M/S PANTHEON INFRASTRUCTURE PVT LTD ,MUMBAI vs. DY CIT CIRCLE- 2(1)(1), MUMBAI

Thus, in view of the liberty granted by the Hon‟ble Bombay High Court, the assessee approached the CBDT, the CBDT vide letter dated 15/03/2017 observed that the communication of Ministry of commerce dated 03/02/2014 (through under Secretary) was not merely a threat, but observation to withdraw the notification. He submitted that the said response was not only contrary to the observation of the Hon‟ble Bombay High Court but also against the spirit of clarification issued by the Empowered Committee came only subsequently and in para 5 of CBDT observed that certain clarifications are awaited from the Field Officers. Thus, effectively the CBDT aligned its own view with that of Empowered Committee and Hon'ble Bombay High Court. The CBDT also proceeded with the exercise of verification of the compliance to the conditions. In other words, CBDT was now open to re-examination of the facts and has effectively given a go-bye to the withdrawal notification. Thereafter, there were series of communication between the assessee and the CBDT and the department starting with March 2017, till date and for more than 7 ½ years there has been no response. Despite in the said communication by the CBDT dated 15/03/2017 has called for the report from the Field Officer.

“2. This Petition under Article 226 of the Constitution of India inter alia challenges the Notification dated 26th March 2014 issued by the Central Board of Direct Taxes withdrawing its Notification dated 17th November 2006 granting the Petitioners' benefit of Section 80-IA of the Income Tax Act 1961 (the Act). The Petitioners also challenge the consequent five reopening notices dated 28th March 2014 seeking to reopen assessment for AYs 2007-08 and 2011-12. The reason recorded for issuing the impugned reopening notices is the CBDT Notification dated 26th March 2014. The Petitioners have challenged to the CBDT Notification dated 26th March 2014 as being beyond the decision dated 3rd February 2014 of the Central Government Ministry of Commerce and Industry which merely rejected the Petitioners' Application for amendment of its approval and had only stated that it may withdraw its approval as an Industrial Park which was granted earlier by Notification dated 17th November 2006. We are prima facie satisfied that the decision dated 3rd February 2014 taken by the Central Government Ministry of Commerce and Industry rejects the Petitioners' application for amendment to the approval granted on 26th July 2006 and had only threatened withdrawal of the approval granted as Industrial Park. In the above view, the basis of the impugned notices is prima facie not sustainable. Therefore, pending disposal of this Petition, five impugned notices dated 28th March 2014 seeking to reopen the assessment of AYs 1997-98 to 2011-12 be stayed pending the final disposal of this Petition. Needless to state that the assessment and appellate proceedings for the subsequent assessment years are not in manner fettered by these proceedings though the same may be subject to final result of this Petition. The Petitioners are given liberty to approach the CBDT with a representation to modify / withdraw the Notification dated 26th March 2014.”

Looking to the fact that already several years have lapsed either because of procrastination attitude by the CBDT or the lackadaisical approach of the Revenue authorities, the jeopardy and injustice to the assessee persists and is perpetuated year after year, whereby, on one hand the ld. AO is continuing to disallow the claim of deduction which assessee is otherwise entitled to; and on the other hand there is no response despite several representations have been made and yet there is no clarification by the CBDT leading to disallow of claim. It has been brought on record that assessee has undertaken several correspondences with the CBDT and the ld. AO since year 2017 and inspite of the fact that both Empowered Committee as well as Hon‟ble Bombay High Court have opined that earlier communication of Ministry of Commerce and Industry was not revocation of approval which fact has already been accepted by the CBDT in its letter dated

