2018 (12) TMI 285 - AT - Income Tax

Tribunal Upholds Exemption, Assessee Wins Appeals

The Tribunal dismissed the Revenue's appeal challenging the exemption under Section 80IA of the Income Tax Act, affirming the CIT(A)'s decision in favor ... Exemption u/s 80IA - mere work contractor or a developed of the road - Held that:- We find that in the case of the assessee itself the issue has been decided by the Tribunal it cannot be said that the assessee company was mere a contractor and not a developer. Therefore, on issue No. 3, we find no infirmity in the order of CIT(A). This issue is decided in favour of the assessee. Disallowance of depreciation on shuttering material purchased from Shyam Steel Industries - Held that:- From the copy of remand report dated 23/08/2016, we find that no such query regarding additions to shuttering material was made. The learned CIT(A) has further held that the detail of purchases of shuttering material has been examined and during examination he had found an amount of ₹ 57,91,665/- having been purchased after 30/09/2011 and rest of the purchases were from 01/04/2011 to 30/09/2011 whereas the assessee had claimed depreciation @100% on the total purchases. The learned CIT(A), after having observed the purchase of shuttering material by the assessee, did not allow claim of the assessee as he held that assessee had not produced the relevant material before the Assessing Officer during the remand proceedings also. However, we feel that one more opportunity should be given to the assessee to produce the purchase bills which has been used for making claim for depreciation. Advance made to NCC-VEE (JV) - Held that:- We find that as per the additional evidence the assessee was bound to pay an amount of 4% to NCC-VEE (JV). The said additional evidence could not be filed before the authorities below. However, we find that the additional evidence goes to the root of the matter and, therefore, we have admitted the same and we remand this issue also back to the file of the Assessing Officer who should readjudicate the above in view of the additional evidence. Addition on account of non confirmation of sundry creditors - AO during remand proceedings again issued notice u/s 133(6) to such creditors and part of the creditors responded and therefore, learned CIT(A) allowed part relief to the assessee - Held that:- CIT(A) has held that during remand proceedings the assessee had not co-operated and he has confirmed the addition by holding that the notices issued to creditors had returned back unserved. However, while confirming the addition he has ignored the fact that the assessee had claimed to have made payments to these creditors through banking channels and assessee was having confirmation from these creditors. Therefore, we deem it appropriate to remand this issue also back to the file of the AO to adjudicate the issue afresh. These grounds are allowed for statistical purposes. Deduction under Chapter VI-A allowable be allowed on the income finally assessed - Held that:- In this respect our attention was invited to a copy of CBDT Circular also, a copy of which is placed at pages 193 and 194 of the paper book which says that if the expenditure is disallowed and such expenditure is related to the business activity against which the Chapter VI-A deduction has been claimed, the deduction needs to be allowed on the enhanced profits. Since we have remanded the entire issue raised by the assessee to the Assessing Officer for readjudication, the Assessing Officer will look into this aspect of additional ground also. The additional ground raised by the assessee is also remitted back to the Assessing Officer for adjudication. Accordingly, this ground is also allowed for statistical purposes. Issues Involved:1. Exemption under Section 80IA of the Income Tax Act.2. Rejection of books of accounts under Section 143(3)/144.3. Disallowance of depreciation on shuttering material.4. Addition of advance made to NCC-VEE (JV).5. Disallowance of expense towards work contract and other tax.6. Addition under the head sundry creditors.7. Opportunity to present evidence and compliance.8. Deduction under Chapter VI-A on enhanced income.Detailed Analysis:1. Exemption under Section 80IA of the Income Tax Act:The Revenue's appeal contested the CIT(A)'s decision to allow the assessee's claim under Section 80IA. The Tribunal found that the issue had already been settled in favor of the assessee by its earlier order, which was confirmed by the Allahabad High Court and the Supreme Court. The Tribunal reiterated that the assessee was not a mere contractor but a developer, having made substantial investments and undertaken significant risks. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision.2. Rejection of Books of Accounts under Section 143(3)/144:The assessee's appeal included a ground challenging the rejection of its books of accounts. However, this ground was not argued by the assessee's representative and was therefore dismissed as not pressed.3. Disallowance of Depreciation on Shuttering Material:The assessee contested the disallowance of depreciation on shuttering material purchased from Shyam Steel Industries. The CIT(A) had upheld the disallowance due to the assessee's failure to produce purchase bills during remand proceedings. The Tribunal decided to give the assessee another opportunity to produce the relevant purchase bills and remanded the issue back to the Assessing Officer for reconsideration.4. Addition of Advance Made to NCC-VEE (JV):The assessee challenged the addition of an advance made to NCC-VEE (JV). The Tribunal admitted additional evidence—a memorandum of agreement requiring the assessee to pay 4% of gross receipts to NCC-VEE (JV)—which had not been presented to the lower authorities. The Tribunal remanded the issue back to the Assessing Officer for re-evaluation in light of the additional evidence.5. Disallowance of Expense Towards Work Contract and Other Tax:The assessee disputed the disallowance of expenses related to work contract and other taxes, amounting to Rs. 3,69,70,315/-. The CIT(A) had upheld the disallowance due to insufficient evidence. The Tribunal noted that the assessee had submitted detailed tax break-ups and remanded the issue back to the Assessing Officer for re-examination.6. Addition Under the Head Sundry Creditors:The assessee contested additions made due to non-confirmation of sundry creditors. The CIT(A) had allowed partial relief, but upheld some additions due to unserved notices. The Tribunal found that the assessee had made payments through banking channels and had confirmations from creditors. The Tribunal remanded the issue back to the Assessing Officer for fresh adjudication.7. Opportunity to Present Evidence and Compliance:The assessee argued that it was not given sufficient opportunity to present its case. The Tribunal's decision to remand several issues back to the Assessing Officer implicitly addressed this concern, ensuring the assessee would have another chance to provide necessary evidence.8. Deduction Under Chapter VI-A on Enhanced Income:The assessee raised an additional ground for deduction under Chapter VI-A on any enhanced income resulting from disallowed expenditures. The Tribunal referred to a CBDT Circular which supports such deductions and remanded this issue back to the Assessing Officer for consideration.Conclusion:The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal for statistical purposes, remanding several issues back to the Assessing Officer for re-evaluation. The assessee was given another opportunity to present relevant evidence and argue for deductions on enhanced income.