Chandra Mohan Garg, Judicial Member

1. This appeal has been filed by the assessee against the order of the ld. CIT(A), Noida dated 30.3.2014 for AY 2009-10, passed u/s 263 of the Income Tax Act, 1961 (for short the Act).

2. The assessee has raised following grounds in this appeal:-

'1. That the Learned CIT (Ld. CIT) has erred on facts and in law in setting aside the assessment to be made de novo.

2. That the order of the Ld. CIT is unlawful and beyond permissible jurisdiction under section 263 of the Income Tax Act (Act). The order of the Learned Assessing Officer (Ld. AO) is not an erroneous order prejudicial to the interest of the revenue within the meaning of section 263 of the Act. As such too the order of the Ld. CIT is unlawful and is liable to be quashed.

3. That the assessment under section 143(3) has been processed by the Ld. AO after duly considering the material explanations and submissions on record including in context of applicable law. Mere difference of view between the view of the Ld. CIT and the Ld. AO cannot form the basis of action under section 263. Provisions of section 263 do not permit substitution of the Ld. CIT's opinion for the opinion of the Ld.AO, particularly when the view of the Ld. CIT are contrary to the record, to precedents and case laws in appellants favour and contrary to the provisions of the Act.

4. That the appellant is entitled to the deduction under section 80IA(4) as allowed by the Ld. AO in the assessment under section 143(3). Appellant is entitled to its claim inter alia in view of precedents in favour of the appellant. As such too, the Ld. CIT has erred in invoking jurisdiction under section 263 and setting aside the assessment to be made de novo. Moreover, it is settled law that even if two views are reasonably' possible, the view favouring the appellant is to be adopted and further the beneficial provisions of deductions from taxable income to promote investment in and development of infrastructure facility are to be interpreted liberally, so as to advance their objectives.

5. That, inter alia, the appellant is entitled to deduction u/s 80IA(4) on the facts and law involved as a developer of the infrastructure facility, even if it has not commenced operating and maintaining but is developing the same, in view of direct decisions in its favour including inter alia reported in ACIT v. Bharat Udyog Ltd. 118 ITO 336 which follows the decision of the Hon'ble Apex Court in K. P. Verghese v. ITO 131 ITR 597 (SC) and as held in TRG Industries (P) Ltd. v. OCIT (2013) 35 Taxmann.com 253 (Amritsar - Tribunal).

6. That the Ld. CIT has erroneously relied on non applicable CBDT Circular No. 1/2006 dated 12.1.2006 which relates to effluent treatment and conveyance system and not to a toll road or highway project, which is the case of the appellant. In any case, the said circular is not binding on the appellant. The Ld. CIT has relied on irrelevant and erroneous material and basis for passing the order under appeal and as such too his order deserves to be quashed.

7. That the Ld. CIT has erred in stating that the Ld. AO has not applied his mind to other claims for example deduction in respect of interest on FDs and whether depreciation was admissible even while the project was not complete. These claims have been processed and correctly allowed after due consideration. There is no final finding by the Ld. CIT that these claims are incorrect. The assessee was duly entitled to these claims which are correctly allowed and as such too setting aside the assessment to be made de novo is unlawful and the order of the Ld. CIT deserves to be quashed.

8. That the order of the Ld. CIT is based on erroneous views and non-appreciation of the facts and law involved including binding case law supporting the appellant which include decisions of the Hon'ble Apex Court and Hon'ble Jurisdictional High Courts. Inter alia the Ld. CIT has erred in not following the ratio of the decision in 131 ITR 597 (SC) in the case of K.P. Vargheese v. ITO wherein it was held that literal construction that leads to absurdity, unjust result or mischief is to be avoided. Construction which permits achieving the obvious intention of the legislature and provisions of rational construction are to be adopted. As such too, the assessee's claim under section 801A(4) has been correctly allowed by the Ld. AO. The Ld. CIT has erred in setting aside the assessment.

9. That without prejudice, in the alternative, as the appellant is eligible for deduction under section 80IA(6), even as per the view of the Ld. CIT, then in any case on the facts and law involved, the assessee is entitled to relief and deduction in this matter, be it under 801A(4) OR 80IA(6). Setting aside the assessment to be made de novo is unlawful, uncalled for and would be merely an academic exercise if permitted.

10. That the Grounds of Appeal as herein are without prejudice to each other.'

3. Briefly stated, the facts giving rise to this appeal are that the assessee filed its return of income declaring nil income on 30.03.2009 for AY 2009-10 through e-filing acknowledgement. Subsequently, the case was selected for scrutiny through CASS and accordingly notice u/s 143(2) of the Act was issued on 25.8.2010. In response to the said notice, Senior Vice President (Finance) and DGM (Finance) of the assessee company attended the assessment proceedings from time to time and furnished details and replies to the queries raised during the course of the assessment proceedings. Books of accounts along with relevant bills and vouchers were also produced and test checked. The AO noted that the assessee claimed set off on account of loss for the preceding year and the assessee has claimed deduction u/s 80IA of the Act on the gross total income and, therefore, the assessee declared total income at nil.

The AO observed that the books of accounts were audited and copy of audit report in Form 3CD was furnished during the assessment proceedings and the assessee also furnished tax details and documents from time to time during the assessment proceedings that have been looked into and verified. The AO also noted that the assessee has also furnished Form No. 10CCB regarding computation of book profit u/s 115JB of the Act.

3.1 The AO, after having gone through and considering the replies submitted by the assessee, inter alia concession agreement and assignment agreement with the Taj Expressway Industrial Development Authority (TEA) held that the assessee has furnished necessary details/documents in respect of its claim of deduction u/s 80IA of the Act in respect of its eligible business u/s 80IA(4) of the Act. The AO finalised the assessment proceedings with a final conclusion that on the facts of the case, the assessee is eligible for deduction u/s 80IA(4) of the Act and therefore, the assessee’s claim of deduction u/s 80IA of the Act is accepted.

4. Subsequently, the CIT, Noida called the record of the regular assessment proceedings for examination and noted that the regular assessment was completed by the AO by passing the assessment order u/s 143(3) of the Act on 30.12.2011. The CIT, Noida made a prima facie opinion that the AO not only overlooked the applicability of provisions of section 80IA(2), (4) and (6) of the Act but also ignored the clarificatory and Circular No. 1/2006 dated 12.1.2006 issued by CBDT and the other relevant statutory provisions of the Act and the Income Tax Rules 1962. The CIT, Noida issued a notice u/s 263 of the Act to the assessee on 11.3.2014. For the sake of clarity in our findings and conclusion, the notice issued by CIT Noida u/s 263 of the Act dated 11.3.2014 is being reproduced as under:-

'F.No. CIT/Noida/2013-14/7691 Dated: 11.3.2014

To,

The Principal Officer,

Jaypee Infratech Ltd.,

Sector-128, Noida (UP).

Sub: Show Cause Notice u/s 263 of the IT Act,1961 in respect of the assessment order for A. Y. 2009-10 to afford the assessee company an opportunity of being heard

A perusal of the assessment order for the Assessment Year (hereafter A. Y.) 2009-10 passed on 30-12-2011 shows that the assessee M/s Jaypee Infratech Ltd., sector-128, Noida (UP) furnished its return of income on 30-09-2009 through e-filing declaring Nil income. The assessment record shows that the case has been picked up for scrutiny (i.e. regular assessment) through CASS (i.e. Computer Assisted Scrutiny Selection). The nature of business of the company is reported by the assessee as development, operation, maintenance of the six-lane access controlled expressway along with road and associated structures & sale/development of lease hold land along the expressway.

2. A Perusal of Form No. 3CD (Rule 6G(2)) filed for this A. Y. certifies that there is no change in the above business of the assessee company. As regards, the method of accounting a/50, there is no change from A. Y. 2008-09 as certified in the said Form. In schedule 'K" regarding 'Significant Accounting Policies' in A. Y. 2008- 09 under the heading 'Revenue Recognition', it is declared that the company is carrying on the business of developing a highway project including housing or other activities being an integral part of the highway project.

Many other crucial documents such as the following further show that clause (b) of the Explanation to sub-section (4)(i) of section BO-IA is the 'infrastructure facility' in assessee's case and housing or residential development or sale of land ete. is an integral part of assessee company's highway project:

I. (i) The Report of the Commission of Inquiry headed by Hon'ble Justice Sidheswar Narayan (Retd.) in chapter XIII describes one of the following obligations on the part of TEA- ‘The Concessionaire shall be granted, by TEA, rights for land development of 25 million sq. meters of land along the proposed Expressway for commercial, amusement, industrial, institutional and residential development. ’

1I. The Final Report in Volume I on Traffic and Revenue Forecast Study for Yamuna Expressway in the State of Uttar Pradesh at page 9 under the heading Revenues states as under: The Revenues from the Project will come from two streams as under:

a) From Land for Development

b) From toll from the users of the Expressway Revenues from Land Development Land for Development measuring about 2500 hectares shall be made available at 5 or more locations along the Expressway for commercial, amusement, industrial, institutional and residential development. There can be many alternative business models in relation to the said Land for Development some of such business models could be as under:

a) To sell the Land for Development on "As is where is basis" without making any further investment.

b) To sell the Land for Development in bulk areas after preparing layout plan identifying various areas for various uses as per applicable bye-laws and with limited or comprehensive internal development such as roads, water supply, drainage, electric supply etc. This will require additional investment and additional period to realize the revenue.

c)By selling fully developed plots for different purposes after completing all external and internal development. This will require further additional investment and additional period to realize the revenue.

d) By constructing residential/ commercial building, including all internal and external developments and then selling it either during construction stage itself or after complete construction. This will require further additional investment and additional period to realize the revenue.

III. In addition, the assessee company has itself submitted a note on Yamuna Expressway Project which under the heading Land for Development has stated the following:

'6.2 There can be many alternative business models in relation to the said Land for Development. Some of such business models could be as under:

a) .....

b) .....

c).. ..

d) By constructing residential/commercial building, including all internal and external developments and then selling it either during construction stage itself or after complete construction. This will require further additional investment and additional period to realize the revenue.'

IV. Most importantly, a concession agreement was entered into between the Taj Expressway Development Authority and Jay Prakash Industries Ltd. on 07-02-2003. In this agreement the word 'Project' (which is assigned to Jay Prakash Industries Ltd.) is defined to mean preparation of TEFR and DPRJ design, engineering, financing, procurement, construction; operation, and maintenance of the Expressway and management of land for development in accordance with the provisions of this agreement and shall include all works relating to or in respect of the Expressway and the land for development. Further, the agreement mentions that the assessee company has been granted by TEA, rights for land development of 25 million sq. mts. of land along the proposed Expressway for commercial, amusement, industrial, institutional, and residential development. This would, therefore, show that land development and institutional and residential development are integral part of the highway project unambiguously and indisputably establishing that the 'infrastructure facility' of the assessee falls in clause (b) of the Explanation appearing at the end of sub-section (4)(i) of section 80-IA of the IT Act 1961.

3. All the submissions of the assessee company furnished in writing before the A.O, have been carefully gone through. From them it is, inter alia, seen that the assessee company has itself made several statements during the assessment proceedings to the effect that the land for development admeasuring about 2500 hectares shall be made available at 5 or more locations along the Expressway jar commercial, amusement, industrial, institutional and residential developments. On account of irrefutable admission on the part of the assessee as to its one of the avowed objects of residential and institutional development consisting of sale of plots and buildings, these activities of housing and sale of land etc. are an integral part of the assessee's proposed highway project. Since, no change is certified in the nature of business in this assessment year the same business continues as 'eligible business' in terms of section 80-IA (1) and the business of the assessee company by its own admission continues to be the same as stated above and the 'infrastructure facility' that the assessee has been developing clearly falls under clause (b) of the Explanation appearing after sub-section (4) (i) of section 80-IA and not under clause (a).

4. However; contrary to the above established position as regards the nature of 'infrastructure activity', when the assessment records were examined, a perusal of Form No. 10 CCB (Rule 18BBB) in A. Y. 2009-10 showed that the tax auditors of the assessee company have though reiterated its nature of business being the same as what is mentioned at para 2 & 3 above, but, under the heading 'Eligible Business Under Section BO-IA', they have specified the 'infrastructure Facility’ as Road including toll road. The A.D. has failed to notice this contradiction while passing the erroneous assessment order allowing deduction u/s 80-IA not realizing that the assessee has not begun to operate the toll road which is a mandatory condition u/s 80-IA (2) of the IT Act, 1961 for being considered for deduction. Where is the question of allowing any profits as deduction when there are no profits in this year from the operation of the toll road?

5. In the above context, however, if Road including toll road, as mentioned as above by the tax auditors in Form no. 10CCB is to be considered as the 'infrastructure facility' of the assessee company as per clause (a) of the Explanation to sub-section (4) (i), then the assessee company gets out of the ambit of section 80-IA for the simple reason that in order to qualify for deduction u/s 80-IA (2), it has to have profits derived from the operation of the road including the toll road which is not the case here as assessee company's Expressway became operational only in F. Y. 2012-13 and would in that case qualify for deduction (of course subject to fulfilling all other attendant conditions under the section) for the first time in A. Y. 2013-14. This is because the assessee company has not developed and begun to operate the toll road in A. Y. 2009-10 and, therefore, the provisions of section 80-IA are not even attracted in terms of the requirement under sub- section (2) of section 80-IA. As against this position of law, the assessee in its letter dated 21- 12-2011 to the A. O. has contended that it is eligible for deduction u/s 80-IA 4)(i) as the deduction is available even to an enterprise only 'developing' the 'infrastructure facility'. Ironically, as mentioned earlier, the assessing officer has failed to notice the contradiction on the same page of Form no. 10CCB mentioning at S.no. 6 thereof the following:

Yamuna Expressway Project- Development, Operation and Maintenance of Noida and Agra along with service road and associated structures and sale/development of lease hold land along the proposed Expressway. Whereas at the S. no. 14 (b) on the same page of form no. 10CCB the tax auditors have specified the 'infrastructure facility' as under:

Road including toll road However, as stated earlier the assessee company gets out of the ambit of section 80-IA, the moment it mentions its 'infrastructure facility' as road including toll road for the reason that the toll road has not begun to operate, a condition which is mandatory to be complied with in terms of sub-section (2) of section 80-IA. As dealt with at para 2, hereinbefore, the declared 'infrastructure facility' of the assessee company as per its significant accounting policy and as per the concession agreement between TEA and JPI Ltd. is carrying on the business of developing a highway project including housing or other activities being an integral part of the highway project. In fact, in this assessment year, the assessee has itself made the claim of deduction against the profits from sale of land which are otherwise never eligible for deduction u/s 80-IA but for the non-obstante provision under sub-section (6) which if complied with enables the eligible business to lodge a claim for deduction u/s 80-IA of the IT Act, 1961. The above would abundantly clarify why the 'infrastructure facility' of the assessee is not road including toll road and the A.O. could have considered its claim for deduction only in the light of its averment in several documents including the agreement dated 07-02-2003 entered into between TEA and JPI Ltd.(dealt with at para 2 hereinbefore) in addition to its own accounting policy that it is a highway project including housing or sale/development of lease hold land along the Expressway and all other activities are an integral part of the highway project.

6. After examination of the above facts and issues from the assessment records for AY 2009-10, it is noticed that the AO has stated at para 4 of the assessment order that the assessee is eligible for deduction u/s 80-IA of the IT Act, 1961 after getting a clarification from the assessee (vide order sheet entry dated 23-12-2011) to the effect that assessee's income during the year had come mainly from the sale of land to 4 parties and that, deduction u/s 80-IA was claimed in respect of such income derived from the sale of land. The A.O. has then passed an erroneous order in as much as he failed to understand that there are no provisions u/s 80-IA which allow for deduction of profits derived from sale of land i.e. no deduction is available u/s 80-IA in a business dealing in sale of properties. However, where sale of land; as is the case of the assessee, is an integral part of the highway project, it is the non-obstante provisions of sub-section (6) of section 80-IA which carve out an exception for such profits to be transferred to a special reserve account so that such profits are actually utilized for the highway project only, before the expiry of three years following the year in which profits were transferred to the reserve account. Further, such profits do not qualify for deduction u/s 80-IA (6) of the IT Act, 1961 also, unless such profits are computed in the prescribed manner. He has thus passed an order which is erroneous in as much as the activity of sale of land was an integral part of assessee's highway project as mentioned in several documents including in its 'Significant Accounting Policies'. Since, the assessee has not computed its profits from the sale of land or other activities (being an integral part of its highway project) in the prescribed manner in terms of rule 18BBE and has not filed Form No. 10CCC prescribed under that rule, the profits from sale of land worked out by it are entirely taxable and deduction in respect of such profits without creation of the special reserve is not envisaged under section 80-IA of the IT Act, 1961. It is ironic that the assessee company on the one hand contends that its infrastructure facility is only road, including toll road and yet it claims deduction in respect its profits derived from the infrastructure facility as per clause (b) of the Explanation without creation of special reserve against the profits derived from the sale of land. Despite, such an incorrect claim and arguments put up to justify the same, the A. O. has, on account of sheer incompetence failed to understand that only the amount utilized, out of the amounts credited to the reserve account, for the purposes of the highway project is admissible as deduction u/s 80-IA of the IT Act, 1961 and no other amount is even eligible for deduction in terms of section 80-IA (6) where the project is integrated such as this particular project.

7. By allowing an absolutely incorrect claim of deduction u/s 80-IA in A. Y. 2009-10 in the regular assessment made by the A.O. u/s 143 (3) of the IT Act, 1961 on 30-12-2011 as brought out in the foregoing paragraphs, he has passed an assessment order which is erroneous as the order has completely glossed over the provisions of sub-section (2), (4) and sub-section (6) of the IT Act, 1961, the latter read with Rule 18BBE of the income Tax Rules, 1962. The order thus passed is prejudicial to the interests of the revenue as a wrong deduction u/s 80-IA has been allowed by not following and implementing the aforementioned provisions of law, thereby causing substantial loss of revenue. The assessee is, accordingly, being afforded an opportunity of being heard before the undersigned on 19-03- 2014 at 11:30 AM to enable it to make its written and oral contentions so as to rebut the above by way of personal appearance or through a duly authorized representative. (D. P. Semwal) Commissioner of Income Tax, Noida. '

5.In response to the said notice u/s 263 of the Act (supra) as reproduced hereinabove, the assessee submitted the first reply dated 19.3.2014 and the Joint Managing Director and officers of the assessee company along with Assessee’s Representative (the AR) made detailed submissions, on the statutory aspects elaborating written submissions concerning the admissibility of the claimed deduction u/s 80IA of the Act applicable to the case of assessee company. The assessee filed a reply to the notice of ld. CIT Noida issued u/s 263 of the Act (supra) on 19.3.2014 and supplemented the same by the second reply dated 25.3.2014 and lastly in continuation also filed third reply on 27.3.2014. The ld. CIT, Noida rejected the objections and submissions of the assessee filed objecting to the validity and legality of the notice u/s 263 of the Act (supra) and passed the impugned order on 30.3.2014. The main operative part of the impugned order reads as under:-

'14. Shri Anil Kumar Chopra, CA, elaborated on the merit of the case also in the written submissions beginning from page no. 2 to 9 of the reply dated 19-03-2014 and the same are contained in Annexure A to this order. As heard during the proceedings and explained in the other two written submissions dated 25-03- 2014 {Annexure B} and 27-03- 2014 (Annexure C) and as also dealt with in the preceding paragraphs, the assessee company has mainly contended the following:

(i) The A.O. in A.Y. 2009-10 & 2010-11 has allowed deduction u/s 80-IA (4)(i) read with Explanation (a) and that this is the correct view because deduction has been allowed after enquiries by A.O. and it cannot be said that the view adopted by the A.O. in A.Y. 2009-10 in assessee's favour is completely unsustainable. Further, in its letter dated 25-03- 2014 (pages 18 & 19), the assessee states that it had filed a letter before the A.O. dated 28-12-2011 which explained that assessee's claim for eligibility was u/s 80-IA (4) (i) in the context of 'developing' the 'Infrastructure Facility', The said letter to the A.O., it is stated, further explained how 3D-lA (2) did not cast any restriction on the assessee's claim. In the context of this reply of the assessee, it is necessary to clarify here that deduction u/s 80-IA is not admissible in terms of subsection (4) as this sub-section only mandates applicability of section 80-IA to the eligible business. Deduction is admissible in terms of sub-sections (1), (2), (4), and (6). Later, in letter dated 27- 03-2014, the assessee has again referred to revenue's insistence on the expression 'begins to operate' and has stated that sub-section 80-IA (2) is subservient to 80-IA (4). It is contended that the word land' used in 80-IA (2) has to be read as 'and/or’ in the context of section 80-IA (4) or to be read as 'or' so as to avoid unworkable, unreasonable, or absurd interpretation which is not reconcilable with the rest of the statued/section 3D-lA (4). The assessee has also referred to the ruling in 103 ITR 613 (ORI) (FB) wherein it has been held that the word 'and' should be construed as 'or' where the context so requires. The asseessee has cited the ruling in the case of Ishwar Singh Bindra 1968 AIR 1450 where the Hon'ble Supreme Court held that the word 'and' had to be read as 'or'. A perusal of the ruling of Hon'ble Orissa High Court in CIT v. Gangaram Chapolia (103 ITR 0613)(1976) together with the omitted provisions of clause (a) of section 271 (1) would show that the decision to use 'or' in place of 'and' is rendered to enable the A.O., wherever he is satisfied, to impose penalty if the return is not filed within time 'or' not filed in the manner required under the various provisions. Here in this case if 'and' is not read as 'or' the assessee would be let off on the ground that both the conditions should not be complied with to attract the penalty and if only one is complied with no penalty would be imposable. The situation and the context with reference to the expression (develops and begins to operate' used in section 80-IA (2) is entirely different as replacement of 'and' by 'or' here would not be in consonance with the other words used in respect of other eligible businesses such as 'starts' providing telecommunication, 'generates' power or 'commences' transmission, etc. This would show that the Ld. A.R. has drawn completely wrong parallels. Similarly, the parallel drawn by the Ld. A.R. with the ruling of Hon'ble Apex Court in Ishwar Singh Bindra & Ors. is far more discordant. The above argument of the Ld. A.R. even though is not acceptable by virtue of the specific merit of the use of the word 'and' under sub- section (6) as explained above that its replacement would be incongruous and discordant to the use of other words in the same sub-section in respect of other activities, the following observations of the Hon'ble Apex Court in Smt. Tarulata Shyam v. CIT [108 ITR 345 (SC)] would put to rest all doubts and clarify that the expressions used under a taxing statute should receive a strict construction so that the interpretation therefrom is in consonance with the avowed aim and object of the legislature and not such as would defeat the same.

'To us, there appears no justification to depart from the normal rule of construction according to which the intention of the legislature is primarily to be gathered from the words used in statute. It will be well to recall the words of Rowlatt J. in Cape Brandy Syndicate v, Inland Revenue Commissioners (1921) 1 KB 64 (KB) at page 71J that:

'in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is n9 equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used".

Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be.'

(ii) The assessee has then referred to its letters written to the A.O. dated 23-11-2011, 21-12-2011, 23-12-2011, 28-12-2011, and 29-12-2011 and contended that assessee's claim had been correctly allowed after considering the contents of all these letters. In this context, it would be proper to record that all these letters were duly perused from the assessment record and thereafter only jurisdiction u/s 263 of the LT. Act, 1961 was assumed by issuing a show cause issued on 11-03-2014. References is assessee's contentions in the aforesaid letters have figured in the discussion on preceding pages answering how jurisdiction was assumed.

(iii) On page 4 of the aforesaid letter dated 19-03-2014, the assessee has explained that through the aforementioned letters it was clarified to the A.O. that deduction was available u/s 80-IA (4)(i) even to an enterprise only ( developing the ‘the' Infrastructure Facility’ and as to how section 80-IA (4)(i) would override 80- lA (2). While asserting so, the Ld. Counsel Shri Chopra, CA, explained that a provision should be interpreted in a manner that it subserves the purpose it is enacted for and not in a manner that frustrates it. The A.O. has not examined assessee's claim of deduction u/s 80-IA in terms of section 80-IA (2) whereunder the qualifying condition regarding admissibility of the deduction is provided for in respect of assessee's claimed 'Infrastructure Facility' - a road including toll road . The said sub-section (2) of section 80-IA mandates that the deduction becomes available, at the option of the assessee, in any 10 consecutive assessment years out of 20 years beginning from the year in which the assessee develops and begins to operate the 'Infrastructure Facility'. The assessee picks up half the sub-section on the one hand to claim that the deduction is available to it in 10 A.Ys. out of 20 years and on the other states that the other half of sub-section (2) is not applicable to it. The assessee has been reluctant to answer the question that if this sub-section {2} is not applicable to it how it contends that it can avail of deduction in 10 A.Ys. out of 20 years mentioned under the other half of the same sub-section? Stated in other words, how can the assessee contend in the same breath that the condition of develops and begins to operate the ‘Infrastructure Facility' is not applicable to it while it asserts that the deduction is available to it in 10 A.Ys. out of 20 years as the period of time for availing the deduction available under the same subsection.

