JUDGMENT

S.J. Vazifdar, J. - Rule. With the consent of the parties, Rule is made returnable forthwith and heard finally.

2. The petitioner seeks a writ of certiorari to set aside an order dated 14th March, 2014, passed by respondent No.2 - The Income Tax Appellate Tribunal (hereinafter referred to as "ITAT") directing it to pay a sum of Rs.80 crores and to furnish corporate securities for the remaining demand of tax of Rs.238.70 crores and interest of Rs.128.20 crores demand for the assessment year 2009-10. The petitioner seeks a stay of the entire demand pending its appeal before the ITAT.

3. The petitioner filed its return of income on 30th September, 2009, declaring a total taxable income of Rs.5,09,100/-. The petitioner filed a revised return on 31st March, 2011, deduction a total income of Rs.8,44,31,495/- under the normal provisions of the Income Tax Act, 1961, while offering interest income from fixed deposit to tax under section 56 of the Act. The petitioner claimed a deduction under section 80-IA of Rs,1,88,77,47,249/-. The taxable book profits under section 115JB amounted to Rs.1,37,76,21,509/- and the tax liability in respect thereof amounted to Rs.15,60,84,517/-. The tax deducted at source was Rs.39,49,14,458/-. From the payments made to the petitioner by various parties, advance tax of Rs.17,75,00,000/- was deposited by the petitioner. A refund of Rs.4,16,32,994/- was claimed in the revised return.

4. The petitioner's return was selected for scrutiny assessment. A reference was made to the Deputy Director of Income Tax - Transfer Pricing Officer (hereinafter referred to as "the TPO") who issued an order dated 11th March, 2013. Respondent No.3 - Deputy Director of Income Tax issued a draft assessment order under section144 dated 25th March, 2013. The petitioner filed its objections before the Dispute Resolution Panel (hereinafter referred to as "DRP") against the draft assessment order. On 31st December, 2013, the DRP issued directions under section 144C(5).

5. The main controversy on merits centres around the petitioner's case regarding section 80-IA, which reads as under :

'80-IA Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.

(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops and industrial park or develops a special economic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution of power or undertakes substantial renovation and modernisation of the existing transmission or distribution lines :

Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of subsection (4), the provisions of this sub-section shall have effect as if for the words "fifteen years", the words "twenty five" years had been substituted

(2A) Notwithstanding anything contained in subsection (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication services, specified in clause (ii) of sub-section (4), shall be hundred per cent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, thirty per cent of such profits and gains for further five assessment years.'

6. The petitioner's case is this. The petitioner started business in the assessment year 1996-97. In other words, according to the petitioner, it's business started only after 1st April, 1995. The petitioner did not claim any deduction before the amendment to section 80-IA. section 80-IA was amended in the year 2000. The petitioner claimed a deduction under section 80-IA for the first time only for the assessment year 2005-06. For the assessment year 2005-2006, the petitioner's claim for deduction under section 80-IA was accepted. The petitioner was, however, denied exemption from the assessment year 2006-07.

The denial of the petitioner's claim for deduction under section 80-IA from assessment year 2006-07 was essentially on two grounds. Firstly, the Revenue contended that the petitioner had commenced business prior to 1st April, 1995 and, therefore, the petitioner was not entitled to the benefit of section 80-IA. The alternative stand of the Revenue was that even assuming section 80-IA is applicable, it would operate as it stood on 1st April, 1995, and not as amended in the year 2000.

7. As regards the first contention of the Revenue viz. that the petitioner commenced business prior to 1st April, 1995, Mr. Pardiwala, the learned senior counsel appearing on behalf of the petitioner placed strong reliance upon the observations of the DRP itself in its directions dated 31st December, 2013. The DRP observed that the petitioner had filed a copy of the assessment orders of M/s. Hutchison Max Telecom Private Limited whose licence the petitioner had purchased for the assessment years 1995-96 and 1996-1997 wherein it stated that the cellular services were started by the assessee on 16th November, 1995. The DRP also referred to copies of letters from the Ministry of Communication dated 30th October, 1995 and 20th October, 1995, which, according to the DRP, indicate that Hutchison Max Telecom Private Limited could commence operations once final clearance obtained from the DoT has been filed. The DRP held that these facts indicate that the cellular services were started in the assessment year 1996-97 i.e. after 1st April, 1995. The objection in that regard was, therefore, allowed. These observations were in respect of the present proceedings which pertain to the assessment year 2009-10. Mr. Pardiwala also relied upon the observations in the directions of the DRP that as the claim for deduction was in respect of the income derived from cellular operations, the issue relating to the commencement of paging operations was not relevant.

