AHURA MAZDA METAL FORMING AND FINISHING, MUMBAI V. ACIT 22(), MUMBAI

ITA 5129/MUM/2011

• Counselvise Citation: 512919914 RSA 2011
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 01-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Assessee Lawyers: HIRO RAI
• Keywords: Competent authority
• Section: 10; 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 5129/MUM./2011 (ASSESSMENT YEAR : 2008-09 ) M/S AHURA MAZDA METAL FORMING AND FINISHING, MAZDA HOUSE BEHIND C.I.D. OFFICE, LBS MARG GHATKOPAR (W), MUMBAI 400 086 PAN AALFA4095L .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-22(1), MUMBAI .... RESPONDENT ASSESSEE BY : MR. HIRO RAI REVENUE BY : MRS. USHA NAIR DATE OF HEARING 15.11.2011 DATE OF ORDER 25.11.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL FILED BY THE ASSESSEE, IS DIRECTED AGA INST THE IMPUGNED ORDER DATED 30 TH MAY 2011, PASSED BY THE COMMISSIONER (APPEALS)-XXX III, MUMBAI, FOR ASSESSMENT YEAR 2008-09. THE SOLE DISPU TE IN THIS APPEAL IS, WHETHER OR NOT THE COMMISSIONER (APPEALS) WAS JUSTI FIED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN DENYING THE DEDUCTIO N UNDER SECTION 80IC OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) OF ` 5,88,62,740. M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 2 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, A P ARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ENGINEE RING GOODS IN GENERAL AND PARTICULARLY FURNITURE, OFFICE APPLIANCES AND S TORAGE SYSTEM. IT STARTED PRODUCTION IN AUGUST 2006. IT MANUFACTURED STEEL AL MIRAH, STOREWELL, WARDROBE, ETC., AND SUPPLIED THE SAME TO GODREJ & B OYCE MANUFACTURING CO. LTD. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27 TH SEPTEMBER 2008, DECLARING TOTAL INCOME AT NIL AFTER CLAIMING 100% D EDUCTION UNDER SECTION 80IC, AS THE UNDERTAKING IS SET-UP IN THE NOTIFIED AREA IN NORTH EASTERN STATES. THE ASSESSING OFFICER, VIDE QUESTIONNAIRE D ATED 30 TH JUNE 2010, ASKED THE ASSESSEE TO EXPLAIN THE APPLICABILITY OF SECTION 80IC. THE ASSESSEE REPLIED AS FOLLOWS:- (I) GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFIT AND GAINS DERIVED BY THE UNDERTAKING FROM THE BUSINESS REFERR ED TO IN SUBSECTION (2). (II) THIS UNDERTAKING HAS BEGUN TO MANUFACTURE BETW EEN THE PERIOD FROM 24/12/1997 TO 01/04/2007. THE FIRST BILL IS DA TED 16TH AUGUST, 2006. [CLAUSE 801C (2)(A)(III)] (III) THE UNDERTAKING IS SET UP IN THE NOTIFIED ARE A IN NORTH- EASTERN STATES. [NOTIFICATION NO.116/2004 DATED 26/3/2004]. (IV) ARTICLES OR THINGS SPECIFIED IN THE THIRTEENTH SCHEDULE PERTAIN TO AREAS I.E. SIKKIRN, HIMACHAL PRADESH AND JAMMU AND KASHMIR. THAT MEANS IN OTHER WORDS, FOR NOTIFIED AREAS IN NORTHER N EASTERN STATES THERE IS NO REQUIREMENT OF PRODUCTION OF SPECIFIED GOODS. (V) THE UNDERTAKING IS NOT FORMED BY SPLITTING UP O R RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE AND THERE IS NO TRANS FER TO THE BUSINESS OF ANY PLANT & MACHINERY ALREADY USED. [801C(4)]. (VI) NO DEDUCTION HAS BEEN CLAIMED UNDER ANY OTHER SECTION IN CHAPTER VI A OR SECTION 10 A OR 10 8. [8OIC(5)]: (VII) ACCOUNTS OF THE UNDERTAKING HAVE BEEN AUDITED . [801A(7)]. THUS, ALL THE CONDITIONS OF SECTION 801C ARE FULFIL LED. THE FOLLOWING INFERENCES WERE DRAWN BY THE ASSESSIN G OFFICER FROM THE ABOVE:- (I) THE ASSESSEE IS MANUFACTURING STEEL ALMIRAHS AN D SUPPLYING TO M/S. GODREJ AND BOYCE MANUFACTURING CO PVT. LTD. M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 3 (II) PRODUCTION STARTED IN AUGUST, 2006. (III) THE FACTORY IS SITUATED AT EPIP COMPLEX, AMIN GAON, GUWHATI. (IV) THE ASSESSEE CLAIMS EXEMPTION AS HE FAILS WITH IN THE PURVIEW OF SEC. 801C(2)(A)(III). 3. THE ASSESSING OFFICER HELD THAT THE ASSESSEES CLAI M RUNS CONTRARY TO THE PROVISIONS OF SECTION 80IC(2)(A)(III) OF THE AC T. THE ASSESSING OFFICER REFERRED TO THE LEASE AGREEMENT BETWEEN ASSAM INDUS TRIAL DEVELOPMENT CORPORATION LTD., (FOR SHORT AIDC ) AND PARTNERS OF THE ASSESSEE FIRM AND POINTED OUT THAT THE LEASE AGREEMENT REQUIRED THAT THE ASSESSEE SHALL EXPORT A MINIMUM OF 25% OF THE TOTAL PRODUCTION IN TERMS O F VALUE EVERY YEAR. AS THE ASSESSEE HAS NOT COMPLIED WITH THESE PROVISIONS , THE ASSESSING OFFICER DENIED THE CLAIM FOR DEDUCTION BY OBSERVING AT PARA -1/PAGE-6 OF HIS ORDER, AS FOLLOWS:- THE ASSESSEES CONTENTIONS HAVE BEEN PERUSED. IT IS TRUE THAT SEC. 80IC DOES NOT ENVISAGE ANY EXPORT OBLIGATION. THE A SSESSEE GETS HIT BY THE SAID OBLIGATION TO EXPORT BY VIRTUE OF ITS LOCA TION IN AN EXPORT PROMOTION INDUSTRIAL PARK ONLY. SEC. 80IC(2)(A)(II I), CLEARLY STATES THAT THE UNDERTAKING HAS TO MANUFACTURE THE GOODS IN ACC ORDANCE WITH THE SCHEME FRAMED FOR THAT INDUSTRIAL PARK. SUCH A QUAL IFICATION IS NOT AVAILABLE IN THE OTHER SECTION 10A, 80HHC, ETC. 4. THEREAFTER, HE SUMMARISED THE REQUIREMENT OF EXPORT PROCESSING ZONE. HE HELD THAT THE TERMS AND CONDITIONS OF THE ASSESS EE FORM WITH AIDC SHOULD BE READ AS EMBEDDED AND AS THE ASSESSEE HAS NOT COM PLIED WITH THE CONDITIONS OF EXPORT, HE IS NOT ENTITLED TO RELIEF UNDER SECTION 80IC. HE FURTHER OBSERVED THAT THE ASSESSEE HAS IMPORTED MAC HINERY UNDER EPCG SCHEME AND HAD AN OBLIGATION OF EXPORT. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE T HE FIRST APPELLATE AUTHORITY, WHEREIN THE ASSESSEE, IN ADDITION TO HIS ARGUMENT THAT ALL THE CONDITIONS SPECIFIED UNDER SECTION 80IC(2)(A)(III) ARE FULFILLED, FURTHER ARGUED THAT THE CONDITIONS IN LEASE DEED CANNOT BE INCORPO RATED INTO THE SECTION. HE M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 4 FURTHER SUBMITTED THAT INDO BURMA BORDER WAS SUPPOS ED TO BE OPEN AND AS THE SAME HAD NOT TAKEN PLACE, NONE OF THE UNITS COU LD EXPORT ANY MATERIAL. HE FURTHER POINTED OUT THAT