(iv) In its reply dated 27-03-2014, the assessee has further contended that the profit derived by it is from the toll road and includes the profit from sale/sub lease on development of land which form intrinsic part of the Infrastructure Facility/toll road. The assessee has in the same paragraph mentioned that the Hon'ble Supreme Court in the matter of Nand Kishore Gupta & Ors. Vs State of U.P. & Ors., has held that the creation of the Expressway and the Five land parcels are complementary to each other and the entire project is of immense public importance.

(iv) (a) In the context of assessee's reference to the above observations of the Hon'ble Apex Court, one cannot be blind as not to see and appreciate the convergence between the observations of the Hon'ble Supreme Court in the aforementioned case and the provisions of sub-section (6) of 80-IA, in as much as, the Hon'ble Apex Court clarifies that development of land parcels and other activities is complementary to the creation of the highway project and the provisions of sub-section (6) subserve the same objective by providing for utilization of the profits from sale of land, etc. only for the highway project. Here also it is not difficult to discern that the assessee on the one hand contends that the provisions of sub-section (6) are not applicable to it and on the other draws support from the observations of the Hon'ble Supreme Court in the aforementioned PIL. It would, therefore, seem that Assessee's contradictory contentions have instead helped conclude that the Hon'ble Supreme Court's observations and the objective of the provisions of sub-section (6) are identical. Therefore, the inescapable and logical conclusion would be that the assessee ought to have complied with the provisions of sub-section (6) of section 80-IA which it has not. The contention of the assessee that the volume of expenditure/investment in the year (Rs. 3,377 crores) was far more than the profits earned during the year from the sale of land is no reason for not complying with the statutory conditions of creating the special reserve to channelize the profits therefrom for utilization for the highway project. The sub-section, as stated earlier, carves out an umbilical relationship between the profits earned from the 'other activities' and their utilization for the highway project only, so that the profits earned from the 'other activities' are not utilized for further acquiring or expanding housing and other activities.

(v) With reference to compliance of sub-section (6) of section 80-IA, assessee's contention (on page 5 of reply dated 27-03-2014) that entries in the books of account or mere nomenclature are not decisive to ascertain the taxable income, the discussion at para 3 above would sufficiently bring out that the object of sub- section (6) is to preclude abuse of the provisions by diverting the profits from the 'other activities' for creation of other business opportunities and thus these are anti-abuse provisions which cannot be brushed aside by branding them as procedural aspect or relating to entries in books of account or mere nomenclature etc. Accordingly, it is consciously felt that reliance placed on the rulings of the Hon'ble Apex Court in the context of the anti-abuse objective is misdirected.

(vi) The extracts from Explanatory Memorandum to Finance Bill, 1999, 2001 and circular no. 14/2001 dated 09-11-2011 have been carefully gone through and these clarifications in no way dilute the operation the provisions of sub-sections (1), (2), (4), and (6) of section 80-IA in unison.

15. Apart from the above, a perusal of the assessment order further brings out that the assessee has claimed deduction u/s 80-IA on interest income also and the interest has been earned by parking its surplus funds in various FDs in banks. The A.O. has not applied the law u/s 8O-IA as only income derived from any business referred to in sub-section (4) is eligible for deduction under that section and no other income. In any case, interest income falls under the head 'income from other sources' as per the settled law in TUTICORIN ALKALIES VS. CIT 227 ITR 172 (Se). The A.O. has not even considered this decision of the Hon'ble Apex Court while making assessment. Similarly, the assessee has claimed depreciation amounting to Rs. 22,67,17,792 in the computation of income. The A.O. has not examined whether this was admissible even while the highway project was still going on and was yet to be completed.

16. The foregoing discussion would amply bring out that the A.O. passed an erroneous order in as much as he failed to appreciate the facts of the case, did not apply the correct law to the facts and circumstances of the assessee company, did not apply his mind to the assertions made by the assessee and did not even comply with CBOT's circular no. 01/2006 dated 12-01-2006, as a result of which an erroneous order was passed being full of errors which has led to loss of revenue and has the effect of perpetuating losses in subsequent years; the order , therefore, simultaneously being prejudicial to the interests of revenue. The A.O. has not applied his mind to other claims also, for example whether he should have allowed deduction in respect of interest on FDs in the face of the relevant ruling of the Hon'ble Supreme Court and whether depreciation was admissible even while the project was not complete, thereby, further rendering the order erroneous and prejudicial to the interests of revenue. The assessment thus completed as a result of wrong appreciation of facts on the record and non- application of mind is set aside, to be made de-novo. The A.D. is, accordingly, directed to make the regular assessment afresh after affording an opportunity of being heard to the assessee.'

6. Finally, the ld. CIT Noida held that the AO passed an erroneous assessment order inasmuch as he failed to appreciate the facts of the case and did not apply the correct law to the facts and circumstances of the case of the assessee company and also opined that the AO did not apply his mind to the assertions made by the assessee and did not comply with the CBDT Circular No. 01/2006 dated 12.1.2006 and other relevant provisions of the Act and the Income Tax Rules, 1962. With these observations, the ld. CIT, Noida concluded that the AO passed an order which was erroneous and prejudicial to the interest of revenue and the CIT Noida set aside the original assessment order and directed the AO to make regular assessment afresh after affording an opportunity of being heard to the assessee. Being aggrieved by the above impugned order, the assessee company has preferred present appeal with the grounds as reproduced hereinabove.

7. Before we proceed to consider the rival submissions of both the sides and to adjudicate the core issue involved in this appeal, we find it appropriate to mention chronological order of relevant dates of important events which would be referred subsequently during our further deliberation and adjudication in this order, which are as follows:-

Chart showing sequence of dates & events.

(i) Date of filing of Return for A.Y 2009-10 30/9/2009

(ii) Date of Notice u/s 143(2) of the Act 25/8/2010

(iii) Date of Query raised by the AO

(iv) Dates of Replies filed by the assessee 23/11/2011, 21/12/2011, 23/12/2011 before AO, 28/12/2011& 29/12/2011

(v) Date of 18 pages office note sheet of the AO which adjudicated the queries of the AO 29/30.12.2011

(vi) Date of passing of Assessment order 30/12/2011

(vii) Date of Notice issued by Ld. CIT u/s 263 of the Act 11/3/2014

(viii) Date of replies filed by the assessee before Ld. CIT, Noida 19/3/2014, 25/3/2014 & 27/3/2014

(ix) Date of the order of the Ld. CIT 30/3/2014

8. We have heard arguments of both the sides and carefully perused the relevant material placed on record, inter alia, paper book filed by the assessee spread over 229 pages, gist of case laws relied upon by the appellant assessee, brief written submissions of the assessee, written submissions of ld. CIT-DR and paper book of case laws spread over 22 pages relied by the ld.CIT- DR.

9. For just and proper adjudication of the case, we also find it appropriate to reproduce brief written submissions made by the ld. AR, on behalf of the assessee, which read as under:

'In the above matter, the appellant begs to submit herein brief written submissions. These are in addition to oral submissions being made, paper book filed and case law gist filed and relied upon. The appellant is a listed company that has been formed as a single object company for carrying on the business of an infrastructure facility as defined in section 80lA of the Income Tax Act (Act). The profits and gains derived from the said eligible business are entitled to deduction u/s 80lA of the Act be it u/s 80IA( 4) or in the alternative without prejudice u/s 80IA(6). In assessment for assessment year involved i.e. 2009- 10 in assessment order dated 30.12.2011 the appellant was correctly allowed deduction u/s 801A. The Learned CIT, Noida (Ld.CIT) has set aside the assessment order to be made de novo after opportunity by Ld. AO to the appellant vide his order dated 30.03.2014 u/s 263 of the Act. Similar deduction u/s 80lA has been allowed to the appellant vide assessment order dated 12.03.2013 in assessment year 2010-11 i.e. in the next year. In short, the deduction was held to be allowable by two separate Assessing Officers in two separate years. While setting aside the assessment in the order under appeal, the Ld. CIT has not arrived at any final finding that the appellant is not eligible for the deduction u/s 801A. The appellant fervently believes that it is eligible for deduction in respect of the infrastructure facility involved u/s 801A( 4) Explanation (a) in respect of its infrastructure facility being road including toll road. Without prejudice to the aforesaid, the appellant also has alternate claims based on which its income from the infrastructure facility would be entirely eligible for deduction of 100% of its profits and gains derived from its eligible business. The above appeal is against order u/s 263 dated 30.03.2014 of Ld. CIT. Order is patently erroneous, unlawful and contrary to the facts and accordingly the same is unsustainable and liable to be quashed. This is seen inter alia from the grounds of appeal filed in this case. The issues on which relief is sought in the grounds of appeal are covered in the appellant's favour by binding precedents including of the Hon'ble Apex Court, the Hon'ble jurisdictional High Court and others. Regarding Grounds No. 1,2,3 and 4:

1. Ld. CIT has erred in setting aside the assessment to be made de novo without recording a final finding as to what would be the correct view to be adopted for the assessee's claim u/s 801A.

2. Order of Ld. CIT is unlawful and beyond permissible jurisdiction u/s 263 of the Act. Order of the Ld. AO is not an erroneous order, prejudicial to the interest of revenue within the meaning of section 263 of the Act.

3. The assessment under section 143(3) has been processed by the Ld. AO after duly considering the material explanations and submissions on record including in context of applicable law. Mere difference of view between the view of the Ld. CIT and the Ld. AO cannot form the basis of action under section 263. Provisions of section 263 do not permit substitution of the Ld. CIT's opinion for the opinion of the Ld. AO, particularly when the views of the Ld. CIT are contrary to the record, to precedents and se laws in appellant's favour and contrary to the provisions of the Act.

4. The appellant is entitled to the deduction under section 80IA( 4) as allowed by the Ld. AO in the assessment under section 143(3). Appellant is entitled to its claim inter alia in view of precedents in favour of the appellant. As such too, the Ld. CIT has erred in invoking jurisdiction under section 263 and setting aside the assessment to be made de novo. Moreover, it is settled law that even if two views are reasonably possible, the view favouring the appellant is to be adopted and further the beneficial provisions of deductions from taxable income to promote investment in and development of infrastructure facility are to be interpreted liberally, so as to advance their objectives. Regarding Ground No. 1 - as seen from Page 28, Para 16 of the Ld. CIT order, the assessment has been merely set aside to be made de novo. The Ld. CIT has relied on irrelevant and erroneous material for passing the order under appeal without taking a final decision in this matter. He has also relied on and taken an erroneous interpretation of non applicable circular 01/2006 dated 12.1.2006 relating to Effluent Treatment and Conveyance System and not applicable to a toll road or highway project which is the case of the appellant. The said circular, in any case, is not binding on the appellant and in fact supports the appellant. Similarly the Ld. CIT has not applied his mind to other claims, for example deduction in respect of FD income and whether depreciation was admissible. These claims have been processed and correctly allowed after due consideration. There is no final finding by the Ld. CIT that these claims are incorrect. As such too setting aside assessment to be made de novo is unlawful. Moreover, the Ld. CIT has also erred in setting aside the assessment because without prejudice, in the alternative, as the appellant would be eligible for deduction under section 80IA(6), even as per the view of the Ld. CIT, then in any case on the facts and law involved, the assesse is entitled to relief and deduction in this matter, be it under 80IA( 4) or 80IA(6). Setting aside the assessment to be made de novo in unlawful, uncalled for and would be merely an academic exercise if permitted. Under section 263 CIT should take a final decision and cannot merely set aside assessment to be made de novo:

*203 ITR 108 (Born.) CIT v. Gabriel India Ltd. It was held that Commissioner, exercising powers under section 263, cancelled order of the ITO observing that order of ITO did not contain discussion in regard to allowability of claim for deduction which indicated non-application of mind and that claim of assessee required examination as to whether expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him - Whether under section 263 substitution of the judgment of the Commissioner for that of the ITO is permissible - Held, no - Whether ITO's conclusion can be termed as erroneous simply because Commissioner does not agree with his conclusion - Held, no - Whether ITO's order could be held to be 'erroneous' simply because in his order he did not make an elaborate discussion - Held, no – Whether provisions of section 263 were applicable to instant case and Commissioner was justified in setting aside assessment order - Held, no. In CIT v. Hotz Industries Ltd 49 Taxmann.com 267 (Del.), it was held that remanding matter for fresh examination was not permissible as Commissioner must reach finding that final finding in assessment order was erroneous and incorrect. We also rely on:

*12 Taxmann.com 118 (Alla.) CIT v. Shiv Prasad

*171 ITR 698 (Alla.) CIT v. Goyal Private Family Specific Trust

*297 ITR 99 (Alla.) CIT v. Mahendra Kumar Bansal

*369 ITR 14 (Del.) Globus Infocom Ltd. v. CIT

'367 ITR 377 (Raj.) CIT v. Deepak Real Estate Developers (I) P. Ltd.

Please see gist of case law filed. Regarding Grounds No. (2), (3) and (4) The assessment order is not erroneous and not prejudicial to the interest of revenue within the meaning of section 263. The assessment was after due process, after considering explanations, filings and submissions on record in context of applicable law. The Ld. CIT has himself noted that the Ld. AO has recorded a 17 pages long 'office note' to the assessment order. Mere difference of view between the Ld. CIT and Ld. AO does not permit action u/s 263. Section 263 does not permit substitution of the Ld. CIT's opinion for the opinion of the Ld. AO particularly when two views are reasonably possible and when there are precedents and case laws in appellant's favour. If two views are possible and the Ld. AO has taken one view with which the Ld. CIT does not agree, it cannot be treated as an erroneous order prejudicial to interest of revenue unless the view taken by the Ld. AO is unsustainable. Please see numerous cases in gist of case law filed, in support of appellant's contentions under these grounds. Brief Facts regarding Business of the Enterprise Company

a) Jaypee Infratech Limited is a company incorporated under the Companies Act, 1956. It is formed as a Special Purpose Vehicle (SPV) on 05/04/2007 for developing, operating and maintaining the toll road between Greater Noida and Agra along with service road and associated structures with rights to collect toll during the Concession period and also the rights for sub lease/ development of land as integral part of the Yamuna Expressway Project.

b) Taj Expressway Industrial Development Authority (TEA) (constituted by Government of Uttar Pradesh (GoUP) vide Notification No. 697/77-4-2001-3(N)/2001 dated 24.04.2001 under U.P. Industrial Area Development Act, 1976) invited offers from interested parties of National/International Stature. The offers were invited by TEA on 14.05.2001 for development, operation and maintenance of 6 lane access controlled Expressway.

c) M/s Jaiprakash Associates Ltd. (formerly known as Jaiprakash Industries Ltd.) was declared the successful Bidder. The Concession Period offered by it was 36 Years.

d) As per the directions of Inquiry Commission headed by Shri. Sidheshwar Narayan, Justice (Retired) High Court Patna and Calcutta, and TEA, M/s JAL incorporated a Special Purpose Vehicle (SPV) viz. Jaypee Infratech Limited for development, operation and maintenance of 6 lane access controlled Expressway.

e) An Assignment Agreement was executed amongst JAL, JIL and TEA for assignment of the Concession Agreement in the name of Jaypee Infratech Limited OIL) on 19/10/2007.

f) Objects of Jaypee Infratech Limited Main Objects: To implement all the objects of the Concession Agreement dated 7/2/2003 between Jaiprakash Industries Ltd. (now Jaiprakash Associates Ltd.) and Taj Expressway Industrial Development Authority (TEA).

g) Project Details i) The concept of the Project Taj Expressway was an outcome of the Policy decision of the Government of V.P. under the statute called V.P. Industrial Area Development Act, 1976 (V.P. Act No of 1976).

ii) The State Government, in exercise of the power as vested under section 3 of the said Act, constituted, just prior to launching the Project, an Implementing Authority, namely, "Taj Expressway Industrial Development Authority" (in Short TEA).

iii) The length of the expressway connecting Noida with Agra was about 160 Kms and it was to pass through a virgin area along the Yamuna River.

iv) Land Offered: TEA has granted rights for land development of 25 million sq. mtrs of land on 90 years lease along the proposed 100 meters wide Expressway for commercial, amusement, industrial, institutional and residential development to the SPV Company. TEA provided the "land for development" along the Expressway at five or more locations of which one location was in Noida or Greater Noida with an area of 5 million sq. mtrs. The aforesaid land for development was in addition to the land for construction of Expressway and was an intrinsic part of the infrastructure facility project.

v) Consideration for Infrastructure Facility: Concessionaire OIL shall be entitled to collect and retain the Fee and toll from the users of the Expressway for concession period of 36 years and amounts from rights to further lease out the developed/undeveloped land (at five or more locations with an area of 5 million sq. mtrs. per land parcel) to sub-leases/ end-user. The toll fee to be charged from the customers was not to exceed the fee as may have been notified by GOUP (Government of State of UP) "Land for Development" is a Concession like the toll fee since the toll fee alone would not have been able to ensure positive return on equity on the Project. This is further substantiated by:

*Notice inviting bids for the Project, whereby Land including 100 meters for the Expressway at five or more locations of which one location was to be in Noida or Greater Noida with an area of 5 million square meters along the Expressway for commercial, amusement, industrial, institutional and residential development was offered on acquisition cost for development, operation and maintenance of the six lane super expressway (the Yamuna Expressway) between Noida and Agra.

*Obligations of the assessee as set forth under the Concession Agreement.

*The Constitutional documents of the Assessee viz Memorandum of Association (MOA) that bars the Company from the undertaking any their business except all the objects of the Concession Agreement dated 07.02.2003.

h) Observation of Supreme Court Judgment in Appellant's favour:

A Public Interest Litigation was filed for inadequate consideration of acquisition of land. The Project was cleared by the Inquiry Commission Report and the PIL also ended in favour of the Government of U.P. The Hon'ble Supreme Court of India in the case of Nand Kishore Gupta & Ors V. State of UP & Others also held that the Expressway is a work of immense public importance and the creation of land parcels would give impetus to the industrial development of the State creating more jobs and helping the economy and thereby helping the general public.

i) Inquiry Commission The Inquiry commission was appointed by the Governor of UP by a Notification No. 1889/77-4-2004-10N/2004, Lucknow dated June 22, 2004 to ascertain the facts and position of transparency of the Project.

*Findings of the Hon'ble Commission of Inquiry under the chairmanship of Shri Sidheshwar Narayan, Justice (Retired) High Court Patna and Calcutta, which states that "Considering the capital cost, gestation period and the uncertainties involved in the revenue from toll collection, inflation etc, it was necessary to strengthen the economic viability of the Project by some mechanism and, accordingly, it was decided to provide 2500 hectares of Land for Development to the successful Bidder along the Expressway".

The Commission further held that:

"The Taj Expressway Project being a land mark event in the Industrial development of State of U.P. is of immense public utility and also in the national interest".

j) Techno Economic Feasibility Report (TEFR) as submitted by the Assessee to YEA and the fact that the toll fee has a 'Negative' Net Present Value (NPV) of the toll fee during the entire concession period (Refer Halcrow Report August, 2013). There is no obligation under the Concession Agreement to carry out housing on "Land for Development".

Section 801A In the instant case the infrastructure facility is the toll road (160 kms long six lane access controlled expressway) and the consideration for developing, operating and maintaining the said infrastructure facility, is by way of toll fee and through the right to develop and sub-lease the land along the toll road. During the period covered by the relevant assessment, the assessee has been rapidly developing the said toll Toad. Section 80IA: Objective The provisions as contained under section 80IA are for promoting and facilitating investment and development of infrastructure in the country and accordingly need to be interpreted so as to advance their objective. Being an infrastructure Company, the Company has been granted Tax Holiday U/s 80 (IA) of the Income Tax Act 1961. Section 80IA applies as provided in clause (i) of subsection (4) to any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills the following conditions, namely:

a) It is owned by a company registered in India or by a consortium of such companies 28[or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act;

b) It has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility;

c) It has started or starts operating and maintaining the infrastructure facility on or after 01.04.1995. It may be pertinent to mention that clause (c) hereinabove requires that the enterprise "has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995". The expression 'has started' indicates events which have already occurred whereas the expression 'starts' indicates the events which would occur. Moreover 'it has started or starts operating and maintaining the infrastructure facility' in context of this section means started developing the infrastructure facility, which has duly been done by the Assessee Company. Applicability of 801A (4) in the case of appellant 801A( 4) Scope of Business Activity The word 'business' is wide enough to cover within its scope all activities that are 'Integral' part of the business of toll road development. Deduction u/s 80IA (1) is to be profits and gains derived from an undertaking or enterprise from any business referred to in sub-section 4 i.e. eligible business. Thus, it is the income from business undertaking which is to be deducted and not only the toll fee. We refer with advantage to the under-mentioned decisions that the income from business would include all income emanating from the same. Please refer gist of case law attached.

*317 ITR 353 (Del.) CIT v. Dharam Pal Prem Chand Ltd. (SLP rejected against Dharam Pal Prem Ch and (SC) in 2010 TIOL-1S-SC-IT)

*300 ITR 6 (Del.) CIT v. Eltek SGS P. Ltd. Income during the year from sale of plots, built up properties, FDRs, bank interest etc. is derived from and forms an intrinsic part of the infrastructure facility project income. Accordingly, any income arising from such land would also be regarded as income derived from the business of development, operation and maintenance of the infrastructure facility i.e. the toll road and it is that income which we have claimed as deduction under section 80IA(4) during the captioned assessment year. The word 'business' is wide enough to cover within its scope the profits from all activities that are integral part of the business of toll road development. It is humbly submitted that since sub-lease of the plots of land is made pursuant to the authority granted under the Concession Agreement, there can be no doubt that the sub-lease income is income derived from the 'business' of toll road development. Where income falls under anyone head of exemption [say explanation (a)], it would be free from tax even if the condition of another head of exemption [say explanation (b)] was not satisfied. The Assessee Company is in the business of developing, operating and maintaining, 'road including toll road', which business has commenced on April 5, 2007. Undoubtedly, therefore, the operating and maintenance of such road would start only after April 1, 1995. Accordingly, it is submitted that the condition laid down in clause (c) of sub-section 4(i) of the section 80lA is satisfied in the Assessee Company's case and accordingly, the deduction under section 80lA ought to be allowed to the Assessee Company. As seen from order of Ld. CIT itself, assessment order, office note to assessment order and paper book, the issues regarding 80lA and its admissibility was intensively processed, enquired into and considered by the Ld. AO who after due consideration correctly allowed the claim. On mere difference of view, Ld. CIT cannot substitute his view for view of AO. The view of the Ld. AO is correct in law and facts and even if two views be possible even then revision u/s 263 is not permissible.

The view of Ld. AO is not an unsustainable or undisputedly, patently erroneous view. Rather it is the view of the Ld. CIT which is incorrect and contrary to binding judgments. The claim was allowed by two Assessing Officers in two assessments i.e. A.Y. 2009-10 and 2010-11. Both of whom allowed deduction u/s 80IA(4)(i) read with Explanation (a). The submissions and contentions of the assessee u/s 263 are supported by decisions of the Apex Court, decisions of the jurisdictional High Court and other High Courts, as seen from gist of case law filed. Jurisdictional High Court decisions are reported in Page 3 of Annexure-A to CIT order: 297 ITR 99 (All.) CIT v. Mahendra Kumar Bansal 171 ITR 698 (All.) CIT v. Goyal Private Family Specific Trust 12 Taxmann.com 118 (Alia.) CIT v. Shiv Prasad We have respectfully and humbly explained at length that our case is covered by section 80IA(4)(i) as read with explanation (a). We have also explained at length as to how we fall under explanation (a) to the said 80IA( 4)(i). We have further explained and submitted that we are an infrastructure facility under the said explanation (a) as a road including toll road and that accordingly we fall in the definition of infrastructure facility as defined in the said explanation. The development rights of land and income therefrom are an integral and intrinsic part of consideration to us in respect of infrastructure facility involved being toll road. The limits of section 80IA(6) apply to infrastructure facilities that fall in the definition of highway project including housing or other activities being an integral part of the highway project as defined in the said explanation (b) and not to infrastructure facility referred in the said explanation (a).