8. However, the DRP at Delhi took a different view in respect of the assessment year 2006-07. (The order was passed by the DRP at New Delhi as at that time, the petitioner's registered office was in Chandigarh and as Punjab & Harayana did not have a DRP, the DRP at Delhi was vested with the jurisdiction in cases relating to assessees in Chandigarh.) Mr. Ahuja, the learned counsel appearing on behalf of the respondents relied upon the directions of the DRP, New Delhi dated 4th February, 2011, in respect of the assessment year 2006-07, which took a different view. In paragraph 5.1.1.4 of the directions, the DRP held :

"5.1.1.4 The Panel has carefully considered the contentions of the Assessing Officer as incorporated in the draft assessment order, the submissions of the assessee alongwith the additional evidence and find that the assessee had itself claimed in the assessment year 1995-96 that it had setup its business prior to 31.03.1995. The said claim was never withdrawn by the assessee. Also, in the statutory audit report prepared by PWC and filed under section 80-IA(7) for the year under consideration, the date of commencement of assessee's operations/ activity was given as 29th November 1994. Similarly, in a letter dated 26 October 2009 filed before the Assessing Officer, it was mentioned that cellular and paging services were rendered in FY 1994-95. In the said letter which is reproduced in Para 12.40 of the draft order, the assessee has given specific and complete year wise details of the activities done by it. In the said letter, it is clearly mentioned that in the FY 1994-95, cellular services were started in local area served by Bombay, New Bombay and Kalyan telephone districts and paging services in local area served by Ahmedabad, Bangalore, Pune Vadodara, Chandigarh, Hyderabad and Ludhiana telephone districts. Further, perusal of the draft order reveals that 17 paging networks of the assessee company were commissioned in the year 1994. In fact, the assesee sold pagers in the financial year 1994-95, which itself establishes the fact that at least paging network was in place and the assessee started providing paging services since no one would buy pagers unless the entire network is in place. The fact that the pager service covered such a vast area across different states of the country, further shows that pager service was provided by the assessee prior to 01.04.1995. Thus, there is adequate evidence to infer that the assessee started providing paging/cellular services prior to 01.04.1995. Therefore, considering the facts and circumstances of the case in totality, the Panel is of the considered view that the conclusion drawn by the Assessing Officer is correct. Therefore, the Panel is in agreement with the Assessing Officer and accordingly, rejects the ground taken by the assessee on this issue."

The DRP, Delhi has, therefore, taken a different view, albeit based on different material. The DRP, Delhi also inferred that even the sale of the pagers in the Financial Year 1994-1995 established that at least paging network was in place and the assessee started providing paging services since no one would buy pagers unless the entire network was in place. Based on the facts before it, the DRP, Delhi came to the conclusion that there was adequate evidence to infer that the petitioner had started providing paging / cellular services prior to 1st April, 1995. Thus, even the sale of pagers prior to 1st April, 1995, is a fact considered to be relevant while deciding whether or not, the cellular network started prior to 1st April, 1995.

9. Mr. Ahuja also drew our attention to certain facts from the assessment order dated 21st April, 2014.

10. The fact, therefore, remains that this is not an open and shut case. It is indeed a strong prima facie case, but not an open and shut case. There is much to be said in favour of and against both the parties.

11. This brings us to the Revenue's alternate contention viz. that even assuming that section 80-IA is applicable, it would operate only as it stood prior to the amendment which came into effect on 1st April, 2000.