CONSEQUENCES FOR THE FA ILURE TO EXPORT HAS BEEN PROVIDED IN THE LEASE DEED ITSELF. THE COMMISSIONER (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE. HE REFERRED TO THE NOTI FICATION DATED 26 TH MARCH 2004, ISSUED BY THE CBDT AS WELL AS THE WEBSITE OF AIDC, EPIP, AMINGAON AND CONCLUDED THAT IT WAS MANDATORY FOR THE ASSESSE E TO HAVE EXPORTED 25% OF THE VALUE OF PRODUCTION AND IN THE ABSENCE OF SU CH EXPORTS, THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF SECTION 80IC(2)(A )(III). AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, THE LEARNED COUNSEL, MR. HIRU RAI, ON BE HALF OF THE ASSESSEE, SUBMITTED THAT THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE SATISFIES THE CONDITIONS SPECIFIED IN SECTION 80IC(2)(A)(III) INA SMUCH AS THE ASSESSEE COMMENCED MANUFACTURE BETWEEN 24 TH DECEMBER 1997 AND 1 ST APRIL 2007 AND UNDERTAKING IS SET-UP IN NOTIFIED AREA IN NORTH EASTERN STATES. HE SUBMITTED THAT THE REQUIREMENT OF EXPORT IS JUST A CONDITION IN THE LEASE DEED AND FOR NON-FULFILLMENT OF THE CONDITION THE CONSEQ UENCES ARE SPECIFIED UNDER THE LEASE DEED. HE REFERRED TO THE PAPER BOOK WHICH CONTAINS A COPY OF THE LEASE AGREEMENT AND SUBMITTED THAT EXPORT IS ONLY O NE OF THE CONDITIONS LISTED IN CLAUSE 2 OF THE LEASE DEED AND THE ASSESS EE WAS REQUIRED TO FULFILL MANY OTHER CONDITIONS. HE SUBMITTED THAT TO TEST TH E PROPOSITION AS TO WHETHER THE ASSESSEE SHOULD BE DENIED BENEFIT UNDER SECTION 80IC(2)(A)(III) IF ANY, OF THE CONDITIONS OF LEASE DEED ARE VIOLATE D, HE READ A FEW CLAUSE WHICH FIXED SEVERAL CONDITIONS AND SUBMITTED THAT B Y NO STRETCH OF IMAGINATION, VIOLATION OF THESE CLAUSES WOULD RESUL T IN DENIAL OF BENEFIT UNDER SECTION 80IC(2)(A)(III) OF THE ACT. HE EMPHASIZED T HE FACT THAT NO VIOLATION OF ANY CONDITION OF THE NOTIFICATION OF THE CENTRAL GO VT. IS RELIED UPON BY THE ASSESSING OFFICER OR COMMISSIONER (APPEALS) TO JUST IFY REJECTION OF THE CLAIM. HE SUBMITTED THAT THE LEGISLATURE WHEREVER IT WANTE D EXPORT TO BE A CONDITION FOR ELIGIBILITY OF DEDUCTION, IT SPECIFIED SO AS IN SECTIONS 80HHC AND 80HHE OF M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 5 THE ACT. HE FURTHER ARGUED THAT WHEREVER THE LEGISL ATURE INTENDED THAT THE LOCATION OF AN INDUSTRIAL UNDERTAKING SHOULD BE IN A SPECIFIED AREA AND THERE SHOULD BE EXPORT ALSO FOR BEING ELIGIBLE FOR A DEDU CTION, IT SAID SO, AS IN SECTION 10A OF THE ACT. HE ALSO POINTED OUT THAT WH EREVER THE LEGISLATURE WANTED TO MAKE EXPORT OF PRE-CONDITION FOR AVAILING OF AN EXEMPTION, IT HAS ALSO SPECIFIED THAT THE ASSESSEE SHOULD BRING FOREI GN EXCHANGE PROCEEDS FROM EXPORT INTO INDIA, WITHIN A PARTICULAR TIME FRAME. HE SUBMITTED THAT THE SCHEME OF THE ACT IS CLEAR AND EVEN THE ASSESSING O FFICER AGREES AT PAGE-6 THAT SECTION 80IC, DOES NOT ENVISAGE ANY EXPORT OBL IGATION. HE SUBMITTED THAT