AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 241
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....12-13. Since the main issue involved in all these appeals is common, the same have been heard together and are being disposed of by a single consolidated order. 2. Brief facts of the case are that the assessee is a company which is engaged in the construction business. Prior to the search and seizure action taken in its case on 08.12.2011, the assessee had filed its returns of income for six out of the seven years under consideration i.e., A.Ys. 2006-07 to 2011-12 and assessments under section 143(3) were also completed for the first three years i.e., A.Ys. 2006-07, 2007-08 and 2008-09. Consequent to the conclusion of the search and seizure action on 03.02.2012 when the last of the authorizations was executed, notices under section 153A were issued by the A.O. on 09.10.2012 for the six years i.e., A.Ys. 2006-07 to 2011-12. In response to the said notices, the returns of income for the relevant six years were filed by the assessee claiming therein deduction under section 80IA. Meanwhile, the return of income for A.Y. 2012-13 was also filed by the assessee on 29.09.2012 claiming deduction under section 80IA. Thereafter, notices under section 143(2) were issued by the A.O. to the ass....
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....gs before the Ld. CIT(A), various submissions were made by the assessee in support of its claim for deduction under section 80IA, which as summarized by the Ld. CIT(A) in his impugned orders, were as under : a) "Section 153A clearly states that the return filed in response to the notice u/s 153A(1)(a) is a return which is required to be furnished u/s 139 of the I.T. Act. Further the section starts with a Nonobstante clause. Thus, a return filed u/s 153A is like a fresh return and all claims can be made in that notwithstanding the earlier returns filed in regular course. b) The return filed by the assessee in response to return u/s 153A steps into the shoes of the returns filed by the assessee u/s 139(1) and the assessment has to be completed afresh on the basis of the return filed u/s. 153A. c) Total income as per section 2(45) is defined as income computed in the manner laid down in the Act and various deductions which are to be given while computing the said income have to be given including claim of deduction u/s 80IA. d) Explanation to sub-section 2 of section 153A provides that all other provisions of the Act shall apply to the assessment made under this section. There....
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.... but assessed the income on the basis of previous returns of income and the earlier completed assessment u/s 143(3). l) The A.O. took a completely wrong view that a infrastructure project facility has to be owned by a person to be eligible for deduction. The AO misinterpreted the clause 4(a) of section 80IA. It is the ownership of the enterprise which is developing the infrastructure facility which is being discussed in the sub-section. The Enterprise should belong to a company or a consortium of companies registered in India. The appellant cited the following decisions of jurisdictional Tribunal ITAT to claim that it is eligible for deduction u/s 80IA. (i) KMC Constructions vs. ACIT (ITA No.338/Hyd/2009). (ii) Koya & Company Constructions Pvt. Ltd., vs., ACIT (ITA.No. 180/Hyd/2006, 167 and 168/Hyd/2008 and 221/Hyd/2008). (iii) Ocean Sparkle Ltd., Vs DCIT. (iv) GVPR Engineers Ltd., vs ACIT (ITA No.347/Hyd/2008). (v) Hon'ble ITAT, Mumbai 'E' Bench decision in the case of Pratibha Industries Ltd vs., ACIT (ITA.No.2197 to 2199/Mum/2008). (vi) Decision of Hon'ble Bombay High Court in CIT vs., ABG Heavy Industries Ltd., (2010) 323 ITR 323." 2.2. After considering the subm....
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....or deciding whether assessee is entitled or not for making a new claim during the course of proceeding under section 153A. The claim of the assessee for deduction under section 80IA thus was allowed by the Ld. CIT(A) for A.Ys. 2009-10 to 2012-13 whereas, the action of the A.O. in disallowing such claim for A.Ys. 2006-07 to 2008-09 was upheld by the Ld. CIT(A). Aggrieved by the same, the assessee has raised this issue in its appeals for A.Ys. 2006-07 to 2008-09 filed before the Tribunal while the Revenue has raised the said issue in the present appeals filed before the Tribunal for A.Ys. 2009-10 to 2012-13. 3. We have heard the arguments of both the sides and also perused the relevant material on record. At the time of hearing before us, the learned representatives of both the sides, besides strongly relying on the relevant portions of the orders of the authorities below which are in their favour, have also cited various case laws in support of their respective stand on the issue relating to the assessee's claim for deduction under section 80IA. We have carefully gone through and deliberated upon the judicial pronouncements cited by the learned representatives of both the sides. 3....
