2018 (3) TMI 1984 - AT - Income Tax

Tribunal rules on Revenue's deduction claims under section 80IA(4) for multiple assessment years.

The Asst. Commissioner of Income Tax, Central Circle, Kolhapur Versus D.M. Corporation Pvt. Ltd.

The Tribunal allowed the Revenue's appeals for assessment years 2006-07 to 2009-10, disallowing the fresh claims of deduction under section 80IA(4). For ... Deduction u/s 80IA(4) - claim made u/s 153A when there was no such claim made in the original return of income of the assessee for the year under consideration - no audit report in form 10CCB as mandated under section 80IA(7) was filed with the original return - whether the assessee was developing infrastructure facility enabling it to claim the aforesaid deduction under section 80IA(4)? - AO denied the assessee aforesaid deduction under section 80IA(4) of the Act on the ground that the work was awarded by the Government of Maharashtra, so the assessee was a contractor and not entitled to the said claim - HELD THAT:- The assessee claims that it was engaged in executing Infra projects, hence was entitled to claim the aforesaid deduction under section 80IA(4) of the Act. The CIT(A) has elaborately discussed the issue and allowed the claim of deduction under section 80IA(4) of the Act holding the assessee to be eligible to claim the aforesaid deduction. The Revenue has not been able to controvert the findings of CIT(A) in this regard. Tribunal in ACIT Vs. Mahalaxmi Infraprojects Ltd. [2018 (1) TMI 1103 - ITAT PUNE] had allowed the aforesaid claim of deduction under section 80IA(4) of the Act in the case of assessee engaged in executing infrastructure projects. Following the same line of reasoning, we hold the assessee to be eligible to claim the aforesaid deduction under section 80IA(4) of the Act. Claiming the deduction u/s 80IA(4) on the additional income offered by the assessee on account of wages - Applying the ratio laid down in CIT Vs. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. and All Cargo Global Logistics Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT] and the ratio laid down in Shri Gajendra D. Pawar [2017 (10) TMI 1299 - ITAT PUNE] we hold that the assessee is not entitled to the claim of deduction under section 80IA(4) of the Act both on original income and on additional income offered, even if the assessee in principle is entitled to claim the aforesaid deduction. We hold that in the years, where the assessment had not been abated, the assessee could not make any fresh claim of deduction under section 80IA(4) of the Act, even if in principle the assessee was entitled to claim the said deduction. We further hold that even on additional income so offered, the assessee cannot make claim of deduction under section 80IA(4) of the Act in the non-abated assessments relating to assessment years 2006-07 to 2009-10. Hence, the additional income offered for the years is to be assessed in the hands of assessee, in addition to the original income offered in the original return of income filed by the assessee. Assessment years 2010-11 to 2012-13 - Assessee is entitled to claim the deduction under section 80IA(4) of the Act on additional income offered in the abated assessment proceedings i.e. assessment years 2010-11 to 2012-13. Accordingly, the grounds of appeal raised by Revenue in assessment years 2006-07 to 2009-10 are allowed and the grounds of appeal raised by Revenue relating to assessment years 2010-11 to 2012-13 are dismissed. Issues Involved:1. Eligibility for deduction under section 80IA(4) of the Income-tax Act, 1961.2. Classification of the assessee as a Developer or Contractor.3. Validity of the claim based on the timing of submission of Form No. 10CCB.4. Entitlement to claim deduction under section 80IA(4) on additional income declared during search proceedings.Detailed Analysis:1. Eligibility for Deduction under Section 80IA(4):The primary issue is whether the assessee is eligible for deduction under section 80IA(4) of the Income-tax Act, 1961. The CIT(A) held that the assessee was eligible for this deduction, noting that the assessee fulfilled the conditions stipulated in sub-clauses (a), (b), and (c) of sub-section (4)(i) of section 80IA. The CIT(A) relied on decisions from various Benches of the Tribunal, which held that an entity involved in the development of infrastructure facilities qualifies for the deduction under section 80IA(4). The CIT(A) observed that the assessee undertook significant responsibilities and risks, including design, development, construction, and maintenance of infrastructure projects, which qualifies it as a developer rather than a mere contractor.2. Classification as Developer or Contractor:The Revenue argued that the assessee was a contractor and not a developer, as the work was awarded by the Government of Maharashtra. The Assessing Officer denied the deduction based on the view that the assessee was only a works contractor, referencing the Explanation inserted by the Finance Act, 2007, and Circular No.3/2008. However, the CIT(A) and the Tribunal found that the assessee's role extended beyond that of a contractor, involving comprehensive development activities, thereby qualifying it as a developer. The Tribunal upheld the CIT(A)'s decision, citing that the assessee's activities met the criteria for development of infrastructure facilities.3. Timing of Submission of Form No. 10CCB:The Revenue raised concerns about the validity of the deduction claim based on the timing of the submission of Form No. 10CCB, which was filed during the proceedings under section 153A and not with the original return under section 139(1). The Tribunal noted that the return filed under section 153A is deemed to be a return filed under section 139, and thus, the provisions of the Act apply accordingly. The Tribunal held that the assessee could claim the deduction under section 80IA(4) in the return filed in response to notice under section 153A, even if it was not claimed in the original return.4. Deduction on Additional Income Declared During Search:The Tribunal addressed whether the assessee could claim deduction under section 80IA(4) on additional income declared during search proceedings. The Tribunal referenced its earlier decisions and the Hon’ble Bombay High Court's rulings, affirming that the assessee is entitled to claim the deduction on additional income offered during search, provided the assessee meets the criteria for deduction under section 80IA(4). The Tribunal differentiated between abated and non-abated assessments, holding that fresh claims could be made in abated assessments, while in non-abated assessments, no fresh claims are allowed.Year-wise Analysis:- Assessment Years 2006-07 to 2009-10: These were non-abated assessments where the original returns did not claim the deduction under section 80IA(4). The Tribunal ruled that the assessee could not make a fresh claim in these years, and the additional income offered during search should be assessed without the deduction.- Assessment Years 2010-11 to 2012-13: These were abated assessments where the assessee could make fresh claims. The Tribunal allowed the deduction under section 80IA(4) on both the original and additional income for these years, following the principle that fresh claims are permissible in abated proceedings.Conclusion:The Tribunal allowed the Revenue's appeals for assessment years 2006-07 to 2009-10, disallowing the fresh claims of deduction under section 80IA(4). For assessment years 2010-11 to 2012-13, the Tribunal dismissed the Revenue's appeals, affirming the assessee's entitlement to the deduction on both original and additional income.