REFERENCE TO CLASSIFICATION OF VARIOUS ZONES B Y THE COMMISSIONER (APPEALS) IS MISCONCEIVED AS SUCH CLASSIFICATION IS AVAILABLE IN SECTION 80IC ITSELF. HE EMPHASIZED THAT SECTION 80IC HAS BEEN IN TRODUCED WITH AN OBJECT OF DEVELOPMENT OF BACKWARD STATES AND NOT WITH AN O BJECT OF ENCOURAGING EXPORTS. LEARNED COUNSEL FINALLY MADE AN ALTERNATIV E SUBMISSION THAT THE SO CALLED VIOLATION OF THE LEASE DEED WAS NOT ACTED UP ON BY THE AIDC AND, HENCE, IT IS A DEFACTO WAIVER OF THE CONDITION AND, HENCE, THERE IS NO VIOLATION. 7. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, REFERRED TO PAGE-6 OF THE ASSESSMENT ORDER AND SUBMITTED THAT T HE LEASE DEED IN QUESTION CANNOT BE SEEN IN ISOLATION. ACCORDING TO HER, AIDC HAS SET-UP EPIP IN AMINGAON UNDER THE SCHEME, WHEREIN THE EXPORT OF GOODS IS EMPHASIZED. SHE SUBMITTED THAT THE INTENTION OF LEGISLATURE IN GRANTING EXEMPTION UNDER SECTION 80IC(2)(A)(III) FOR UNITS SITUATED IN EPIP IS TO ENCOURAGE EXPORTS. THUS, SHE SUBMITS THAT THE LEASE DEED IS IN LINE WI TH THE ENTIRE SCHEME OF THINGS. SHE TOOK THIS BENCH THROUGH THE ORDER OF TH E COMMISSIONER (APPEALS) AND SPECIFICALLY AT PARA-12 FROM PAGES-10 TO 13. SH E CONTENDED THAT AMINGAON HAS BEEN DESIGNATED BY THE GOVT. OF ASSAM AS A EPIP WITH CONDITIONS AND BENEFITS. SHE RELIED ON THE FOLLOWIN G CASE LAWS:- PADMASUNDARA RAO (DECD.) V/S STATE OF TAMIL NADU, [ 2002] 255 ITR 0147 (SC); AND M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 6 PRAKASH NATH KHANNA V/S CIT, [2004] 266 ITR 0001 (S C) SHE PRAYED THAT THE ORDER OF THE COMMISSIONER (APPE ALS) BE UPHELD. 8. IN REPLY, THE LEARNED COUNSEL SUBMITTED THAT THE CA SE LAWS CITED ARE IN HIS FAVOUR AS THE PLAIN LANGUAGE OF THE SECTION HAS TO BE CONSIDERED. 9. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE HOLD AS FOLLOW S:- 10. SECTIONS 80IC(1) AND 80IC(2)(A)(III) READ AS FOLLOW S:- SECTION 80-IC - [SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERT AKINGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRIS E FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHAL L, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE, (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY ART ICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEE NTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING (I) ON THE 23RD DAY OF DECEMBER, 2002, AND ENDING B EFORE THE 1ST DAY OF APRIL, 2007], IN ANY EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF SIKKIM; 80IC(2)(A)(III) ON THE 24TH DAY OF DECEMBER, 1997, AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY EXPORT PR OCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR IND USTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR S OFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE BOARD IN M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 7 ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN ANY OF THE NORTH-EAST ERN STATES; 11. A PLAIN READING OF THE ABOVE SECTIONS REQUIRE THE F OLLOWING CONDITIONS TO BE FULFILLED FOR AN ASSESSEE TO AVAIL DEDUCTION UNDER THE SAID SECTION VIZ. (I) THE GROSS TOTAL INCOME OF THE ASSESSEE SHOULD I NCLUDE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM ANY BUSINESS REFERRE D TO IN SUB-SECTION (2); (II) SUB-SECTION (2) REQUIRES MANUFACTURE OR PRODUC TION OF ARTICLE OR THING, NOT BEING AN ARTICLE OR THING SPECIFIED IN THE THIR TEENTH SCHEDULE; (III) ASSESSEE UNDERTAKES SUBSTANTIAL EXPANSION DURING TH E PERIOD BETWEEN 24 TH DECEMBER 1997 AND 1 ST APRIL 2007, IN ANY EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR IND USTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PART OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PART, AS SPECIFIED BY THE BOARD IN AC CORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY CENTRAL GOVT. IN THIS REGARD IN ANY OF THE NORTH EASTERN STATES. 12. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER ( APPEALS) HAVE NOT DISPUTED THE FACT THAT THE ASSESSEE SATISFIES ALL T HE ABOVE CONDITIONS SPECIFIED IN SECTION 80IC(2)(A)(III). THERE CASE IS THAT THE ASSESSEE HAS FAILED TO EXPORT 25% OF ITS VALUE OF PRODUCTION, WHICH, ACCORDING TO THE ASSESSING OFFICER AND COMMISSIONER (APPEALS), IS NOT IN ACCORDANCE WITH T HE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVT. IN THIS REGARD. 13. LET US NOW SEE FROM WHERE THE REVENUE GETS THIS REQ UIREMENT OF EXPORT. IN THE LEASE AGREEMENT DATED 5 TH MAY 2005, BETWEEN AIDC LTD. AND THE ASSESSEE IN CLAUSE (2)(S) AT PAGE-8, IT IS STAT ED AS FOLLOWS:- THE LESSEE SHALL ABIDE BY THE UNDERTAKING GIVEN THA T IT SHALL EXPORT THE PRODUCE OF THE ALLOTTED PLOT TO THE TUNE OF MIN IMUM 25% OF THE TOTAL PRODUCTION IN VALUE TERMS EVERY YEAR. 14. OTHER THAN THIS CONDITION IN THE LEASE DEED, THE RE VENUE HAS NOT BROUGHT OUT ANY OTHER MATERIAL THAT THE ASSESSEE HA S TO NECESSARILY EXPORT M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 8 25% OF THE VALUE OF ITS PRODUCTION TO AVAIL BENEFIT UNDER SECTION 80IC(2)(A)(III) OF THE ACT. THE COMMISSIONER (APPEA LS) HAS EXAMINED THE NOTIFICATION GIVEN BY THE CBDT I.E., NOTIFICATION N O.116/2004 (F.NO.142/49/ 2003-TPL) DATED 26 TH MARCH 2004. THIS IS EXTRACTED AT PAGE-6 OF THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) . THOUGHT THE NOTIFICATION SPEAKS ABOUT THE EXPORT PROMOTION INDU STRIAL PARK, NOWHERE HAS THE COMMISSIONER (APPEALS) BROUGHT OUT THAT THERE I S A CONDITION IN THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVT. THA T THE ASSESSEE HAS TO NECESSARILY EXPORT A PORTION OF THE TOTAL PRODUCTIO N AND THAT TOO IN ACCORDANCE WITH THE CONDITION OF THE LEASE DEED. HA VING EXAMINED THE NOTIFICATION, THE COMMISSIONER (APPEALS) FAILED TO POINT OUT ANY SUCH REQUIREMENT