TaxTMI 
TaxTMI 
2015 (7) TMI 577
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....d advocate Ms.Sheth waives service of notice of Rule on behalf of respondent Nos.1 and 2. 3. The facts involved in the case are as under: 3.1 The petitioner is a consortium of companies, which has come into existence due to Joint Venture of two companies. The petitioner is engaged in the business with the consortium of two companies. A separate agreement in the form of Joint Venture, which is entered into and share of profits are separately determined. In such capacity, the petitioner is engaged and undertakes the work of civil construction, viz. constructions of roads, bridges, canals, etc. The petitioner filed its return of income for the Assessment Year 2007-08 accompanied by relevant documents such as Profit and Loss Account, Balance-Sheet, Audited Report, etc. In the return of income, the petitioner-assessee claimed deduction under Section 80 IA(4)of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 3.2 The Assessing Officer issued notice under Section 143(2) of the Act and thereupon scrutiny assessment was framed under Section 143(3). The assessment was finalised under Section 139(1) by order dated 13.04.2009. By way of impugned notice, the said comp....
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....decided by the Hon'ble Supreme Court in Liberty India Vs Commissioner of Income Tax [(2009) 317 ITR 218(SC)]. 4.2 As against the above submissions on behalf of the petitioner, learned advocate for the respondents contend that with reference to the contents in the affidavit-in-reply filed on behalf of the respondents, that the re-opening was justified as it was noticed that members of Joint Venture had made claim under Section 80 IA(4) in their own cases including the income coming from their share from the business of the petitioner Joint Venture. It was submitted that the assessee had wrongly claimed deduction on insurance claim receipt, which was also a ground for reopening. 4.3 Learned advocate for the respondent submitted that the contention of the assessee that for the Assessment Year 2008-09, relief under Section 80 IA(iv) was granted by the Commissioner of Income Tax cannot be accepted because the Department has preferred Appeal against the order of the Appellate Commissioner. He further submitted that as per Section 80 IA(iv)(i) as amended with effect from 01st April, 2002, deduction can be allowed only to a person who makes investment and himself execute a developmen....
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....t and repaid rail transport systems. The provision of section 80IA(4) shall not apply to a person who execute a work contract entered into with the undertaking or enterprises referred to in that section. Thus, when a person makes the investment and himself execute the development work will be eligible for tax benefit u/s.80IA(4). In this case, the assessee has executed the contract work with the National Highway Authority in India. The execution of work contract will not be eligible for the tax benefit u/s.80IA. Apart from this angle, other criteria in respect of the ownership of the development project etc. are requires to be verification. During the course of assessment it is remained to be Verified, whether the assessee was the owner of the infrastructure facility or not. In case, the assessee is in operation and maintaining infrastructure facility, the assessee needs to secure operation as well as maintenance contract and concerned assets has to be transferred to the assessee for such purpose. The intention behind this provision was to give a fillip of deduction against the total income of the assessee derived from the infrastructure project as the entire cost of the infrastr....
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....ter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1 : Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2 : For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) Where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) Where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) Where an assessment has been made, but (i) Income chargeable to tax has been under- assessed; or (ii) Such income has ....
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....t. In order to take 100 percent Tax Exemption available for Development of Infrastructure facility u/s.80IA of the Income Tax Act, the Assessee maintained books of accounts for such eligible project as an independent entity and got audited its books of account as required by the said section & obtained audit report in Prescribed Form No.10CCB, from a firm of Chartered Accountants." 6.2 The Assessing Officer before finalizing the assessment, carried out the proceedings under Section 143 and scrutiny was undertaken. The assessment so culminated into the Assessment Order, in which the aspect of deduction in question was discussed and dealt with. The relevant parts from the Assessment Order dated 13.04.2009 are extracted hereinbelow. "The A.R. Of the assessee has furnished the copy of audit report u/s.44AB and u/s.80IA(4) of the I.T. Act in Form No.3CB and 3CD of and 10CCB of the I. T. Rules duly, audit the books of accounts in both the set separately. The A R of the assessee and account are attends along with the books of accounts and relevant records for verification. He furnished the further details as called for. The assessee derived income from Road construction work secured f....
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.... mind the submission of the assessee, total income is computed as under: Reg: Agrawal JV (AOP) Deesa A.Y. 2007-08. Net profit as per statement Rs.3,68,91,167/- Add: Disallowance as discussed above out of interest exp. Rs. 13,38,811/- Rs.3,82,29,978/- Less: Deduction u/s.80IA(4) Rs.3,82,29,978/- Total assessed income Rs. NIL 6.3 From the above facts and material on record, which was also before the Assessing Officer, it is evident that the necessary facts and material relating to the claim for deduction by the assessee under Section 80IA(4) made in the return of income were considered by the Assessing Officer. He applied his mind to those materials and allowed deduction as per his Assessment Order. It could neither be demonstrated, nor it is revealed that the Assessing Officer had any tangible material with him so as to validly exercise the powers of reopening. Once the Assessing Officer on the basis of material before him had applied his mind and granted deduction in the Assessment Order, it was not permissible for him to exercise powers under Section 147 on the same material on the ground that certain aspects were not considered or that they were overlo....
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....rom industrial undertaking under Sections 80I, 80IA, 80IB of the Act itself generation of profits from infrastructural activity that attracts incentives under the said provisions, and not ownership in the business. The relevant observations are as under: 7.4 If the reasons recorded in the present case are attentively read, it is mentioned, "during course of assessment it is remained to be verified, whether the assessee was the owner of the infrastructure facility or not'." In the next also it was stated "on verification of profit and loss account'." It was further stated "during the assessment proceedings it is remained to be verified the expenses incurred '". Thus, what can be figured out from the reasons recorded is that the Assessing Officer wanted to re-open the assessment as according to him certain aspects remained to be verified. It cannot be gainsaid that re-opening of assessment for the purpose of "verifying" or "verification" will be necessarily an action based on a mere change of opinion. The connotation of word "to be verified", "verification" is to reexamine the existing material. Verification is always with reference to the details already considered once....