9911796707
TMI Blog2010 (10) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. The explanation given by assessee for change in the actual investment as compared to the proposed investment is bona fide one. - As soon the assessee kept ready the units in the industrial park, the assessee’s obligation under the scheme completes. The assessee in this case has entered into lease agreement/sale agreement with the parties for leasing or sale of industrial units. The assessee entered these agreements with the parties only after the industrial unit came into existence or kept ready. The parties concerned who have taken the industrial units on lease or sale, if they fail to commence the units, the department cannot find fault with the assessee. Addition on the basis of sworn statement of the directors during survey - Held that:- there is no mention of work-in-progress in the questions or in the statement. There is no details of work-in-progress furnished by the assessee. This is an agreed addition for the assessment year 2005-06 on which the assessee filed a revised return offering additional income. Now the assessee cannot go back from its statement and claim the offer is towards work-in-progress and consequently cannot claim set off in this assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year 2005-06, which is evidenced by the lease agreement which has entered into for the 12 floors on 23-12-2005 in which the industrial unit commenced its operation from 15-2-2006. Further, assessee entered into lease agreement on 25-3-2005 with Tata Consultancy Services under which 5 floors (1st to 5th floor) were leased out. The 11th floor was leased out to M/s. Excellent Data Research (P.) Ltd., on 23-12-2005. Further, the assessee sold portion of building consisting 1st to 6th floor and the 12th floor to M/s. Vijaya Info Tech vide sale deed dated 22-2-2006 which is before the end of the financial year 2005-06. The floor space in 7th to 11th floor were maintained and operated by the assessee in the capacity of developer by the assessee which were leased out in the subsequent financial year 2006-07 to Business and Marketing Research (P.) Ltd., and M/s. Cognizant Technologies. According to learned AR the assessee set up the industrial units which is more than four in the assessment year under consideration and it has fulfilled the conditions stipulated in the section 80-IA(4)(iii). He drew our attention to the approval accorded under Industrial Park Scheme, 2002 under Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t certificates, if the authority wants to reject it, valid and justifiable reasons must be given therefore. Rejecting the application on merely considering the fact whether S is a place which could be considered as requiring approval for notification for promotion of pilgrimage, was an extraneous consideration to the provisions of the Act and the Rules and benefit could not be refused to the assessee on this ground. 4.1 He submitted that in the assessment year under consideration the assessee offered income for taxation under the head of income i.e., (i) sale of software units (ii) rental revenue - software park. To support this, he drew our attention to the Profit and Loss Account for the period 1-4-2005 to 31-3-2006 relating to the e-park which is placed on record at Paper Book 36. According to learned AR the total proposed investment to be made by assessee as per Notification is at Rs. 75 crores. The actual investment made by the assessee is Rs. 62.63 crores as per P L account placed at PB 36. Further he drew our attention to the consolidated P L account for the year ended on 31-3-2006 which is placed on record at PB 13 as per which the total expenditure is Rs. 88.77 crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is located in the industrial park set up by the assessee viz., Tata Consultancy Services. The benefit under section 80-IA(4)(iii) is available to assessee only when it develops, develops and operates or maintains and operates an industrial park or Special Economic Zone notified by the Central Government in accordance scheme framed and notified by the Central Government for period beginning on 1-4-1997 and ending on 31-3-2006. According to him, mere approval by Ministry is not sufficient. The industrial park of the company should be notified by the CBDT under this section. According to him, approval letter issued by Ministry of Commerce clearly states that the benefit of section 80-IA should be available only after notification of the industrial park by CBDT. CBDT notified industrial park only on 21-8-2006. Further, he submitted that as per sub-section 9(2) of the Industrial Park Scheme, 2002, the tax benefit under the Income-tax Act can be availed by the assessee only after the number of units indicated in the application or located in the industrial park. Only, the completion of the construction of the proposed units cannot be treated as location of all the proposed units and un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no need for liberal interpretation. According to him meaning of the provisions cannot be twisted and the intention of the Legislature has to be seen. The meaning to the word locate shall be given with an intention of promoting industrial area. Further, he relied on the following judgments : 1. Orissa State Warehousing Corpn. v. CIT [1999] 237 ITR 589 (SC) wherein held that a fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislation. The court is to ascribe the natural and ordinary meaning to the words used by the Legislature and the court ought not, under any circumstances, substitute its own impression and ideas in place of the Legislature intent as is available from a plain reading of the statutory provisions. 