IN THE NOTIFICATION. THE QUESTION ARISE S AS TO HOW IT IS CONTENDED BY REVENUE THAT ONLY 25% OF THE VALUE OF PRODUCTION IS TO BE EXPORTED, AND NOT THE ENTIRE PRODUCTION OR SUBSTANTIAL PRODUCTION . THE LEARNED DEPARTMENTAL REPRESENTATIVE HAD NO SATISFACTORY ANS WER TO THIS QUESTION. THE SECTION CONTEMPLATES DEDUCTION OF THE ENTIRE PR OFITS AND GAINS OF THE UNDERTAKING IN THE SPECIFIED AREA AND HAS NO REFERE NCE TO EXPORT PROFITS. THERE IS NO PROPORTIONATE EXEMPTION CONTEMPLATED. 15. A CONDITION IN THE LEASE DEED BETWEEN THE AIDC AND THE ASSESSEE CANNOT BE READ WITH SECTION 80IC(2)(A)(III) OF THE ACT. TO TEST THIS PROPOSITION, AS STATED BY MR. HIRO RAI, THERE ARE M ANY OTHER CONDITIONS SPECIFIED IN THE LEASE DEED FOR E.G., CLAUSES (2)(A ), (2)(B), (2)(C), (2)(D) AND (2)(T), EXTRACTED BELOW:- 2(A) THAT THE LESSEE WILL BEAR, PAY AND DISCHARGE A LL RATES, TAXES, CHARGES AND ASSESSMENT OF EVERY DESCRIPTION WHICH M AY DURING THE SAID TERM BE ASSESSED, CHARGED OR IMPOSED UPON EITH ER ON THE LANDLORD OR TENANT OR THE OCCUPIER IP RESPECT OF DE MISED PREMISES OR THE BUILDING TO BE ERECTED THEREUPON. 2(B) THE LESSEE SHALL PAY THE DEVELOPMENT CHARGES O F THE PLOT CALCULATED AT THE RATE PRESCRIBED BY THE CORPORATIO N FOR EPIP FROM TIME TO TIME. THE CORPORATION RESERVES THE RIGHT TO ENHA NCE THE RATE BY ANY COMPETENT COURT SUBSEQUENTLY. M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 9 2(C) THAT THE LESSEE WILL BEAR, PAY AND DISCHARGE A LL SERVICE CHARGES, SPECIAL MAINTENANCE CHARGES, ROAD MAINTENANCE CHARG ES, STREET LIGHTING CHARGES, ARBORICULTURAL CHARGES AND OTHER ANCILLARY SERVICES, REQUIRED FOR THE UPKEEP OF THE INDUSTRIAL AREAS WHI CH MAY DURING THE SAID TERM BE ASSESSED, CHARGED, LEVIED OR IMPOSED B Y THE LESSOR. THE LESSOR RESERVES THE RIGHT TO REVISE THE RATE O F SERVICE CHARGES AND SPECIAL MAINTENANCE CHARGES FRO M TIME TO TIME AND THE DECISION OF THE LESSOR SHALL B E FINAL, CONCLUSIVE AND BINDING ON THE LESSEE AND IT SHALL N OT BE QUESTIONED IN ANY COURT O LAW OR OTHERWISE. 2(D) THAT THE LESSEE WILL OBEY AND SUBMIT TO THE RU LES OF MUNICIPAL OR OTHER COMPETENT AUTHORITY NOW EXISTING OR HEREAFTER TO EXIST SO FAR AS THE SAME RELATE TO THE IMMOVABLE PROPERTY IN THE AR EA OR SO FAR AS THEY AFFECT THE HEALTH, SAFETY, CONVENIENCE OF THE OTHER INHABITANTS OF THE PLACE. 2(T) THE LESSEE SHALL NOT EMIT EFFLUENT IN ANY FORM (SOLD, LIQUID AND GAS) FROM THE ALLOTTED PLOT. 16. IF THE PROPOSITION OF THE ASSESSING OFFICER AS CONF IRMED BY THE COMMISSIONER (APPEALS) IS ACCEPTED, THEN VIOLATION OF ANY OF THESE CONDITIONS IN LEASE DEED WOULD RESULT IN THE ASSESS EE BEING DENIED RELIEF UNDER SECTION 80IA(2)(B)(III). IS THE REVENUE TO VE RIFY AS TO WHETHER THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS IN THE CO NTRACT I.E., LEASE AGREEMENT BEFORE GRANTING DEDUCTION UNDER SECTION 