The deduction provided u/s 80IA(4)(i) is the relevant deduction for infrastructure facility as in our case. There is no restriction in our case u/s 80IA(6). The limits and requirements of 80IA(6) apply to highway project as defined in the said explanation (b) and not to road including toll road including intrinsic land as consideration for that infrastructure facility project as defined in said explanation (a). Accordingly, the requirements of 80IA(6) are not applicable to us. However, kindly note that in the alternative without prejudice to our contention that we are eligible under 80IA(4) as read with explanation (a), we have made an alternate claim u/s 80IA(6) as if our project is not eligible under said explanation (a] it is then eligible under said explanation (b). Regarding reference to accounting note to balance sheet in earlier financial year 2007-08 when no claim for deduction was made u/s 80IA, the same has been clarified fully including inter alia on Page-6 of Annexure A to Ld. CIT order. Please note that Paper Book-Page 79, Tax Audit Report states business of the company as follows "the company is engaged in development, operation and maintenance of the six-lane access controlled expressway along with service road and associated structures & sale I development of leasehold land along the proposed expressway". Paper Book- Page 85 for A.Y. 2009-10 80lA Auditor's Report, Form 10CCB states business as follows "Yamuna Expressway Project Development, Operation and maintenance of the six-lane access controlled expressway between Noida and Agra along with service road and associated structures and sale/development of leasehold land along the proposed expressway". Lack of jurisdiction and unlawful order under section 263 Further regarding lack of jurisdiction u/s 263 and unlawful order u/s 263, it is submitted as under: The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (243 ITR 83) has held that a bare reading of section 263 makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner is that the order of the AO is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied with twin conditions, namely (i) the order sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. Further, the Supreme Court has held that when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law. In this regard, it is humbly submitted that where there has been a detailed application of mind by the AO during the assessment proceedings, after which a view has been formed by him, the said view cannot be said to be erroneous or prejudicial to the interest of the revenue and be revised by invoking the provisions of section 263. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (243 ITR 83) has held that the provisions of section 263 can be invoked, inter alia, where the order passed is without application of mind. However, in the present case, it is abundantly clear that the deduction has been allowed to us by the AO after proper application of mind. In this regard, attention is also invited to the decision of the Gujarat High Court in the case of CIT vs. Arvind Jewellers (259 ITR 502) wherein it is held that where material was on record and said material was considered by ITO and a particular view was taken, mere fact that different view could be taken, should not have been basis for an action u/s. 263. Attention is also invited to another decision of the Delhi High Court in CIT vs. Honda Siel Power Products Ltd. (194 TAXMAN 175). In that case, the Assessing Officer had allowed deduction under sections 80HHC and 80-lB. The Commissioner, while exercising his powers under section 263, held that the assessment orders passed by the Assessing Officer were erroneous and prejudicial to the interests of the revenue inasmuch as the Assessing Officer had not applied the provisions of section 80-IB(13)/80-IA(9) and had wrongly calculated the deduction under section 80HHC without reducing the claim already allowed as deduction to the extent of such profits and gains under section 80-lB from the profits and gains computed for allowing such deduction. However, on appeal, the High Court held as under:

"When a regular assessment is made under section 143(3), a presumption can be raised that the order has been passed upon an application of mind. No doubt, this presumption is rebuttable, but there must be some material to indicate that the Assessing Officer had not applied his mind. In the instant case, there was no material to indicate that the Assessing Officer had not applied his mind to the provisions of section80-IB(13), read with section 80-IA (9). The presumption that the assessment order passed under section 143(3) by the Assessing Officer had been passed upon an application of mind, had not been rebutted by the revenue. No additional facts were necessary before the Assessing Officer for the purpose of construing the provisions of section 80-IB(13), read with section 80-IA(9]. It was only a legal consideration as to whether the deduction under section BOHHC was to be computed after reducing the amount of deduction under section 80-IB from the profits and gains. There was no doubt that the Assessing Officer had allowed the deduction under section BOHHC without reducing the amount of deduction allowed under section BO-IB from the profits and gains. He did not say so in so many words, but that was the end result of his assessment order. It could not be said that the Assessing Officer had failed to make any enquiry because no further enquiry was necessary and all the facts were before the Assessing Officer".

(underlined for emphasis)

Further, in (IT vs. Honda Siel Power Products Ltd. (194 TAXMAN 175) (DEL), it is held that in cases where the Assessing Officer adopts one of the courses permissible, in law, or where two views are possible and the Assessing Officer has taken one of the possible views, the Commissioner cannot exercise his powers under section 263 to differ with the view of the Assessing Officer, even if there has been a loss of revenue. On each of the issues raised by the Ld. CIT, the AO has made detailed enquiries and after proper application of mind had passed the assessment order. It is further submitted that in the captioned assessment year, the AO has rightly allowed us deduction u/s. 80IA( 4) for the profits derived from sale of land and other income since the same are profits and gains derived from the business of developing, operating or maintaining an infrastructure facility i.e. a road including toll road. It is humbly submitted that as is clear from the activities carried out by us as also the Concession Agreement, the land received for sale and/or development under the Concession Agreement is in fact a part of the compensation received by us for developing, operating and maintaining the toll road. Indeed, without the revenue from said land, the toll road project would not be viable, since the mere collection of the toll from such road, would not even meet the cost of construction of the toll road. The detailed submission in this regard has been made in the subsequent part of this letter and also borne out by submissions made during assessment proceedings. Accordingly, it is submitted that, even on merits, the profits derived by us from sale of land is a profit derived from our business of developing, operating and maintaining the toll road and accordingly, the deduction allowed to us by the AO u/s. 80IA(4) is neither erroneous nor prejudicial to the interest of the revenue. The Hon'ble Gauhati High court has in case of Bongaigaon Refinery and Petrochemicals Ltd. Vs. Union of India And others (287 ITR 120) stated that error in the order of the Assessing officer and resultant prejudice to the interest of the revenue are twin factors to co-exist for conferring authority on the commissioner to invoke powers under section 263. Entertainment of a view different from the one adopted by the assessing officer, if plausible would not clothe the commissioner with the power to interfere. In CIT v. Gabriel India Limited 203 ITR 108 (Bom.), it was held if an ITO acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order. Also, the Supreme Court in CIT v. Max India Ltd. (295 ITR 282) has held that since different views existed on day when the Commissioner passed his order and moreover mechanics of section have become so complicated over years that two views were inherently possible. Where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to revenue. On the facts and law involved, the views and order of the Ld. CIT are erroneous and not sustainable. This is also as per gist of case law referred to herein clearly supporting the appellant. The Ld. CIT's reliance on the decision in Smt. Tarulata Shyam v. CIT 108 ITR 345 (SC) in fact the decision supports the appellant as it says the interpretation of taxing statutes should be in consonance with the avowed aim and object of the legislature which is the interpretation being sought by the appellant for grant of allowance and for removal of any doubts. The Ld. CIT has also not been able to properly rebut or distinguish much binding case law relied by the appellant. Moreover, it is well known decision like in the K.P. Verghese v. ITO 131 ITR 597 (Se) which governs interpretation of statute in India wherein it was held that a statutory provision must be so construed that absurdity and mischief may be avoided so as to achieve obvious intention of the legislature and produce a rational construction. Beneficial Tax Deduction provisions to be interpreted liberally The beneficial tax deduction provisions provided by Section 80IA are to promote investment in and development of infrastructure facility. Accordingly they are to be interpreted liberally so as to advance their objectives.

(a) 196 ITR 188 (Se) Bajaj Tempo Ltd. V. CIT Interactive of Statutes-Taxing Statute-Incentive for growth and development- Provision interpreted liberally- Restriction on exemption- To be construed so as to advance objective and not frustrate it.

(b) 2371TR 662 (Mad.) CIT v. Salem Textiles Ltd. Interpretation of taxing statutes-Liberal construction of beneficial provisions. The provisions of section 33 of the Act have to be construed purposefully and beneficially to achieve the object behind section 33 of the Act and it cannot be construed in a restricted or mechanical manner. The provision should be construed with common sense so that unnecessary difficulties are not created against the assessee in claiming development rebate.

(c) 342 ITR 366 (Kar.) ClT v. J. Palemar Krishna (d) 236 ITR 130 (Allah.) ClTv. Laxmi Metal Industries (e) 248 ITR 94 (J&K) CIT v. Jammu and Kashmir Tourism Development Corporation It is a settled law that in taxing statute, if two reasonable views are possible, then the view favouring the assessee is to be adopted:

Inter alia in the following, it has been held that in interpretation of taxing statute, meaning of words and phrases has to be seen as understood in common parlance in commercial circles i.e. the meaning that people conversant with the subject matter would attribute to it. 144 ITR 225 (SC) CIT v. Mahindra and Mahindra Ltd. Our case is also clearly supported by the decision of the Supreme Court in 231 ITR 814 (SC) Kerala State Co-operative Marketing Federation Ltd. v. CIT wherein it was held that the correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether the income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption. A word acquires meaning only with reference to its text and context. Please note that it is also settled law that specific provisions would override general provisions. Toll roads would generally be highways which are toll road. In context of the special terms, as in the Concession involved relating to right of the assessee to gather toll and to develop, operate and maintain the facility as toll road, the infrastructure facility of the assessee falls in definition of toll road. We again rely on the said decision in 231 ITR 814 (SC) that where income falls under anyone head of exemption [said clause (a)], it would be free from tax even if the condition of another head of exemption [said clause (b)] was not satisfied. The assessee has invested over Rs. 11,000 crores in its toll road project. The assessee's investment in the toll road project upto 31.3.2011 aggregates to Rs. 10,159 crores. A certificate was filed in this regard from M/s. R. Nagpal Associates, Chartered Accountant and statutory auditor of the assessee. The overall utilization and investment in the project far exceeds the income of the year and as such even the alternate claim u/s 80IA(6) would be eligible to the appellant. Ground No. 5 "That, inter alia, the appellant is entitled to deduction u/s 80IA(4) on the facts and law involved as a developer of the infrastructure facility, even if it has not commenced operating and maintaining but it is developing the same, in view of direct decisions in its favour including inter alia reported in ACIT v. Bharat Udyog Ltd. 118 ITD 336 which follows the decision of the Hon'ble Apex Court in K. P. Verghese v. ITO 131 ITR 597 (SC) and as held in TRG Industries (P) Ltd. V. DCIT (2013) 35 Taxmann.com 253 (Amritsar- Tribunal)". This issue is covered by binding judgments in appellant's favour. The appellant also respectfully relies on submissions in Annexure- Band C to Ld. CIT order. Please see gist of case law attached on this ground on which we rely. Moreover, it is humbly submitted that there is no requirement at under section 80IA( 4) that the deduction would be available only after the assessee has begun the operation of the infrastructure facility. If that was the case, then the deduction available under section 80IA( 4) to enterprises that are only into 'development' of infrastructure facility would never be allowed to them. Section 80IA(2) subservient to Section 80IA( 4)

*Section 80IA(2) is subservient to 80IA( 4) and is to be seen in context of 80IA( 4).

*Section 80IA(2) reads "The deduction specified in subsection (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 an industrial park 23[or develops 24[***J a special economic zone referred to in clause (iii) of sub-section (4)J or generates power or commences transmission or distribution of power 25[or undertakes substantial renovation and modernisation of the existing transmission or distribution lines." (Underlining ours) With reference to our various earlier submissions and further to the same, it is once again submitted that 80IA(2) is subservient to 80IA(4) and is to be seen in context of 80IA(4). The word 'and' as underlined above in 80IA(2) has to be read as 'and / or' in context of 80IA(4) or to be read as 'or' so as to avoid unworkable, unreasonable or absurd interpretation which is not reconcilable with the rest of the statute/section 80IA(4). As submitted earlier, section 80IA( 4) permits deduction to: 80IA(4) (i)

'(i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely.-"

(Underlining ours)

When and in context of 80IA(2) as aforesaid includes or and is to be read as and / or that would further make it clear that an enterprise 'developing' an infrastructure facility is entitled to the said deduction. When 'and' is read as 'or' it would make the provisions of section 80IA(4)(i) and 80IA(2) harmonious, workable and be in accordance with the text, context and object of the provisions. In 103 ITR 613 (ORI) (FB) it has been held that the word 'and' should be construed as 'or' where the context so requires. In the case of Iswhar Singh Bindra 1968 AIR 1450, the Hon'ble Supreme Court held in context of interpretation of statute in that case, that the word 'and' had to be read as 'or'. Copy of the said decision is attached. The Hon'ble Apex Court quoted from Stroud's Judicial Dictionary, 3rd ED to state that sometime 'and' by force of contents, reads as 'or'. They also quoted Maxwell on interpretation of statute, 11th ED that to carry out the intention of the legislature, it is occasionally found necessary to read 'or' or 'and' one for the other. Kindly also see our submissions as contained in Annexures to Ld. CIT order including particularly Annexure- C.

Ground No. 6 "That the Ld. CIT has erroneously relied on non applicable CBDT Circular No. 1/2006 dated 12.1.2006 which relates to effluent treatment and conveyance system and not to a toll road or highway project, which is the case of the appellant. In any case, the said circular is not binding on the appellant. The Ld. CIT has relied on irrelevant and erroneous material and basis for passing the order under appeal and as such too his order deserves to be quashed".

The said circular relates to effluent treatment and conveyance system and not to toll road or highway project. It is not binding on appellant. It in fact supports appellant by saying that the deduction is available even to an enterprise carrying on the business of developing any infrastructure facility. The purpose of the circular was to clarify availability of the deduction to effluent treatment and conveyance system. There is nothing in the circular which says that the benefit would not be available to an enterprise developing any infrastructure facility. The use of the word 'and' in passing that "the deduction is available for any ten consecutive assessment years out of twenty assessment years beginning from the year in which the enterprise develops and begins to operate any infrastructure facility" in the circular has to be understood as aforesaid in context in which used to mean (and/or) for effluent treatment and conveyance system.

Ground No. 7 "That the Ld. CIT has erred in stating that the Ld. AO has not applied his mind to other claims for example deduction in respect of interest on FDs and whether depreciation was admissible even while the project was not complete. These claims have been processed and correctly allowed after due consideration. There is no final finding by the Ld. CIT that these claims are incorrect. The assessee was duly entitled to these claims which are correctly allowed and as such too setting aside the assessment to be made de novo is unlawful and the order of the Ld. CIT deserves to be quashed". Here too, these are some observations of the Ld. CIT and no final finding against the appellant as to how the view of the Ld. AO was unsustainable. The depreciation relates to business being carried on which income has earned. It is on assets used for the business and the interest involved emanates from the business of infrastructure facility for the single object company. Decision in Tuticorin mentioned by Ld. CIT relates to interest income during pre- commencement of business period. The appellant's business has commenced and business income has been earned and assessed correctly for interest income. In Lok Holdings - 308 IT 356 (BOM)- business income assessed in respect of bank interest for an assessee engaged in construction business. This was for surplus money with bank in course of the business. Tuticorin distinguished as above in this case.'

10. Further, we also find it just and proper to reproduce reply and submissions of the ld. DR on behalf of the revenue which read as under:-

*Section 80-IA(1) grants deduction in respect of any profits and gains derived by an undertaking from any business referred to in sub-section (4) thereof.

*Under sub-section (2), the deduction is admissible for a period of ten consecutive years out of 20 years beginning with the year in which the undertaking develops and begins to operate the infrastructural facility referred in clauses (a), (b) and (c) to Explanation to sub-section (4).

*As per sub-section (2A), the admissible deduction is 100% of the profits and gains of eligible business for first five Assessment Years, "commencing at any time during the period as specified in sub-section (2)" i.e., from the year in which "the undertaking or enterprise develops and begins to operate any infrastructural facility" and thereafter, 30% of profits and gains for the further period of five years.

*As per clause (c) of sub section( 4), the start of the operation and maintenance of a infrastructure project is an essential pre requisite for the eligibility for deduction.

*The clause (a) of the Explanation to sub-section (4) covers infrastructural facility being " a road including a toll road, a bridge or a rail system" whereas clause (b) thereof refers to" a highway project including housing or other activities being an integral part of the highway project".

*Sub-section (6) states that notwithstanding anything contained in sub-section (4), where housing and other activities are an integral part of the highway project and the profits of which are computed on such basis and manner as may be prescribed, "such profit shall not be liable to tax where the profit has been transferred to a special reserve account and the same is actually utilized for the highway project. .. before the expiry of three years ... ".

*The basis and manner in which the profits of housing and other activities are to be computed for the purposes of subsection (6) are specified in Rule 18BBE which mandates maintenance of separate accounts for the activities of housing and other activities and submission of a certificate specifying the amount credited to the reserve account and the amount utilized during the relevant previous year for the highway project. The certificate is to be furnished in Form 10CCC which is to be required to be submitted along with the return of income.

*From the above, it is apparent that in respect of an assessee claiming to be engaged in building and infrastructural facility in the nature of a highway project including housing and other activities being an integral part of the highway project, the profits arising from housing and other activities would be exempt from tax under sub-section (6) whereas the profits arising exclusively from highway project would be admissible for deduction under sub-section (1) read with sub-section (2) and (2A).

*Any relaxation of the provisions of Chapter VI-A (including the prescribed Rules thereto) is governed by Section 119(2)(c) of the Act which mandates only the Board in the event that it finds it desirable or expedient to avoid genuine hardship in any case, to do so subject to the condition that the default (in compliance for which the relaxation is sought) was due to circumstances beyond the control of the assessee and it has complied with such requirement before the completion of the assessment. Further, every such order is to be laid before each House of Parliament.

*The assessee has begun to operate the infrastructural facility w.e.f. 09.08.2012 and hence prior to this date it had only profits which are attributable to sale of land, transferred to it in terms of Concessionaire Agreement. Therefore, in respect of profits exclusively from the highway project, the assessee would be eligible for deduction under Section 80-1A only w.e.f Assessment Year 2013-14.

*The case of the assessee squarely falls within clause (b) of Explanation to sub-section (4) and therefore, the assessee would be eligible for exemption in respect of profits from housing and other activities wholly under sub-section (6) of section 80lA of the Act. The failure of the AO to examine the claim of the assessee with reference to the applicable provisions of the Act i.e. clause (b) of the Explanation to sub section (4) ead with subsection (6) of section 801A indisputably was an error on the part of the AO and resultantly, the assessment order became erroneous.

*Without prejudice to the contention that the claim of the assessee is squarely covered under sub-section (6) of section 80lA of the Act, even if the argument of the assessee that its case falls under sub section (4) thereof is accepted, it is undeniable that the assessee has entered into an agreement with the State Government for 'Developing, operating and maintaining a new infrastructure facility and therefore its activity squarely falls within (iii) of clause (b) of sub section (4) of section 801A. Since sub section (2) of section 801A categorically states that the deduction will be admissible 'beginning from the year in which the under taking or the enterprise develops and begins to operate any infrastructure facility' no deduction for income generated by activities of such infrastructure facility and/or any allied activity would be eligible for deduction in any year prior to the beginning of operations of the infrastructural facility. Further such section 4 states that the deduction would be admissible to the enterprise which, inter alia, "has started or starts operating and maintaining the infrastructural facility on or after 1st day of April, 1995." Thus the deduction to the assessee which has entered into an agreement for developing, operating and maintaining an infrastructure facility, under the provisions of sub section (4), would be admissible only from the year the operation of the facility begins.

*The A.O. had raised this issue in the assessment proceedings. In response, the assessee advanced twin arguments. Firstly, it referred to the wordings of clause (c) of subsection (4) 'it has started or starts operating and maintaining the infrastructure facility'. The assesee has tried to interpret the expression 'starts' to cover future events. The assessee deliberately omits reference to the phrase "after 1st April, 1995" which occurs in the said clause(c). Clearly, the word "started" is intended to cover cases where the operation and maintenance has commenced prior to 114/1995 and the work "starts is intended to cover cases where the commencement is after 114/95. Clause (c) specifies one of the conditions of eligibility of deduction and only clarifies that projects which has started operation and maintenance prior to the specified date or after the specified date will be eligible for the deduction. The said clause in no way can or is intended to override the stipulation in sub section (2) which mandates availing of deduction, in cases of eligible projects, only from the beginning of the operation of the facility. In fact the wording of clause of sub section (4) reiterates the condition of sub section (2) in as much as it makes the start of the operation and maintenance of a infrastructure facility, a pre requisite for the grant of deduction. It may be relevant to mention that the deduction u/s 801A to infrastructure facility was for the first time introduced in the statute, sub section (4A) of section 80lA as it stood prior to 114/1999, w.e.f. A.Y. 1996-97 (i.e.lst April, 1995) and clause (c) brings into the ambit of eligibility projects which has started before this date and also subsequent to this date. The second argument taken is that the deduction u/s 801A(4 )(i) is admissible also to an undertaking which only develops the infrastructure facility but does not operate it. Therefore the admissibility cannot be reckoned with reference to the commencement of operation. This argument is un-acceptable for the reason that the undeniably, case of the assessee is one in which it has entered into an agreement for developing, operating and maintaining the infrastructure facility a distinct category of eligible project specifically covered under sub clause (iii) of clause ( c) of sub section 4. Assessee has not entered into an agreement only for developing of an infrastructure facility envisaged in sub clause (i) of clause (c) of sub section (4). In case of the assessee, the unambiguous provision of the statute is that the deduction would be admissible only on the commencement of the operation. The AO, in accepting the said argument of the assessee, was indisputably in error in rendering the consequential assessment order erroneous.

*Without prejudice to the contention made in the preceding point, the question that the developer of an infrastructural facility, who is an eligible entity, will not be able to claim the same since it does not operate the facility and hence could not have commenced operation, points to an apparent ambiguity in law. Firstly, no such ambiguity arises in the present case where the assessee has not entered into an agreement, in terms of sub clause (b) of sub section (4), only for development of the infrastructure facility but for the development, operation and maintenance of the facility. The AO in accepting the contention of the assessee has taken into consideration an ambiguity that never existed in the case and had no relevance to the case and was therefore clearly in error. Secondly, actually there is no ambiguity. There can be an instance where an assessee has entered into an agreement with the Centre/State Govt./Statutory Authority only for development of the infrastructure facility but thereafter transfers such facility to another entity or the Centre/State Govt/Statutory Authority and in consideration thereof, is entitled to the reverse stream arising to the transferor entity, either wholly or partially, for a specified time period. The statute provides that in such cases also, the deduction would be admissible to the developer. This interpretation is supported by the proviso to clause (c) of sub section 4 which envisages transfer of an infrastructure facility from a developer to another enterprise for operation and maintenance.

*As regards the provisions of sub section (6), the assessee has admittedly not created any special reserve. Neither has it maintained separate accounts for housing and other activities nor has it furnished Form 10CCC during either with return of income or during the assessment proceedings. Acceptance of the claim of deduction by the AO without ensuring the fulfillment of the aforesaid statutory prescription applicable to the case of the assessee, or even without seeking a response from the assessee in respect of such failure undoubtedly was an error on the part of the AO and the consequential order granting the deduction squarely falls in the category of an erroneous order, contemplated in section 263 of the Act.

*That the filing of Form No. 10CCC, creation of a special reserve and utilisation of such reserve are mandatory conditionalities for availing of deduction U/S 80IA(6) of the Act, being the statutory provision under which the claim of the assessee appropriately falls, has been accepted by the assessee company in as much as in its annual account for the F.Y. 2013-14, note no. 26 states that ' Accordingly, in compliance of the provisions contained therein, a 'Special Reserve' aggregating Rs. 2800,69,052 (F.Y.2008-09 Rs. 255,36,26,035; F.Y. 2009-10 Rs. 362,48,77,424; F.Y. 2010-11 Rs. 1168,12,74,807 & F.Y. 2011-12 Rs. 1014,71,29,786) has been created during the year for the respective years. Since the said sum has been utilised by the Company for development of the infrastructure facility (the Yamuna Expressway) during the respective years an aggregate amount of Rs. 2800,69,08,052 ... has been transferred from 'Special Reserve Account to 'Special Reserve Utilisation Account' during the year, for the respective years". Thus, the assessee itself acknowledges that the conditionalities specified in 80IA(6) is applicable to its case and requires to be fulfilled for the grant of deduction in respect of an infrastructure facility being a highway project including housing or other activities being an integral part of the highway project.

*The denial of claim for deduction by the Assessing Officer In the proceedings under Section 143(3) for A.Y.2011- 12 was based on identical grounds and has been upheld as such by the CIT (Appeals) in the appellate order for A.Y.2011- 12 dated 12.01.2015, notwithstanding that during the course of the appellate proceedings Form No. 10CCC for that year and had also filed a copy of its annual account for F.Y. 2013-14, wherein, as referred to above, a special reserve had been created, purportedly in compliance with sub-section (6) of section 801A. It is significant that the assessee itself has submitted before the Assessing Officer Form No. 10CCC for the A.Y. 2009-10 during set aside order in respect of which the revisionary order has been passed.

of the assessee that by creating a special reserve much after the relevant previous year and even the assessment proceedings for both A.Ys. 2009-10 and 2011-12, that it has complied with the provisions of Section 80-IA(6) in spirit is fallacious in as much as firstly, the substantive provisions of the statute, which grants a vested right either to the revenue ought to the assessee, cannot be ignored and secondly that the circumstances under which the provisions of Chapter VI-A can be relaxed has been provided for in the statute itself in Section 119(2)( c) of the Act. The assessee's action of creating special reserve post facto after the conclusion of assessment proceedings and furnishing a certificate of Form 10CCC dated 15.11.2014 is irrelevant for determining the eligibility of the deduction .

