF B.S. SANGWAN VS ITO (2015) 53 TAXMAN .COM 402 (DELHI- TRIBUNAL) TO WHICH ONE OF US (C.M. GARG, JM) WAS TH E CO-AUTHOR. ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 139 121. LD. DR REPLIED THAT THE AO DID NOT EXAMINE AN D VERIFY THE ISSUE OF ALLOWABILITY OF INTEREST EARNED BY THE ASSESSEE FRO M PARKING OF SURPLUS FUNDS IN THE FIXED DEPOSIT ACCOUNTS IN THE BANKS AND ALLOWED THE SAME. LD. DR FURTHER CONTENDED THAT THE AO HAS NOT APPLIED THE LAW U/S 8 0IA OF THE ACT AS ONLY INCOME DERIVED FROM ANY BUSINESS REFERRED TO IN SUB SECTION (4) IS ELIGIBLE FOR DEDUCTION UNDER THAT SECTION AND NO OTHER INCOME. THE LD. DR ALSO CONTENDED THAT THE AO IGNORED THE SETTLED LAW RENDERED IN THE CASE OF TUTICORIN ALKALIS VS CIT (SUPRA). THE LD. DR ALSO SUBMITTED THAT THE AO WRONGLY ALLOWED CLAIM OF DEPRECIATION IN COMPUTATION OF INCOME WITHOUT EXAMI NING THE FACT WHETHER THE SAME WAS ADMISSIBLE EVEN WHILE THE PROJECT WAS STIL L GOING ON AND YET TO BE COMPLETED. 122. THE LD. AR, PLACING REJOINDER TO THE ABOVE SUB MISSIONS OF THE REVENUE, REPLIED THAT IT IS NOT OPEN AND ALLOWABLE TO THE CI T NOIDA TO ISSUE NOTICE ON ONE AND ONLY ONE REASON AND REVISING THE ASSESSMENT U/S 263 OF THE ACT ON TWO MORE ISSUES OR REASONS WHICH WERE NOT MENTIONED IN THE N OTICE U/S 263 OF THE ACT IN THE LIGHT OF DECISIONS OF HONBLE HIGH COURT OF AND HRA PRADESH AND IN THE CASE OF G.K. KABRA (SUPRA) AND DECISION OF COORDINATE B ENCH OF ITAT DELHI IN THE CASE OF B.S. SANGWAN (SUPRA) AND DECISION IN THE CA SE OF GENESIS COLORS (P) LTD. VS CIT (2014) 42 TAXMANN.COM 552 (DELHI-TRIB). ALTERNATIVELY, THE LD. AR FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO ABOV E CONTENTIONS, ON MERITS IT IS CONSIDERED THAT THE CLAIM OF THE ASSESSEE IN REGARD TO INTEREST INCOME AND ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 140 DEPRECIATION HAVE BEEN PROCESSED AND CORRECTLY ALLO WED BY THE AO AFTER DUE CONSIDERATION AND EXAMINATION BY THE AO. THE LD. A R PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF LOK HOLDIN G 308 ITR 356 (BOMBAY) SUBMITTED THAT THE BUSINESS INCOME ASSESSED IN RES PECT OF EARNED BANK INTEREST FOR AN ASSESSEE ENGAGED IN CON STRUCTION BUSINESS IS BUSINESS INCOME AS THIS HAS BEEN EARNED FROM PARKIN G OF SURPLUS FUNDS WITH THE BANKS IN THE COURSE OF BUSINESS. THE LD. AR POINTE D OUT THAT THE HONBLE BOMBAY HIGH COURT HAS CONSIDERED THE RATIO OF THE D ECISION OF HONBLE APEX COURT IN THE CASE OF TUTICORIN ALKALI (SUPRA) AND H AS DISTINGUISHED THE SAME. LD. AR STRENUOUSLY CONTENDED THAT THE CLAIM OF DEPR ECIATION RELATES TO BUSINESS BEING CARRIED ON AND IT WAS CLAIMED ON THE ASSETS U SED FOR THE BUSINESS AND INTEREST INVOLVED EMANATES FROM THE BUSINESS OF DEV ELOPMENT OF INFRASTRUCTURE FACILITY FOR THE SINGLE OBJECT COMPANY. LD. AR ALS O SUBMITTED THAT WHEN BUSINESS INCOME OF THE ASSESSEE WAS EXEMPTED U/S 80 IA(4) OF THE ACT, THEN WHY ASSESSEE WOULD ASSAIL WRONG CLAIM OF DEPRECIATION. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS OF BOTH THE PARTIES, AT THE VERY OUTSET, WE NOTE THAT THE CIT, NOIDA HAS ISSUED NOTICE U/S 263 OF THE ACT (SU PRA), ONLY RAISING AND DISPUTING THE SOLE ISSUE, THE AO ALLOWED EXEMPTION TO THE ASSESSEE UNDER CLAUSE (A) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT AND THE ASSESSEE WAS SHOWCAUSED ON THIS SOLE ALLEGATION ONLY WHICH CLEAR LY SHOW THAT THE NOTICE U/S 263 OF THE ACT WAS NOT GIVEN ON THE ISSUES OF INTER EST BUT IT IS APPARENT FROM PAGE 27 AND 28 IN PARA 15 OF THE IMPUGNED ORDER THA T THE CIT, NOIDA ALSO ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 141 REVISED THE ASSESSMENT ORDER PASSED U/S 143(3) OF T HE ACT ON THE ISSUE OF ALLOWABILITY OF EXEMPTION ON THE INTEREST INCOME AN D ALLOWABILITY OF CLAIM OF DEPRECIATION IN THE COMPUTATION OF INCOME. WE MAY FURTHER OBSERVE THAT THE ITAT-DELHI IN THE ORDER PASSED IN THE CASE OF GENES IS COLOR PVT. LTD. (SUPRA) HAD ALSO CONSIDERED THE RATIO OF THE DECISIONS OF HONBLE HIGH COURT OF DELHI IN THE CASES OF CIT VS ASHISH RAJPAL (2010) 320 ITR 674 DELHI AND DECISION IN THE CASE OF CIT VS CONTIMETERS ELECTRICALS P. LT D. (2009) 317 ITR 249 (DELHI) WHEREIN DISMISSING THE APPEAL OF THE REVENUE, IT WA S HELD THAT THE ISSUE WHICH HAD NOT BEEN PART OF NOTICE U/S 263 OF THE AC T COULD NOT FORM BASIS FOR REVISION OF THE ASSESSMENT ORDER U/S 263 OF THE ACT . IN THE LIGHT OF DECISION OF HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF G.,K. KABRA (SUPRA), THE CASE OF B.S. SANGWAN (SUPRA) AND GENESIS COLOUR PVT . LTD. VS CIT (SUPRA), WE ARE INCLINED TO HOLD THAT IT IS NOT OPEN AND PERMIS SIBLE FOR THE CIT TO REVISE THE ORIGINAL ASSESSMENT ORDER ON THE GROUND(S) WHICH HA S NOT BEEN MENTIONED IN THE NOTICE U/S 263 OF THE ACT AND ON WHICH ASSESSEE WAS NOT SHOWCAUSED IN THE SAID NOTICE. IN THE PRESENT CASE, THE CIT, NOIDA HAS RE VISED THE ASSESSMENT ON THE ISSUES OF ALLOWABILITY OF EXEMPTION ON INTEREST INC OME AND ALLOWABILITY OF CLAIM OF DEPRECIATION AND THIS FACTUM IS FATAL TO THE ASS ESSMENT ORDER. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON ALL FOUR CORNE RS, ACCORDINGLY, WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE LD. AR THA T THE LD. CIT WAS NOT EMPOWERED TO REVISE ASSESSMENT ORDER U/S 253 OF THE ACT ON THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IA(4) OF THE ACT O N THE INTEREST EARNED FROM ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 142 DEPOSIT OF SURPLUS FUNDS, WHICH WERE UNDISPUTEDLY R ECEIVED FROM SUB-LEASE/SALE OF LAND IN SHORT TERM FIXED DEPOSITS WITHIN THE BAN KS AND ON THE ISSUE OF ALLOWABILITY OF CLAIM OF DEPRECIATION BECAUSE THESE TWO ISSUES VIZ. INTEREST ON FDS AND DEPRECIATION HAVE NOT BEEN DISPUTED AND ALL EGED IN THE NOTICE U/S 263 OF THE ACT AND ASSUMPTION OF JURISDICTION U/S 263 O F THE ACT WAS NOT VALID AND IMPUGNED ORDER ON THESE ISSUES IS VOID AB INITIO. 123. ON CAREFUL AND VIGILANT READING OF THE OPERATI VE PARTS OF THE IMPUGNED ORDER (AS REPRODUCE HEREINABOVE) FROM PARA 7, WE N OTE THAT THE LD. CIT HAS ANNEXED REPLY OF THE ASSESSEE, AS ANNEXURE A TO THE IMPUGNED ORDER, THEREAFTER, MENTIONING THE CASES LAWS RELIED BY THE ASSESSEE TH E LD. CIT POINTED OUT THAT AN INCORRECT ASSUMPTION OF THE FACTS OR AN INCORRECT A PPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AS IT IS PASSED AFTER WRONG APPRECIATION OF FACT AVAILABLE BEFORE THE AO AND NO N-APPLICATION OF MIND ON THE PART OF THE AO WHICH HAS RESULTED IN ALLOWING THE D EDUCTION U/S 80IA OF THE ACT WHICH WAS NOT ADMISSIBLE, IF THE AO HAD TAKEN IN TO ACCOUNT AND FOLLOWED THE LAW UNDER THE PROVISION OF SUB SECTION (2), (4) AND (6) OF THE SECTION 80IA OF THE ACT AND CLARIFICATION UNDER CBDTS CIRCULAR NO. 1/2 006 DATED 12.1.2006 (SUPRA). THEREAFTER, THE LD. CIT OBSERVED THAT THE ORDER PAS SED BY THE AO HAS BEEN RENDERED ERRONEOUS AND IN SO FAR AS IT IS PREJUDICI AL TO THE INTEREST OF THE REVENUE AS THE TAX WHICH WAS LAWFULLY ELIGIBLE ON P ROFIT FROM SALE OF LAND HAS NOT BEEN LEVIED DUE TO SUCH OMISSION OF THE PART OF THE AO TO FOLLOW SUB ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 143 SECTIONS (2), (4) & (6) OF SECTION 80IA OF THE ACT, CBDT CIRCULAR (SUPRA), AND RULE 18BBE OF THE INCOME TAX RULES, 1962. THIS ALLO WANCE OF DEDUCTION HAS LEAD TO LOSS OF REVENUE, THEREFORE ORDER IS ALSO PR EJUDICIAL TO THE INTEREST OF THE REVENUE. IN SUBSEQUENT PARA, THE LD. CIT FURTHER NO TE THAT AN ORDER IS ERRONEOUS DEVIATING FROM LAW AND THE EXPRESSION PREJUDICIAL T O THE INTEREST OF REVENUE IS OF WIDE IMPORT WHICH IS NOT CONFINED TO MERE LOSS O F TAX. 124 . IN THE SUBSEQUENT PARAS OF THE IMPUGNED ORDER THE L D. CIT ALSO OBSERVED THAT THE AO IN THIS CASE OMITTED TO APPLY AND INVOK E ALL THE DISCUSSED PROVISIONS OF THE ACT AND CORRESPONDING RULES AND THIS GRIEVOU S ERROR HAS SET A BAD TREND FOR SIMILAR ASSESSMENTS CAUSING PREJUDICE TO THE WH OLE OF REVENUE ADMINISTRATION. THESE ALLEGATION HAVE ALSO BEEN REP EATED INTO THE SUBSEQUENT PARAS. BUT WE ARE UNABLE TO SEE ANY DISCUSSIONS OR DELIBERATIONS ON THE SUBMISSION OF THE ASSESSEE BEFORE LD. CIT, HIMSELF OR BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. 