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2025 (4) TMI 51 - HC - Income TaxDeductions u/s 80IA - Validity of notification dated 26 March 2014 which revoked the earlier approval notification dated 17 November 2006 - claim denied on account of rescinding the approval dated 17 November 2006 by the impugned notification dated 26 March 2014 - ITAT had prima facie observed that the rescinding of the earlier notification does not stand once the Central Government through the Empowered Committee had clarified that the assessee still holds approval for all the 14 units and their corresponding areas in the Industrial Park. Petitioners challenge to the impugned notification dated 26 March 2014 withdrawing or cancelling the earlier approval/notification dated 17 November 2006 proceeds on the premise that the impugned notification dated 26 March 2014 has been issued by the CBDT when the power for issuing such notification was never vested in the CBDT but was vested in the Central Government - HELD THAT - Nothing to support the Petitioners contention about the impugned notification dated 26 March 2014 being ultra vires or otherwise incompetent. The issue involved in Ackruti City Ltd 2013 (4) TMI 488 - BOMBAY HIGH COURT was entirely different and based upon the observations in paragraphs 3 and 4 no case is made out to interfere with the impugned notification dated 26 March 2014. No other point was urged regarding the invalidity of the impugned notification dated 26 March 2014. The challenge to the letter / communication dated 03 February 2014 which was one of the grounds for issuing impugned notification dated 26 March 2014 is already abandoned or not pressed by the Petitioners. Accordingly no grounds warranting interference with the impugned notification dated 26 March 2014. ITAT however recorded a finding of fact that even though the assessee had leased out five/four floors to a particular tenant but the tenants are carrying on their operations as independent units and their activities are functionally different. Therefore the Tribunal applying the functional test recorded a specific finding of fact that each unit occupying a different floor was an independent unit with independent facilities instrumentation power connection door number and had other facilities to function independently. Therefore Primal Projects (P) Ltd. 2020 (11) TMI 778 - KARNATAKA HIGH COURT was a case where the ITAT had recorded specific findings of fact about the assessee successfully satisfying the functional test of having at least five independent units. It is in these circumstances that the Division Bench of Karnataka High Court refused to interfere with the ITAT s order by observing that whether or not the assessee has complied with the conditions laid down in the Scheme in order to enable it to claim deduction under S. 80-IA (4) (iii) of the Act is a pure question of fact. The Division Bench of the Karnataka High Court also noted that the findings of fact recorded by ITAT had not been assailed by the revenue on the ground and the same were perverse. Further the Division Bench noted that the revenue was even otherwise unable to demonstrate perversity in the record of the findings of fact. Accordingly the Revenue s Appeal against the ITAT s order was dismissed. Again nothing in the above decision would assist the Petitioners in sustaining the challenges raised in the present Petition. At this stage a challenge to the notices seeking to reopen the assessment could be sustained only if the Petitioners make out a case of non-compliance with jurisdictional parameters. No such case was made out or even attempted to be made out. It is not for this Court to address merits or de-merits of assessment or re-assessment. At this stage it is not for this Court to go into disputed questions of fact about whether the Petitioners complied with the conditions laid down in the Scheme or the approval granted to the Petitioners under the Scheme. Petitioners can raise all such factual aspects in the assessment/re-assessment proceedings. If the same are raised there is no reason to presume that the same will not be considered following law. Mr Suresh Kumar contested Mr. Kacheria s contention. Even the Revenue s contentions are kept open because this is not the stage or the forum to decide such disputed and contentious issues involving adjudication into facts and legal issues dependent upon such facts. For all the above reasons we are satisfied that no case is made out to interfere with the impugned notification dated 26 March 2014 or the impugned notices seeking to reopen the assessment. This Petition is therefore disposed of by rejecting the challenges raised by the Petitioners while directing Respondents 1 to 4 to consider the Petitioners representations with due regard to the minutes of the Empowered Committee meeting dated 11 November 2014 and without being influenced by the rejection of the Petitioner s challenges in this Petition.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Validity of the Notification dated 26 March 2014 The legal framework involves Section 80IA (4) (iii) of the Income Tax Act, 1961, and Section 21 of the General Clauses Act, 1897. The Court interpreted that the notification was issued by the Central Government, not merely by the CBDT. The notification stated that the Central Government, through the Ministry of Finance, exercised its powers to rescind the approval granted to the Petitioners. The Court found that the notification was consistent with the powers conferred under the relevant statutes, and thus, the challenge to its validity was rejected. 2. Compliance with Approval Conditions The Petitioners argued that they complied with the conditions of the approval, specifically maintaining the required number of units. However, they also sought an amendment to reduce the number of units from 14 to 6 due to mergers and amalgamations beyond their control. The Court noted contradictions in the Petitioners' stance and found that the factual determination of compliance was not suitable for resolution in this proceeding. The Court deferred to the ongoing ITAT proceedings for a factual determination. 3. Legality of Reopening Assessment Notices The reopening of assessments was challenged on the basis that the impugned notification was invalid. The Court found that the jurisdictional parameters for reopening were met and that the Petitioners would have the opportunity to contest the merits during reassessment proceedings. The Court did not find grounds to interfere with the notices at this stage. 4. Challenge to Rejection of Amendment Application The Petitioners abandoned their challenge to the communication dated 3 February 2014, which rejected their amendment application. As a result, the Court proceeded on the premise that this communication remained in effect, and the Petitioners' challenge to the notification based on this communication was unsustainable. 5. Consideration of Petitioners' Representations The Court directed the Respondents to consider the Petitioners' representations against the impugned notification and notices, in light of the Empowered Committee meeting minutes, which suggested that the withdrawal of approval might be too harsh. The Court emphasized the need for a reasoned decision and an opportunity for the Petitioners to be heard. SIGNIFICANT HOLDINGS The Court held that:
The Court concluded by disposing of the Petition, rejecting the challenges raised by the Petitioners, and directing the Respondents to consider the Petitioners' representations. The interim orders were vacated, and no costs were ordered.
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