2. CBDT v. Cochin Goods Transport Association [1999] 236 ITR 993 (Ker.) wherein it was held that so long as the language employed in the statutory provision and more so in the fiscal statute is clear, the court should interpret it on the face value and there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Commerce and Industry, vide its letter dated 17-2-2005 has given approval to the assessee for setting up an industrial park in terms of Industrial Park Scheme, 2002. Subsequently, the assessee applied to the Ministry vide its letter dated 7-1-2006, for reduction of the number of units to be set up in industrial park. The Ministry of Finance (CBDT) notified the assessee s case in the Gazette of India vide Notification dated 21-8-2006 bearing No. 216/2006 (F.No. 178/72/2006-ITA-I). The important conditions which are relevant to avail the benefit under section 80-IA (4)(iii) are as follows : Clause ( 1 )( vii ) Minimum number of industrial units 30 ( viii ) Total Investment Proposed Rs. 75 crores ( x ) Investment of infrastructure development including investment on built up space for industrial use Rs. 61.80 crores ( xi ) Proposed date of commencement of the Industrial park September, 2005 Clause 6 : The tax benefits under the Act can be availed of only after the number of units indicated in Para 1(vii) of this Notification, are located in the Industrial Park. Clause 7 : M/s. Meen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te was fixed as 10th November, 2006 in view of facilitating the plug and play conditions. (v) On 6-6-2006 entered into agreement with M/s. Cognizant Technologies in the capacity of a Confirming Party for the 9th and 10th Floors as the 7th, 8th and 9th floors were sold to operator M/s. Vijaya Infotech and 10th and 11th Floors were sold to same operators on 13-9-2006. 7.1 The benefit under section 80-IA(4)(iii) of the Income-tax Act will be available to the assessee only after the proposed number of industrial units i.e., 4 are located in the industrial park and in case of delay in the implementation of the project for more than one year, as per clause 8 of the Notification of CBDT fresh approval shall be required under the Industrial Park Scheme, 2002 for availing benefit under section 80-IA(4). In the assessment year under consideration, all the 4 units were to be located in the industrial park area. Now, the contention of the learned AR that though the CBDT issued notification on 21-8-2006, therein mentioned that the industrial park as approved by the Central Government as per the terms and conditions mentioned therein and the date of commencement of the industrial park is me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62.80 crores, the amount mentioned there in the approval letter is only estimate cost of the project and the actual investment were changed on account of changes in the facilities provided to the operators and it was actually made an investment of Rs. 62.63 crores. It is also a fact that as per original approval letter the assessee is required to establish 30 units and later this was changed to 4 units as per revised approval letter dated 10-4-2007. Due to this, there is a change in the total investment. The explanation given by assessee for change in the actual investment as compared to the proposed investment is bona fide one. The other contention of the department is that the Notification by Central Government is not an automatic to grant the deduction under section 80-IA. In our opinion, when the Central Government approves the assessee s project under Industrial Park Scheme framed by Central Government, the conditions under section 80-IA(4)(iii) are satisfied. Further the scheme provides for automatic approval, also it is not unlikely that in such a case, there is no specific Central Government approval as it is not necessary, so that a special approval by the Board recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. We must not adopt a strict literal interpretation of section 80-IA(4)(iii) but we must construe its language having regard to the object and purpose which Legislature had in view in enacting the provision and in the context of the setting in which it occurs. We cannot ignore the context and the collocation of the provision in which the provision appears. The primary objection against the literal construction of section 80-IA(4)(iii) is that it leads to manifestly unreasonable and absurd consequences. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is well recognized rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade only on the basis of sworn statements of the Directors of the assessee company during the course of survey under section 133A of the Income-tax Act. The facts of the issue are that the director of the assessee company Shri C. Sivarama Prasad in his sworn deposition given on 16-2-2006, offered an amount of Rs. 25 lakhs as additional income for the assessment year 2005-06 offered an amount of Rs. 25 lakhs as additional income for the assessment year 2005-06 over and above the normal income of the Company and accordingly filed revised return of income offering the same for the assessment year 2005-06. He stated that this additional income is offered to purchase peace from the department and to avoid litigation. Subsequently, in the computation of income for the assessment year under consideration, i.e., assessment year 2006-07, the assessee company claimed the said amount of Rs. 25 lakhs as deduction. The assessee was requested to explain as to how this expenditure is an allowable one. The assessee company submitted that the additional income offered as an addition to closing Work-in-Progress (WIP) and stated that this has to be taken as opening WIP for the subsequent assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