125. WE MAY FURTHER NOTE THAT THE LD. CIT HAS NOT CONCLUSIVELY DECIDED THAT THE CLAIM OF THE ASSESSEE DOES NOT FALL UNDER CLAUS E (A) OF EXPLANATION TO SECTION 80IA (4) (I) OF THE ACT AND SAME FALLS UNDER CLAUSE (B) OF SAME PROVISION. THERE IS NO FURTHER LOGICAL FINDINGS BY THE LD. CIT TO TH IS EFFECT THAT SINCE THE CLAIM OF THE ASSESSEE FALLS UNDER CLAUSE (B) EXPLANATION TO SECTION 80IA (4) (I) AND HENCE, THE PROVISIONS OF SUB SECTION 6 TO SECTION 80IA (4) (I) IS APPLICABLE TO THE CASE OF THE ASSESSEE WHICH WAS NOT COMPLIED. THE LD. CIT, WITHOUT GIVING ANY ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 144 FINDINGS, HAS SET ASIDE THE ASSESSMENT ORDER TO BE MADE DE NOVO WITHOUT CONCLUSIVELY DECIDING THE ISSUE IN ONE WAY OR THE O THER WHICH COMES WITHIN THE TEETH OF THE OBSERVATIONS AND RATIO OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF GLOBUS INFROCOM LTD. VS. CIT (SUPRA) . FROM THE OPERATIVE PART OF THIS ORDER, AS REPRODUCED HEREIN ABOVE, IT IS CLEAR THAT WHILE INVOKING SECTION 263 OF THE ACT THE COMMISSIONER SHOULD TAKE A FINAL DECISION THAT THE LAW APPLIED BY THE ASSESSEE TO THE FACTS OF CASE IS NOT IN ACCORDANCE WITH LAW AND THUS IT IS NOT SUSTAINABLE. MERE SET ASIDE OF ASSES SMENT ORDER TO BE MADE DE NOVO WITHOUT ANY CONCLUSION ON FACTS AND APPLICABILITY O F LAW IS NOT VALID. 126. WE FURTHER NOTE THAT THE JUDICIAL PROPOSITIONS AND OPINION ARE UNANIMOUS THAT THE EXPRESSION AND ESSENCE AS APPEARING IN THE FABRIC & LANGUAGE OF THE SECTION 263 OF THE ACT MUST BE CONFINED TO JURISDIC TIONAL ERRORS. ERRONEOUS ASSESSMENT REFERS TO AN ASSESSMENT THAT DEVIATES FR OM THE LAW AND IS, THEREFORE, INVALID AND UNSUSTAINABLE. AN ASSESSMENT ORDER CANN OT BE ALLEGED AS ERRONEOUS, UNLESS IT IS NOT IN ACCORDANCE WITH LAW. THIS SECTI ON DOES NOT ALLOW SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE AO, WHO PASSED THE ASSESSMENT ORDER IN QUESTION, UNLESS THE ORDER OF T HE AO IS HELD TO BE ERRONEOUS, UNTENABLE AND UNSUSTAINABLE IN LAW IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE UNDER REVISION. WE MAY FURTHER POIN T OUT THAT WHEN THE AO TAKES A VIEW AND THE COMMISSIONER, WITHOUT RECORDING ANY FINDING, THAT THE VIEW TAKEN AND ORDER PASSED BY THE AO IS NOT CORRECT AND THERE FORE, THE SAME IS ERRONEOUS ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 145 AND PREJUDICIAL TO THE REVENUE; HOLDS