In view of the aforesaid facts and circumstances and looking to the imperilment caused to the assessee on year to year basis, we direct the Jurisdictional AO to verify the number of units and area for which assessee was granted approval and if assessee is found to have complied with the minimum number of units requirement, i.e., 14 units in the Industrial Park (which was earlier notified by the CBDT); and if such conditions are fulfilled, then this Bench will decide the issue of deduction u/s. 80IA (4) sans any clarification or re- issue of notification by the CBDT, because the rescinding of earlier notification does not stand once the Central Government through Empowered Committee has clarified that assessee still hold the approval for all the 14 Units and area in the Industrial Park. Before us, the assessee has enclosed the list of occupants for all the three years of various units, which ld. JAO is directed to verify and report before us. The reason for seeking the report is that, firstly, assessee still continues to enjoy the approval of Ministry of Commerce and Industry and CBDT had also acknowledged it vide letter dated 15/03/2017, but yet no action has been taken or amended notification has been issued; and secondly, several years have lapsed whereby assessee continues to be taxed by way of disallowance of deduction u/s. 80IA (4). Ld. JAO is directed to submit his report within one month from the date of receipt of this communication / interim order. Assessee is also directed to cooperate with the Ld. AO to submit all the necessary documents.

List this case for hearing on 10/02/2025. The matter shall be listed as part heard.

The aforesaid interim order had captured all these facts which had been narrated by the ld. Counsel before us and the entire sequence of events including the order of the Hon‟ble Bombay High Court dated 20/01/2016 in various communications and had sought for the report from the ld. AO.

In pursuance of the aforesaid direction and interim order, the ld. AO has submitted his exhaustive report vide letter dated 06/02/2025. The salient features emerging from the ld. AO report includes letter dated 13/05/2022 and 04/08/2022 wherein following facts have been given after proper enquiry. a) It captures the chronology of events and factual background of application submitted by the assessee company for approval of industrial Park under IPS-2002, grant of approval by the Central Government, and subsequent rejection of modification application and withdrawal of notification dated 17-11-2006 and connected facts. b) That the assessee has furnished various details and required information for verification to the Ld. Assessing Officer vide letters dated 28-02-2022, 11-03-2022, 20-04-2022 and 25-04- 2022, etc. c) That the communication vide letter dated 04-08-2022 states that CBDT vide letter dated 15-03-2017 had raised following three points for verification by the assessing officer i) Date of Merger/ Amalgamation ii) Duration up to which the undertaking adhered the terms and conditions iii) Completion Certificate d) That the erstwhile Assessing Officer called for various details from the assessee including detailed floor plan of the Industrial Park, layout of the building, photographs of the entire structure and the units for necessary verification. e) That the Assessing Officer, based on the information/details collected and verification-conducted, submitted a point-wise reply to the queries

The ld. AO‟s report of each of the points can be summarized in the following manner:- I. Actual date of completion in terms of IPS-2002 and the completion certificate: - The Assessing Officer takes note of the submission made by the assessee that there was no requirement to submit completion certificate under the provisions of IPS-2002 He also notes the submission of the assessee that there was a distinction between the terms "unit" and "Occupant. The Assessing Officer in the report states that Industrial Park, approved under IPS-2002, will be continued to be governed by the scheme of 2002 and not by IPS-2008 The Assessing Officer in the report concludes that the contention of the assessee that the requirement for completion certificate was not applicable in the case of the assessee appears to be correct. He then added that the petitioner has in fact submitted Occupation Certificate (OC) issued by the Brihanmumbai Municipal Mahanagarpalika and also the completion certificate issued by the Architect, which evidence that not only the construction of the Park was completed but the same was ready to be occupied II. Number of units constructed at the time of completion of the Park The Assessing Officer in the report dated 04-08-2022 has referred to and relied upon earlier report of 13-05-2022 containing 78 pages. The Assessing Officer at page 77 of the report concluded as under As per the evidence in the form of building layout, occupation certificates, architect completion certificates, photographs submitted it is seen that the total area approved as per DIPP approval and constructed appears to be the same. The details of which are as under: a) Area and Number of Units to be constructed as per DIPP approval dated 26-07-2006 (amended vide letter dated 04-08- 2006)

Thus, this factual report by the ld. AO now makes it very clear-  Firstly, number of units in the premises has remained unchanged since the beginning;  Secondly, there was no change in the total area of the industrial park for the units which was the basis of the communication by the under Secretary dated 03/02/2014 based on which CBDT has withdrawn the notification with retrospective effect. Later on, once the empowered committee had again clarified this issue, the CBDT had called for the report from the Field Officer to verity the same very aspects. Now that ld. AO had already submitted report with the higher authorities which now clarifies that there is nothing adverse against the assessee. Ergo, in view of this factual report by the ld. AO which has been done after conducting proper enquiry and that already Empowered Committee had clarified this issue that assessee undertaking may avail the income tax benefit till the date it adheres the terms and conditions granted earlier. It is also not in dispute that completion certificate of undertaking was already submitted and all the conditions have been found to be satisfactory, therefore, now there cannot be any dispute that assessee is eligible for claim of deduction u/s.80IA(4)(iii).