80IA(2)(A)( III)? THE ANSWER IS OBVIOUSLY NO . THE CONSEQUENCES OF BREACH OF THE AGREEMENT BETW EEN AIDC AND THE ASSESSEE ARE IN PAGE-9, PARA-3(A) OF THE LE ASE AGREEMENT. IT IS SPECIFIED THEREIN THAT IN CASE OF BREACH OF A CONDI TION OF LEASE BY THE LESSEE, IT SHALL BE LAWFUL FOR THE LESSOR TO RE-ENTER, WITH OUT TAKING RECOURSE TO A COURT OF LAW UPON THE DEMISED PREMISE, ETC. A LEASE DEED IS A CONTRACTUAL DOCUMENT BETWEEN THE ASSESSEE AND AIDC AND IT CANNO T BE TREATED AS A STATUTORY CONDITION. THE RIGHTS AND DUTIES BETWEEN THE PARTIES ARE SPECIFIED IN THIS AGREEMENT AND THE BREACH OR VIOLATION OF SU CH RIGHTS AND CONDITIONS, TO OUR MIND, DOES NOT EFFECT THE LANGUAGE OF SECTIO N 80IC(2)(A)(III). SECTION 80IC(2)(A)(III) DOES NOT REQUIRE AN ASSESSEE TO EXP ORT ANY PORTION OF ITS PRODUCTION. THE ENTIRE PROFITS OF THE UNDERTAKING A RE EXEMPT IF THE UNDERTAKING IS LOCATED IN THE SPECIFIED AREA. THUS, TO DENY THE CLAIM OF THE M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 10 ASSESSEE, ON THE GROUND THAT THERE IS A VIOLATION I N THE TERMS OF THE LEASE DEED WITH AIDC IS LEGALLY UNTENABLE. THE ASSESSING OFFICER, IN HIS ORDER, RECORDS THAT THE WORDING OF SECTION 80IA(2)(B)(III) DOES NOT ENVISAGE EXPORT OF GOODS. NO VIOLATION IS POINTED OUT OF ANY CNODIT ION OF THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVT. HENCE IN OUR VIEW , THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IC(2)(A)(III). 17. WE ARE ALSO IN AGREEMENT WITH THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT WHEREVER THE LEGISLATURE WANTED T HE UNDERTAKING TO BE LOCATED IN A SPECIFIED AREA AND THAT SUCH UNDERTAKI NG SHOULD ALSO EXPORT GOODS, IT EXPRESSLY SAID SO IN THE SECTION ITSELF F OR E.G., IN SECTION 10A, DEDUCTION OF PROFITS IS GRANTED TO AN UNDERTAKING L OCATED IN AN ELECTRONIC HARDWARE PART OR A STP AND ONLY WHERE THE UNDERTAKI NG DERIVES PROFITS / GAINS FROM EXPORTS. THIS IS A SECTION WHERE DUEL CO NDITIONS ARE SPECIFIED. THERE IS NO SUCH REQUIREMENT OF EXPORT UNDER SECTIO N 80IC AND, HENCE, WE CANNOT READ SUCH CONDITION INTO IT. 18. COMING TO THE JUDGMENTS OF HON'BLE SUPREME COURT IN PADMASUNDARA RAO (DECD.) (SUPRA) , THEIR LORDSHIPS HAVE HELD AS FOLLOWS:- THE COURT CANNOT READ ANYTHING INTO A STATUTORY PRO VISION WHICH IS PLAIN AND UNAMBIGUOUS. A STATUTE IS THE EDICT OF TH E LEGISLATURE. THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR OF LEGISLATIVE INTENT. THE FIRST AND PRIMARY RULE OF C ONSTRUCTION IS THAT THE INTENTION OF THE LEGISLATION MUST BE FOUND IN THE W ORDS USED BY THE LEGISLATURE ITSELF. THE COURT ONLY INTERPRETS THE LAW AND CANNOT LEGISL ATE. IF A PROVISION OF LAW IS MISUSED AND SUBJECTED TO THE ABUSE OF THE PR OCESS OF LAW, IT IS FOR THE LEGISLATURE TO AMEND, MODIFY OR REPEAL IT, IF DEEMED NECESSARY. LEGISLATIVE CASUS OMISSUS CANNOT BE SUPPLIED BY JUD ICIAL