2015 (3) TMI 367 - HC - Income Tax

Application for issue of Notification under Section 80IA4(iii) rejected - Held that - The impugned order for rejecting application is a speaking order. It is a settled principle of law that a person who claims benefit of exemption from payment of taxes has to fully satisfy the provisions extending the benefit. Data furnished by the applicant, being inconsistent and divergent does not lead to a conclusive inference regarding whether the total allocation for industrial use is actually 75% keeping in view the discrepancies in area as well as ambiguity about industrial activities carried out in several units owned by individuals and families, which has remained unspecified. Moreover, the unsubstantiated claim about the fulfillment of conditions pertaining to commercial activity also does not prove that the same is in accordance with para 4(2A) of the Scheme. In fact, the inconsistencies in data and manipulation of information does not lead to evidences on the basis of which the application deserves approval.Despite giving many opportunities and substantial time for compliance, satisfactory explanation has not been filed. It has thus not been found to be a fit case for notification u/s. 80IA(4)(iii) of the Act. Hence, the competent authority has decided to reject the application. - Decided against assessee. Stay application - Held that - We are not inclined to stay this order for the reason that the assessment order for Assessment Year 2011-12 has already been passed on 28.3.2014 and the amounts due thereunder have not been paid only because of its application for benefit of Section 80IB(4) was pending before the CBDT. We did indicate to Mr.Jhaveri that in case the petitioner deposit the entire amount of demand attributable to the claim under Section 80IA(4) of the Act, we would be inclined to grant stay. This was unacceptable to the petitioner. At this stage Mr.Jhaveri states that the petitioner is ready to offer security. We are not inclined to accept it. Accordingly, the application for stay of this order is rejected. - Decided against assessee.

Summary

Issues involved:
Challenging orders of Central Board of Direct Taxes (CBDT) and Deputy Commissioner of Income Tax regarding rejection of application for Notification under Section 80IA4(iii) of the Income Tax Act, 1961 and denial of stay pending appeal.

Analysis:
1. The petitioner applied for approval of its Industrial Park under Section 80IA(4) of the Act for Assessment Year 2011-12, but the CBDT did not dispose of the application timely. Subsequently, the Assessing Officer passed an Assessment Order without extending the benefit under Section 80IA(4) to the petitioner. A writ petition was filed in the High Court seeking early disposal of the application, leading to a direction to CBDT for disposal. The CBDT then rejected the application, prompting the present challenge.

2. The impugned order denied approval under Section 80IA(4) citing specific conditions related to the allocation of area for industrial and commercial activities. The petitioner argued that the order did not properly consider their submissions, leading to a miscarriage of justice. However, the Court clarified that in writ jurisdiction, the focus is on decision-making processes rather than factual determinations unless arbitrary or perverse.

3. The petitioner contended that the decision-making process was flawed as no personal hearing was granted. The Court noted that there was no explicit request for a personal hearing in the petitioner's submissions and highlighted the absence of prejudice due to the lack of a hearing request. Additionally, it emphasized that orders granting tax exemptions must be supported by full compliance with the relevant provisions.

4. The impugned order was deemed a speaking order, emphasizing the petitioner's inconsistent data submissions and shifting stands regarding the area allocations for industrial and commercial activities. The Court highlighted the importance of accurate and consistent information when seeking exemptions, noting discrepancies in the petitioner's claims. Ultimately, the Court upheld the rejection of the application, citing insufficient evidence to support approval under Section 80IA(4)(iii) of the Act.

5. Given the conduct of the petitioner in changing figures when confronted and the factual nature of the grievances, which were not shown to be arbitrary or perverse, the Court dismissed the petition. The petitioner's request for a stay was also rejected, as the assessment order had already been passed, and the petitioner declined to deposit the demanded amount or offer acceptable security.

This detailed analysis covers the issues raised in the legal judgment, highlighting the key arguments, court observations, and the final decision rendered by the High Court.