THAT THE ASSE SSMENT ORDER IS REVISABLE U/S 263 OF THE ACT, THEN THE ORDER OF THE COMMISSIONER IS NOT VALID AND SUSTAINABLE. WE MAY FURTHER NOTE THAT IT WOULD BE INCORRECT TO S AY AS BROAD PROPOSITION THAT AN ASSESSMENT ORDER CANNOT BE ERRONEOUS, IF THE AO HAS ADOPTED ONE OUT OF TWO POSSIBLE VIEWS. IN THIS SITUATION, THE ORDER OF THE AO CAN BE HELD AS ERRONEOUS ONLY WHEN THE COMMISSIONER HOLDS AND IS ABLE TO DEM ONSTRATE THAT THE VIEW TAKEN BY THE AO WAS NOT PLAUSIBLE AND REASONABLE, BEING LEGALLY UNSUSTAINABLE, UNTENABLE AND INCORRECT, BUT THE SAID FINDING MUST BE RECORDED BY THE COMMISSIONER TO PROVIDE LEGITIMATE LIFE TO THE ORDE R OF REVISION U/S 263 OF THE ACT. 127. IN THE LIGHT OF AFORESAID DISCUSSION, IF WE AN ALYSE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE OBSERVE THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINI NG INFRASTRUCTURE FACILITY PROJECT SINCE ITS INCORPORATION W.E.F. 5.4.2007. WE ALSO OBSERVE THAT THE DEVELOPMENT OF THE TOLL ROAD WITH CONTROLLED ACCESS AND EXIT POINTS AND RIGHT TO COLLECT TOLL FROM THE USERS CLEARLY PUT THE EXPRESS WAY WITHIN THE AMBIT OF ROAD WHICH IS A TOLL ROAD. WE FURTHER HOLD THAT THE DEVE LOPMENT OF THE EXPRESSWAY BETWEEN NOIDA AND AGRA AND DEVELOPMENT OF FIVE LAND PARCELS ADJACENT TO EXPRESSWAY ARE INSEPARABLE AND INTEGRAL PART OF ONE PROJECT AND THE ASSESSEE IS ENTITLED AND ELIGIBLE FOR DEDUCTION U/S 80IA (4) OF THE ACT ON THE INCOME EARNED AND DERIVED FROM THE BUSINESS OF DEVELOPMENT OF INF RASTRUCTURE FACILITY DURING ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 146 AY 2009-10 AFTER COMMENCEMENT OF ITS BUSINESS W.E.F . 5.4.2007 AT THE OPTION OF THE ASSESSEE WHICH CANNOT BE DENIED BY WRONGLY PUTT ING THE CASE OF THE ASSESSEE IN CLAUSE (B) OF EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT. 128. IN VIEW OF OUR AFORESAID OBSERVATIONS AND CONC LUSION, ON THE FACTS OF THE CASE, WE ARE INCLINED TO HOLD THAT THE VIEW TAKEN B Y THE AO, WHILE GRANTING DEDUCTION U/S 80IA (4) OF THE ACT TO THE ASSESSEE, IS A REASONABLE AND PLAUSIBLE WHICH CANNOT BE HELD AS LEGALLY UNSUSTAINABLE AND N OT IN ACCORDANCE WITH LAW AND ALSO BEING PASSED WITHOUT APPLICATION OF MIND. WE, THEREFORE, ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED NOTICE AND ORD ER OF LD. CIT IS NOT VALID AND VOID AB INITIO ON THE FOLLOWING REASONS:- (I) THE VIEW TAKEN BY THE AO WHILE GRANTING DEDUCTION U /S 80IA(4) OF THE ACT, IN RESPECT TO INCOME FROM SALE/ SUB LEASE OF LAND FOR DEVELOPMENT, IS REASONABLE, PLAUSIBLE AND THE SAME CANNOT BE HELD AS UNSUSTAINABLE AND NOT IN ACCORDANCE WITH LAW AND THEREFORE, THE