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2011 (8) TMI 654 - HC - Income TaxIndustrial park in the nature of pharmaceutical park - Park approved by ministry of commerce however CBDT did not notify such parks - development work completed before 31.03.06 - Revenue contended out of 30 only 4 unit are functional, thus approval itself should be withdrawn - Held That - undertakings,falls in three categories (a) those engaged in the business of developing ; (b) those engaged in the business of developing and operating ; and (c) those engaged in the business of maintaining and operating an industrial park. These are separate and distinct. petitioner approached the Central Government for developing an industrial park providing infrastructural facilities for pharmaceutical industries. not for developing and operating the industrial park, or for maintaining. Reliance also place on sub-rule (3) of rule 18C which requires CBDT to notify industrial park. Notice was quashed and revenue were asked to take consequential steps to interpret rule 18C with respect to the petitioner s industrial park.
Issues Involved:
1. Validity of the communication proposing to withdraw the approval of the industrial park. 2. Requirement for the Central Board of Direct Taxes (CBDT) to notify the industrial park under Rule 18C of the Income-tax Rules, 1962. Issue-wise Detailed Analysis: 1. Validity of the Communication Proposing to Withdraw the Approval of the Industrial Park: The petitioner-company challenged the communication dated February 16, 2009, proposing to withdraw the approval of its industrial park. The petitioner argued that it had completed all developmental works and sold all 32 sub-plots to pharmaceutical companies by March 31, 2006, fulfilling the requirements under the Industrial Park Scheme, 2002. The petitioner contended that it was not obligated to ensure that the industrial units were set up by the companies to whom plots were allotted. The petitioner claimed that the withdrawal of approval based on the non-existence of units was impermissible. The court noted that the Scheme required a minimum of 30 units and the last date for implementation was March 31, 2006. It was undisputed that the petitioner claimed tax benefits under section 80-IA(4)(iii) and was granted such deductions for the assessment year 2005-06. The CBDT did not notify the industrial park, suggesting that the approval should be withdrawn due to only four units being set up and none functional as of April 25, 2008. The court examined the Scheme and related documents, noting that the petitioner was approved for developing an industrial park, not for operating or maintaining it. The court emphasized that the petitioner fulfilled its obligation by developing infrastructural facilities and allocating plots to 32 units before March 31, 2006. The court interpreted the term "locate" to mean allocating plots to producing industries, which the petitioner had done. The court concluded that the petitioner fulfilled the requirements under the Scheme by providing infrastructural facilities and allocating plots. The responsibility to ensure that industries set up their units and commence production was not borne out from the Scheme. The court found the proposal to withdraw approval based on the non-existence of functional units legally unsustainable and quashed the impugned notice. 2. Requirement for the CBDT to Notify the Industrial Park under Rule 18C of the Income-tax Rules, 1962: The petitioner argued that under Rule 18C(2), once the industrial park was approved by the Ministry, the CBDT was required to notify it. The petitioner claimed that the CBDT's failure to notify the park and its suggestion to withdraw approval was improper. The court noted that Rule 18C(2) required the undertaking to be approved by the Ministry, and Rule 18C(4) mandated the CBDT to notify industrial parks for benefits under section 80-IA. The court observed that the Scheme defined an "undertaking" as one engaged in developing, developing and operating, or maintaining and operating an industrial park. The petitioner was approved for developing an industrial park, and it fulfilled the general conditions by providing infrastructural facilities and allocating plots. The court found that the petitioner met the requirements for availing tax benefits and that the CBDT's failure to notify the park was unjustified. The court directed the respondents to ensure that the necessary notification under Rule 18C(4) was issued by the CBDT for the petitioner's industrial park. Conclusion: The court quashed the impugned notice dated February 16, 2009, and directed the respondents to take consequential steps to ensure the issuance of the necessary notification for the petitioner's industrial park under Rule 18C(4) of the Income-tax Rules, 1962.
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