*A proposal for action under Section 263 of the Act for A.Y. 2010-11 has been submitted by the Assessing Officer and Joint Commissioner of Income Tax concerned vide their letters dated 21.08.2014 and 25.08.2014 to the Commissioner of Income Tax and the show cause notice for the year has been issued on 19.01.2015 .

*The order under Section 263 for A.Y. 2009-10 dated 30.03.2014 categorically states that "the inescapable and logical conclusions would be that the assessee ought to have complied with provisions of sub-section (6) of Section 80- IA which it has not". Further, the CIT has also noted that the assessee had claimed deduction u/s 80lA on interest income from FDs made by deploying its surplus funds and the same has been erroneously accepted by the A.O. In this context, reference is invited to the decision of the ITAT Chandigarh Bench A in the case of Vodafone Essar Ltd., (2013) 153 TTJ (Chd) 451, wherein an identical issue had been over looked by the AO and the CIT had invoked the powers available u/s 263 of the Act. It was held that the AO had failed to make proper investigation into the eligibility of the assessee in relation to the claim of deduction u/s 80IA of the Act both on the business profits, interest income and other income received during the year. The order passed by the AO was an erroneous order and in the facts and circumstances of the case it was validly exercised. Moreover, the assessee has claimed depreciation amounting to Rs 22.67 crores and had been granted by the Assessing Officer even while the highway project had not been completed. The order of the Assessing Officer, which allowed the deduction under Section 80-IA and the depreciation, was patently erroneous and prejudicial to the interest of the revenue and was, without an iota of doubt, liable for the exercise of revisionary jurisdiction under Section 263 of the Act.

*In the case of Malabar Industrial Co. Ltd. (243 ITR 83), the Hon'ble Supreme Court held that and incorrect application of law or orders passed without application of mind, would render it as erroneous. The jurisdictional High Court in the case of Jagdish Kumar Gulati (269 ITR 71) .held that if the AO fails to make proper inquiry, the order would be erroneous and prejudicial to the interest of revenue. In the case of Bhagwan Das (272 ITR 367), the Allahabad High Court reiterated the principle that grant of exemption to an assessee, without any discussion and without any application of mind, was erroneous and prejudicial to the interest of revenue. In the case of Tara Devi Agarwal (88 ITR 323), it was held that where the AO fails to make inquiries which are called for in the facts and circumstances of the case such order would be rendered erroneous. Merely making some queries without addressing the basic issues involved would amount to non application of mind as has been held by the Guwahati High Court in the case of Parasmal Jain (249 CTR 534). '

11. The ld. AR briefly reiterated his written submissions and arguments before us and contended that the AO took a reasonable and sustainable view while granting deduction u/s 80IA(4) of the Act. Ld. CIT-DR also contended and took us through her written submissions as reproduced hereinabove and submitted that the AO allowed deduction to the assessee without any valid reason and keeping aside the relevant provisions of the Act and IT Rules 1962 and CBDT Circular No. 1/2006 dated 12.1.2006. The ld. CIT DR mainly harping on the factual and legal contention that the assessee is in the business of development of a highway project including housing and other activities being an integral part of the highway project and defined in clause (b) of Explanation to section 80IA(4)(i) of the Act. Ld. CIT-DR further contended that the income from sale or sub lease & land is not an income from the business of infrastructure development business, hence, deduction thereon is not allowable u/s 80IA(4) of the Act.

12. Ld. CIT DR drawing our attention to the impugned notice issued to the assessee and the impugned order passed u/s 263 of the Act, revising the assessment order, submitted that the business of infrastructure facility development was not started in the assessment year under consideration and the same actually became operational on 9.4.2012 when the project was inaugurated and hence the assessee is not entitled for deduction on the income from such activity which is not a part of infrastructure facility development business. Ld. CIT-DR further pointed out that if for the sake of argument it is accepted that the income of the assessee is entitled for deduction, then again the same cannot be allowed for the assessee was the assessee has not complied with the mandatory provisions of sub-section (6) of section 80IA of the Act and Rule 18BBE of IT Rules, prescribes the manner in which the profits of housing and other activities are to be computed for the purpose of sub-section (6) which mandates maintenance of separate books of accounts for the activities of housing and other activities and submission of a certificate specifying the amount credited to the reserve account and the amount utilized during the relevant previous year for the highway in Form No. 10CCC along with return of income.

13. Ld. CIT DR vehemently contended that the assessee is not entitled for deduction u/s 80IA(4) of the Act on the profits and gains earned from sale/sub lease of land during the financial period under consideration as first, this activity is out of ambit of infrastructure facility development, secondly, the assessee did not commence its business operations during the financial year under consideration and thirdly, the assessee did not comply with the mandatory provisions of sub-section (6) of section 80IA of the Act and Rule 18BBE of IT Rules, 1962. Therefore, the assessment order has been passed grating deduction u/s 80IA of the Act, without application of mind, without analysing the facts of the case in the light of relevant provisions of the Act, relevant IT Rules and CBDT Circular 1/2006 dated 121.1.2012, which is not in accordance with law and unsustainable, hence, the ld. CIT rightly invoked provisions of the section 263 of the Act by issuing notice and by passing impugned order setting aside the assessment order to be made de novo. Ld. CIT DR also pointed out that as extracts from assessee’s Annual Report/Account for AY 2013-14 and certificate of Auditor in Form 10CCC dated 15.11.2014 (Paper Book of the Revenue/submissions of case laws page 13 to 19) shows that the assessee tried to patch up deficiency in statutory compliance of sub section (6) and the IT Rule 18BBC of Income Tax Rules.

14. The ld. AR placed a brief rejoinder to aforesaid contentions of the Revenue and submitted that as per stipulations, terms and conditions of the concession agreement between the assessee and the TEA, the assessee assigned work of development of Expressway and not a highway. The ld. AR further contended that the main object of work assigned to the assessee was to develop 6 lane Expressway with controlled access and exit points for fast moving traffic and the users of Expressway has to pay a toll at toll plazas situated at entry or access points and therefore the assessee has to develop a toll road connecting Noida to Agra. The ld. AR, repeating his written submissions, also submitted that, since the assessee was under obligation to pay cost of land acquisition plus Rs. 100/- per hectare per annum lease rent on land for construction and development of Expressway, in addition to bearing cost of construction of Expressway and development of land, therefore, the project could not be viable unless the absolute rights on the land for development are given to the assessee as the only toll revenue was not sufficient even to meet cost of construction and development.

15. The ld. AR pointed out that assessee’s business commenced from the date of its incorporation i.e. 5.4.2007 as prior to incorporation, the bid of holding company was accepted and the TEA allowed the successful bidder to create a Special Purpose Vehicle (SPV) company in order to implement the project successfully, hence, when the business of development of infrastructure facility was started during the financial year under consideration, then the income earned from sale/sub lease of land for development is an income of first degree business operations and hence, the same is eligible for deduction u/s 80IA(4) of the Act. The ld. AR also contended that since the asessee has developed toll road and opted to avail deduction u/s 80IA(4) of the Act for AY 2009-10, therefore, the assessee also complied with the provisions of Rule 18BBB of the Income Tax Rules, 1962 and also submitted certificate in Form no. 10CCB.

16. The ld. AR has also drawn our attention towards paper book page page 228 and 229 and submitted that the assessee also complied with provisions of sub-section (6) of section 80IA of the Ac t and Rule 18BBC of Income Tax Rules 1962 only support this fact that assessee is a sincere and honest taxpayer and to fulfil requirements of the alternate claim of the assessee which does not mean that the assessee concedes that its claim falls under clause (b) of Explanation 80IA(4)(i) of the Act.

17. Main controversy revolves around the fact that the assessee has claimed deduction u/s 80IA(4) of the Act on the basis that as per concession agreement between the TEA and the assessee company, the assessee develops 'infrastructural facility' as per clause (a) of Explanation to section 80IA(4)(i) which was granted by the AO and subsequently, the ld. CIT, Noida issued notice u/s 263 of the Act on the contention that the claim of the assessee does not fall in clause (a) of Explanation to section 80IA(4)(i) of the Act and the AO passed an assessment order which was not only erroneous but also prejudicial to the interest of the revenue and he rejected the objections and submissions of the assessee company and directed the AO to frame afresh de novo assessment by passing the impugned order.

18. When computation of income and audit report filed along with return of income, queries of the AO, replies of the assessee dated 23.11.2011, 21.12.2011, 23.12.2011, 28.12.2011 and 29.12.2011 filed during assessment proceedings, office note dated 29/30.12.2011 of the AO, original assessment order passed u/s 143(3) of the Act, notice issued by ld. CIT Noida u/s 263 of the Act (supra), written submissions and contentions of the assessee objecting to the proceedings u/s 263 of the Act dated 19.3.2014, 25.3.2014 and 27.3.2014, impugned order, rival written submissions and contentions of both the sides (as reproduced hereinabove) placed before us and the ratio of the case laws relied by both the parties and specially, grounds raised by the assessee before us in this appeal are kept in close juxtaposition, side by side, the following prime issues emerge for our consideration for proper adjudication of the present appeal:

(i) Whether in view of concession agreement and allied documents, the assessee claim falls u/s 80IA(4)(i) Explanation clause (a) or (b) and whether the assessee is developing a road (including toll road) or highway?

(ii) Whether in the background of concession agreement and judgment of the Hon’ble Supreme Court in the case of Nand Kishore Gupta vs State of UP, the AO was correct in treating the subject year as falling in the eligible period u/s 80IA(2) of the Act in the light of the fact that the assessee did commence the development of the infrastructure facility since 5.4.2007 and was actively developing the infrastructure facility during the assessment year under consideration?

(iii) Whether the AO took a plausible reasonable and sustainable view by allowing the assessee claimed deduction under clause (a) of Explanation to Section 80IA(4)(i) of the Act?

(iv) Whether the assessment order questioned and alleged by the ld. CIT, is unsustainable and not in accordance with law and has been passed without application of mind, in the peculiar facts and circumstances of the case, specially in the light of the provisions of section 80IA(4) r/w its sub-sections (2) & (6) and other relevant provisions of the Act and the Income Tax Rules, 1962.

(v) Whether the CIT Noida was in error by invoking provisions of section 263 of the Act in the peculiar facts and circumstances of the present case, specially when he has not decisively concluded the issue i.e. whether the assessee is developing a toll road or a highway project and left it midway without any decisive conclusion/direction?

(vi) Whether the ld. CIT exercised its powers u/s 263 of the Act in revising the assessment order on the issue of allowability of deduction u/s 80IA(4) of the Act on interest earned from FDR and without show causing the assessee in the notice u/s263 of the Act &on the issue of allowability of depreciation and, therefore, the same is not valid and void ab initio on these issues.

19. In order to decide above prime issues, we deem it appropriate to reproduce relevant provision of the concession agreement for effective and proper adjudication of the case which read as under:-

The provisions of section 80IA(1)(2), (4) and (6): Deduction 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 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 fiteeen 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 an industrial park (or develops a special economic zone) rendered to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution or power (or undertakes substantial renovation and modernisation of the existing transmission or distribution lines.'

(3) xxxxxx

(4) This section applies to-

(i) any enterprise carrying on the business l[of (i) developing or

(ii) operating and maintaining or

(iii) developing, operating and maintaining] any infrastructure facility which fulfils all the following conditions, namely:

a) it is owned by a company registered in India or by a consortium of such companies 2[ or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act.]

(5) xxxxxxx

(6) The amount of deduction in the case of the business of a ship shall be thirty per cent of the profits and gains derived from such ship for a period of ten consecutive assessment years including the initial assessment year provided that the ship -

(i) is owned by an Indian company and is wholly used for the purposes of the business carried on by it ;

(ii) was not, previous to the date of its acquisition by the Indian company, owned or used in Indian territorial waters by a person resident in India; and

(iii) is brought into use by the Indian company at any time during the period beginning on the 1st day of April, 1991 and ending on the 31st day of March, 1995.'

20. First of all, we may point out that the nucleus of the activities and business of the assessee is the concession agreement (hereinafter 'Agreement') executed on 7.2.2003 between the Taj Expressway Industrial Development Authority (in short 'TEA') a statutory body constituted under U.P Industrial Development Act, 1976, and the assessee company. The relevant provisions of this agreement read as under:-

Objects of the Agreement (Assessee’s Paper Book at page 100)

'A. The Government of UP has Set up TEA for anchoring development of Taj Express way Project, which, interalia, includes construction of six lane, 160 km long Super Expressway with service roads and associated facilities connecting Noida and Agra, passing through a virgin area along the Yamuna River.

B. TEA has invited bids for development of a Techno Economic Feasibility Report (TEFR) and Detailed Project Report (OPR), arrangement of finance, construction and operation of the said Expressway subject to and on the terms and conditions contained in the Notice inviting offers and the company had also submitted a bid on the due date i.e. 18.01.2003.

C. After evaluation of the Bids so received, TEA accepted the BID of the Company and issued letter of Acceptance No. TEA/341/2003 dated 23.01.2003 to the Company (Annexure-A).

D. The Company informed TEA Vide its letter No. JIL/302 dated 23.01.2003 (Annexure - B) that:

a. it opts to take up the Project exclusively by itself without any equity participation by TEA; and

b. it opts for "Schedule For land release" as per Option-II specified in Notice Inviting Offer, to develop the Project in three phases.

E. TEA and the Company have mutually agreed on the terms and Conditions of the Concession Agreement to be executed between the Parties.'

CHAPTER - II

SCOPE OF WORK

2.1 The 'Work' shall include preparation of TEFR and Detailed Project Report (DPR), arrangement of finances, design, engineering, construction and operation of six-lane Expressway alongwith service roads and associated structures as per requirement, between Noida and Agra in Uttar Pradesh, India except the construction of Expressway between Noida and Greater Noida, which is already under execution jointly by NOIDA and GNIDA and shall be completed in all respects, operated and maintained jointly by NOIDA and GNIDA at its own cost till the start of the Concession Period. This road would have provision for expansion to 8-lane in future based on traffic volume.

2.2 The scope of Work also includes operation and maintenance of the Expressway, including collection and retention of Fees during the term of the Concession Period.

2.3 The Expressway shall be developed in following 3 phases :-

Phase 1 : Expressway stretch between Greater Noida and the proposed Taj International Airport.

Phase 2 : Expressway stretch between the proposed Taj International Airport and an intermediate destination between the proposed Taj International Airport and Agra as may be mutually agreed between the Parties.

Phase 3: Expressway stretch between the aforesaid intermediate destination and Agra.

CHAPTER – III

GRANT OF CONCESSION

3.1 Subject to and on the terms and conditions set forth in this Agreement, TEA hereby undertakes to cause Goup to grant to the Concessionaire and the Concessionaire hereby accepts the Concession for a period of thirty six years commencing from the COD including the exclusive right, license and authority during the subsistence of this Agreement to implement the Project.

3.2 Subject to and on the terms and conditions set forth in this Agreement, the Concession hereby granted shall oblige the Concessionaire to undertake the following in accordance with the provisions of this Agreement, the Applicable Laws and the Applicable Permits.

i To develop, design, engineer, finance, procure and construct the Expressway within the Construction Period;

ii Upon completion of the Expressway and during the Concession Period to manage, operate & maintain the Expressway and regulate the use thereof by third parties;

iii Demand, manage and collect appropriate Fees from vehicles and persons liable to payment of Fees for using the Expressway or any part thereof and refuse entry of any vehicle to the Expressway if the due Fees is not paid;

iv Perform and fulfil all of the Concessionaire’s obligations under this Agreement;

v Bear and pay all expenses, costs and charges incurred in the fulfilment of all the Concessionaire’s obligations under this Agreement.

3.3 The Concessionaire shall be granted, by TEA, rights for land development of 25 million sq. Mtrs of land along the proposed Expressway for commercial, amusement, industrial, institutional and residential development. The land for the purpose of development shall be provided by TEA along the Expressway at five or more locations of which one location shall be in Noida or Greater Noida with an area of 5 million sq. mtrs. The aforesaid land for development shall be in addition to the land for construction of Expressway.

3.4 The Expressway between Noida Toll Bridge and Greater Noida (about 25 Kms) has already been constructed and opened for general public by GOUP. In consideration of capital cost of this Expressway between Noida and Greater Noida, the TEA shall grant leave and license to the Concessionaire to use it for concession during the Concession Period. The capital cost of this already constructed Noida- Greater Noida Expressway shall be treated as interest free loan to the Concessionaire, which shall be repaid by the Concessionaire to TEA in 15 equal yearly instalments starting from 11th year of the Concession Period.

3.5 The Concessionaire shall submit TEFR / DPR within 2 years of signing the Concession Agreement.

3.6 The Concession Period shall commence on COD and shall end on the date of expiry of period of 36 (thirty six) years plus any extensions thereto provided in accordance with the provisions of this Agreement. However in case COD is not achieved within 7 (seven) years or such extended period as may be approved by TEA, after signing of this Agreement solely on account of Concessionaires default, the Concession Period shall be reduced by the period of delay in achieving the COD.

3.7 Concessionaire shall be entitled to collect and retain the Fee from the users of the Expressway between Noida and Greater Noida during the terms of the Concession Agreement.

3.8 The alignment of the Expressway between Greater Noida and Agra shall be finalised by the Concessionaire in consultation with TEA.

CHAPTER – IV

LAND

4.1 Land for construction of Expressway shall be provided by TEA to the Concessionaire, generally in a width of 100 meters along the alignment of the Expressway with additional land width, where required, for developing other facilities like Toll Plazas etc., on following terms & conditions.

a. The land for construction of Expressway shall be released as per following 3 stages:

Stage – 1 - Land for Phase 1 of Expressway within 6 (six) months of finalisation of Alignment of the Expressway

Stage – 2 - Land for Phase 2 of Expressway within 12 (twelve) months of finalisation of Alignment of the Expressway

Stage – 3 - Land for Phase 3 of Expressway within 18 (eighteen) months of finalisation of alignment of the Expressway

b. The land shall be leased for a period starting from the date of transfer till the end of the Concession Period through such lease deed as may be mutually agreed between the Parties.

c. The land shall be free from Encumbrances.

d. The sole premium of the transferred land shall be equivalent to the acquisition cost plus a lease rent of Rs. 100.00 (Rupees one hundred) only per hectare per year. The acquisition cost shall be the actual compensation paid to the land owners without any additional charge and shall be payable by the Concessionaire as per applicable rules. The lease rent shall be payable annually.

4.2 The land for development shall be released as per following 3 stages:

Stage 1 : 10% land (250 hectare) for development would be made available after Concessionaire makes financial arrangements for Phase – 1 to the satisfaction of TEA.

Stage 2 : 10% land (250 hectare) for development would be made available within 6 (six) months of stage–1, provided the Concessionaire-Finalises the DPR/TEFR study - Commences construction of phase–1- Makes financial arrangement for Phase–2 to the satisfaction of TEA

Stage 3 : balance 80% land (2000 hectare) for development would be made available within 12 (twelve) months of stage -1, provided TEA accepts the DPR / TEFR study prepared Concessionaire. - TEA is satisfied with the physical progress of phase– 1 and phase – 2 - Concessionaire makes financial arrangement for phase-3 to the satisfaction of TEA. For the purpose of satisfaction of TEA in respect of Financial Arrangement as aforesaid, the Concessionaire shall submit phasing of estimated expenditure, source of funds including own funds and copies of communication from the lenders in case of debt by way of term loan, NCD or any other instrument showing their intention for providing the debt.

4.3 Land for development shall be transferred by TEA to the Concessionaire free from all Encumbrances on following terms & conditions :

a. It shall be on lease for a period of 90 (ninety) years from the date of transfer through such lease deeds as may be mutually agreed between the Parties.

b. The land to be transferred shall be as per the request and choice of the Concessionaire subject to availability, in such a manner that the Concessionaire is entitled to achieve 150 Floor Area Ratio (FAR) on such land. If due to local byelaws or other statutory provisions, it shall not be possible to achieve 150 FAR, then TEA shall evolve suitable mechanism, as may be mutually agreed between the TEA and the Concessionaire, so as to enable the Concessionaire to achieve 150 FAR.

c. The sole premium of the transferred land shall be equivalent to the acquisition cost plus a lease rent of Rs. 100.00 (Rupees one hundred) only per hectare per year. The acquisition cost shall be the actual compensation paid to the land owners without any additional charge and shall be payable by the Concessionaire as per applicable rules. The rent shall be payable annually for 90 (Ninety) years from the date of transfer of land.

d. The Concessionaire shall be entitled to further sublease developed / undeveloped land to sub-lessees / end-users in its sole discretion without any further consent or approval or payment of any charges / fee etc. To TEA or any other relevant authority.

e. After sub-lease of part of the land by the Concessionaire, the same can be transferred / assigned without requiring any consent or approval of or payment of any additional charges, transfer fee, premiums etc. To TEA or to any other relevant authority and/or there can be subsequent multiple sub-leases of the land in smaller parts. The lease rent of the respective sub-leased portion of land shall be paid by the sub-lessees / transferees to TEA directly on pro-rata basis @ Rs. 100.00 (Rupees one hundred) per hectare per year. The Concessionaire shall be required to pay lease rent to TEA for the portion of land remaining in its possession after sub-lease, on pro-rata basis at the aforesaid prescribed rate. Total lease rent paid by the Concessionaire and various sub-lessees / transferees shall be Rs. 100.00 (Rupees one hundred) per hectare per year.

f. Each sub-lease and/or transfer shall after the execution thereof be notified by the transferor or the transferee or the sub-lessor/sub-leassee to TEA and till such time it is so notified the transferor/sub-lessor shall remain jointly and severally liable alongwith the transferee / sub-lessee for payment of lease rent to TEA.

g. The Concessionaire may make a request to TEA to execute the lease deed directly in favour of Concessionaire’s subsidiaries, assigns, transferees etc. In respect of any portion of the land on the same terms and conditions as mentioned above, and on receipt of such request TEA shall execute the lease deed in respect of such portion of land directly in favour of such subsidiaries, assigns and transferees.

h. In case TEA and the Concessionaire consider it appropriate, tripartite agreement for sub-lease deed may be executed between the TEA, Concessionaire and the Sub-lessee.

4.4 The Concessionaire shall be free to decide the purpose for which transferred land will be used i.e. for commercial, amusement, industrial, institutional, residential etc. And also for the area of land to be allocated for different uses. The Concessionaire shall also be free to decide whether the sub’-leased land shall be in the form of plots or constructed properties. No permission of TEA shall be required either for the land use or for transfer of leasehold / sub-leasing / multiple sub-leasing of land. The land use shall however be as per applicable Master Plan and other regulations.

4.5 The rights of the sub-lessees / end-users shall not be affected by termination of this Agreement, or expiry of Concession Period and subsequent renewals shall be granted by TEA without any additional cost to transferees / sub-lessees / end-users, standard terms and conditions notwithstanding. The Concessionaire / sub-lessees / end-users shall follow the statutory laws / byelaws etc. for the land use.

4.6 If the land is not made available by TEA to the Concessionaire at Stages 1, 2 & 3 according to the schedule mentioned in Clause 4.1 and 4.2 above for any reason other than attributable to the Concessionaire, TEA, at its discretion, shall either reimburse to the Concessionaire the additional cost and loss of revenue occasioned to the Concessionaire on account of the said delay or the Concessionaire shall be compensated by suitably extending the Concession Period.'

21. In view of above agreement, the assessee was under obligation to do 'work' as mentioned in para 2.1 of chapter II and in turn, concession was granted by the TEA to the assessee as mentioned in chapter III, the land for construction of Expressway and land for development was provided to the assessee and the same was released by the TEA, as per terms of 4.1 and 4.2, respectively, of Chapter IV of the agreement. As per above provisions and terms of the agreement, the TEA has to provide land for expressway and land for development to the assessee on cost of acquisition plus a lease rent of Rs.100/- per hectare per year. The assessee was under obligation to construct Expressway between Agra and Noida in U.P. and concession as mentioned in Chapter-III was granted to the assessee. From vigilant perusal of the concession agreement, we note that the assessee, in turn, was given the right to collect toll fees from expressway users and also granted right to decide the disbursement and purpose of land given for development and the rights to use the land as its own or to sub-lease the same to a third party in accordance with urban development policy and applicable rules of the Government of UP.

