2016 (8) TMI 744 - HC - Income Tax

Grant of deduction under section 80IA(4) - Application for approval and for notification of its industrial part under the Industrial Park Scheme, 2008 came to be rejected - Held that - To begin with CBDT is not accurate in commenting that MARS Planning & Engineering Services Pvt. Ltd., was appointed by the petitioner as an agency for quality maintenance. MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC in order to advise the Government about the completion of the industrial park and for maintenance of the facilities as per the State Government subsidy scheme for the specified period. It was in this background that MARS Planning & Engineering Services Pvt. Ltd. had in its report dated 5.9.2010 certified that the infrastructure work was completed and the assessee should be approved as having completed the project of industrial park. It was on the basis of such recommendations from MARS Planning & Engineering Services Pvt. Ltd., and GIDC that the specially constituted committee in its meeting dated 28.2.2011 decided to grant the subsidy under the said scheme at the rate of 20% of the eligible investment in such park. A final approval in this respect was issued on 14.3.2011 and subsequently the Industries Commissioner under letter dated 8.4.2013 certified that as per the joint inspection team report, the park has completed industrial park as per the guidelines issued by Government Resolution dated 10.6.2004. Ignoring such evidence, CBDT proceeded on the basis that AUDA which was a local authority had not given any clear certificate that the industrial park was completed with constructed units by 31.3.2011. This insistence from CBDT was impermissible for two reasons. Firstly, the scheme pertained to certificate from a local authority and would not confine its purview to certification by AUDA alone and second that the insistence on demonstrating completion of industrial units by the leasing industries was not part of the requirement of the scheme at all, as held in case of Ganesh Housing Corporation Ltd.(2011 (8) TMI 654 - Gujarat High Court ). For such reasons, the second part of the CBDT s objection must fail. Coming to the first objection, of the petitioner having failed to produce a completion certificate from the local authority, we have noticed that MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC for the purpose of certifying the quality control and completion of the project for State subsidy. MARS Planning & Engineering Services Pvt. Ltd. had already given such completion certificate well before 31.3.2011, on the basis of which State Level Committee had approved the petitioner for grant of subsidy, which was also granted along with completion certificate. There was thus voluminous evidence on record to suggest that the project was completed before 31.3.2011. However, we do appreciate the anxiety of CBDT that such task should normally not be part of its responsibility. It is in this regard that completion certificate should be provided by a local authority. In strict sense of the term, perhaps the petitioner did not fulfill this requirement. However, a more liberal or practical approach could be that when MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC who had certified that the project was completed before 31.3.2011 and when the State Government had acted on such report and approved the subsidy, this should have been seen as a substantial compliance of such requirement. However, to put the issue beyond any controversy, we permit the petitioner to produce such certificate from GIDC, which is also a local authority, before CBDT which may be done latest by 30.9.2016. If such certificate providing that the project of the petitioner is completed before 31.3.2011, is issued, CBDT shall approve the petitioner for grant of deduction under section 80IA(4) of the Act and issue necessary notification in this respect, within three months from the date of receipt of such certificate.

Summary

Issues Involved:
1. Challenge to the rejection of the petitioner's application for approval and notification of its industrial park under the Industrial Park Scheme, 2008.
2. Analysis of evidence regarding the completion of the industrial park before the specified date.
3. Requirement of a completion certificate from a local authority.

Detailed Analysis:

1. Challenge to the Rejection of the Application:
The petitioner challenged the CBDT's order dated 5.11.2014, which rejected the petitioner's application for approval and notification of its industrial park under the Industrial Park Scheme, 2008. The petitioner argued that the project was completed before the extended deadline of 31.3.2011, making it eligible for deductions under section 80IA(4) of the Income Tax Act, 1961.

2. Analysis of Evidence Regarding Completion:
The petitioner provided various documents to support the claim that the industrial park was completed before 31.3.2011. These included:
- A completion report dated 5.9.2010 from MARS Planning & Engineering Services Pvt. Ltd.
- A project completion certificate dated 8.4.2013 from the Industries Commissioner, Government of Gujarat.
- Certificates and letters issued by the Ahmedabad Urban Development Authority (AUDA).

CBDT rejected these documents, noting:
- The work completion certificate from AUDA did not specify a completion date and was requested almost a year after the claimed completion date.
- The occupancy certificate dated 17.6.2010 from AUDA was only for one unit and did not cover all 182 units.
- The completion report from MARS Planning & Engineering Services Pvt. Ltd. indicated that work was still pending as of 16.6.2010.
- The project completion certificate from the Industries Commissioner was issued in response to a request made two years after the claimed completion date.

CBDT concluded that the project was actually completed in 2013, not before 31.3.2011 as claimed.

3. Requirement of a Completion Certificate from a Local Authority:
CBDT insisted on a completion certificate from a local authority, which the petitioner did not provide. The court noted that the Industrial Park Scheme required a certificate from a local authority but did not specify that it had to be AUDA. The court referred to the case of Ganesh Housing Corporation Ltd. v. Padam Singh, where it was held that the completion of the project, not the establishment of industrial units, was the requirement.

The court observed that MARS Planning & Engineering Services Pvt. Ltd. was appointed by GIDC to certify the quality and completion of the project for state subsidy. This certification, along with the approval of the State Level Committee and the grant of subsidy, constituted substantial compliance with the requirement.

Conclusion:
The court set aside the impugned order dated 5.11.2014, allowing the petitioner to produce a completion certificate from GIDC by 30.9.2016. If such a certificate is provided, CBDT is directed to approve the petitioner's application for deduction under section 80IA(4) of the Act and issue the necessary notification within three months. The petition was allowed and disposed of accordingly.