ASSESSMENT ORDER CANNOT BE ALLEGED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. (II) THE REVISION OF THE ASSESSMENT ORDER ON THE ISSUE O F ALLOWABILITY OF DEDUCTION U/S 80IA(4) OF THE ACT IN REGARD TO THE I NCOME OF INTEREST ACCRUED TO THE ASSESSEE FROM THE DEPOSIT OF SURPLUS FUNDS IN THE FIXED DEPOSIT BANKS ACCOUNTS AND ALLOWABILITY OF DE PRECIATION IS ALSO NOT VALID BECAUSE THESE ISSUES HAD NOT BEEN RA ISED OR POINTED ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 147 OUT IN THE NOTICE ISSUED U/S 263 OF THE ACT AND THU S, IT IS NOT OPEN AND PERMISSIBLE FOR THE LD. CIT TO REVISE THE ASSES SMENT ORDER ON THESE GROUNDS. SINCE ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT WAS NOT VALID ON THESE TWO ISSUES, THE GROUNDS RAIS ED BY THE ASSESSEE ON MERIT BECOME ACADEMIC AND INFRUCTUOUS. (III) ON THREADBARE ANALYSIS OF OPERATIVE PART OF THE IMP UGNED ORDER, AS DISCUSSED HEREIN ABOVE, WE ALSO HOLD THAT THE LD. C IT HAS NOT CONCLUSIVELY DECIDED THE ISSUE WITH A CONCLUSION IN ONE WAY OR THE OTHER AND HAS LEFT IT MIDWAY, WHICH COVERS THIS CAS E IN FAVOUR OF THE ASSESSEE BY THE RECENT JUDGMENT OF HONBLE DELH I HIGH COURT IN THE CASE OF GLOBUS INFOCUM LTD. VS. CIT (SUPRA) . (IV) IN VIEW OF OUR FINDINGS AND CONCLUSION, AS RECORDE D HEREINABOVE, ON THE FACTS OF THE CASE AND THE RELEVANT PROVISION S OF THE ACT, WE HAVE NO HESITATION TO HOLD THAT THE ASSUMPTION OF J URISDICTION TO ISSUE NOTICE TO THE ASSESSEE U/S 263 OF THE ACT (SU PRA) AND TO SET ASIDE THE ASSESSMENT ORDER, BY PASSING THE IMPUGNED ORDER U/S 263 OF THE ACT WAS NOT VALID AND THE SAME WAS VOID AB I NITIO. HENCE, THE NOTICE ISSUED BY THE LD. CIT U/S 263 OF THE ACT , IMPUGNED ORDER WITHOUT ANY CONCLUSIVE FINDINGS, SETTING ASID E AND REVISING THE ASSESSMENT ORDER TO BE REFRAMED DE NOVO AND ALL SUBSEQUENT PROCEEDINGS CONDUCTED AND ORDERS, IF ANY, PASSED IN PURSUANCE THERETO DESERVE TO BE QUASHED AND WE QUASH THE SAME . WE ORDER ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 148 ACCORDINGLY. THUS, ISSUES NUMBER (IV) IS DECIDED I N THE NEGATIVE AND ISSUE NO. (V) & (VI) ARE DECIDED IN THE AFFIRMA TIVE, IN FAVOUR OF THE ASSESSEE. 129. FINALLY, THE GROUNDS RAISED BY THE ASSESSEE AN D ISSUES FOR DETERMINATION, AS SET OUT BY US (SUPRA) ARE DECIDED IN FAVOUR OF T HE ASSESSEE AND CONSEQUENTLY APPEAL OF THE ASSESSEE IS ALLOWED IN THE MANNER AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13/4/1 5 SD/- SD/- (T.S. KAPOOR) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 13 TH APRIL 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR ITA NO. 3339/DEL/2014 ASSTT.YEAR: 2009-10 149