22. Ld. AR has also drawn our attention towards observations of the Hon’ble Supreme Court in the judgment of Nandkishore Gupta vs State of UP in Civil Appeal No. 7468 of 2010 dated 8.9.2010 in para 30 & 34 and submitted that the project commissioned by the assessee was of immense public importance and the implementation of the said project resulted into existence of five developed parcels/centres in the state for the use of citizens and creation of these five parcels was also insuring the maximum utilisation of the Expressway. The ld. AR also submitted that the creation of the Expressway and five land parcels was complimentary to each other and can be viewed as important parts of integral scheme. The relevant observations of Hon’ble Apex Court read as follows:-

'The Expressway is a work of immense public importance. The State gains advantages from the construction of an Expressway and so does the general public. Creation of a corridor for fast moving traffic resulting into curtailing the traveling time, as also the transport of the goods, would be some factors which speak in favour of the Project being for the public purpose. Much was stated about the 25 million square meters of land being acquired for the five parcels of land. In fact, in our opinion, as has rightly been commented upon by the High Court, the creation of the five zones for industry, residence, amusement etc., would be complimentary to the creation of the Expressway. It cannot be forgotten that the creation of land parcels would give impetus to the industrial development of the State creating more jobs and helping the economy and thereby helping the general public. There can be no doubt that the implementation of the Project would result in coming into existence of five developed parcels/centers in the State for the use of the citizens. There shall, thus, be the planned development of this otherwise industrially backward area. The creation of these five parcels will certainly help the maximum utilization of the Expressway and the existence 3 of an Expressway for the fast moving traffic would help the industrial culture created in the five parcels. Thus, both will be complimentary to each other and can be viewed as parts of an integral scheme. Therefore, it cannot be said that it is not a public purpose.

.................. (last part of para 30)

We have already considered this question that in the present case, there is nothing to indicate that the acquisition is for the Company i.e. for Jaiprakash Industries Ltd. It is only, therefore, that we are at pains to point out that the Government was only using the Company for implementing its policy.'

(last part of para 34)

23. Hence, in view of above observations of Hon’ble Apex Court in para 30, we may safely infer that the land for development of the Expressway and development of five land parcels for industrial, commercial, amusement and residential purposes was allotted to the assessee under concession agreement. The work of the development of the Expressway and development of the land are integral and inseparable part of the project/scheme. We may also point out that the land for development was not allotted only for residential/housing purpose but also for the purpose of industrial, commercial and amusement etc., hence the concession agreement was intended to use the assessee company for implementation of the development policy of U.P. Government as observed by Hon’ble Apex Court in last operative part of para 34 of the judgment in the case of Nand Kishore Gupta (supra).

24. The ld. DR vehemently contended that as per language used by the legislature in sub-section (2) to section 80IA of the Act and the similar language which was again used by the CBDT in Circular No. 1/2006 stipulates that the assessee will be entitled for exemption u/s 80IA(4)(i) of the Act only when the enterprise develops and begins to operate infrastructure facility, means the exemption is not available when the enterprise only develops infrastructure facility because the word 'and' used by the legislature in sub-section (1) and CBDT circular (supra) between the word 'develops' and 'begins to operate' between the word 'develops' and 'begins to operate' requires both the conditions to be fulfilled simultaneously and the assessee has begun to operate the infrastructure facility only when the toll road was actually inaugurated by the Hon’ble Chief Minister of UP on 9.8.2012, which is related to FY 2012-13 pertaining to AY 2014-15, then exemption is not allowable for AY 2009-10 i.e. the assessment year under appeal.

25. Ld. AR replied that the assessee is entitled to deduction u/s 80IA(4) of the Act on the fact and law involved and relevant to the issue as a developer of the infrastructure facility, even if it has not commenced operating and maintaining but it is developing the same. Placing reliance on the decisions of Hon’ble Supreme Court in the case of K.P. Vergese vs ITO 131 ITR 597 (SC), the order of ITAT Mumbai in the case of ACIT vs Bharat Udyog Ltd. 118 ITD 336 (Mumbai Tribunal) and on the order of ITAT-Amritsar in the case of TRG Industries (P) Ltd. vs DCIT (2013) 35 Taxman.com 253 (Amritsar Tribunal) submitted that this issue is covered in favour of the assessee by the ratio of these judgments and orders.

26. Ld. AR reiterating its argument submitted before the ld. CIT Noida and relying on written submissions dated 19.3.2014, 25.3.2014 and 27.3.2014 (annexed to order of CIT as Annexure A, B & C) placed before the ld. CIT during proceedings u/s 263 of the Act, submitted that there is no requirement u/s 80IA(4) that the deduction would be available only after the assessee has begun the operation of the infrastructure facility. Ld. AR strenuously contended that it is a well accepted proposition that the taxing statutes and provisions conferring benefit for the assessee should be given an interpretation which enables the assessee to secure benefit and it should be so interpreted and the words used therein should be assigned such meaning as would enable the assessee to secure the benefit and deduction intended to be given by the legislature to the assessee. Ld. AR also contended that if the meaning adopted by the Revenue and the ld. CIT is accepted, that deduction u/s 80IA(4)(i) of the Act would be available only after assessee has begun the operation of the infrastructure facility then the deduction u/s 80IA(4) would be available only after completion of project which is obviously spread over several years and exemption to those enterprises, which are involved only into the 'development' of infrastructure facility, would never be available and this interpretation would defeat and frustrate the very purpose of the beneficial taxation legislation.

27. Ld. AR further submitted that section 80IA(2) and is to be seen in the context of section 80IA(4) and the words used in sub-section (2) viz. 'develops and begins to operate' has to be read and interpreted in the context of intention and spirit of section 80IA(4) and the words 'and' in section 80IA(2) may be read or used as 'or' as to avoid unworkable, unreasonable or absurd interpretation which is not reconcilable with the intention and literal meaning of sub-section (4). Ld. AR placing reliance on the decision of Hon’ble Supreme Court in the case of Ishwar Singh Bindra vs State of UP 1968 AIR 1450 (SC) and decision of Full Bench of Hon’ble Orissa High Court in the case of CIT vs Gangaram Chapolia (1976) 103 ITR 613 (Orissa-FB), submitted that the conjunctive 'and' in sub-section (2) of section 80IA of the Act between 'develops' and 'begins to operate' and should be construed as 'or' to save the very purpose of the beneficial provisions of Section 80IA of the Act and CBDT Circular 1/2006 (supra). Ld. AR also pointed out that the allegation of noncompliance of CBDT Circular (supra) has not been mentioned in the notice u/s 263 of the Act and the same cannot be used for revising the assessment order.

28. On careful consideration of above rival submissions of both the sides, firstly we are in agreement with the contentions of the ld. AR that the allegation of non-compliance of the CBDT Circular No. 1/2006 (supra) has not been mentioned by the ld. CIT Noida in the notice issued to the assessee u/s 263 of the Act (supra). Secondly, the construction of language and words used by the legislature in sub-section (2) of section 80IA of the Act and used by the CBDT in Circular No. 1/2006 (supra) are similar viz. 'develops and begins to operate'. The heading given by the legislation to section 80IA of the Act reads as 'Deductions in respect of profits and gains from industrial undertaking or enterprise engaged in infrastructure development etc.' which, to our humble understanding, express the intention of the legislature that the exemption therein section 80IA of the Act is available for the undertakings or enterprise which are engaged in the business of infrastructure development etc. Meaning thereby infrastructure development is paramount consideration for grant of exemption u/s 80IA of the Act. If the literal meaning is given to the conjunctive word 'and' between 'develops' and 'begins to operate' then the enterprise would be entitled to exemption only when the enterprise develops and begins to operate infrastructure facility on or after 1.4.1995, as required by condition (c) of section 80IA(4)(i) of the Act.

29. Under said interpretation as given by the Revenue authorities, the enterprise would be entitled for exemption u/s 80IA(4) of the Act only after completion of the project even if development takes more than one year to start operations and then only the income derived from operating and maintaining of infrastructure facility would be eligible for exemption and enterprises engaged in development activities would never be entitled for exemption. Obviously, this cannot be an intention of legislature and CBDT circular (supra) while framing the provision of section 80IA of the Act and issuing Circular No. 1/2006 (supra) respectively.

30. At this juncture, we respectfully take cognizance of the decision of Hon’ble Supreme Court in the case of K.P. Verghese (supra) and decision of Full Bench of Hon’ble Orissa High Court in the case of Gangaram Chopalia (supra) and decision of Hon’ble Jammu & Kashmir High Court in the case of CIT vs J&KTDC (2001) 248 ITR 94 (J&K), as relied by the ld. AR. In the case of K.P. Varghese v ITO (supra), the Apex Court held that the interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. The relevant part of the decision reads as under:-

'A statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. Where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the court may modify the language used by the legislature or even do some violence to it, so as to achieve the obvious intention of the legislature and produce a rational construction.

Speeches made by the members of the legislature on the floor of the House when the bill is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for its introduction can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in western countries but also in India, that the interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible.'

31. Ld. AR placing reliance on the decision of Hon’ble Supreme Court in the case of Bajaj Tempo Ltd. vs CIT (1992) 196 ITR 188 (SC), the ld. AR submitted that if provision for checking abuse is found to have resulted into nullifying the very purpose of its enactment then the provisions of taxing statutes should be interpreted liberally so as to advance the objective of the provisions and not frustrate it. Ld. AR has further drawn our attention towards decision of Hon’ble Bombay High Court in the case of CIT vs ABG Heavy Industries Ltd. (2010) 322 ITR 323 (Bombay) and submitted that after considering the ratio of the decision of Hon’ble Apex Court in the case of Bajaj Tempo Ltd. (supra) it was also held that an assessee did not have to develop the entire part of eligible business or activity in order to qualify for a deduction u/s 80IA of the Act.

32. Ld. DR contended that the toll was inaugurated on 9.8.2012 (relevant to AY 2013-14). Hence, literal meaning does not allow to grant exemption u/s 80IA of the Act from AY 2009-10. Ld. AR placing rejoinder submitted that the assessee started its operation from 5.4.2007. Hence income earned from the activities which are inextricably linked with the main object and scope of work, commencement of business operation are eligible for exemption u/s 80IA of the Act. Firstly, we note that Hon’ble Apex Court laid a basic principle for interpretation of beneficial taxation statutes in the case of Bajaj Tempo Ltd. (supra) which reads as follows:-

'A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate it.

BY THE COURT: 'If a provision for checking abuse is found to have resulted in nullifying the very purpose of its enactment and the Legislature intervenes, then it can be assumed that the Legislature, having been satisfied of the failure of the purpose for which the provision was inserted, proceeded to cure the defect by suitably amending the provision or removing it.'

33. In the decision of ABG Heavy Industries (supra) the Hon’ble Bombay High Court referring to the ratio of the decision of Hon’ble Apex Court in the case of Bajaj Tempo (supra) held the assessee did not have to develop the entire port/project into to qualify for a deduction u/s 80IA of the Act. Their lordships further held that the Parliament did not legislate a condition impossible of compliance. The relevant operative part of this order reads as follows:-

'19. The obligations which have been assumed by the assessee under the terms of the contract are obligations involving the development of an infrastructure facility. Section 80-IA of the Act essentially contemplated deduction in a situation where an enterprise carried on the business developing, maintaining and operating an infrastructure facility. A port was defined to be included within the purview of the expression "infrastructure facility". The obligations which the assessee assumed under the terms of the contract were not merely for supply and installation of the cranes, but involved a continuous obligation right from the supply of the cranes to the installation, testing, commissioning, operation and maintenance of the cranes for a term of ten years after which the cranes were to vest in JNPT free of cost. An assessee did not have to develop the entire port in order to qualify for a deduction under section 80-IA. Parliament did not legislate a condition impossible of compliance. A port is defined to be an infrastructure facility and the circular of the Board clarified that a structure for loading, unloading, storage, etc., at a port would qualify for deduction under section 80-IA. The condition of a certificate from the Port Authority was fulfilled and JNPT certified that the facility provided by the assessee was an integral part of the port. The assessee developed the facility on a BOLT basis under the contract with JNPT. On the fulfillment of the lease of ten years, there was a vesting in the JNPT free of cost.'

34. Therefore, in view of ratio laid down by Hon’ble Apex Court in the case of Bajaj Tempo (supra) and by Hon’ble Bombay High Court in the case of ABG Heavy Industries (supra), we respectfully note that a provision in taxing statute granting incentives for promoting growth and development should be construed liberally and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it also has to be construed so as to advance the objective of the provision and not to frustrate it or to defeat its purpose. We further respectfully note the ratio of the decision of Hon’ble Bombay High Court in the case of ABG Heavy Industries (supra) wherein it was categorically held that the assessee did not have to develop the entire port or project in order to qualify for exemption u/s 80IA of the Act and that should not be an intention and expectation of legislature to legislate a condition impossible of compliance.

35. Turning to the facts and circumstances of the present case, we note the ld. AR has contended that at the instance of the AO, the assessee submitted various replies to the queries of the AO including reply dated 28.12.2011(PB page 187 to 193) wherein it was submitted that as per requirement of section 80IA(4)(i) of the Act the assessee company is a special purpose vehicle (SVP) company incorporated and registered in India and it has entered into a concession agreement with a statutory body i.e. Taj Expressway and Industrial Development Authority (TEA) constituted under the UP Industrial Development Act, 1976 and has also started its operation from April 5, 2007, therefore, the condition laid down in clause (c) is wholly satisfied. Ld. AR further pointed out that u/s 80-IA (4)(i) of the Act, deduction is available even to an enterprise only developing the infrastructure facility. Ld. AR further explained that an enterprise not operating and maintaining the infrastructure facility but only developing the same is also eligible for exemption u/s 80IA of the Act. The ld. AR also pointed out that if a view is taken that as per clause (c) of section 80IA(4)(i) of the Act, the deduction is available only after the enterprise starts 'operating and maintaining' the infrastructure facility, the enterprise only developing such infrastructure facility would never be eligible for any deduction under this section, because after completion of only development of infrastructure facility, such an enterprise would never 'operate and maintain' the infrastructure facility.

36. Ld. AR, reiterating its earlier arguments submitted that it is a well settled position that the beneficiary provisions in the taxation statutes should be interpreted in such a manner so it subserves the purpose for which it is enacted and does not frustrate the object behind the statute and its purpose. Accordingly, ld. AR submitted that in order to fulfil the purpose of section 80IA(4)(i) i.e. to make even income from development of infrastructure facility eligible for deduction u/s 80-IA(4)(i) of the Act, clause (c) of the same provision of the Act should be read as 'has started or starts developing or operating or maintaining or developing, operating and maintaining the infrastructure facility on or after 1st day of April 1995.'

37. Ld. AR strenuously contended that if clause (c) is interpreted in the manner as adopted by the ld. CIT, the it would be interpreted to cover the cases only relating to operation and maintenance of the infrastructure facility, the entire reason and purpose for amending section 80IA(4)(i) to separately allow deduction for development of infrastructure facility would lose its purpose.

38. Having heard arguments of both the sides and after having gone through relevant material placed on record, written submissions, gist of case laws relied by both the parties, we note that the main controversy in this case is mainly that the assessee is claiming that as per objects of the company, concession agreement and main activities of the company, the company developed a toll road between Noida and Agra and his claim for deduction falls on four corners within the ambit of clause (a) of Explanation to section 80IA(4)(i) of the Act. Per contra, the main contention of the ld. CIT, Noida is that the assessee developed 'a highway project' which was inaugurated on 9.8.2012 by Hon’ble Chief Minister, Government of UP which falls under clause (b) of Explanation to section 80IA(4)(i) of the Act and said period is related to financial year 2012-13 pertained to AY 2013-14 and since the project of the assessee had not started its operation in the period related to AY 2009-10, therefore, the AO wrongly allowed the claim of the assessee.

39. Ld. AR submitted that the assessee company was incorporated under the Companies Act 1956 as a special purpose vehicle (SPV) on 5.4.2007 for developing, operating and maintaining the toll road between Noida and Agra along with service road and associated structures with rights to collect toll during the concession period and also given rights for sub-lease/development of land as an integral part of Expressway project. Ld. AR further submitted that Taj Expressway Industrial Development Authority (TEA) was constituted by Government of UP vide Notification No. 697/77-4-2001-03(N)/2001 dated 24.04.2001 under UP Industrial Area Development Act 1976 which invited offers from interested parties of national and international stature on 14.5.2001 for development/operation and maintenance of six lane access controlled Expressway.

40. Ld. AR further submitted that M/s Jaiprakash Associates Ltd. (JAL) (formerly known as Jaiprakash Industries Ltd.) was declared the successful Bidder as the Concession Period offered by it was lowest i.e. 36 Years. Ld. AR further submitted that as per the directions of Inquiry Commission headed by the former Hon’ble Judge of High Court of Patna and Calcutta, the TEA and the JAL incorporated Special Purpose Vehicle (SPV) viz. Jaypee Infratech Limited the assessee company, for development operation and maintenance of 6 lane access controlled Expressway by way of execution of an Assignment Agreement for the purpose of assigning the assignment of the Concession Agreement in the name of assessee company i.e. Jaypee Infratech Limited (JIL) on 19/10/2007. The ld. AR also pointed out that to implement all the objects of the Concession Agreement dated 7/2/2003 between Jaiprakash Industries Ltd. (now Jaiprakash Associates Ltd.) and Taj Expressway Industrial Development Authority (TEA), the assessee company was formed as a Special Purpsoe Vehicle (SVP) on 5.4.2007 and after incorporation of assessee company, the said assignment agreement (supra) was also executed on 19/10/2007.

41. Elaborating objects and project details, the ld. AR submitted that the concept of the Taj Expressway project was an outcome of the Policy decision of the Government of U.P. under the statute called U.P. Industrial Area Development Act, 1976 (U.P. Act No of 1976) and in exercise of the power as vested under section 3 of the said Act, the Government of UP constituted an Implementing Authority namely, "Taj Expressway Industrial Development Authority" (TEA) just prior to launching the project viz. the expressway connecting Noida with Agra was about 160 Kms of length and it was to pass through the virgin area of UP State along the Yamuna River.

42. Ld. AR further submitted that the TEA has granted rights of land development ofn25 million sq. mtrs land provided to the assessee on lease for the period of 90 years, along the proposed 100 meters wide Expressway for commercial, amusement, industrial, institutional and residential development. Ld. AR pointed out that the TEA provided the "land for development" along the Expressway at five or more locations of which one location was in Noida or Greater Noida with an area of 5 million sq. mtrs. The aforesaid land for development was in addition to the land for construction of Expressway and was an integral and inseparable part of the infrastructure facility project. Ld. AR also contended that the land for expressway and land for development was made available by the TEA for the assessee company at the consideration of cost of acquisition plus Rs.100 per hectare per year lease rent and the assessee company was not given any title right on the land used for expressway which was agreed between the parties of the Agreement to be returned after expiry of concession period of 36 years.

43. Ld. AR elaborating the consideration for infrastructure facility submitted that the assessee company was entitled to collect and retain the Fee or toll from the users of the Expressway for concession period of 36 years and amounts from the rights to further lease out the developed/undeveloped land (at five or more locations with an area of 5 million sq. mtrs. per land parcel) to subleases/ end-user out of the land provided by the TEA to the assessee. Ld. AR further submitted that the toll fee to be charged from the customers was not to exceed the fee as may have been notified by Government of UP. Ld. AR strongly pointed out that the "Land for Development" is actually a consideration like the toll fee since the toll fee alone would not have been able to ensure positive return on equity on the Project.

44. Ld. Counsel has also drawn our attention towards decision of Hon’ble Supreme Court of India dated 8.9.2010 in Civil Appeal No. 7468 of 2010 Nand Kishore Gupta & Others vs State of UP with other civil appeals and submitted that a public interest litigation was filed with an allegation of inadequate consideration of acquisition of land which was dismissed by Hon’ble Supreme Court by holding that the expressway is a work of immense public importance and creation of land parcels by way of land development along with expressway would give impetus to the industrial development of the state creating more jobs and helping the state economy and thereby helping the general public. Ld. AR has further drawn our attention towards findings of the Inquiry Commission headed by Hon’ble Former High Court Judge, and submitted that Inquiry Commission also held that it was necessary to strengthen economic viability of the project by some mechanism and, therefore, it was decided to provide 2500 hectare of land for development to the successful bidder along with the proposed expressway. Ld. AR also added that the inquiry commission held that the Taj Expressway, being a landmark event in the industrial development of state of UP, is of immense public utility and also in the national interest. Ld. AR specially pointed out that there is no obligation on the assessee company under the concession agreement to carry out housing activities on the land for development which is a narrow area and land for development was given along the proposed the 100 metre expressway, for industrial, commercial, institutional, amusement and residential development to the assessee company.

45. Ld. AR also again took us to the provisions of section 80-IA of the Act and submitted that the deduction u/s 80IA(1) is to be given on profits and gains derived from an undertaking or enterprise from any business referred to in subsection 4 i.e. eligible business and the word 'business' is wide enough to cover within its scope all activities that are 'integral part' of the business of toll road development. Ld. AR also submitted that it was the income from business undertaking which is to be deducted and not only the income or revenue from toll fee. Placing reliance on the decision of Hon’ble Delhi High Court in Dharam Pal Prem Chand Ltd. 317 ITR 353 (Del.) and another decision in the case of CIT v. Eltek SGS P. Ltd. 300 ITR 6 (Del.) submitted that the term 'income from business' would include all income emanating from the same.

46. Ld. AR turning to the facts of the present case submitted that any income arising from such land, allotted to the assessee for development, would also be regarded as income derived from the business of development, operation and maintenance of the infrastructure facility i.e. the toll road and it is that income which the assessee company has claimed as deduction under clause (a) of explanation to section 801A(4)(i) of the Act, during the assessment year under consideration. Ld. AR also submitted that the word 'business' is wide enough to cover within its scope the profits from all activities that are integral part of the business of toll road development which obviously falls under clause (a) of Explanation to section 80IA(4) of the Act and the same would be exempt from tax. Ld. AR has further pointed that the assessee company is in the business of developing, operating and maintaining 'road including toll road' which was commenced on 5.4.2007, therefore, the conditions laid down in clause (c) of sub-section 4(i) of section 801A is satisfied in the present case and accordingly, the deduction under section 801A ought to be allowed to the Assessee Company and the view taken by the AO while granting exemption to the assessee is a plausible and reasonable view which cannot be said to be a view erroneous or prejudicial to the interest of revenue and unsustainable in law.

47. Ld. AR reiterating its written submissions vehemently contended that case of the assessee is covered by section 80IA(4)(i) r/w clause (a) of explanation thereto, as we are developing, maintaining and operating infrastructure facility as defined in the said explanation (a) as 'road including toll road'. Ld. AR elaborating the financial rights and obligations on the assessee company submitted that the development rights on the land and income therefrom are integral and inseparable part of the consideration to the assessee company in respect of facility involved being toll road the rider created in section 80IA(6) apply to the infrastructure facility entity that fall in the definition of 'highway project including housing or other activities being an integral part of the highway project' as defined in clause (b) of explanation to section 80IA(6) of the Act. Ld. AR vehemently contended that the restriction imposed by the legislature u/s 80IA(6) is not applicable to the assessee company and the limits and requirement in the said section apply to 'highway project' as defined in clause (b) of explanation to section 80IA(4)(i) of the Act and not to the 'road including toll road' as mentioned in clause(a) of Explanation to section 80IA(4)(i) of the Act, including integral and inseparable part of the development rights and income therefrom on the land given to the assessee company for development as major part of consideration for the infrastructure facility project.

48. Ld. AR also submitted that the assessee company is eligible for exemption under clause (a) of Explanation 80IA(4)(i) of the Act, the assessee company, without prejudice to the aforesaid contentions, have also made an alternative claim u/s 80IA(6) of the Act, that if it is concluded that the assessee company is not eligible for exemption under clause (a) of explanation, then the assessee company may be considered eligible under clause (b) of explanation to section 80IA(4) of the Act. Ld. AR further pointed out assessee’s Paper Book page no. 79 and tax audit reports and submitted that the business of the assessee company is that the assessee company is engaged in development, operation and maintenance of six lane access controlled Expressway along with service road and associated structures and sale/development of leasehold land provided by TEA for development along the proposed expressway. Ld. AR has also drawn our attention to assessee’s paper book page no. 85 and submitted that as per auditor’s report, form no. 10CCB for AY 2009-10, the assessee company’s business was development, operation and maintenance of six lane access controlled Expressway between Noida and Agra along with service road and associated structures and sale/development or leasehold land along with the proposed Expressway.

49. Precisely, the contentions of the appellant company are that the assessee has entered into a contract with TEA for development of a expressway and development of 25 million sq mtr land adjacent to expressway which is a 'toll road' as the assessee was granted right to collect toll/ fee from the users of expressway, therefore, the assessee is entitled for exemption under clause (a) of explanation to section 80IA(4)(i) of the Act. It is also the contention of the assessee company that the assessee is in the business of developing, operating and maintaining 'road including toll road', for which the business has commenced on 5.4.2007, therefore, the operation and maintenance of such road had started after 1.4.1995, accordingly, the condition laid down in clause (c) of sub-section 4(i) of section 80IA of the Act is satisfied in the assessee’s case and exemption under clause (a) of Explanation to Section 80IA(4)(i) of the Act was rightly allowed to the assessee.