The ld. DR submitted that now that the report has been submitted by the ld. AO clarifying the position, the matter should be restored back to the ld. AO and in light of these reports, and CBDT will issue the notification and assessee can get a consequential relief.

On the other hand, ld. Counsel objected that already so many years have lapsed and despite several communications, the CBDT has given no response nor any notification has been issued.

Here in this case, as noted above already CBDT has issued a notification vide notification dated 17/11/2006 in pursuance of approval from the empowered committee, Ministry of Commerce. Once these facts were made clear, subsequently by the Empowered Committee and even CBDT has acknowledged vide its communication dated 15/03/2017 and only the report from the Field Officer was awaited, then there remains no hurdle in granting benefit of deduction u/s 80IA(4)(iii) of the Act. Since 2017, till date almost eight years have lapsed and no notification issued. Now the question is whether in absence of any notification can deduction be granted u/s. 80IA(4)(iii). In our view, once earlier notification was issued by CBDT, same cannot revoked / withdraw the notification with retrospective effect, because the withdrawal was on 03/02/2014. There is no provision which has been brought to our notice or shown that CBDT has power to withdraw the notification retrospectively. It is a well settled law that the executive orders / circulars in absence of any legislative competence cannot be made applicable with retrospective effect. This proposition has been upheld by the Hon‟ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. vs. Tata Communication Ltd. reported in (2022 SCC online SC 1280). For the sake of ready reference, the relevant observation and the principle laid down by the Hon‟ble Supreme Court is as under:- “29. It is a settled principle of law that it is the Union Parliament and State Legislatures that have plenary powers of legislation within the fields assigned to them, and subject to certain constitutional and judicially recognized restrictions, they can legislate prospectively as well as retrospectively. Competence to make a law for a past period on a subject depends upon present competence to legislate on that subject. By a retrospective legislation, the Legislature may make a law which is operative for a limited period prior to the date of its coming into force and is not operative either on that date or in future.

The power to make retrospective legislations enables the Legislature to obliterate an amending Act completely and restore the law as it existed before the amending Act, but at the same time, administrative/executive orders or circulars, as the case may be, in the absence of any legislative competence cannot be made applicable with retrospective effect. Only law could be made retrospectively if it was expressly provided by the Legislature in the Statute. Keeping in mind the afore-stated principles of law on the subject, we are of the view that applicability of the circular dated 12th June, 2012 to be effective retrospectively from 1 April 2009, in revising the infrastructure charges, is not legally sustainable and to this extent, we are, in agreement with the view expressed by the Tribunal under the impugned judgment.”

Another important proposition is that as per the Industrial Park Scheme 2002 under which the approval has been granted to the industrial park of the assessee, the approval has to be granted only by the Central Government from the Empowered Committee and the power to withdraw the approval is also granted by the Central Government. The only limited role given to the CBDT under Rule 18C (4) of the Income Tax Rule, 1962 is to notify the industrial park upon approval given by the Central Government. Now here in this case Central Government Empowered Committee has already given approval and even the modification to the approval has been done by the Empowered Committee. Thus, the issue of notification by the CBDT is merely a ministerial Act. This principle has been laid down by the Hon‟ble Gujarat High Court in the case of Creative Infocity Ltd., vs Under Secretary on the Special Civil Application No. 9247 of 2011, wherein the Hon‟ble Gujarat High Court had observed and held as under:- “4. According to learned counsel for the petitioner, the Central Board of Direct Taxes has no authority in delaying the grant of benefits under Section 80-IA of the Act of the industrial park to the petitioner by starting a second line of inquiry in spite of approval granted by the Commerce Ministry. In other words, according to the petitioner, the Board ought to have notified the industrial park on getting a copy of approval letter dated June 21, 2001 of the Commerce Ministry, which is annexed to the writ-application as Annexure: A.

In order to appreciate the aforesaid question, it will be profitable to refer to the provision contained in Rule 18C of the Income Tax Rules, 1962 which is quoted below: "18C: Eligibility of Industrial Parks and Special Economic Zones for benefits under section 80-IA [iii]:- [1] The undertaking shall begin to operate an industrial park during the period beginning on the 1st day of April, 1997, and ending on the 31st day of March, 2002. [1A] The undertaking shall begin to develop or develop and operate or maintain and operate a special economic zone any time during the period beginning on the 1st day of April, 2001 and ending on 31st day of March, 2006. [2] The undertaking shall be duly approved by the Ministry of Commerce and Industry in the Central Government under the scheme for industrial park or Special Economic Zones notified by that Ministry. [3] The undertaking shall continue to fulfill the conditions envisaged in the scheme. [4] On approval under sub-rule [2], the Central Board of Direct Taxes, shall notify industrial parks for benefits under section 80- IA."

A plain reading of the aforesaid provision makes it clear that the undertaking of the assessee should be at first duly approved by the Commerce Ministry under the Scheme of Industrial Parks or Special Economic Zones notified by the Ministry as provided in sub-rule [2]. Once such approval under sub-rule [2] is given, it is the duty of the Board to notify the industrial park for the benefits under Section 80-IA of the Act. Sub-rule [3], however, makes it mandatory that an undertaking should continue to fulfill the conditions envisaged in the Scheme.

Therefore, we find substance in the contention of Mr. Shah, the learned counsel appearing on behalf of the petitioner, that once approval is given by the Commerce Ministry to the petitioner in terms of sub-rule [2] of Rule 18C, the Board is duty bound to notify the industrial parks for benefits under Section 80-IA without any further investigation as to whether the petitioner has complied with the terms and conditions envisaged in the scheme. Since the power of grant of approval has been conferred upon the Commerce Ministry, in the absence of any express provision in the Rules, it should be presumed that the authority, which has given approval, has the power of revocation and examination of compliance of the conditions upon which the approval has been accorded. Therefore, it is the duty of the Commerce Ministry to decide whether an industrial undertaking is complying with the conditions envisaged in the scheme and if the undertaking fails to comply with those conditions, it is the Commerce Ministry alone, which has the right to withdraw the benefit granted under sub-rule [2] of Rule 18C of the Rules. As soon as the approval under sub-rule [2] of Rule 18C is given, it is obligatory on the part of the Central Board of Direct Taxes to notify industrial parks in terms of sub-rule [4] of Rule 18C.

In the case before us, there is no dispute that till today, the Commerce Ministry has not revoked the approval given in terms of sub-rule [2] of Rule 18C and thus, it is the duty of the Board to notify the industrial parks for the benefits under Section 80-IA of the Act.” 24. Thus, the CBDT could not have on its own motion withdrawn the notification and even otherwise also the communication of Ministry of Commerce dated 03/02/2014 which was relied upon by the CBDT for withdrawing the notification has been subsequently clarified by the Ministry of Commerce itself as well as by the Hon‟ble Bombay High Court, thus, there means no reason for withdrawal of notification.

In so far as the contention of the ld. DR that matter should be restored back to the file of the ld. AO, we are unable to accept his request for the reason that already more than 8 years have lapsed and despite so many communications by the assessee, there is no response from the CBDT and further, already the report of the Field Officer / ld. AO is there on the record accepting the fact that all the conditions stands fulfilled therefore, we direct the ld. AO to allow the claim of deduction u/s.80IA(4) for the aforesaid assessment years appealed before us. Consequently, claim of deduction u/s.80IA(4)(iii) as claimed by the assessee is allowed. Accordingly, appeal of the assessee is allowed.

In the result, all the appeals of the assessee are allowed.