12. The DRP held against the petitioner in this regard. The DRP in the present case observed that as the assessee had commenced operations from the assessment year 1996-97 and as the option under the amended section 80-IA was not available at that time, it has to be presumed that the assessee had started claiming the deduction from the assessment year 1996-97. It was further observed that in view of section 80-IA(2A), the ten year limit of the period for which the assessee was eligible to claim a deduction under section 80-IA was over by the assessment year 2005-06. The DRP, therefore, held that the petitioner was not eligible for deduction under section 80-IA for the assessment year under consideration viz. 2009-10. The objection in this regard was, therefore, disallowed.

13. It is not in dispute that the decision of the ITAT at Ahmedabad is clearly in favour of the petitioner on this issue. In Asstt. CIT v. Vodafone Essar Gujarat Ltd. [2010] 38 SOT 51 the Tribunal held that the amended provisions of section 80-IA would be available to all undertakings set up after 1st April, 1995, but before 31st March, 2000 and will also include undertakings set up after 31st March, 2000. The Tribunal referred to the circular No.14 of 2001 issued by the CBDT to this effect. The ITAT at Calcutta followed this decision in the case of Itc Ltd. v. Commissioner Of Income-Tax No. 475 (Kol.) of 2010, dated 10-6-2011]. The Assessing Officer did refer to these judgments, but has not dealt with them at all.

We are informed that appeals are pending before the Gujarat High Court against the decision of the Tribunal at Ahmedabad which we have referred to earlier.

14. We have obviously referred to the decision of the Tribunal only with a view to indicate the position as regards the petitioner's appeal pending before the Tribunal in respect of the final assessment order passed for the assessment year 2009-10. As far as the Tribunal is concerned, at least on the alternate case of the Revenue, the petitioner has made out more than just a strong prima facie case. Even on the first issue, the scales would tip in favour of the petitioner on account of the categorical findings of the DRP that the petitioner commenced its business only after 1st April, 1995 in the assessment year in question itself. However, before the Tribunal, the issue would be debatable, including on the basis adopted by the directions of the DRP, New Delhi. As we mentioned earlier, on this issue the petitioner has made out a strong case, but not an open and shut case even as far as the Tribunal is concerned.

15. By the impugned order, the Tribunal has taken into consideration the financial hardship pleaded by the petitioner. In fact, the operative part of the order is prefaced with the observation that the Tribunal has taken into account the liquidity position as well as the continuous loss incurred by the petitioner.

16. The question, therefore, is whether in these facts and circumstances, the impugned order can be said to be unreasonable warranting an interference in exercise of our extraordinary jurisdiction under Article 226. As against a demand of what would now be about Rs.400 crores, the petitioner has been directed to deposit a sum of only Rs.80 crores i.e. about 20%. For the balance amount, the Revenue has merely directed the petitioner to furnish a corporate guarantee.

17. Mr. Pardiwala contended that the issue has been recurring from the year 2005-2006. The question of stay, he submitted, ought not to be considered merely from the assessment year in question but an overall view ought to be taken. He relied upon the following observations from the judgment of a Division Bench of the Delhi High Court in this regard in Nokia Corpn. v. DIT (International Taxation) [2007] 292 ITR 22/162 Taxman 369

"19. What has apparently come in the way of the Commissioner of Income-tax (Appeals) is the impression carried by him (and which has been articulated by learned counsel for the Revenue) that each assessment year has to be treated as independent of the other and, therefore, the Commissioner of Income-tax (Appeals) took the assessment year 2003-04 by itself and applying the decision of the Special Bench of the Tribunal granted relief to the petitioner by requiring a deposit of only Rs.4.86 crores. This is, of course, one possible way of looking at the issue. However, it has to be remembered that the State is bound to be fair to those with whom it has to deal with, and to the extent possible, it must avoid any harassment to the assessee public without causing any loss to the exchequer. Therefore, if one looks at the matter in a broader perspective (and there is no reason why we should not), then it would be necessary to take into account the tax liability of the petitioner for the entire period in respect of which the dispute is still alive, that is to say from the assessment year 1997-98 till the assessment year 2003-04. If this is done and an across the board review is taken of the tax liability of the petitioner as well as the amounts paid by the petitioner, as has actually been done by the Tribunal in its order dated July 29, 2005, then the petitioner would be entitled to a refund. On the other hand, if each year is taken separately, then of course there would be a liability against the petitioner for the assessment year 2003-04 - but such a narrow or constricted view does not commend itself to us since it would unnecessarily deprive an assessee of good money due to it from the Revenue. Looked at in this larger perspective, we are of the view that the petitioner would be entitled to the relief prayed for since it has, quite clearly, paid more than the amount that is due if the order passed by the Special Bench is implemented.