50. The precise reply and contentions of the revenue is that the assessee’s business activities fall under clause (b) of explanation to section 80IA(4)(i) of the Act i.e. 'a highway project including housing or other activities being an integral part of the highway project'. The ld. CIT DR further contended that since the assessee company has not commenced business operations during the year under consideration and the assessee has begun to operate infrastructure facility w.e.f. 9.8.2012, when the expressway was inaugurated, hence, prior to this date, the assessee had earned only profits which are attributable to sale of land which was transferred to it in the terms of concession agreement, therefore, the assessee would be eligible for deduction u/s 80IA only w.e.f. AY 2013-14. On this issue, it was also contended by the ld. CIT DR that in respect of an assessee claiming to be engaged in building infrastructure facility in the nature of a highway project including housing and other activities being an integral part of the highway project, the profits arising from housing and other activities would be exempt from tax under sub-section (6) of the section 80IA. Further, the manner in which the profits of housing and other activities are to be computed for the purpose of sub-section (6) are specified in rule 18BBE of the IT Rules, 1962 which mandates the maintenance of separate books of accounts for the activities of housing and other activities and also requires the submission of a certificate specifying the amount so credited to the reserve account and the amount utilized during the relevant previous year for highway project and it was also required that such certificate is to be furnished in Form 10CCC which should be submitted along with return of income.

51. Ld. AR also placed a rejoinder to the above submissions of the ld. CIT DR that the concession agreement was executed for development of expressway and development of road. Ld. AR has further drawn our attention towards assessee’s paper book page 180 to 184 and submitted that it was clarified before the AO that in consideration of the assessee, in agreeing to develop, design, engineer, finance, procure and construct toll road, the assessee has been granted right for land development of 25 million sq mtr of land in addition to the right to collect 'toll fee' and the revenue/profits generated from sub-leasing of the plots/land earned by the assessee company or the income derived from the 'business' of development of road also covers within its scope the profits from all activities that are integral part of the business of the road development. Ld. AR also invited our attention towards Form No. 10CCB r/w auditor’s certificate under Rule 18BBB that the assessee is certified to be engaged in developing, operating and maintaining the infrastructure facility which is certified to be 'road including toll road'.

52. On careful consideration of above rival submissions, we note that firstly it would be just and proper to consider the meaning of the 'highway', 'Expressway', 'Toll', 'Toll gate', 'toll plaza' and 'road including toll road' which are being repeatedly used by both the sides during arguments. We may point out that these words have not been defined in Income Tax Act and neither the ld. AR nor ld. CIT-DR has placed any reference of meaning to the above stated terms. Therefore, we are compelled to refer available dictionaries to properly understand the appropriate meaning of these terms/words for proper adjudication of actual aspects of this case, which read as under:-

(A) Highway - a public road that everyone has right to use (Ref. Chamberlain dictionary, First Indian Edition 2001 at page 635)

A public road especially an important road that joins cities or towns together (Ref. Cambridge Dictionary, low price edition 1996 at page 669)

(B) Expressway - a major road for fast moving traffic, especially with three lane per carriageway and limited access and exit points (Ref. Chamberlain dictionary, first Indian edition 2001 at page 462 & 892.)

A wide road built for fast moving traffic travelling long distances with a limited number of points at which drivers can enter and leave it. (Ref. Cambridge dictionary, low price edition 1996 at page 485)

(C) Toll - a charge payable to use of a bridge or road (Ref. Concise Oxford Dictionary, at page 1507)

(D) Toll gate - a barrier across a road where a charge must be paid to proceed further (Ref. Concise Oxford Dictionary, Edition at page 1507).

A gate at the start of a road or a bridge at which you pay an amount of money in order to use the road or bridge. (Cambridge Dictionary, low price edition 1996 at page 1533)

(E) Toll Plaza - a row of toll booths on a toll road (Ref. Concise Oxford Dictionary edition at page 1507)

(F) It is pertinent to note that 'Toll plaza' has also been defined at page 9 of the concession agreement as structures and barriers erected on the Expressway. For the purpose of regulating the entry/exit of vehicles in accordance with the provisions of this Agreement.' The word 'Tolling contract' has been also defined at page 9 of the agreement as the contract, if any, entered into by the concessionaire i.e. assessee with tolling contractor for operation of 'Toll Plazas', including collection of fees for and on half of the concessionaire.'

53. In view of above referred definitions, in our humble understanding, a 'highway' is a public road that everyone has right to use; an 'Expressway' is major road for fast moving traffic with three lane per carriage way, meaning thereby both way six lane, with controlled limited access and exit points; whereas a 'Toll' is a fee or charge payable to use of a road or bridge; Tollgate' is a gate at the start of a road or bridge at which user pays an amount of money (toll). For the use of road or bridge; and 'Toll plaza' is a row of toll booths on a toll road.

54. Turning to the facts of the present case, we may note that in the concessionaire agreement the words, 'highway' and 'toll road' have not been used and the word 'Expressway' has been used several times which has been defined at page 6 of the agreement as the access controlled 6-lane Expressway between Noida and Agra with service roads and associated facilities and on the same page 6 of the agreement the word 'Fees' has also been defined as 'Fees means the charges levied on and payable for vehicles using the Expressway in accordance with the fees as may be settled under this agreement.' The cumulative meaning of these words used in definitions and other stipulations of the agreement make it vivid that there was a contract between assessee company and the TEA for developing, operating and maintaining a six lane controlled access Expressway with limited access and exit points between Noida and Agra and a fees/toll was payable to assessee company for vehicles using the Expressway at toll plazas i.e. at row of toll booths on toll road.

55. Ld. DR placing reliance on the decision of Hon’ble Supreme Court in the case of Ishikawaijima Harima Heavy Industries Ltd. vs DIT, Mumbai (2007) 288 ITR 408 (SC) submitted that the object of the contract in question may be inferred from the stipulation and terms and conditions of the contract and as per intention of the parties to the contract, any other meaning or intention can not be given to the contract and the agreement (supra) between the assessee company and TEA is intended to develop, operate and maintain a 'toll road', therefore, the AO took a reasonable and plausible view in allowing exemption u/s 80IA(4) of the Act.

56. The relevant operative part of decision of Hon’ble Supreme Court in the case of Ishikawaijima Harima Heavy Industries Ltd. (supra) reads thus:-

'In constructing a contract, the terms and conditions thereof are to be read as a whole. A contract must be construed keeping in view the intention of the parties. No doubt, the applicability of the tax laws would depend upon the nature of the contract, but the same should not be construed keeping in view the taxing provisions.'

57. On the basis of foregoing discussion, we are of the considered opinion that the business activities of the assessee company fall within the ambit of clause (a) of Explanation to section 80IA(4)(i) of the Act. We decline to agree with the ld. CIT-DR that the assessee is engaged in the development of infrastructure facility of a 'highway including housing or other activities being an integral part of the highway project'.

58. Although the ld. AR has also placed an alternative claim u/s 80IA(6) but in view of our observations and findings, as set out above, the alternative said claim of the assessee and objections of ld. CIT DR about non-compliance of requirement of sub-section (6) of section 80IA of the Act becomes academic and infructuous and we refrain ourselves to deliberate further on the alternate claim of the assessee as well as legal objections of ld. CIT DR.

59. Now reaching to next issue that whether the assessee company is eligible for exemption u/s 80IA(4)(i) of the Act for its income from sale/sub-lease of land for assessment year under consideration viz. 2009-10, ld. DR, at the very beginning, submitted that the AO granted exemption under clause (a) of explanation to section 80IA(4)(i) of the Act not only in AY 2009-10 but the same deduction under similar set of facts and circumstances was also granted to the assessee for AY 2010-11. Ld. AR placing reliance on the decision of Hon’ble Supreme Court/High Court in the case of Ishika (supra) submitted that the meaning and object of a contract can only be understood by the contents of contract and the intention and purpose of the contracting parties and no authority including taxing authorities are allowed to interpret the contract in arbitrary manner which goes beyond the contents of the contract and intention of the contracting parties.

60. Ld. AR further contended that the assessee company entered into any concession agreement with TEA for development of an Expressway between Noida and Agra and assessee was given a right to collect toll/fees from the users of Expressway, hence, Expressway was actually a toll road. Ld. AR further pointed out that the assessee company, in addition to collection of toll right, was also granted 25 million sq. Meter land for development on cost of acquisition plus lease premium of Rs. 100/- per hectare per annum and in turn the assessee company was under obligation to develop, design, engineer, frame, procure and construct toll road and hence, the income from sale/development of land was indeed income derived from 'Business' of development of road and would be eligible for deduction.

61. Ld. AR, reiterating assessee’s arguments and submissions before AO vide letter dated 21.12.2011, submitted that the consideration for developing, operating and maintaining the said infrastructure facility is provided, inter alia, by way of right to develop and sub lease the adjoining land allotted to assessee is evident from concession agreement executed between assessee and the TEA and relevant extracts, conditions and clauses clearly demonstrate that the assessee was under obligation of development, operation and maintenance of the Expressway and development of 25 million sq. Metre land along the proposed Expressway for commercial, industrial, institutional, amusement and residential development. It was also explained that as per concession agreement, the assessee company was under obligation to pay cost of acquisition plus lease rent of Rs.100/- per hectare per annum for the land proposed to be used for construction of Expressway and also for the 25 million square Meter land for development along the proposed expressway at five or more locations. Ld. AR further explained that the assessee was not granted any title over the Expressway and land used for construction of Expressway except right to collect toll/fees as prescribed by Govt. of UP from time to time only during concession period of 36 years and assessee was granted land for development with right to further sub-lease developed or undeveloped land to sub lessees or land users.

62. Ld. DR has further drawn our attention towards Chapter IV of concession agreement clauses 4.3(d), 4.4 and 4.5 and submitted that the object of the infrastructure scheme can be seen from the global tender notice inviting offers to show that the infrastructure facility as envisaged was road including toll road along with development of infrastructure for commercial, industrial, amusement, residential and institutional development. Further, the land was to be offered on acquisition cost on lease for 90 years by the TEA and the development of the said land and works thereon was a means for compensation and consideration to the infrastructure developer i.e. the assessee in view of the same. It was an obligation on the assessee towards the objective of the infrastructure development and as source of funds for meeting the investment involved in the project. Ld. AR vehemently contended that in view of above facts, the revenue/profits generated from sub-leasing of plots/land earned by the assessee are definitely an income derived from the 'Business' of development of road and would be eligible for deduction. Ld. AR pointed out that the development of land was an integral and inseparable part of the business of road development due to its inextricable proximity with financial viability of the project and the word 'Business' is wide enough to cover within its scope the profits from all activities that are integral part of road development. To support assessee’s claim, ld. AR also pointed out that since sub-lease of plots is made pursuant to the rights granted under the concession agreement, therefore, the income earned from sub-lease of land plots is the income derived from 'Business' of road development and hence, the same eligible for exemption u/s 80IA(4)(i) of the Act because the assessee started its business operations from 5.4.2007 onwards.

63. Ld. AR has again drawn our attention towards submissions of the assessee dated 23.12.2011 before the AO and submitted that the income from sub-lease of land for development is income derived from the business of infrastructure facility. Ld. AR further illustrated that in case the assessee had received a sum of money as consideration from the state government, then undisputedly the said sum of money would be income from the business of infrastructure facility and if instead of a sum of money, the assessee has been allotted land for development with related rights and obligations, then obviously the income on sub-lease of the land is just a sum of money in kind on its realisation and is income from the business of said infrastructure facility. Ld. AQR further contended that the said income from sub lease of land has been utilized for developing the infrastructure facility and same was actually utilized during the relevant financial year for infrastructure facility project and the overall cost/capital expenditure was for exceeding from the income derived therefrom and as such there was no taxable income.

64. Ld. CIT DR replied in her written submissions that the clause (b) of Explanation to section 80IA(4)(i) of the Act refers to a 'highway project including housing or other activities being an integral part of the highway project' is applicable to the extant case and so sub section (6) states that notwithstanding anything contained in sub-section (4) of section 80IA of the Act, where housing and other activities are integral part of the highway project and the profits of which are computed on such basis and manner in which the profits of housing and other activities are to be computed for the purpose of subsection (6), are specified in Rule 10BBE. The said Rule mandates maintenance of separate books of accounts for the activities of housing and other allied activities and further submission of an auditors’ certificate in Form 10CCC is required certifying that the amount of income was credited to reserve account and the said amount was utilized during the relevant previous year for the highway project. Ld. CIT DR strenuously contended that when it is apparent from the concession agreement and other relevant facts that in respect of an assessee claiming to be engaged in building and infrastructural facility in the nature of a highway project including housing and other activities being an integral part of the highway project, the profits arising from housing and other activities would be exempt from tax under sub-section (6) of section 80IA of the Act whereas the profits arising exclusively from highway project would be admissible for deduction u/s 80IA(i) r/w sub-section (2) and (2A) and since the assessee has not maintained separate books of accounts, has not transferred the amount of profit from housing and other activities to a special reserve and also has not submitted a required certificate in Form No. 10CCC to certify the fact that the amount of reserve has been actually utilized for the highway project during relevant previous year, therefore, the assessee is not eligible for exemption u/s 80IA of the Act for income derived during the year under consideration.

65. Ld. CIT DR also contended that the assessee has begun to operate the infrastructure facility w.e.f. 9.8.2012 when the Expressway was inaugurated by the Hon’ble Chief Minister of UP and hence prior to this date, it had only earned profits from sale or sub lease of land which was admittedly transferred to the assessee under terms of the concession agreement and therefore the assessee would be eligible for deduction/exemption u/s 80IA of the Act only w.e.f. AY 2013-14 (relevant to FY 2012-13).

66. Ld. CIT DR also submitted that without prejudice to the contention that the claim of the assessee is squarely covered under sub-section (6) of section 80IA of the Act, even if the argument of the assessee that the claim of the assessee falls under sub-section (4) thereof is accepted, and when the assessee entered into an agreement with the State Government of UP for 'developing, operating and maintaining a new infrastructure facility and therefore its business activities squarely falls within clause (b) of Explanation to section 80IA(4)(i) f/w clause (iii) of the Act and since sub-section (2) of section 80IA categorically states that the deduction will be admissible 'beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility' no deduction for income generated by activities of such infrastructure facility and/or any allied activity would be eligible for deduction in any year prior to the beginning of operations of the infrastructure facility. Ld. CIT DR also pointed out that as per sub-clause (c) of clause (i) of sub section (4) of section 80IA of the Act, the deduction would be admissible to the enterprise which 'has started or starts operating and maintaining the infrastructure facility on or after 1st day of April, 1995' and therefore, the deduction to the assessee which has entered into an agreement for developing, operating and maintaining an infrastructure facility, under provisions of section 80IA(4) of the Act would be admissible only from the year in which the operation of facility begins.

67. Ld. CIT DR pressing its written submissions, further argued that in response to query raised by the AO, the assessee advanced twin arguments, firstly, referring to the words and language of clause (c) of sub section (4) 'it has started or starts operating and maintaining the infrastructure facility' the assessee submitted that the expression 'starts' covers future events and the assessee deliberately omitted to refer the last part of clause (c) i.e. after 1st April 1995'. Ld. CIT-DR has drawn our attention towards page 4 of her written submissions and submitted that the word 'started' is intended to cover cases where the operation and maintenance has commenced prior to 1.4.1995 and word 'starts' is intended to cover cases where the commencement is after 1.4.1995. Ld. CIT DR further pointed out that clause (c) specifies one of the mandatory conditions of eligibility of deduction and only clarifies that the projects which have started operation and maintenance prior to the specified date or after the specified date will be eligible for deduction and clause ( c), in no way can or is intended to override the stipulation in sub-section (2) which mandates availing of deduction, in the cases of eligible projects, only from the beginning of the operation facility. Ld. CIT DR also pointed out that the wording of clause ( c) of sub section (4) reiterates the condition of sub section (2) inasmuch as it makes the start of the operation and maintenance of infrastructure facility, a prerequisite for the grant of deduction.

68. Ld. CIT DR further drawing our attention towards her written arguments submitted that the assessee raised second argument before the AO that the deduction u/s 80IA(4)(i) is admissible also to an undertaking which only develops the infrastructure facility but does not operate it, therefore, the admissibility cannot be reckoned with reference to the commencement of operation. Ld. CIT DR vehemently contended that this argument of the assessee is not acceptable because the case of the assessee is one in which it has entered into an agreement for developing, operating and maintaining infrastructure facility a distinct category of eligible project specifically covered under sub-clause (iii) of clause (c) of section 80IA(4) of the Act and the assessee has not entered into an agreement only for developing of infrastructure facility as envisaged in sub-clause (i) of clause (c) of sub-section (4) and as per provisions of the Act, the exemption/deduction would be admissible only on the commencement of the operation.

69. Ld. CIT DR also tried to lead us to interpret the relevant provisions of the Act and submitted that the contention of the assessee is not acceptable that the development of infrastructure facility would not be eligible for exemption if the commencement of operation of infrastructure facility is accepted as prerequisite for exemption as the assessee has not entered into an agreement only for development of infrastructure facility but for development, operation and maintenance of infrastructure facility. Ld. CIT DR also submitted that there can be an instance where an assessee has entered into an agreement with Centre/State Govt./Statutory Authority only for development of infrastructure facility and after completion of development, the developer assessee transfers such facility to another entity and in consideration thereof, receives consideration and earns profits, then transferor is entitled to deduction arising to it i.e. transferor entity and for this situation, the statute of the Act provides that in such cases also, the deduction would be available to the developer and therefore a provision has been provided to clause (c) of sub-section 4 of section 80IA of the Act.

70. Ld. AR placing rejoinder to the above legal contentions of the revenue, submitted that the language used in clause (c) is 'has started' or 'starts'. The expression 'has started' indicates the events which have already occurred whereas the expression 'starts' indicates the events which would occur and since the assessee is in the business of developing, operating and maintaining 'road including toll road' which business has commenced on 5.4.2007, therefore, the condition laid down in clause (c) of sub-section 80IA(4)(i) is wholly satisfied. Ld. AR, reiterating his arguments before the AO, submitted that deduction is available even to an enterprise only 'developing the infrastructure facility', meaning thereby an enterprise not operating and maintaing the infrastructure facility but only developing the same is also eligible for deduction u/s 80IA of the Act. Ld. AR also contended that if a view is taken that as per clause (c) of section 80IA(4)(i) the deduction is available only after the enterprise starts 'operating and maintaining' the infrastructure facility, the enterprise only developing such infrastructure facility would never be eligible for any deduction under this section, because such an enterprise would never 'operate or maintaining' the infrastructure facility. Ld. AR repeated his earlier arguments and submitted that it is a settled legal preposition that a provisions should be interpreted in such a manner so that it subserves the purpose for which it is enacted and does not frustrate the same.

71. In our humble understanding, statutory provision should be interpreted in the light of intention of legislation, heading given to the provision, language used therein and the context in which the particular proviso of the Act requires interpretation. The heading given by legislature to section 80IA of the Act reads as under:-

'Deduction in respect of profits and gains from Industrial undertaking or enterprises engaged in infrastructure development etc. '

72. Meaning thereby the provisions of Section 80IA of the Act is related to the deduction in respect of profits and gains from enterprises engaged in infrastructure development etc. We further note that as per language used therein sub-section (1) grants deduction in respect of any profits and gains derived by an undertaking or an enterprise from any business referred to in subsection (4) thereof, under sub-section (2) the admissible deduction is 100% of the profits and gains of eligible business for ten (10) consecutive assessment years (AY) out of twenty (20) AYs beginning with the AY in which such undertaking or enterprise develops and begins to operate any infrastructure facility referred in clause (iii) of sub-section (4).

73. We may further note that sub-section (4)(i) r/w clause (a) and (b) are related to deduction in respect of the enterprise carrying on business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils the following conditions:-

(a) It is owned by a company registered in India or by consortium of such companies;

(b) It has entered into an agreement with Central Government or a State Government or a local authority or any Statutory Body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility.

(c) It has started or starts operating and maintaining the infrastructure facility on or after 1st day of April, 1995. As per proviso to sub-clause (c) above in case of transfer of infrastructure facility or after 1.4.1999 by an enterprise which developed such infrastructure facility or transferor enterprise to another enterprise i.e. transferee enterprise shall apply to the transferee enterprise as if it were the enterprise to which this clause (c) applies and the deduction form profits and gains would be available to such transferee enterprise for the remaining or unexpired period. The above noted meaning of aforesaid provisions is apparent from the language used therein.

74. Now if we consider the object of legislation, then as we have noted earlier that as per the heading given to the provision of section 80IA of the Act, the object of legislation is to provide deduction to the enterprises which are engaged in infrastructure development etc. It means that the infrastructure development is the main object of this provision to encourage entrepreneurs to put their resources and endeavours towards infrastructure development. In sub-section (2) the words 'develops and begins to operate any infrastructure facility' have been used. We also note that explaining the first and second condition or eligibility of deduction is prescribed in clauses (a) and (b) to sub-section (4)(i) of the Act.

75. Noticeably, sub-section (4)(i) mandates that any Enterprise carrying on the business of (i) development or (ii) operating and maintaining or (iii) developing, operating and maintaining any new infrastructure facility will be entitled for deduction explaining the third condition for eligibility of deduction whereas in clause (c) to sub-section (4)(i) it has been prescribed that the enterprise would be eligible for deduction when it started or starts operating and maintaining the infrastructure facility on or after 1st day of April 1995.

76. Before going further to interpret third condition prescribed in clause (c) of sub-section (4)(i) as per our humble understanding, we note that the development is a continuous process which starts from the date of commencement of business and beginning of the development activities and comes to an end when development work concludes and thereafter operation and maintenance thereto is started. When the intention of legislation is that the entrepreneurs should be encouraged and promoted towards infrastructure development etc., then it is a positive inference that the legislation intended to grant deduction for the enterprises which only develops or which operates and maintains or which develops, operate and maintain infrastructure facility. Our aforesaid view also finds support from proviso to sub clause (c) to section 80IA (4)(i) of the Act, wherein it is also provided that if developer of an infrastructure facility transfers the same, then the transferee enterprise would also be eligible for deduction as if it were the enterprise to which this clause (c) applies i.e. transferor enterprise, meaning thereby the enterprise which only develops infrastructure facility is eligible for deduction and in case developer transfers the facility for operation or maintenance to another enterprise then the transferee would also be eligible to deduction for the remaining or unexpired period as per sub section (2) or other relevant provisions of the Act. Hence, in view of above discussion, we may point out that the legislation has categorically adopted the date of 1st day of April 1995 for mandatory starting or commencement date of infrastructure facility development and the enterprises which started developing or starts operating and maintaining infrastructure facility on or after 1str day of April, 1995 are held to be eligible for deduction u/s 80IA(4)(i) of the Act.

77. We may further observe that the elaborate meaning of collective and cumulative reading of sub section (2) and (4)(i) mandates three pre-conditions in clause (i) of sub-section (4) viz. (a), (b) and (c) and it is required for the enterprise which claim deduction that all three conditions should be fulfilled simultaneously. If the intention of legislation was the deduction would be allowed only to the enterprise who develops and begins to operate and maintain infrastructure facility then it was not required to segregate or mandate the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining as stipulated in sub section (4)(i) and condition (a) and (b) thereto. This interpretation also finds support from proviso to subclause (c) i.e. third condition wherein the transferee of infrastructure facility is also held to be eligible in the same manner in which the transferor which developed such infrastructure facility, is eligible for the remaining or unexpired period of deduction. In this situation, we may safely infer or draw a conclusion that the intention of the legislation is to grant deduction not only to an enterprise which develops, operates and maintains but also to an enterprise which only develop infrastructure facility. We, therefore, decline to acceptance interpretation of section 80IA of the Act as given by ld. CIT DR in her written submissions placed before us during arguments.

78. We further consider the contention of the ld. AR that the company started and began to operate its business activities from 5.4.2007 and irrespective of the fact that the infrastructure facility was formally inaugurated by the Hon’ble Chief Minister of UP Government on 9.8.2012, the assessee is eligible for deduction w.e.f. AY 2009-10 (relevant to Financial Year 2008-09) and onwards as and when business activities of developing infrastructure has begun, then income derived from business would be certainly eligible for deduction. Ld. AR has also contended that the activity of sub lease or sale of land for development, which was received by the assessee as a major part of consideration of project, is an integral and inseparable part of main business activity of development of infrastructure facility, therefore, income/profits derived during AY 2009-10 from sub-lease of land are the first degree operational profits of the business which is eligible for deduction u/s 80IA(4)(i) read with Explanation (a) thereto.

79. Since we have already held that the assessee company is in the business of development of 'road including toll road' infrastructure facility and the enterprises which only develops infrastructure facility are eligible for deduction u/s 80IA(4)(i) of the Act from the date when it begins to operate its business activity of development of infrastructure facility. Ld. CIT DR could not demolish these contentions of the assessee including the contention that the business operations of eligible enterprises visualises the development of infrastructure facility. When development activities come to an end or completed and such activity begins to facilitate the intended users, the act of operation and maintenance starts only after creation of entire or part development of infrastructure facility as per requirement. Further, the development work may spread over years which falls under several assessment period/years and if the beneficiary is expected to complete the project or completion of project is considered to be a pre-condition for deduction, then the eligible developing enterprise will have to wait till completion of the entire project during whole development period, which may have spread over several years, for want of this impractical condition. In this situation, the eligible enterprise would become eligible only in the last year of development wherein development work ends and infrastructure facility begins to operate, this certainly can not be an intention of the beneficial taxation legislation.

80. We further decline to accept the contention of ld. CIT, Noida and ld. CIT DR that since the assessee has not maintained separate books of accounts and has not created a reserve as required in Rule 18BBC and has not field required utilization certificate in Form 10CCC, therefore, the assessee is not entitled for deduction u/s 80IA(4)(i) of the Act as the sale of land or other activities being integral part of its highway project because since by earlier part of this order, we have held that the assessee is in the business of development of infrastructure facility of 'road including toll road' and the assessee activities fall within the ambit of clause (a) of Explanation to sub-section (4)(i) of section 80IA of the Act and allegations and conclusion of ld. CIT, Noida are contrary to the facts and circumstances of the Act.

81. In view of foregoing discussion, we are of the considered view that the beneficial taxation provisions deserve a liberal interpretation which actually subserve the very purpose and object of the legislation and does not defeat or frustrate the same as has been held in several decisions and orders of Hon’ble Supreme Court and High Court including decision in the case of Hon’ble Apex Court in the case of CIT vs Vatika Township Ltd. 367 ITR 466 (SC).

82. A plethora of judgments of Hon’ble Supreme Court and various Hon’ble High Courts have firmly laid down the Rule that a provision for deduction, exemption, incentives, benefits and relief should be interpreted liberally, reasonably and in favour of the assessee as observed by the Hon’ble Apex Court in the judgement in the case of CIT vs. South Arcot City 176 ITR 117 at page 119 (SC). In the judgment of Hon’ble Supreme Court in the case of CIT vs. Mahindra 144 ITR 225 at page 239 (SC) it was further held that the beneficial taxation provisions should be so construed as to effectuate the object of the legislature and not to defeat it.

83. The Hon’ble Supreme Court in the judgment in the case of Prabhakar P.R. Vs. CIT 284 ITR 549 (SC) held that although the exemption provisions are to be construed strictly as regards the applicability thereof to the case of the assessee but once it is found that the same is applicable, the same are required to be interpreted liberally. As per ratio the judgment of Hon’ble Madras High Court in the case of AGS Tiber vs. CIT 233 ITR 207 (Madras), the interpretation of beneficial taxing statue should be liberal but logical. Subsequently, the Hon’ble Supreme Court in the judgment in the case of Mysore Minerals vs. CIT 239 ITR 775 (SC) also held that the beneficial provision should be assigned such meaning as it would enable the assessee to secure benefit intended to be given by the legislature to the assessee.

84. We are sincerely conscious about our limits that we cannot amend, alter or modify the statutory provision in any manner and also it would not be reasonable or permissible for the court to rewrite the section or substitute the words of its own for the actual words used by the Legislature in the name of giving effect to the reposed or supposed underlying object of the statue as observed by Hon’ble Supreme Court in the case of CIT vs. Budhiraja vs. 204 ITR 412(SC). AT the same time, we respectfully take guidance from the recent judgment of the full bench of Hon’ble Supreme Court in the case of CIT vs. Vatika Township Ltd. 3 (supra) wherein, speaking for the constitution bench of Apex Court, their Lordship held as follows at page 494):

'To attain welfare state is our constitutional goal as well, enshrined as one of its basic features, which runs through our Constitution. It is for this reason, specific provisions are made in the Constitution, empowering the Legislature to make laws for levy of taxes, including the income-tax. The rationale behind collection of taxes is that revenue generated therefrom shall be spent by the Governments on various developmental and welfare schemes, among others. At the same time, it is also mandated that there cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the conceptible to two interpretations, the interpretation which favours the sub-established principle of statutory interpretation, to help finding out as to whether particular category of assessee are to pay a particular tax or not. No doubt, with the application of this principle, courts make endeavour to find out the intention of the Legislature. At the same time, this very principle is based on 'fairness'doctrine as it lays down that if it is not very levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax. This principle also acts as a balancing factor between the two jurisprudential theories of justice-Libertarian theory on the one hand and Kantian theory along with Egalitarian theory propounded by John Rawls on the other hand. Tax laws are clearly in derogation of personal rights and property interests and are, therefore, subject to strict construction, and any ambiguity must be resolved against imposition of the tax.'

85. In the shadow of above considerate view if we analyse the facts of the present case, then we have to hold that the AO took a reasonable and plausible view that the assessee is eligible for deduction u/s 80IA(4)(i) read with clause (a) of Explanation thereto. Sub-section (2) also clarifies that the deduction shall be at the option of the assessee and the assessee is eligible for deduction on the income earned from sub-lease/sale of land which was provided by the TEA to the assessee with an absolute right to use it, undisputedly the assessee company has started its business of developing the infrastructure facility w.e.f. 5.4.2007 and the same was continuing during relevant period pertaining to relevant assessment year under consideration i.e. AY 2009-10, and if assessee wants to avail its legal option to claim deduction u/s 80IA(4)(i) of the Act, then the assessee cannot be denied for the same by following a hyper technical approach which is contrary to letter and spirit of the beneficial taxation legislation. Accordingly, issue no. (i), (ii) and (iii), as set out by us, are decided in favour of the assessee. Validity of the Action u/s 263 of the Act.

86. On the question (iv) & (v) and (vi) as set out above by us, regarding examination of validity of issuance of notice, assumption of jurisdiction and passing of impugned order u/s 263 of the Act, the Ld. AR placing reliance on the decision of Hon’ble Supreme Court in the case of Malabar Industries Co. Ltd. Vs. CIT (supra) submitted that as per 263 of the Act it is clear that the pre requisite to exercise of jurisdiction by the Commissioner is that the order of the AO, in question, is erroneous in so far as it is prejudicial to the interest of the Revenue and the commissioner has to be satisfied with twin conditions, namely, (i) the order sought to be revised is erroneous; and (ii) prejudicial to the interest of the Revenue. The Ld. AR, further submitted that when the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the view taken by the AO is unsustainable in law and the same is found to be passed without application of mind.

87. Further, placing reliance on the decision of the Hon’ble Gujrat High Court in the case of CIT Vs. Arvind Jewellers (Supra) submitted that where the relevant material was on record which was duly considered by the AO and a reasonable and sustainable view was taken then merely because different view can be taken, should not have been the basis for invoking the revisionary powers under the section 263 of the Act. The Ld. AR, further contended that when a regular assessment is made u/s 143(3) of the Act, a presumption must be drawn that the order has been passed upon an application of mind and the Commissioner has to rebut such presumption with the support of some cogent material to show that the AO had not applied his mind while passing the assessment order. To support this preposition, the Ld. AR has relied on the decision of the Hon’ble High Court of Delhi in the case of CIT vs. Honda Siel Power Products Ltd. (Supra) and also contended that where the AO adopts one of the courses permissible in law or where two views are possible and the AO has taken one of the possible views then the commissioner cannot exercise his powers under section 263 of the Act to differ with the view taken by the AO, even if there has been a loss of Revenue.

88. The Ld. AR has further drawn our attention towards assessee’s paper book from page 93 to 196 and submitted that the AO has made detailed enquiries and after proper application of mind, has passed assessment order u/s 143(3) of the Act. The Ld. AR further contended that the AO has rightly allowed deduction u/s 80 IA (4) of the Act for the profits derived from the sale of land and other income since the same are profits and gains derived from the business of developing, operating and maintaining of an infrastructure facility i.e. a road including toll road and from the main business activities carried out by the assessee during the period under consideration. The Ld. AR, also pointed out that the land for development which was received by the assessee under concession agreement, was, in fact, an important part of consideration received by the assessee for developing, operating and maintaining the toll road and without earning the revenue from said land, the toll road project would not be viable because only collection of the toll from such road would not even meet the cost of construction of toll road. The Ld. AR strenuously contended that aforesaid facts were submitted before the AO replying to the queries of the AO during assessment proceeding through vide replies dated 23.11.2011, 21.12.2011, 23.12.2011, 28.12.2011 & 29.12.2011 and the AO adjudicated his queries after considering the explanation, replies and documents by way of passing a note sheet entry consisting of 18 pages. Hence, the AO had made a detailed inquiry about the claim of deduction u/s 80 IA (4) of the Act before allowing the same to the assessee. Further, stressing upon the above facts, the Ld. AR, also contended that in the light of above exercise and detailed enquiry conducted by the AO prior to allowing the deduction to the assessee, the Ld. CIT, Noida was not correct in holding that the AO passed assessment order without making proper enquiry and without application of mind and the same was erroneous and prejudicial to the interest of the Revenue.

89. Placing reliance on the decision of Hon’ble Gauhati High Court in the case of Bongaigaon Refinery and Petro Chemicals Ltd. vs. Union of India (Supra), the Ld. AR contended that the error in the order of the Assessing Officer and resultant prejudice to the interest of Revenue are twin factors to coexist for conferring authority on the commissioner to invoke powers u/s 263 of the Act. Merely entertaining a different view from the one adopted by the AO, which is plausible and reasonable, would not clothe the Commissioner with power to revise or interfere u/s 263 of the Act. Further, placing reliance on the decision of Hon’ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. (Supra), the Ld. AR pressed into service another proposition that if the AO, while framing assessment in accordance with law, makes certain assessment, then the same cannot be branded as erroneous unless it is not in accordance with law, by the Commissioner simply because, according to him, i.e. the Commissioner, the order should have been written more elaborately, as the section 263 of the Act does not allow substitution of the order of the AO for that of the commissioner. On behalf of the assessee, reliance was also placed on the ratio of the decision of the Hon’ble Supreme Court in the case of CIT vs. Max India Ltd. (Supra) wherein it was held that since different views existed on the day when the Commissioner passed the order and the mechanics of that section had become so complicated over the years, the subsequent amendment of section 80 HHC of the Act, even though retrospective, would not be attracted. In this case Hon’ble Apex Court, referring and reiterating the ratio laid down in its earlier order in the case of Malabar Industries Ltd. (supra), has held that where two views are possible and the AO has taken one view in the assessment order with which the commissioner does not agree, then the same cannot be termed as an erroneous order prejudicial to the interest of revenue unless the view taken by the AO is 'unsustainable' in law. Ld. AR, vehemently contended that a plethora of judgments of Hon’ble Supreme Court and Hon’ble various High Courts have firmly laid down the rule that a provision for deduction, exemption or relief should be interpreted liberally and reasonably in favour of the assessee and these provisions should be so construed as to achieve the object of the beneficiary taxation legislation and not to frustrate the same. Reliance was placed on the decision of Hon’ble Supreme Court in the cases of CIT vs. South Arcot Society 176 ITR (SC) and CIT Vs. Mahindra 144 ITR 225 at page 239 (SC).

91. The Ld. AR has also drawn our attention towards recent decisions/ judgment of Hon’ble Delhi High Court in the case of CIT vs. DLF Ltd. (2013) 350 ITR 555 (Delhi), decision of Hon’ble Andhra Pradesh High Court in the case of Spectra shares and Scrips Pvt. Ltd. (2013) 354 ITR 35(AP) and decision of Hon’ble Calcutta High Court in the case of CIT vs. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (cal.) and submitted that there should be an essential element of 'unsustainability' in the order of the AO, and not mere prejudicial to the interest of the Revenue or a mere erroneous view, which can be revised u/s 263 of the Act.

92. The Ld. AR, also forwarded a preposition by drawing our attention towards recent decision of Hon’ble High Court of Delhi in the case of Globus Infocum Ltd. vs. CIT 369 ITR 14 (Delhi) and submitted that under section 263 of the Act, the Commissioner should take a final decision and not merely set aside the assessment order to be made afresh de novo and remanding the matter for fresh examination is not permissible as the commissioner must reach to a conclusion and finding that final finding in assessment order was erroneous and incorrect. The Ld. AR also reiterated his arguments and lastly contended that in view of several decisions on this issue including decisions of Hon’ble Delhi High Court in the case of Honda Siel Power Products Ltd. (Supra) , decision of the Hon’ble Gujarat High Court in the case of CIT vs. Nirma Chemicals Works P. Ltd. 309 ITR 67 (Gujarat), decision of the Hon’ble Gauhati High Court in the case of Bongaigaon Refinary (Supra) and decision of the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Dipak Mittal 324 ITR 411 (P & H ) submitted that jurisdiction cannot be invoked u/s 263 of the Act where two views are possible and merely because the CIT is not agree with the view taken by the Assessing Officer does not allow the commissioner to avail valid jurisdiction to revise the order.

93. To above submissions of the Ld AR, on behalf of the Revenue, the Ld. CIT- DR, drawing our attention towards last page 7 & 8 of her written submissions (as reproduced hereinabove), contended that the Ld. CIT in his order categorically states that 'the inescapable and logical conclusions would be that the assessee ought to have complied with the provisions of sub section (6) of section 80IA which it has not' and the Ld. CIT also noted that the assessee had claimed deduction u/s 80IA of the Act on interest income on FDs made by deploying its surplus funds in the bank and the same has been erroneously accepted by the AO. The Ld. CIT- DR, referring to the decision of ITAT Chandigarh Bench 'A' in the case of Vodaphone Essar Ltd. (2013) 153 TTJ (Chd) 451, contended that where, in a given situation, an identical issue had been overlooked by the AO and the CIT had invoked the powers available u/s 263 of the Act, it was held the AO had failed to make proper investigation into the eligibility of the assessee in violation to the claim of deduction u/s 80 IA of the Act on the business profits, interest and other income received during the year, therefore, the order of the AO was held to be erroneous and prejudicial to the interest at the Revenue and the Tribunal upheld the order of the CIT u/s 263 of the Act.

94. The Ld. CIT-DR also pointed out that the Assessee had claimed depreciation amounting to Rs. 22.97 crores and had been granted by the AO even while the highway project had not been completed, therefore Ld. CIT rightly held that the assessment order was patently erroneous and prejudicial to the interest of the Revenue. The Ld. CIT DR parted with the argument on this issue with a final submission that the Ld. CIT was quite judicious and correct in holding that the AO passed an erroneous order inasmuch as he failed to appreciate the facts of the case, did not apply the correct law to the facts and circumstances of the assessee company, did not apply his mind to the assertions made by the assessee and did not even comply with the CBDT circular no. 1/2006 dated 12.1.2006 and thus, due to these reasons, order passed by the AO u/s 143(3) of the Act was erroneous and also has the effect of perpetuating losses in the subsequent years, therefore, the same was also prejudicial to the interest of the Revenue.

95. The Ld. AR placed brief rejoinder to the above submissions and contentions of the Ld. CIT-DR and pointed out that the AO made sufficient and required enquiry about claim of the assessee as the AO raised several queries during assessment proceedings and the assessee submitted detailed replies supported by various documents and evidence to show that the claim of the assessee is sustainable and further, the AO adjudicated the queries by passing a detailed note sheet vide dated 30.12.2011 and therefore, it cannot said that the AO did not make adequate, proper and required enquiry while allowing the claim of the assessee. The Ld. AR also pointed out that the AO took a reasonable and plausible view which cannot be held as unsustainable by any stretch of imagination. The Ld. AR finally submitted that the Ld. CIT did not conclusively hold that the order of the AO is not sustainable and the Ld. CIT is not empowered to set aside the assessment order, without any conclusion, for fresh adjudication without any legal cause or basis, hence, impugned order is not valid and justified.

96. On vigilant and careful reading of section 263 of the Act we may note that there are four main stages of the power of revision granted to the Commissioner under supervisory jurisdiction. Firstly, the Commissioner has power to call and examine assessment records and for that the commissioner does not need to show any reason as its part of administrative control to call for records of any proceeding under the Act, and examine the same. Secondly, the Commissioner can also consider that any order passed under the Act is erroneous in so far as it is prejudicial to the interest of the Revenue and for this purpose, having regard to the stipulation and fabric of language of section 263 of the act it is vivid that the Commissioner may exercise his powers by calling and examining the records in the manner as indicated above and at this stage of consideration of the appearance of intended assessee or his representative is not required and therefore, there is no question or situation for the assessee to appear, object and making any submissions before the commissioner. We also note that at this stage after calling for and examining the records, if the commissioner reaches to a prime facie conclusion that the assessment order is erroneous and in so far it is prejudicial to the interest of the revenue, then the third stage of section 263 of the act comes.

97. In our humble understanding of this provision, aforesaid two stages are purely administrative and the proceeding of the third stage is quasi-judicial and the same requires the commissioner to discharge his duties as per letter and spirit of the section 263 of the Act, which reads as under :-

(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

[Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,-(a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include-

(i) an order of assessment made by the Assistant Commissioner [or Deputy Commissioner] or the Income-tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A;

(ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120;

(b) 'record' [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the Commissioner;

(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the Commissioner under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.

(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.

(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [National Tax Tribunal,] the High Court or the Supreme Court.

Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.'

98. In the light of language stipulations used by the Legislature in section 263 of the Act, at third stage the Commissioner may, after giving an opportunity being heard for the assessee and after making such enquiry, as he deems necessary, pass such order as per facts and circumstances of the case including an order enhancing or modifying the assessment, or cancelling the assessment and directing the AO for fresh assessment. Meaning thereby, that the Commissioner must give an opportunity of being heard on the issues raised by the Commissioner in the notice u/s 263 of the act and it also confers on the Commissioner the powers to issue show cause to the assessee and to make such enquiry, as required under the factum and allegations against the assessee and reply and objections thereto submitted by the assessee, as the Commissioner deems necessary. The fourth stage u/s 263 of the Act provides that in the order the Commissioner is empowered to enhance or modify the assessment and if situation requires he is also empowered to pass an order cancelling the assessment to direct the AO for framing of afresh assessment.

99. In the light of above stages emerged from the language used in section 263 of the Act and the proposition & ratio of the decisions relied by both the parties, we proceed to examine the validity of assumption of jurisdiction.

100. On careful consideration of aforesaid rival contentions of both the sides, at the very outset, we find it appropriate to go through the paper book filed by the assessee wherein the AO has raised several queries by way of note sheet entries and letter dated 16.12.2011, 21.12.2011, 23.12.2011 and 28.12.2011 respectively (paper book page 93-94). We further note that the assessee submitted various relevant documents, inter alia, concession agreement, assignment agreement along with its first reply dated 23.11.2011, second reply on 21.12.2011, third reply on 23.12.2011, fourth reply on 28.12.2011 and last reply on 29.12.2011 regarding its claim of deduction u/s 80 IA (4) of the Act. It is also pertinent to note that the AO adjudicated the issue of queries and replies in regard to said claim by passing a detailed note sheet entry spread over 18 pages, which we are making part of this order, as Annexure – A, for sake of proper and just appreciation of assessment proceedings, said note sheet entry clearly shows the deliberations between the AO and the assessee company on the said issue and adjudication by the AO supporting the allowability of the claim of deduction to the assessee company.

101. We may further note that by the earlier part of this order, we have held that the assessee company is into the business of development of infrastructure facility i.e. which is a toll road as per its operational features and controlled and chargeable access and exit and the assesses’ claim under clause (a) of Explanation to section 80IA (4) (i) of the Act is justifiable and plausible as per relevant provisions of the Act in the light of the character, facts and circumstances of the business of the assessee. Hence, we are of the considered opinion that the prepositions of two views is not applicable to the present case and even if view posed by the Ld. CIT is analysed then we note that the Ld. CIT himself has not conclusively decided that the assessees’ claim of deduction falls under ambit of clause (b) of explanation to section 80IA (4) (i) of the Act.

102. In the case of CIT vs. Gabriel India Ltd. (supra), the Hon’ble Bombay High Court has held that the power u/s 263 (1) of the Act is in the nature of supervisory jurisdiction and can be exercised only if the circumstances must exist to enable the Commissioner to exercise power of revision subsection (1) of section 263 of the Act viz. (i) the order should be erroneous; and (ii) by virtue of the order being erroneous and prejudicial to the interest of the revenue. Speaking for Hon’ble Bombay High Court, their Lordships held that an order cannot be termed as erroneous unless it is not in accordance with law and if the AO, acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him (Ld. CIT), the order should have been written more elaborately. Their Lordships further went on to hold that there must be some prima facie material on record to show that the tax which was lawfully eligible has not been imposed.

103. In the present case, the AO has raised a number of queries regarding the claim of the assessee u/s 80IA (4) of the Act which were replied by the assessee through detailed submissions supported by relevant documents and other evidence coupled with several legal propositions and decisions. It is also pertinent to note that the AO has passed a detailed order / note sheet entry (enclosed here with this order as Annexure – A for sake of clarity and brevity) while dealing and adjudication the issue of allowability of the claim of the assessee for deduction u/s 80 IA (4) of the Act. We may respectfully take note of the decision of Hon’ble Bombay High Court in the case of Gabriel India Ltd. (supra) and hold that the order of the AO cannot be held as erroneous merely because, according to the Ld. Commissioner, the order should have been written more elaborately in so many words for invoking supervisory provisions u/s 263 of the Act. There must be some prima facie material on the record to show that the order is unsustainable in law and the tax which was legally eligible has not been imposed.

104. The ratio of the judgments of Hon’ble Delhi High Court relied by the Ld. CIT-DR in the cases of Geevee Enterprises Vs. CIT 99 ITR 375 (Delhi) and in the case of Duggal F. Co. Vs. CIT 220 ITR 456 (Delhi) is that the order of the AO becomes erroneous because such an enquiry had not been made and not because there was anything wrong with the assessment order if all the facts stated therein were assumed to be correct. The Ld. CIT- DR has also placed reliance, to support impugned order, on the judgments of Hon’ble Supreme Corut in the cases of Malabar Industries Co. Ltd. vs. CIT 243 ITR 83 (SC) and Smt. Tara Devi Aggarwal vs. CIT (1973) 88 ITR 323 (SC) and submitted that the incorrect application law and ignorance of binding board circular or order passed without application of mind would render it erroneous.

105. Furthermore, the Ld. CIT-DR placing reliance on the decisions of Hon’ble Jurisdictional High Court of Allahabad in the case of Jagdish Kumar Gulati vs. CIT (2004) 269 ITR 71 (All.) submitted that in the assessment order passed vs. 143(3) of the Act it is expected that the AO will make a detailed enquiry to find out correct income of the assessee and not to accept facts placed by the assessee on their face value. The Ld. AR, pointed out this is a case of an assessee who was the owner of a number of properties and the order was held be erroneous and prejudicial to the indirect of the Revenue by holding that the AO could not find out the correct income from the house property and he also failed to investigate the investments made by the assessee in construction of a particular house property. The Ld. AR vehemently contended that the present case is that wherein proper, detailed and adequate enquiry has been made.

106. The Ld. CIT-DR has also pressed the ratio of the judgments as Hon’ble Jurisdictional Allahabad High Court in the case of CIT vs. Bhagwandas (2005) 272 ITR 367 (All.) and submitted that if it is found that there was no discussion in the assessment order regarding the question as to whether the amount of income shown by the assessee which was being claimed to be exempt, had actually been earned by the assessee or not then the commissioner had rightly initiated the assessment proceedings u/s 263 of the Act as the exemption has been granted by the AO without any discussion and without application of mind. The Ld. AR, pointed out that the facts of the present case are not similar to the case of Bhagwan Das (Supra) as there are detailed queries of the AO and detailed replied by the assessee followed by detailed note sheet entry adjudication hence, present case is not case wherein as enquiry has been made or the claim of the assessee is allowed without any discussions and without application of mind.

107. The Ld. CIT-DR also pointed out that the Ld. CIT has rightly followed judgment of ITAT Chandigarh in the case of Vodaphone Essar Ltd. vs. CIT (supra), as no enquiry or investigation was made by the AO while considering the admissibility of claim of deduction vs. 80IA of the Act in the hand of assessee and in the present case also the AO, while adjudicating the claim of deduction vs. 80IA (4) of the assessee, has not made any inquiry or investigation and an identical issue had been over looked by the AO and in these set of facts and circumstances it was held that the AO had failed to make proper investigation into the eligibility of the assessee in relation to claim deduction vs. 80IA of the act. The Ld. AR, also contended that the case of vodaphone (Supra) is the case of no enquiry and in the present case there is detailed enquiry, hence, facts of the present case are not similar.

