2012 (4) TMI 331 - HC - Income Tax

An application filed with the Ministry of Commerce and Industries for registration of the industrial park under the Industrial Park Scheme, 2002 to avail of benefits/exemption under Section 80IA - petitioner was informed that the date of commencement of park was after 31st March, 2006, their application was not covered under the 2002, Scheme - the 2002 Scheme ended on 31st March, 2006 and the 2008, Scheme was notified on 8th January, 2008 and parks set up on or after 1st April, 2006 but not later than 31st March, 2009 were covered by the said scheme - the petitioner did not fulfil the requirements of 2008, Scheme on the minimum requirement of constructed area required and required minimum number of units - Held that - when an application was filed on 23rd September, 2006, there was no scheme in place/operation, which had been framed and notified by the Central Government -The 2002, Scheme had lapsed as it was effective, notified and applicable upto 31st March, 2006 - with effect from 1st April, 2006 there was no scheme which had been framed and was gazetted. Therefore, no undertaking could take advantage or benefit of Section 80 IA(4)(iii) of the Act

Issues Involved:
1. Applicability of the 2002 Scheme versus the 2008 Scheme.
2. Retrospective effect of the 2008 Scheme.
3. Conflict between Section 80 IA(4)(iii) and the 2008 Scheme.
4. Application of the principle of promissory estoppel.

Detailed Analysis:

1. Applicability of the 2002 Scheme versus the 2008 Scheme:

The petitioner, Regency Soraj Infrastructures, filed an application on 23rd September 2006 under the 2002 Scheme for benefits under Section 80IA of the Income Tax Act. The application was rejected on the grounds that the 2002 Scheme had ended on 31st March 2006, and the petitioner's park commenced after this date. The court noted that the 2002 Scheme was applicable only for undertakings operating between 1st April 1997 and 31st March 2006. Since the petitioner filed the application after this period, the 2002 Scheme was not applicable. The 2008 Scheme, which came into effect from 1st April 2006, was the relevant scheme, but the petitioner did not meet its requirements.

2. Retrospective Effect of the 2008 Scheme:

The petitioner argued that the 2008 Scheme, being delegated legislation, could not have retrospective effect. The court held that Section 80 IA(4)(iii) requires a scheme to be framed and notified by the Central Government. The 2002 Scheme had lapsed on 31st March 2006, and there was no scheme in operation until the 2008 Scheme was notified on 8th January 2008. The retrospective effect of the 2008 Scheme was to confer benefits on undertakings that met its criteria from 1st April 2006 onwards. Thus, no benefit was withdrawn but rather conferred retrospectively.

3. Conflict Between Section 80 IA(4)(iii) and the 2008 Scheme:

The petitioner claimed a conflict between Section 80 IA(4)(iii) and the 2008 Scheme, arguing that the proviso extended the 2002 Scheme's period. The court found no conflict, stating that the second proviso to Section 80 IA(4)(iii) did not extend the 2002 Scheme but allowed for a new scheme to be framed for the period ending 31st March 2009. The 2008 Scheme was framed and notified to cover this period. The court emphasized that for any benefit under Section 80 IA(4)(iii), a scheme must be framed and notified, which was not the case between 1st April 2006 and 8th January 2008.

4. Application of the Principle of Promissory Estoppel:

The petitioner invoked promissory estoppel, arguing that they had commenced development based on the 2002 Scheme. The court rejected this plea, noting that the petitioner applied for notification only on 23rd September 2006, after the 2002 Scheme had ended. The court found no promise or assurance from the respondents that the 2002 Scheme would be extended. The correspondence between the petitioner and the Ministry of Commerce and Industries did not constitute a promise but was part of the process of gathering information. Therefore, the principle of promissory estoppel did not apply.

Conclusion:

The court dismissed the writ petitions, holding that the petitioner was not entitled to benefits under the 2002 Scheme as it had ended on 31st March 2006, and the petitioner did not meet the requirements of the 2008 Scheme. The retrospective application of the 2008 Scheme was valid and intended to confer benefits on eligible undertakings. The plea of promissory estoppel was also rejected as there was no promise or assurance from the respondents. The petitioner was granted liberty to appeal against the assessment order dated 22nd October 2010 on merits but could not challenge the validity of the rejection letters/orders dated 28th July 2009 and 8th October 2008.

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