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TMI Blog2016 (11) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. was appointed by GIDC who had certified that the project was completed before March 31, 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 the Central Board of Direct Taxes which may be done latest by September 30, 2016. If such certificate providing that the project of the petitioner is completed before March 31, 2011, is issued, the Central Board of Direct Taxes shall approve the petitioner for grant of deduction under section 80-IA(4) of the Act and issue necessary notification in this respect, within three months from the date of receipt of such certificate. - Special Civil Application No. 17118 of 2014 - - - Dated:- 6-8-2016 - Akil Kureshi And A. J. Shastri, JJ. For the Petitioner : R. K. Patel with B. D. Karia, with Darshan R. Patel, Advocates For the Respondent : Mauna M. Bhatt, Advocate JUDGMENT Akil Kureshi, J. 1. The petitioner has challenged an order dated November 5, 2014 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Direct Taxes however, by impugned order dated November 5, 2014 rejected such application giving detail reasons upon which the petitioner has approached this court. 5. The Central Board of Direct Taxes noted that the petitioner had produced various documents including the completion report dated September 5, 2010 of MARS Planning and Engineering Services Pvt. Ltd., an agency approved by the Government of Gujarat for third party quality assurance, a project completion certificate dated April 8, 2013 issued by the Industries Commissioner, Government of Gujarat. The Central Board of Direct Taxes also referred to certain certificates and letters issued by the Ahmedabad Urban Development Authority ( AUDA for short). Such evidence was however, discarded by the Central Board of Direct Taxes making the following observations : Sl. No Document Inference 1 Work completion certificate dated May 8, 2013 issued by AUDA in which details of project infrastructure has been mentioned as per site condition. In the entire text of the letter, there is no mention of the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vital question is why such request was made when only one unit was complete and not all the units. The obvious indication is that since only one unit was complete before the cut-off date, the applicant obtained this certificate and has been using it as an evidence under the camouflage that the entire project was complete by this date and the applicant can avail huge tax benefits for ten years. It may further be clarified here that the completion of project not only means completion of basic infrastructure but also industrial units which are the integral part of any industrial park. Hence, the date of completion would mean not only completion of infrastructure but also the completion of all industrial units as well. Hence, the only information this document provides is that the first unit was completed and was ready for occupation by June 17, 2010 and no light is thrown upon the completion/occupation of the remaining around 180 industrial units 3. Completion report dated September 5, 2010 of MARS Planning and Engineering Services Pvt. Ltd and agency approved by Government of Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he certificate of the AUDA dated June 17, 2010 (at SL No.1 of this table) that only one unit was fit for occupation. Moreover, it specifically mentions that Construction in progress is in respect of 19 units and therefore the completion of project as a whole on that day remains unsubstantiated. Therefore, this document does not prove completion of project by September 5, 2010. 4. A letter dated April 8, 2013 related to project completion certificate issued by Industries Commissioner, Government of Gujarat This letter issued by the Industrial Commissioner, Gandhinagar dated April 8, 2013 is in response to applicants request for issuing completion certificate made vide its letter dated March 14, 2013. Why the applicant applied for the issue of completion certificate about two years subsequent to the claimed date of completion, i.e., September 5, 2010 is not understood. Further, the text of the letter indicates that the same is in context of releasing financial grant to the applicant as per State Government Scheme linked to the development work and hence is not sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identiary value. (v) The AUDA's letter also suggests that 'the decision regarding the actual date or final completion of said project may be taken at your level'. 15. In view of the above, the only choice that remains with us is to decide the date of completion based on the information contained in the said four documents. As already discussed, after analyzing these documents, the date of completion/occupation is established to be certainly beyond March 31, 2011 and hence the applicant has failed to meet the deadline regarding completion of the project. Thus, the condition at para 4(1) of the Industrial Park Scheme, 2010 has not been met in this case. Accordingly, I have been directed to state that it has not been found to be a fit case for notification under section 80- IA(4)(iii) of the Act. Hence, the competent authority has decided to reject the application. 6. If one analyses this order of the Central Board of Direct Taxes, it has principally two elements. One is the objection of the Central Board of Direct Taxes that no completion certificate was issued by the local authority, one of the requirements under the Industrial Development Scheme of 2008. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the report of the joint inspection team in which it was stated that the developer has created infrastructure as per the guidelines. Out of the said investment, ₹ 463.12 lakhs is eligible for subsidy and on the basis of which the Committee has recommended that subsidy of ₹ 92.63 lakhs be granted. The State level approval committee thereupon resolved to grant subsidy of ₹ 92.63 lakhs at the rate of 20 per cent. eligible on investment of ₹ 463.12 lakhs. 10. On March 14, 2011, the Additional Industries Commissioner conveyed to the petitioner the final approval for the subsidy assistance of ₹ 92.63 lakhs sanctioned in favour of the petitioner. 11. On April 8, 2013, the Industries Commissioner once again conveyed to the petitioner with respect to project completion certificate for industrial park, in which it was stated that the petitioner had completed the work of infrastructure in the park as per the sanction by the State Level Approval Committee in total area of industrial park of 500000 sq. mtrs. and allocable sub plot area of 387500 sq. mtrs., number of plots being 180 on the basis of which subsidy of ₹ 92.63 lakhs was already sanction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the agency was appointed by the petitioner and is not a local authority. This certificate also matches with the AUDA's certificate dated June 17, 2010 as per which it was found that only one unit was in occupation. Regarding the letter of Industries Commissioner dated April 8, 2013, it was observed that same was in response to the petitioner's letter. In any case, a letter which was issued on March 14, 2013 would throw no light on the question of completion of the project as on September 5, 2010, as claimed by the petitioner. 14. In our opinion the Central Board of Direct Taxes has brought in the element of completion of industrial units on the proposed industrial park instead of completion of the project, a distinction made by this court in the case of Ganesh Housing Corporation Ltd. v. Padam Singh, Under Secretary reported in [2011] 339 ITR 441 (Guj). This question had come up in the background of the assessee's claim therein for deduction for having developed an industrial park before March 31, 2016 as per the then prevailing scheme. The Revenue had argued that the units which were located in such industrial park had not started production before the last d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to develop the infrastructural facilities. In short, the petitioner was required to setup an industrial park with all infrastructural facilities to enable the pharmaceutical industries to setup their units on the plots so allotted. Term 'locate' used in sub-clause (2) of clause 9 of the Scheme must be viewed from the angle of having allocated the plots to the producing industries. In the Advanced Law Lexicon by P. Ramanatha Aiyar [2009 edition], while explaining the term 'locate', it is stated that according to the context the word may be employed as meaning : To ascertain and determine the place of ; to state the locality of ; to designate the site or place of ; to determine the situation or limits. So according to the context it may mean to direct, or to lead to ; to fix in place ; to select or determine the bounds or place ; to set in a particular spot or position ; as applied to land, to select, survey, and settle the boundaries of a particular tract of land, or to designate a particular portion of land by limits. Similarly, in Black's Law Dictionary, the term 'location' has been explained as to mean, 'the specific place or po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending industries were in no way under the control of the petitioner. There can be variety of reasons why such industries may not be able to start their units, such as, non availability of funds for setting up of the units, pending approval and clearances from the Government and other agencies and such similar reasons which can be attributed only to the intending industries and not to the petitioner. In fact, the scheme requires that the petitioner not only fulfil but continue to fulfill all conditions of approval assessing the period when the tax benefit is available. If we accept the strict requirements insisted by the respondents, it would mean that not only that to that number of industrial units indicated in the application for approval of industrial park must be operational on the last date of expiry of the Scheme, they must continue to operate till the petitioner avails of all the tax benefits. In a given situation, it may happen that the number of units, after initially coming into existence, may have to be closed down for variety of reasons such as non availability of market for their product or non-availability of raw materials, or even labour problems. Would in such a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (supra). For such reasons, the second part of the Central Board of Direct Taxes's objection must fail. 17. Coming back to the first objection, of the petitioner having failed to produce a completion certificate from the local authority, we have noticed that MARS Planning and 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 and Engineering Services Pvt. Ltd. had already given such completion certificate well before March 31, 2011, on the basis of which the 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 March 31, 2011. However, we do appreciate the anxiety of the Central Board of Direct Taxes that such task should normally not be part of its responsibility. It is in this regard that completion certificate should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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