2018 (8) TMI 61 - HC - Income Tax

Withdrawal of approval granted by the first respondent Union Commerce Ministry under the Industrial Park Scheme 2002 and Section 80IA - the notification (No. 21/2014) dated 27.03.2014 withdrawing the earlier approval given by another notification (dated 09.02.2007) - Held that - In the present case, there does not appear to have been any prior opportunity; even the written submissions given to the committee was not considered or adverted to. The material facts, such as the approval given by the town planning authorities, the repeated inter se correspondence between the Haryana Director of Industries (based on whose recommendation the approval and notification were issued in 2007) and the explanation given by the petitioner were completely ignored. DIPP just went by a bare comparison of the area in the Original Application (24299.75 sq. mtrs.) and the final built up area (14715.55 square meters). The petitioner s explanation as regards the built up area being the larger super area (for which the leases were entered into) and the actual carpet area being 8094 square meters were ignored altogether. In these circumstances, the impugned order and notification suffers from non application of mind. In the absence of any stipulation as to the minimum requirement of industrial park under the scheme as well as under the Income Tax Act, the unreasoned order of DIPP (ignoring the record and overlooking the material explanation of the petitioner with respect to the area constructed, the super area in fact leased and that there was no suppression of facts anytime) withdrawing the earlier notification cannot survive. As regards the other ground, i.e. non-construction beyond the scheme, the court notices that the approval was in fact issued after the date mentioned by the DIPP. Following the reasoning in Silverland (2011 (11) TMI 384 - BOMBAY HIGH COURT) of the Bombay High Court, that reason cannot survive. The impugned order and notification, withdrawing the earlier notification (of 2007) is hereby quashed. The second respondent shall consider all the materials on the record and after granting proper opportunity of hearing to the petitioner, and in the light of the above discussion, issue a reasoned order, dealing with all contentions. The fresh order shall be restricted to the question of constructed area and whether there was any material suppression, having regard to the position of the scheme and the Income Tax Act, especially that in the absence of any stipulation in either of them regarding minimum constructed area qualifying for benefit of the scheme. Writ petition allowed.

Summary

Issues Involved:
1. Withdrawal of approval under the Industrial Park Scheme 2002 and Section 80IA of the Income Tax Act.
2. Alleged non-compliance with the conditions of the approval and notification.
3. Discrepancy in the built-up area of the Industrial Park.
4. Delay in the commencement and completion of the Industrial Park project.

Issue-wise Detailed Analysis:

1. Withdrawal of Approval:
The petitioner challenged the withdrawal of approval granted by the DIPP under the Industrial Park Scheme 2002 and Section 80IA of the Income Tax Act. The approval had been initially granted on 09.02.2007, but was withdrawn by notification No. 21/2014 dated 27.03.2014. The petitioner argued that the withdrawal was unilateral and without granting any opportunity for a hearing.

2. Non-compliance with Conditions:
The DIPP's withdrawal was based on the alleged non-compliance with the conditions mentioned in the approval letter dated 05.12.2006 and the notification dated 09.02.2007. Specifically, it was argued that the petitioner failed to commence the Industrial Park by 31.03.2006 and that the occupation certificate issued only covered 8094.02 sq. meters, whereas the initial application declared an area of 24299.75 sq. meters.

3. Discrepancy in Built-up Area:
The petitioner consistently maintained that the DIPP was aware that the built-up area was 14715.55 sq. meters, as evidenced by various reports and correspondence with the Haryana Director of Industries. The DIPP, however, noted the discrepancy between the initially declared area (24299.75 sq. meters) and the actual constructed area (14715.55 sq. meters), and further claimed that the actual area constructed was only 8094.02 sq. meters.

4. Delay in Commencement and Completion:
The DIPP cited that the project was not completed within the stipulated period. The petitioner argued that the scheme and the statute allowed a grace period of one year, within which the construction was completed. The court referred to the precedent set in M/s. Silverland Developers Pvt. Ltd. v. Empowered Committee & Ors., where a similar delay was deemed permissible.

Judgment Analysis:
The court found that the DIPP's decision to withdraw the approval was based on a misappreciation of the facts and circumstances. The petitioner had consistently communicated the actual built-up area (14715.55 sq. meters), and this was part of the record when the approval was initially granted. The court noted that the DIPP failed to consider the petitioner's explanation and the material facts, such as the approval given by the town planning authorities and the inter se correspondence between the Haryana Director of Industries.

The court also addressed the issue of delay, citing the Silverland Developers case, which allowed for a grace period beyond the initially stipulated date. The court held that the DIPP's withdrawal of approval, based on the alleged non-compliance with the construction timeline, was unsustainable.

Conclusion:
The court quashed the impugned order and notification withdrawing the earlier approval. It directed the second respondent to reconsider the materials on record, grant a proper hearing to the petitioner, and issue a reasoned order addressing all contentions. The fresh order should focus on the constructed area and whether there was any material suppression, considering the scheme and the Income Tax Act, which do not stipulate a minimum constructed area for qualifying benefits. The writ petition was allowed without any order on costs.