INTERPRETATIVE PROCESS. RISHABH AGRO INDUSTRIES LTD. V. P. N. B. CAPITAL SE RVICES LTD. [2000] 101 COMP CAS 284 (SC); [2000] 5 SCC 515 FOLL OWED. A CASUS OMISSUS CANNOT BE SUPPLIED BY THE COURT EXC EPT IN THE CASE OF CLEAR NECESSITY AND WHEN REASON FOR IT IS FOUND IN THE FOUR CORNERS OF THE STATUTE ITSELF A CASUS OMISSUS SHOULD NOT BE RE ADILY INFERRED AND M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 11 FOR THE PURPOSE ALL THE PARTS OF THE STATUTE OR SEC TION MUST BE CONSTRUED TOGETHER AND EVERY CLAUSE OF A SECTION SH OULD BE CONSTRUED WITH REFERENCE TO THE CONTEXT AND OTHER CLAUSES THE REOF SO THAT THE CONSTRUCTION TO BE PUT ON A PARTICULAR PROVISION MA KES A CONSISTENT ENACTMENT OF THE WHOLE STATUTE. THIS WOULD BE MORE SO IF A LITERAL CONSTRUCTION OF A PARTICULAR CLAUSE LEADS TO MANIFE STLY ABSURD OR ANOMALOUS RESULTS WHICH COULD NOT HAVE BEEN INTENDE D BY THE LEGISLATURE. AN INTENTION TO PRODUCE AN UNREASONABL E RESULT IS NOT TO BE IMPUTED TO A STATUTE IF THERE IS SOME OTHER CONSTRU CTION AVAILABLE. WHERE TO APPLY WORDS LITERALLY WOULD DEFEAT THE OBV IOUS INTENTION OF THE LEGISLATION AND PRODUCE A WHOLLY UNREASONABLE R ESULT THE COURT MUST DO SOME VIOLENCE TO THE WORDS SO AS TO ACHIEVE THAT OBVIOUS INTENTION AND PRODUCE A RATIONAL CONSTRUCTION. THIS PROPOSITION, WHEN APPLIED TO THE FACTS OF THE CASE, CLEARLY SUPPORT THE ARGUMENT OF THE ASSESSEE. THE LANGUAGE EMPLOYED IN SECTION 80IC(2)(A)(II), DOES NOT REQUIRE EXPORT AND READING OF SUCH A CONDITION INTO THE SECTION WILL BE AGAINST THE RULES OF INTERPRETA TION OF STATUES LAID DOWN IN THE ABOVE CASE BY THE HON'BLE SUPREME COURT. 19. COMING TO THE JUDGMENT IN PRAKASH NATH KHANNA (SUPR A), THE SAME IS NOT RELEVANT TO THE FACTS OF THE PRESENT CASE. 20. RELIANCE PLACED BY THE COMMISSIONER (APPEALS) ON TH E LITERATURE IN THE WEBSITE OF AIDC IS ERRONEOUS AS THIS IS NOT THE SCH EME FRAMED AND NOTIFIED BY THE CENTRAL GOVT. 21. IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE CONT ENTIONS OF THE ASSESSEE THAT IT IS ELIGIBLE FOR GRANT OF DEDUCTION UNDER SECTION 80IC(2)(A)(IV) OF THE ACT. WE ORDER ACCORDINGLY. 22. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH NOVEMBER 2011. SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH NOVEMBER 2011 M/S AHURA MAZDA METAL FORMING AND FINISHING ITA NO. 5129/MUM./2011 12 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, A BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 15.11.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17.11.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 21.11.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 21.11.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 21.11.2011 SR.PS 6. DATE OF PRONOUNCEMENT 25.11.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 25.11.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER