Delhi High Court
Mewar Sugar Mills Ltd. vs Chairman Central Board Of Direct Taxes ... on 9 October, 1998
Author: R.C. Lahoti
Bench: R.C. Lahoti
ORDER
R.C. Lahoti, J.
1. The petitioner is a company which was incorporated as a limited company in the erstwhile State of Udaipur for running a sugar mill. Presently, it has a capacity of 1500 TCD. In the year 1971, the petitioner company started a distillery the capacity whereof is presently 10,000 GL per annum. As on 31.3.1989 the accumulated losses of the petitioner company were Rs.593 lakhs against the share capital and reserves of Rs. 94 lakhs. This has led to erosion of the net worth of the company, the main reason whereof was problem in sugarcane production in 80s.
2. The proceedings under the Sick Industrial Companies ( Special Provisions) Act, 1985 ( hereinafter SICA,for short) were initiated on 15.5.90. The BIFR sanctioned a revival scheme. One of the clauses of the scheme, relevant for deciding this petition, was as under :-
Central Government :
The provisions of Section 41(1) of the Income-tax Act, 1961 shall not apply in respect of the value of all the remissions, concessions and reliefs given under the rehabilitation scheme.
3. The scheme unfortunately did not run as envisaged during the years 1990-91 and 1991-92. However, in the year 1992-93 the company made profit of Rs. 157 lakhs. The petitioner company and the operating agency proposed one time settlement of dues to the financial institutions which was accepted by the latter. A few events occurring thereafter are not of relevance for the purpose of this petition. Suffice it to state that on 7.5.95, BIFR sanctioned a revised scheme which included the following clauses amongst others :
"5.4 Central Government i) For seeking exemption under provisions of Section 41(1) of the Income-tax Act, 1961 in respect of the value of all the remissions, concessions and reliefs given under the rehabilitation scheme, the company would be required to approach an appropriate authority."
xxxx xxxx xxxx xxxx 5.5 Promoters
i) xxx xxxx xxxx xxxx
ii) xxx xxxx xxxx xxxx
iii) xxx xxxx xxxx xxxx
iv) xxx xxxx xxxx xxxx
v) Financial implications arising out of non-availability of exemption under Section 41(1) of the Income-tax Act, 1961 would be borne by the promoters/company without seeking further relief from FIs/Bank/State Government.
xxxx xxx xxxx
4. Acting upon the above said clause 5.4 and 5.5(v) tantamounting to a direction by the BIFR, the petitioner made a representation to the Director General of Income-tax, New Delhi praying for waiver under the provisions of Section 41(1) of the Income-tax Act,1961 in regard to the interest amount of Rs. 332 lakhs claimed and allowed in the earlier years.
5. On 26.8.96, the Directorate of Income-tax communicated his rejection of the petitioner's prayer assigning the following reasons :
"Your request for exemption from the applicability of the provisions of Section 41(1) of the Income-tax Act, 1961 has been carefully considered. The amount in respect of which exemption from the operation of Section 41(1) has been sought is Rs. 177.54 lakhs. If exemption from the operation of the provisions of Section 41(1) is denied and the deemed income of Rs. 177.54 lakhs is included in the total income for the financial year 1995-96, the Co. would become liable to pay taxes in the financial year 1998-99 in respect of which year the loss is presently shown at Rs. 25.50 lakhs. The amount of tax payable will come to Rs. 69.93 lakhs. From the estimated cash flow statement it is seen that the Co. would be having a cash balance of Rs. 777.61 lakhs at the end of the financial year 1998-99. The cash balance would increase to Rs. 1010.52 lakhs at the end of the financial year 1999-2000. Therefore an outgo of Rs. 69.93 lakhs would not materially affect the cash balance. The DSCR has been calculated upto F.Y. 1997-98 with an average of 1.61 which is sufficiently higher than the expected average of 1.33. In view of the position as discussed above we have not found it possible to grant the relief prayed for by the Co."
6. The petitioner once again represented to the DIT for reconsidering its prayer and recalling his rejection whereupon vide letter dated 6.7.1996 the petitioner has been informed that the Central Board of Direct Taxes has found no reason to interfere with the earlier decision refusing the petitioner's prayer for relief under section 41(1) of the Income-tax Act, 1961.
7. Aggrieved thereby the petitioner has approached this court.
8. Here itself it would be relevant to notice three circulars issued from time to time by the Central Board of Direct Tax.
8.1 Circular No. 523 dated 5.10.1988 provided, inter alia, as under :
"The Central Board of Direct Taxes have been advised that if a scheme is sanctioned in pursuance of Section 17(3) of the Act, it will have an overriding effect over the provisions of the Income- tax Act by virtue of Section 32 of the Act.
3. Consequently, if the BIFR sanctions a scheme under Section 17(3) of the Act specifically excluding or limiting the application of sections 41(1), 79 and 115J or of any one or more of these sections of the Income-tax Act, 1961 in respect of assessment years which are also specified then the Assessing officer will have to take due cognizance of this order and give effect to the same. Such a situation may arise in the case of a sick industrial company which has debited its account in respect of its interest liability in a particular assessment year. Subsequently, if in a scheme sanctioned by the BIFR, banks are directed to either waive or reduce the interest liability, this remission will become chargeable to tax under Section 41(1) of the Income-tax Act in the year of reduction or waiver by the banks. It is possible that for speedier rehabilitation, the BIFR in its scheme provides that section 41(1) would not apply in the case of the sick company. The Assessing Officer, in these circumstances, will not subject to tax the remission or cessation of interest , liability under Section 41(1).
4. It may, however, be clarified that section 32(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 refers only to the Provisions of this Act and of any rules or scheme, made thereunder and not to orders passed under Section 17(2). Therefore, orders passed by BIFR under Section 17(2) will not have the effect of overriding the provisions of the Income-tax Act."
8.2 Circular No. 576 dated 31.8.1990 issued in clarification of circular No. 523 dated 5.10.1988 provided, inter alia, that once the scheme was sanctioned by BIFR it would have overriding effect over the provisions of the Income-tax Act, 1961 in regard to the matters covered in circular No. 523 and subsequent circular i.e. dated 31.8.90.
8.3 However, CBDT then changed its opinion. Vide circular No. 683 dated 8.6.94 the Board formed and expressed an opinion that circulars No. 523 and 576 were issued overlooking the provisions of section 19(2) of SICA and hence were withdrawn on 30.12.93. A letter dated 30.12.1993 was addressed to AAIFR and BIFR. The circular noted, inter alia, as under:-
"3. The Board had withdrawn with immediate effect the above circular No. 523 and 576 vide its letters of even numbers dated 30.12.1993. The said letter to AAIFR and BIFR clarified that each case of fiscal concession of financial assistance under Direct Tax Laws will now be considered in each individual case on merits for the purpose of consent as contemplated in Section 19(2) of SICA, 1985 and consent or denial of consent will be conveyed to BIFR by the Central Government. The model agency for coordination between the Board for Industrial and Financial Reconstruction ( BIFR) and Central Board of Direct Taxes and appellate authority for Industrial and Financial Reconstruction ( AAIFR) and Central Board of Direct Taxes will be the Director General of Income-tax (Admn.), 7th floor, Mayur Bhawan, New Delhi-110 001, Cases al- ready decided in accordance with the Circular No. 523 and 576 were however, not required to be reopened.
9. There are two provisions of SICA which are relevant for our purpose and hence are reproduced hereunder :-
"19. Rehabilitation by giving financial assistance._(1) Where the scheme relates to preventive, ameliorative, remedial and other measures with respect to any sick industrial company, the scheme may provide for financial assistance by way of loans, advances or guarantees or reliefs or concessions or sacrifices from the Central Govt, a State Govt, any scheduled bank or other bank, a public financial institution or State level institution or any institution or other authority ( any Government, bank, institution or other authority required by a scheme to provide for such financial assistance being hereafter in this section referred to as the person required by the scheme to provide financial assistance) to the sick industrial company.
(2) Every scheme referred to in sub-section (1) shall be circulated to every person required by the scheme to provide financial assistance for his consent within a period of sixty days from the date of such circulation.
(3) Where in respect of any scheme the consent referred to in sub-section (2) is given by every person required by the scheme to provide financial assistance, the Board may, as soon as may be, sanction the scheme and on and from the date of such sanction the scheme shall be binding on all concerned.
(4) Where in respect of any scheme consent under Section (2) is not given by any person required by the scheme to provide financial assistance, the Board may adopt such other measures, including the winding up of the sick industrial company, as it may deem fit.
32. Effect of the Act on other laws._(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 ( 46 of 1973), and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976), for the time being in force or in the Memorandum or Articles of association of an industrial company or in any other instrument having effect by virtue of any law other than this Act.
10. The submission of the learned counsel for the petitioner is that Section 41(1) of the Income-tax Act, 1961 does not provide any 'financial assistance' nor does provide any 'relief or concession' to the sick unit and hence application of Section 19 of SICA is not attracted to Section 41(1) of the Income-tax Act, 1961. In other words, BIFR while sanctioning a scheme under Section 19 of the Act need not circulate the same to the Director of Income-tax or any other authority of the Income-tax for that matter. The scheme of rehabilitation once framed under SICA shall attract the applicability of Section 32 which gives it an overriding effect over any other provision contained in any other law excepting those specified in Section 32(1). Learned counsel further submitted that BIFR should itself have made a provision in the scheme taking care of Section 41(1) of Income-tax Act and should not have made the scheme relating to the petitioner dependant on the mercy of any authority under the Income-tax Act, 1961 as has been done by clauses 5.4 and 5.5(v) of the scheme dated 15.5.95. Learned counsel for the petitioner went on to submit that such a provision in the scheme is redundant inasmuch as it is for the BIFR to decide whether the rehabilitation scheme should contemplate benefit of exemption from Section 41(1) of the Income-tax Act, 1961 being made available to the petitioner company as a part and parcel of the scheme of rehabilitation. If BIFR does not make up its own mind then there is no provision in the Income-tax Act, which authorises any authority of the Income-tax department to consider a prayer for exempting any one from the operation of Sec.41(1) of the Income-tax Act, 1961.
11. Section 41(1) of the Income-tax Act, 1961 provides as under :-
41 (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee ( hereinafter referred to as the first-mentioned person) and subsequently during any previous year,
(a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever any amount in respect of such loss of expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business of profession and accordingly chargeable to income tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made in existence in that year or not; or
(b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year.
[Explanation 1.- For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts.] [Explanation 2.- For the purposes of this sub-section,"successor in business" means-
(i) where there has been an amalgamation of a company with another company, the amalgamated company;
(ii) where the first-mentioned person is succeeded by any other person the business or profession, the other person;
(iii) where a firm carrying on a business or profession is succeeded by another firm, the other firm.
[(2) Where any building, machinery, plant or furniture,
(a) which is owned by the assessee;
(b) in respect of which depreciation is claimed under clause (i) of sub-section (1) of Section 32; and
(c) which was or has been used for the purposes of business, is sold, discarded, demolished or destroyed and the moneys payable in respect of such building, machinery, plant or furniture, as the case may be, together with the amount of scrap value, if any, exceeds the written down value, so much of the excess as does not exceed the difference between the actual cost and the written down value shall be chargeable to income-tax as income of the business of the previous year in which the moneys payable for the building, machinery, plant or furniture became due."
12. The learned Senior Standing Counsel for CBDT, respondent No.1, has submitted that the Board has issued circulars laying down policy guidelines and it is for the Director of Income-tax to give or not to give consent to any individual scheme of rehabilitation under SICA in so far as the provisions of Section 41(1) of the Income-tax Act, 1961 are concerned. The CBDT and Director of Income-tax have applied their mind to the financial condition and resources of the petitioner company and then arrived at a finding assigning reasons for forming the opinion adverse to the petitioner. This Court cannot in exercise of writ jurisdiction interfere with such opinion formed by the CBDT and the Director of Income-tax.
13. Two issues arise for decision :
(1) In so far as applicability of Section 41(1) of Income-tax Act, 1961 is concerned read in co-relation with the provisions of SICA whether S.19 or Section 32 of SICA would apply ?
(2) Whether the CBDT was justified in issuing circular No. 683 dated 8.6.94 to AAIFR and BIFR communicating that a scheme framed under section 19 of SICA should have consent of the Director- General of Income-tax (Admn) which consent may be given or denied depending on the facts of each case?
14. The learned counsel for the petitioner has submitted that Section 41 of the Income-tax Act is a general provision of law governing liability of certain profits to tax. SICA is a special legislation governing the sick industrial units. As the preamble to SICA states it is an Act to make in the public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. For two reasons, submitted the learned counsel for the petitioner, the provisions of the SICA have to be given an overriding effect over the provisions of the Income-tax Act including Section 41 thereof. Firstly, SICA being a special legislation governing sick industrial units, so far as any sick industry is concerned, the provisions of the Income-tax Act shall have to give way to the provisions of SICA. Secondly, the object of Income-tax Act is to collect revenue and enrich public funds thereby whereas SICA has been enacted in public interest so as to achieve an objective placed on a much higher pedestal by strengthening the financial backbone of the nation and thereby contributing to the industrial, financial and economic growth of the nation as a whole. A few decisions to support giving a wider sweep to the non obstinate clause with which Section 32 of the SICA opens were placed before the Court which we feel no necessity of noticing for we are satisfied on a bare reading of Section 32 of SICA that it does override the provisions of Income-tax Act. However, we say so by enclosing a rider to this statement that such overriding is confined to the extent of inconsistency between the two enactments. If there be no inconsistency the occasion for permitting SICA or a scheme framed thereunder overriding the Income-tax Act would not arise.
15. Section 19(1) of SICA speaks of a scheme framed thereunder providing for financial assistance by way of (i) loans, advances or guarantees, (ii) reliefs or concessions, and (iii) sacrifices. All these emanate from (i) the Central Govt, (ii) a State Govt iii) any scheduled bank or other bank, (iv) a public financial institution or State level institution, (v) any institution or other authority. The learned counsel for the petitioner invited attention of the Court to the meaning of the terms 'reliefs' and concession as occurring in Section 19 of the Act and as defined by Black's Law Dictionary.
15.1 'Relief' is defined as:
Relief. The public or private assistance or support, pecuniary or otherwise, granted to indigent persons, Deliverance from oppression, wrong or injustice. In this sense it is used as a general designation of the assistance, redress, or benefit which a complainant seeks at the hands of a court, particularly in equity. It may be thus used of such remedies as specific performance, injunction, or the reformation or rescission of a contract.
15.2 'Concession' is defined as :
Concession. A grant, ordinarily applied to the grant of specific privileges by a government; e.g. French and Spanish grants in Louisiana. A voluntary grant, or a yielding to a claim or demand ( e.g. when each side in a labour dispute reduces its demands to effect a settlement). A rebate or abatement ( e.g. reduced rent for first year as inducement to lease property).
15.3 The learned counsel submitted that excluding the operation of Section 41 of the Income-tax Act does not amount to giving a relief or concession by the Central Govt to a sick industrial unit and therefore, there is no occasion for any scheme under Section 19 being circulated to the Central Govt for the purpose of excluding the operation of Section 41 of the In-come-tax Act nor could the petitioner have been directed to approach the Director of Income-tax ( Administration) for securing his consent to the waiver of tax under Section 41 of the Income-tax Act. The learned counsel further submitted that in order to ameliorate the petitioner from the financial stringency under which it has befallen and to enable it breathing a life again the Board should itself have provided for the petitioner unit being excluded from the operation of Section 41 of the Income-tax Act and once a provision to that effect was made by the scheme then by virtue of Section 32 of SICA it would have overridden the provisions of the Income-tax Act. It was also submitted that circular issued by CBDT has unnecessarily influenced the Board in view of the same having been communicated to it.
16. The learned Sr Standing counsel for the CBDT has, on the other hand, submitted that Section 41 of the Income-tax Act is an independent provision, the operation whereof cannot be permitted to be excluded or suspended by the provisions of SICA or any scheme framed thereunder. The learned counsel also submitted that under the instructions of CBDT the Director of Income-tax has examined the scheme and the need of exempting the petitioner unit from the operation of Section 41 of the Act whether such exemption was really needed for ameliorating the petitioner unit and putting it back to life and having taken into consideration all the relevant facts and circumstances the prayer has been rejected for reasons available on record, also reflected by the order dated 26.8.1996.
17. In our opinion, the learned counsel for the parties have taken two extreme stands, diametrically opposed to each other and the correct view of law lies somewhere in between. The submission made by the learned counsel for the petitioner takes care of 'reliefs' or 'concessions' as occurring in Section 19 of SICA but does not take notice of the term 'sacrifices' from the Central Govt. The term 'sacrifice' means ' surrender or giving up of something valued for the sake of someone or something else, esp. a higher consideration,... to surrender or give up something for the sake of some other person or thing.[see Chamber's 21st Century Dictionary, 1996 Edn,p.1236] The benefits obtained by the petitioner under the scheme framed by SICA are profits and gains of business chargeable to Income-tax under Section 41 of the Income-tax Act. If the Central Govt is restrained from taxing the petitioner under Section 41 to the extent of the amount obtained or the value of benefit accruing to it under the scheme then to the extent of the restraint the Central Govt would be sacrificing its revenue. Thus, excluding the operation of or exempting from Section 41 of the Income-tax Act qua the petitioner would be covered by the phrase 'sacrifices from the Central Govt.' Once this view is taken, the consequence which follows is that the question as to excluding the operation of Section 41 of the Income-tax Act is rendered a subject for the consideration of the Board under Section 19 of the SICA.
18. The Board for Industrial and Financial Reconstruction established under Section 4 of the SICA consists of experts in the field. As subsection (3) of Section 4 provides the Chairman and other members of the Board are the persons of ability, integrity and standing who have special knowledge of, and professional experience of not less than 15 years in science, technology, economics, banking industry, law relating to labour matters, industrial finance, industrial management, industrial reconstruction administration, investment accountancy, marketing and so on and so forth. Such experts in whom the law has chosen to repose confidence of a high degree are expected to apply their mind while framing a scheme under section 19 to the question whether the operation of Section 41 of the Income-tax Act, 1961 should be excluded or suspended, either wholly or partly, for the success of the rehabilitation scheme of any industrial unit. If the Board may form an opinion favourable to the sick unit demanding for 'sacrifice from the Central Govt' referable to Section 41 of the Income-tax Act, the scheme would amount to providing a 'financial assistance' by the Central Govt by way of relief in Income-tax and therefore, the same shall be required to be circulated to the Central Govt ( the Director Income-tax, Administration in view of the circular of the CBDT) in order to satisfy the requirement of sub-section (2) of Section 19. The applicability of sub-sections (3) and (4) of Section 19 would also be attracted.
19. In the event of their being any disagreement or difference of opinion between the proposal qua the operation of Section 41 of the Income-tax Act as incorporated by the BIFR in its scheme framed under Section 19(1) of SICA and the view taken by the Director of Income-tax ( as has been done in his communication dated 26.8.1996) the scope for discussion across the table and any one of the two being in a position to persuade the other to agree to his view point subject to hearing the petitioner or any other institution or instrumentality adversely effected, as the case may be, cannot be ruled out. This would enable the object, behind Section 19 of SICA being achieved effectively.
20. Section 32 of SICA comes into play only when the provisions of SICA or any rules or schemes made thereunder are inconsistent with the provisions of the Income-tax Act. The case of relief under Section 41 of the Income-tax Act can be taken care of while framing a scheme under Section 19 of the Act. The exemption of a sick unit from the operation of Section 41 of the Income-tax Act being sacrifice from the Central Govt., once a provision is made in the scheme in that regard after following the procedure prescribed under Section 19 then in the event of any clause of the scheme being inconsistent with the operation of Section 41 of the Income-tax Act, 1961, the scheme shall have an overriding effect. However, the provisions of Section 41 of the Income-tax Act cannot be given a complete go bye solely by reference to Section 32 of the SICA merely because the petitioner happens to be a sick unit unless a provision in that regard has been made and incorporated in the scheme.
21. To sum up:
(1) The non obstinate clause contained in sub-section (1) of Section.32 of SICA does not give the SICA a blanket overriding effect on all other laws; the overriding effect is given to the provisions of SICA, rules or schemes made thereunder only to the extent of inconsistency therewith contained in any other law excepting a few exceptions enumerated therein.
(2) Exempting from and suspending the operation of the provisions contained in Section 41 of the Income-tax Act, 1961 as regards a sick industry amounts to 'sacrifice from the Central Govt.'- the expression as used in Section 19(1) of SICA.
(3) It is for the BIFR to form an opinion while framing a scheme of rehabilitation for a sick industry whether an exemption from operation of S 41 of the Income-tax Act, 1961 is required to be engrafted in the scheme so as to secure the object of rehabilitation and if so then to what extent. If the BIFR may form an opinion in favour of grant of such exemption then the same amounts to 'financial assistance' from the Central Govt to the extent of the sick industry having been exempted from the operation of Section 41 of the Income-tax Act.
(4) The draft scheme containing such provision shall attract applicability of sub-section(2) of S 19 of SICA and shall have to be circulated to Director of Income-tax Administration for his consent as well. The applicability of sub-section (3) and (4) of Section 19 would also be attracted.
22. That being the position of law the BIFR was not justified in finalising the scheme dated 15.5.95 in the manner in which it has been done. Clauses 5.4 and 5.5(v) of the scheme are not consistent with Section 19 of the Act. While proposing a draft scheme the Board should have deliberated upon and recorded its own proposal qua the operation of Section 41 of the Income-tax Act, 1961. Such draft scheme should then have been circulated amongst others to the Director of Income-tax (Administration) as well requiring his consent to the scheme whereafter the applicability of sub-section (3) and (4) of S.19 would also have been attracted.
23. The BIFR appears to have belaboured under some misapprehension as to CBDT circular of 1994. The earlier circular issued by the CBDT generally provided for the provision in the scheme regarding Section 41(1) of the Income-tax Act being respected as final by the assessing officer. It did not speak of any consent being given by or on behalf of the Central Govt to the scheme dealing with income-tax liability of the sick unit. That circular was guided purely by Section 32 of SICA. The CBDT rightly gave a second thought to its earlier circular The circular No. 683 dated 8.6.94 proceeds on correct lines and is consistent with the view of law taken by us herein above. However, the BIFR should have communicated with the Income-tax Department on the lines suggested by the circular No.683 at the stage reached after framing the proposed scheme and before sanctioning the same.
24. In any case, the procedure adopted by the respondents, i.e., the BIFR enacting clauses 5.4 and 5.5(v) in its scheme leaving the petitioner to take up its own brief pleading with the Director of Income-tax and the Director of Income-tax dealing with the petitioner's such prayer cannot be countenanced within the frame work of Section 19 of SICA.
25. Though we are holding clauses 5.4 and 5.5(v) of the scheme dated 15.5.95 falling foul of Section 19 of SICA, the entire scheme need not be struck down for this deficiency alone. In our opinion, the deficiency can be removed by striking down clauses 5.4 and 5.5(V) only of the scheme and directing reconsideration by BIFR of the petitioner's prayer for exempting it from the operation of Section 41 of the Income-tax Act and finalising such prayer in accordance with Section 19 of the Act and consistently with the observations made hereinabove. This will also satisfy the requirement of CBDT circular No. 683 dated 8.6.94. Rest of the scheme shall remain valid and binding on the parties.
26. The petition is partly allowed. Clauses 5.4 and 5.5(V) of the scheme dated 15.5.95 are struck down and set aside. The BIFR shall consider the petitioner's prayer for exempting the petitioner's unit from the operation of Section 41 of the Income-tax Act, 1961, forming its own opinion thereon, incorporating the same in the scheme in place of the present clauses 5.4 and 5.5(V) and circulate the same in accordance with Section 19(2) of SICA and then sanction the same. The petition stands disposed of accordingly. No order as to costs.