108. On thoughtful perusal and consideration of the judgments relied by Ld. CIT-DR, we note that the decisions of Hon’ble Delhi High Court in the case of Gee Vee Enterprises (Supra) and Duggal & Co. (supra) are pertaining to the situation when there was no enquiry about the issues raised by the Ld. CIT and the AO failed to make any enquiry regarding claims and details submitted by the assessee and as such there was no enquiry by the AO and the details and claims filed along with the return of the assessee were accepted without making any enquiry. The judgments of Hon’ble Supreme Court in the case of Malabar Industries Co. Ltd. (Supra) are also related to a situation where the AO had accepted the entry in statement of account filed by the assessee in absence of any supporting materials without making any enquiry. Furthermore, the Hon’ble Apex Court, in the case of Smt. Taradevi Agarwal (supra) held that where an income has not been earned and is not assessable , merely because the assessee wants it to be assessed in his or her hands in order to assist someone else who would have been assessed to a larger amount, an assessment so made can certainly be erroneous and prejudicial to the interest of the revenue.

109. The judgment of Hon’ble Jurisdictional High Court of Allahabad in the case of Jagdish Kumar Gulati, (supra) as relied by the Ld. CIT-DR, is the case of a property owner wherein the assessing officer could not find out the correct income from House property and also failed to investigate investment made by the assessee in construction of a property and the facts and details of the assessee were accepted by the AO on face value, hence, it was held that the order is erroneous and prejudicial to the interest of the Revenue. Further, from the another judgment of Hon’ble High Court of Allahabad, as relied by Ld. CIT-DR, in the case of Bhagwandas (Supra) we note that the order of the commissioner passed u/s 263 of the Act was upheld in a peculiar situation wherein the assessing officer passed an order without any discussion and without application of mind and there was no discussion regarding the question as to whether the amount of income shown by the assessee which was claimed being exempt had actually been earned by him or not. It is also pertinent to note that the order of ITAT, Amritsar in the case of Vodaphone (Supra) is also a case of 'no enquiry' wherein the AO finalized the assessment without placing any document on record as to when the business of the assessee had commenced, and no enquiry or investigation was made by the AO while considering the eligibility of the claim of deduction u/s 80IA of the Act in the hands of the assessee.

110. In view of ratios laid down by the judgments, as relied by the Ld. CITDR and having gone through the facts of these cases, at the outset, we sincerely note that judgments are the light houses in the path of adjudication of taxation appeals but we respectfully observe that the benefit of the ratio of the same is not available to the Revenue as the present case is neither a case of 'no enquiry' nor is a case where the AO, failed to make necessary enquiry and the assessment order was passed without any discussion or enquiry and the AO allowed the claim of the assessee without application of mind and thus, we respectfully hold that the benefit of the ratio of these orders/ judgments are not available for the Revenue in the present appeal as the facts and circumstances of the present case are clearly distinguishable from the facts of these cases and instant case is not a case wherein the AO passed assessment order without any enquiry, without application of mind and the AO failed to make proper enquiry.

111. Turning to propositions and ratio of the judgments, as relied by the assessee, at the cost of repetition, we note that as per land mark decision of Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra), prerequisite for exercise of jurisdiction u/s 263 of the Act is satisfaction of the AO by twin conditions namely (i) the order of the AO sought to be revised is erroneous and (ii) it is prejudicial to the interest of the Revenue. It was further held that where two views are possible and the AO has adopted one of the two views then the assessment order is not erroneous and prejudicial to the interest of revenue merely because the Ld. Commissioner is not agree to the view adopted by the AO. The same view has been reiterated by Hon’ble Apex Court in the case of CIT vs. Max India Ltd. (Supra) and by Hon’ble High Court of Delhi in the case of CIT vs. New Delhi Television Ltd. (supra).

112. At this point, the Ld. AR has also pressed in to service the ratio of the decision of Hon’ble High Court of Delhi in the case of CIT vs. DLF Ltd. (2013) 350 ITR 555 (Delhi) and submitted that it is not mere prejudice to the Revenue or a mere erroneous view which can be revised u/s 263 of the Act but also there should be the element of 'unsustainability' in the order of the assessing officer, which empowers the commissioner to issue notice and to proceed to pass an appropriate order. On careful reading of the same we note that Hon’ble High Court has held as under (at page 562) :

'In this case, the record reveals that the Assessing Officer had issued notice, and held proceedings on several dates (of hearing) before proceeding to frame the assessment. He added nearly Rs. 2 crores to the income at that time. The Commissioner took the view that the assessment order disclosed an error, in that the deduction under section14 A had not been made. Now, while the statutory direction to the Assessing Officer to calculate, proportionately, the expenditure which an assessee may incur to obtain the dividend income, for purposes of disallowance, cannot be lost sight of, equally, such a requirement has to be viewed in the context and circumstances of each given case. In the present case, it was repeatedly emphasized that the assessee’s dividend income was confined to what it received from investment made in a sister concern, and that only one dividend warrant was received. These facts, in the opinion of this court, were material, and had been given weightage by the Tribunal in its impugned order. There is no dispute that the investment to the sister concern, was not questioned; even the Commissioner has not sought to undermine this aspect. Equally, there is no material to say that apart from that single dividend warrant, any other dividend income was received. Furthermore, there is nothing on record to say that the assessee had to expend effort, or specially allocate resources to keep track of its investments, especially dividend yielding ones. In these circumstances, it can be said that whether the deduction under section 14A was warranted, was a debatable fact. In any event, even if it were not debatable, the error by the Assessing Officer is not 'unsustainable'. Possibly he could have taken another view; yet, that he did not do so, would not render his opinion an unsustainable one, warranting exercise of section 263.'

113. The Ld. AR has also placed reliance on the decision of Hon’ble Gujarat High Court in the case of Arvind Jewellers (Supra) wherein it was held thus :

'Held, that the finding of fact by the Tribunal was that the assessee had produced relevant material and offered explanations in pursuance of the notices issued under section 142(1) as well as section 143(2) of the act and after considering the material and explanations, the Income-tax Officer had come to a definite conclusion. Since the material was there on record and the said material was considered by the Income-tax Officer and a particular view was taken, the mere fact that different view can be taken should not be the basis for an action under section 263. The order of revision was not justified.'

Hence, as per the preposition and ratio laid down by Hon’ble Gujarat High Court is that when the assessee had produced relevant material and offered explanation in pursuance of notices u/s 143(2) and 142(1) of the Act and after considering the material and explanations, the AO had come to a definite conclusion. Their Lordship further held that in this situation, since the material was

there on record and the said material was considered by the AO and a particular view was taken, the mere fact that a different view can be taken should not be the basis for a valid action u/s 263 of the Act and therefore, dismissing the appeal of the revenue the Hon’ble High Court held that the order u/s 263 of the Act was not justified and valid. 114. The Ld. AR also sought support from preposition laid by Hon’ble Jurisdictional High Court of Allahabad in the judgment passed in the case of CIT vs. Shiv Prasad (2011) 12 Taxmann. Com 118 (All.) and submitted that the proceedings u/s 263 of the act can only be taken in case if the assessment order is found to be erroneous and prejudicial to the interest of the Revenue and if one condition does not exist the revisional powers u/s 263 can not be exercised. The Ld. AR further submitted that as per ratio of the judgment of Hon’ble High Court of Allahabad in the case of CIT vs. Goyal Private Family specific Trust (1988) 171 ITR 698 (All.) in absence of specific findings that the assessment order was erroneous the cancellation of assessment was not justified. 115. The Ld. AR further, placing reliance on the decision of Hon’ble Jurisdictional High Court of Allahabad in the case of CIT vs. Mahendra Kumar Bansal (2008) 297 ITR 99 (All.) vehemently contended that merely because the Assessing Officer had not written a lengthy order, without bringing on record, specific instances it would not establish that the assessment order passed u/s 143(3)/148 of the Act is erroneous and prejudicial to the interest of the Revenue. In this case, their Lordship further held that even though, in the assessment order, there was no mention that the detailed enquiry had been made nor any evidence had been discussed, yet the returned income was accepted even then the order was not erroneous and could not be revised u/s 263 of the Act. 116. On behalf of the assessee, it was also contended that the Commissioner, instead of commenting upon or giving a final finding, simply observed that it was possible to take another view then the word 'Possible' would indicate that there was no finding or adjudication by the Commissioner and his observations were based on mere suspicion and uncertain. The Ld. AR also drawn our attention to the recent decision of Hon’ble High Court Delhi in the case of Globus Infocom Ltd. vs. CIT (supra) wherein it was held thus : 'Thus, in cases of wrong opinion or finding on merits, the CIT has tocome to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under Section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. 17. This distinction must be kept in mind by the CIT while exercising jurisdiction under Section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interest of Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged 'inadequate investigation', it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. 18. It is in this context that the Supreme Court in Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax, (2000) 243 ITR 83 (SC), had observed that the phrase 'prejudicial to the interest of Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is caused to the interest of the Revenue.' 117. The Ld. AR also took us through the judgment of Hon’ble Rajasthan High Court in the case of CIT Vs. Deepak Real State Developers (I) P. Ltd. (2014) 367 ITR 377 (Raj.) and submitted that where the Commissioner did neither reject the documents or records to be irrelevant, nor lacking in their probative worth and he simply remanded the matter to the Assessing Officer observing that these ought out to have been laid before the AO and should be examined at the time of assessment then it was held that the order of revision u/s 263 of the Act was not valid. 118. Continuing with arguments on the validity of assumption of jurisdiction u/s 263 of the Act, the Ld. AR also brought to our notice the recent decision of Hon’ble High Court of Delhi in the case of CIT vs. Hotz Industries Ltd. (2014) 49 Taxmann. Com.267 (Delhi) and contended that once inquiries were conducted and a decision was recorded by the AO, it cannot be said that it was a case of 'no inquiry' and the commissioner must reach to a finding that the finding recorded by the AO was erroneous, not because no inquiries were conducted, but because final conclusion in the assessment order was wrong and untenable or unsustainable in law. The relevant operative para of this order is reads as follows : 'Commissioner in the order under Section 263 did not go into the said question on merits, but observed that the 'Assessing Officer it appears' ad not caused any inquiries or investigation, but accepted the contention of the assessee. Commissioner observed, 'therefore, meaningful inquiry should be conducted'. This does not meet the requirement that the decision of the Assessing Officer should be erroneous. Once inquiries were conducted and a decision was reached by the Assessing Officer, it cannot be said that it was a case of no inquiry. In such cases, the Commissioner must reach a finding that the finding of the Assessing Officer was erroneous, not because no inquiries were conducted, but because the final finding was wrong and untenable.' 119. At this juncture, we further find it appropriate to address rival legal contentions of both the sides on the issue of revision of assessment order on other two issues viz. allowbility of deduction on the income earned by the assessee from interest on fixed deposits of surplus funds with banks and allowability of depreciation as mentioned in para 15 of the impugned order (as reproduced hereinabove) of the Ld. CIT, Noida. Firstly, the Ld. AR pointed out that these two issues were not mentioned by the Ld. CIT in the notice u/s 263 of the Act, hence, revision on these two issues is not permissible for the commissioner u/s 263 of the Act. The Ld. CIT-DR pointed out that the assessee has not taken this ground, hence, the same cannot be entertained. The Ld. AR, vehemently contended that in all the grounds raised by the assessee specially in grounds no. 1 the assessee has challenged the validity of assumption of jurisdiction to issue notice and to revise assessment order u/s 263 of the Act which obviously covers validity of revision on these issues also, hence, the assessee has right to elaborate its contentions and allege the impugned order with this allegation. On careful consideration of above submissions we are of the considered opinion that the assessee, in its grounds of appeal, has challenged, inter alia, validity of the notice, assumption of jurisdiction and impugned order passed u/s 263 of the Act, hence, the assessee has legal right to question the validity of revisional action of the of the Ld. CIT in the impugned order on all four corners specially under Ground no. 7 and other grounds raised before us. Ground No. 7 120. The ld. AR has drawn our attention to para 15 of the impugned order, as reproduced hereinabove in para 4 of this order and vehemently contended that the CIT Noida has disputed only sole issue pertaining to allowability of assessee’s claim under clause (a) of Explanation to section 80IA(4)(i) of the Act and in the notice dated 11.3.2014 issued u/s 263 of the Act (supra) but in the final impugned order passed u/s 263 of the Act dated 30.3.2014, the CIT Noida has also disputed and revised two more issues in para 15 of the impugned order viz. issue of interest earned by the assessee by parking its surplus funds in various fixed deposits accounts in the bank and issue of claim of depreciation on the project which was yet to be completed in addition to the main issue which is not permissible. To support above contention, the ld. AR has placed reliance on the decision of Hon’ble Andhra Pradesh High Court in the case of CIT vs G.K. Kabra (1995) 211 ITR 336 (AP) and deicison of ITAT Delhi in the case of B.S. Sangwan vs ITO (2015) 53 Taxman.com 402 (Delhi- Tribunal) to which one of us (C.M. Garg, JM) was the co-author. 121. Ld. DR replied that the AO did not examine and verify the issue of allowability of interest earned by the assessee from parking of surplus funds in the fixed deposit accounts in the banks and allowed the same. Ld. DR further contended that the AO has not applied the law u/s 80IA of the Act as only income derived from any business referred to in sub section (4) is eligible for deduction under that section and no other income. The ld. DR also contended that the AO ignored the settled law rendered in the case of Tuticorin Alkalis vs CIT (supra). The ld. DR also submitted that the AO wrongly allowed claim of depreciation in computation of income without examining the fact whether the same was admissible even while the project was still going on and yet to be completed. 122. The ld. AR, placing rejoinder to the above submissions of the revenue, replied that it is not open and allowable to the CIT Noida to issue notice on one and only one reason and revising the assessment u/s 263 of the Act on two more issues or reasons which were not mentioned in the notice u/s 263 of the Act in the light of decisions of Hon’ble High Court of Andhra Pradesh and in the case of G.K. Kabra (supra) and decision of Coordinate Bench of ITAT Delhi in the case of B.S. Sangwan (supra) and decision in the case of Genesis Colors (P) Ltd. vs CIT (2014) 42 Taxmann.com 552 (Delhi-Trib). Alternatively, the ld. AR further submitted that without prejudice to above contentions, on merits it is considered that the claim of the assessee in regard to interest income and depreciation have been processed and correctly allowed by the AO after due consideration and examination by the AO. The ld. AR placing reliance on the decision of Hon’ble Bombay High Court in the case of Lok Holding 308 ITR 356 (Bombay) submitted that the business income assessed in respect of earned bank interest for an assessee engaged in construction business is business income as this has been earned from parking of surplus funds with the banks in the course of business. The ld. AR pointed out that the Hon’ble Bombay High Court has considered the ratio of the decision of Hon’ble Apex Court in the case of Tuticorin Alkali (supra) and has distinguished the same. Ld. AR strenuously contended that the claim of depreciation relates to business being carried on and it was claimed on the assets used for the business and interest involved emanates from the business of development of infrastructure facility for the single object company. Ld. AR also submitted that when business income of the assessee was exempted u/s 80IA(4) of the Act, then why assessee would assail wrong claim of depreciation. On careful consideration of above rival submissions of both the parties, at the very outset, we note that the CIT, Noida has issued notice u/s 263 of the Act (supra), only raising and disputing the sole issue, the AO allowed exemption to the assessee under clause (a) of Explanation to Section 80IA(4)(i) of the Act and the assessee was showcaused on this sole allegation only which clearly show that the notice u/s 263 of the Act was not given on the issues of interest but it is apparent from page 27 and 28 in para 15 of the impugned order that the CIT, Noida also revised the assessment order passed u/s 143(3) of the Act on the issue of allowability of exemption on the interest income and allowability of claim of depreciation in the computation of income. We may further observe that the ITAT-Delhi in the order passed in the case of Genesis Color Pvt. Ltd. (supra) had also considered the ratio of the decisions of Hon’ble High Court of Delhi in the cases of CIT vs Ashish Rajpal (2010) 320 ITR 674 Delhi and decision in the case of CIT vs Contimeters Electricals P. Ltd. (2009) 317 ITR 249 (Delhi) wherein dismissing the appeal of the Revenue, it was held that the issue which had not been part of notice u/s 263 of the Act could not form basis for revision of the assessment order u/s 263 of the Act. In the light of decision of Hon’ble High Court of Andhra Pradesh in the case of G.,K. Kabra (supra), the case of B.S. Sangwan (supra) and Genesis Colour Pvt. Ltd. vs CIT (supra), we are inclined to hold that it is not open and permissible for the CIT to revise the original assessment order on the ground(s) which has not been mentioned in the notice u/s 263 of the Act and on which assessee was not showcaused in the said notice. In the present case, the CIT, Noida has revised the assessment on the issues of allowability of exemption on interest income and allowability of claim of depreciation and this factum is fatal to the assessment order. This issue is covered in favour of the assessee on all four corners, Accordingly, we are inclined to accept the contention of the ld. AR that the ld. CIT was not empowered to revise assessment order u/s 253 of the Act on the issue of allowability of deduction u/s 80IA(4) of the Act on the interest earned from deposit of surplus funds, which were undisputedly received from sub-lease/sale of land in short term fixed deposits within the banks and on the issue of allowability of claim of depreciation because these two issues viz. interest onFDs and depreciation have not been disputed and alleged in the notice u/s 263 of the Act and assumption of jurisdiction u/s 263 of the Act was not valid and impugned order on these issues is void ab initio. 123. On careful and vigilant reading of the operative parts of the impugned order (as reproduce hereinabove) From para 7, we note that the Ld. CIT has annexed reply of the assessee, as Annexure A to the impugned order, thereafter, mentioning the cases laws relied by the assessee the Ld. CIT pointed out that an incorrect assumption of the facts or an incorrect application of law will satisfy the requirement of the order being erroneous as it is passed after wrong appreciation of fact available before the AO and non-application of mind on the part of the AO which has resulted in allowing the deduction u/s 80IA of the Act which was not admissible, if the AO had taken in to account and followed the law under the provision of sub section (2), (4) and (6) of the section 80IA of the Act and clarification under CBDT’s circular no. 1/2006 dated 12.1.2006 (supra). Thereafter, the Ld. CIT observed that the order passed by the AO has been rendered erroneous and in so far as it is prejudicial to the interest of the Revenue as the tax which was lawfully eligible on profit from sale of land has not been levied due to such omission of the part of the AO to follow sub sections (2), (4) & (6) of section 80IA of the Act, CBDT Circular (Supra), and Rule 18BBE of the Income Tax Rules, 1962. This allowance of deduction has lead to loss of Revenue, therefore order is also prejudicial to the interest of the Revenue. In subsequent para, the Ld. CIT further note that an order is erroneous deviating from law and the expression prejudicial to the interest of Revenue is of wide import which is not confined to mere loss of tax. 124. In the subsequent paras of the impugned order the Ld. CIT also observed that the AO in this case omitted to apply and invoke all the discussed provisions of the Act and corresponding Rules and this grievous error has set a bad trend for similar assessments causing prejudice to the whole of revenue administration. These allegation have also been repeated into the subsequent paras. But we are unable to see any discussions or deliberations on the submission of the assessee before Ld. CIT, himself or before the AO during assessment proceedings. 125. We may further note that the Ld. CIT has not conclusively decided that the claim of the assessee does not fall under clause (a) of Explanation to section 80IA (4) (i) of the Act and same falls under clause (b) of same provision. There is no further logical findings by the Ld. CIT to this effect that since the claim of the assessee falls under clause (b) Explanation to section 80IA (4) (i) and hence, the provisions of sub section 6 to section 80IA (4) (i) is applicable to the case of the assessee which was not complied. The Ld. CIT, without giving any findings, has set aside the assessment order to be made de novo without conclusively deciding the issue in one way or the other which comes within the teeth of the observations and ratio of the judgment of Hon’ble Delhi High Court in the case of Globus Infrocom Ltd. vs. CIT (Supra). From the operative part of this order, as reproduced herein above, it is clear that while invoking section 263 of the Act the commissioner should take a final decision that the law applied by the assessee to the facts of case is not in accordance with law and thus it is not sustainable. Mere set aside of assessment order to be made de novo without any conclusion on facts and applicability of law is not valid. 126. We further note that the judicial propositions and opinion are unanimous that the expression and essence as appearing in the fabric & language of the Section 263 of the Act must be confined to Jurisdictional errors. Erroneous assessment refers to an assessment that deviates from the law and is, therefore, invalid and unsustainable. An assessment order cannot be alleged as erroneous, unless it is not in accordance with law. This section does not allow substitution of the judgment of the commissioner for that of the AO, who passed the assessment order in question, unless the order of the AO is held to be erroneous, untenable and unsustainable in law in the light of facts and circumstances of the particular case under revision. We may further point out that when the AO takes a view and the commissioner, without recording any finding, that the view taken and order passed by the AO is not correct and therefore, the same is erroneous and prejudicial to the Revenue; holds that the assessment order is revisable u/s 263 of the Act, then the order of the Commissioner is not valid and sustainable. We may further note that it would be incorrect to say as broad proposition that an assessment order cannot be erroneous, if the AO has adopted one out of two possible views. In this situation, the order of the AO can be held as erroneous only when the commissioner holds and is able to demonstrate that the view taken by the AO was not plausible and reasonable, being legally unsustainable, untenable and incorrect, but the said finding must be recorded by the commissioner to provide legitimate life to the order of revision u/s 263 of the Act. 127. In the light of aforesaid discussion, if we analyse the facts and circumstances of the present case, we observe that the assessee company is in the business of developing, operating and maintaining infrastructure facility project since its incorporation w.e.f. 5.4.2007. We also observe that the development of the toll road with controlled access and exit points and right to collect toll from the users clearly put the Expressway within the ambit of road which is a toll road. We further hold that the development of the Expressway between Noida and Agra and development of Five land parcels adjacent to Expressway are inseparable and integral part of one project and the assessee is entitled and eligible for deduction u/s 80IA (4) of the Act on the income earned and derived from the business of development of Infrastructure facility during AY 2009-10 after commencement of its business w.e.f. 5.4.2007 at the option of the assessee which cannot be denied by wrongly putting the case of the assessee in clause (b) of Explanation to section 80IA(4)(i) of the Act. 128. In view of our aforesaid observations and conclusion, on the facts of the case, we are inclined to hold that the view taken by the AO, while granting deduction u/s 80IA (4) of the Act to the assessee, is a reasonable and plausible which cannot be held as legally unsustainable and not in accordance with law and also being passed without application of mind. We, therefore, are of the considered opinion that the impugned notice and order of Ld. CIT is not valid and void ab initio on the following reasons:- (i) The view taken by the AO while granting deduction u/s 80IA(4) of the Act, in respect to income from sale/ sub lease of land for development, is reasonable, plausible and the same cannot be held as unsustainable and not in accordance with law and therefore, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the Revenue. (ii) The revision of the assessment order on the issue of allowability of deduction u/s 80IA(4) of the Act in regard to the income of interest accrued to the assessee from the deposit of surplus funds in the fixed deposit banks accounts and allowability of depreciation is also not valid because these issues had not been raised or pointed out in the notice issued u/s 263 of the Act and thus, it is not open and permissible for the Ld. CIT to revise the assessment order on these grounds. Since assumption of jurisdiction u/s 263 of the Act was not valid on these two issues, the grounds raised by the assessee on merit become academic and infructuous. (iii) On threadbare analysis of operative part of the impugned order, as discussed herein above, we also hold that the Ld. CIT has not conclusively decided the issue with a conclusion in one way or the other and has left it midway, which covers this case in favour of the assessee by the recent judgment of Hon’ble Delhi High Court in the case of Globus Infocum Ltd. vs. CIT (Supra). (iv) In view of our findings and conclusion, as recorded hereinabove, on the facts of the case and the relevant provisions of the Act, we have no hesitation to hold that the assumption of Jurisdiction to issue notice to the assessee u/s 263 of the Act (supra) and to set aside the assessment order, by passing the impugned order u/s 263 of the Act was not valid and the same was void ab initio. Hence, the notice issued by the Ld. CIT u/s 263 of the Act, impugned order without any conclusive findings, setting aside and revising the assessment order to be reframed de novo and all subsequent proceedings conducted and orders, if any, passed in pursuance thereto deserve to be quashed and we quash the same. We order accordingly. Thus, issues number (iv) is decided in the negative and issue no. (v) & (vi) are decided in the affirmative, in favour of the assessee. 129. Finally, the grounds raised by the assessee and issues for determination, as set out by us (supra) are decided in favour of the assessee and consequently appeal of the assessee is allowed in the manner as indicated above.