In arriving at this conclusion, we have also taken note of the fact that the order of the Special Bench has not been stayed and is still operative and has in fact been given effect to by the Tribunal itself in its order dated July 29, 2005. Consequently, we issue a writ of mandamus and stay the requirement of the petitioner having to deposit Rs.4.86 crores till its appeal for the assessment year 2003-04 is heard by the Commissioner of Income-tax (Appeals). This would necessarily imply that the Commissioner of Income-tax (Appeals) should hear the appeal of the petitioner for the assessment year 2003-04 without insisting on any deposit.

The writ petition is allowed. All pending interim applications are disposed of. No costs."

Mr. Pardiwala attempted to apply the ratio of this judgment to the present case in view of the fact that for the period 2005-06 to 2009-10, the petitioner had paid 43.80% of the amount of tax demanded and had furnished bank guarantees and fixed deposits for another 22.20% of the entire demand. Accordingly, 66% of the total amount demanded was paid and/or secured. Mr. Pardiwala contended that if the decision of the Tribunal at Gujarat is followed and indeed it ought to be, the petitioner would, in fact, be entitled to a refund.

18. It is doubtful whether the judgment would apply in the facts of this case. In that case, the Division Bench noted that a judgment of a Special Bench of the tribunal in the assessee's own case supported the case of the assessee. On the basis of the judgment of the tribunal, the assessee contended that it's liability would be about Rs.4.86 crores for the assessment year 2003-04. The assessee was, accordingly, asked to deposit the amount of Rs.4.86 crores. In the above observations, the Division Bench noted that if the order of the Special Bench is implemented, the assessee would be entitled to a refund as the assessment span over a number of years. Thus, in that case, only one issue was involved and that issue had been decided by a Special Bench of the tribunal in favour of the assessee in respect of the assessments relating to the previous years viz. 1996-97. In the case before us, the applicability of the amendment of the year 2000 to section 80-IA is not the only issue. There is a disputed question of fact viz. as to when the petitioner started the business i.e. before or after 1st April, 1995. This issue is certainly open before the Tribunal, especially in view of the fact that different views appear to have been taken by the DRP, Mumbai and DRP, New Delhi.

19. The decision of the Tribunal at Ahmedabad would only pertain to the second issue viz. the applicability of the amendment of the year 2000 to section 80-IA. In the present case, however, the first issue may also be open before the Tribunal although it has been held in favour of the petitioner in the order of the DRP where it was held that the petitioner had commenced its business after 1st April, 1995.

20. Mr. Pardiwala submitted that the respondents have taken advantage of the assessment order for the assessment year 2005-06. The petitioner was denied the advantage of deduction of expenses on the ground that the business had not even been set up at that time. Mr. Pardiwala submitted that the petitioner was denied the benefit of an amount of about Rs.11 crores on account of this. This is but one aspect to be taken into consideration.

21. Looking at the entire matter before the Tribunal, the scales are definitely tipped in favour of the petitioner. However, there is something to be said about the respondent's case on the first issue. This is especially in view of the directions passed by the DRP in New Delhi. Although these directions are contrary to the order of the DRP, the issue is at large before the Tribunal. In these circumstances, we do not find the impugned order to be unjust or perverse for it requires the petitioner to deposit only about 20% of the tax demanded and accepts a mere corporate guarantee for the balance amount of over Rs.275 crores.

22. In the circumstances, the petition is dismissed. There shall be no order as to costs.

SUNIL