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....n the jurisdiction of the Assessing Officer in not including any new income to such fresh total income pursuant to search which was not added during the original assessment, in the like manner, there is no restriction on the assessee to claim any deduction Which was not allowed in the original assessment. The requirement of section 153A is to compute the total income of each of such assessment years. Such determination of the total income has to be done afresh without any reference to what was done in the original assessment. Of course, the AO is entitled to make any addition in the fresh assessment, which he made in the original assessment, provided he is satisfied with the merits of the addition. But the mere fact that there was some addition in the original assessment, would not preclude the assessee from Contesting the addition in the subsequent proceedings. As it is going to be a fresh exercise of framing assessment or reassessment of the total income at the end of the AO, the assessee cannot be stopped from not even arguing about the merits of his case qua the addition which was made in the original assessment. Debarring the assessee from making a claim about the deductibilit....
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....ncome." 3.2. For the reasons given above, it was held by the Tribunal that the starting point of the assessment under section 153A is the amount of income declared in the return of income and when the A.O. has to compute the total income of the assessee on the basis of the return of income, there may not be any scope for arguing that the assessee has been rendered powerless to even lodge a claim in respect of which deduction was not allowed earlier. In the said case before the Tribunal, reliance was placed by the learned D.R. in support of Revenue's stand on the decision of Hon'ble Supreme Court in the case of Sun Engineering (supra) as in the present case, but the same was found to be misconceived by the Tribunal for the reasons given in paragraph No.8 of its order which are already extracted above. 4. Besides the decision of Hon'ble Supreme Court in the case of Sun Engineering (supra), the A.O. has relied upon the decision of Hon'ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra) to hold that assessee is not entitled to claim deduction under section 80IA for the first time in the returns filed in response to notice issued under section 153A for the rele....
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....essments without any fetters, if need be. 4.1. Hon'ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra) also did not accept the arguments of the assessee that the new claim can be made for the first time even in the return filed in response to notice under section 153A when the original assessment had already been completed by observing that if the same is taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the Ld. CIT(A), ITAT and the High Court, on a notice issued under section 153A of the Act, the A.O. would have power to un-do what has been concluded up to the High Court. It was held that any interpretation which leads to such conclusion has to be repelled and/or avoided. It is pertinent to note here that when any new claim is made by the assessee for deduction in response to the notice under section 153A which was not made in the original assessment proceedings as in the present case, the situation as contemplated by the Hon'ble Rajasthan High Court would not arise at all as there is no occasion in such case for the A.O. to un-do something which has been concluded up to the H....
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....ection 132, the A.O. shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years in the prescribed form and verified in the prescribed manner and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. It was held by the Tribunal that it is because of this provision of law stated in section 153A(1)(a) that a statutory presumption is made that a return filed under section 153A is a return required to be filed under section 139(1) of the Act. The Tribunal also took note of the nonobstante clause contained in section 153A and held that said provision over-rides all other provisions stated in the Act in matters of filing of return of income consequent to a search and therefore, the return filed in pursuance of notice issued under section 153A is as good as a return filed under section 139(1). It was also held that where an assessee has filed its return of income as prescribed by law, even if as a consequence of search carried out under section 132 and in....
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....r section 80IA was also examined by the A.O. on merit and on such examination, he held that the assessee not being the owner of the infrastructure facility as required by sub-clause (a) of clause (i) of sub-section (4) of section 80IA was not eligible to claim deduction under section 80IA. In support of this conclusion, the A.O. relied on the decision of Mumbai Special Bench of ITAT in the case of B.B. Patil & Sons 35 SOT 171. The Ld. CIT(A), however, has not agreed with this stand of the A.O. According to him, the ownership of the infrastructure facility is not the intention of the provision of section 80IA(4)(i)(a) and what is contemplated therein is the ownership of enterprise. As pointed out by the Ld. Counsel for the assessee at the time of hearing before us, this issue now stands covered by the decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323 wherein it was held that after section 80IA was amended by the Finance Act, 2001, the section applies to an enterprise carrying on the business of "(i) developing" or "(ii) operating and maintaining," or "(iii) developing, operating and maintaining any infrastructure facility which fulfi....
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....land owned by it was declared by the assessee as agricultural income and the same was claimed to be exempt from tax. During the course of assessment proceedings, the copies of relevant deed evidencing purchase of agricultural land as well as declaration of the concerned farmers who had taken the said land on lease were filed by the assessee. From the perusal of the said documents as well as other material available on record, the A.O. recorded the following findings/observations. i) "The assessee could not produce any lease agreement entered into between the assessee and the farmers. ii) The assessee could not produce Pattadar Pass book to support its claim. iii) It is found from the prospectus of the assessee's company filed with SEBI in the year 2007, issued in connection with public issue that in contains the following clause. "36. Risk pertaining to not obtaining mutation of the title deeds - Our company has acquired various freehold lands without any commitment to deploy them for immediate business requirements or operations. Further, in respect of some of these free hold lands, we are yet to obtain the mutation of the title deeds. Though we have moved application with....
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....d the nature of payment being agricultural income, the common practice adopted is giving lands on oral agreements. One has to take into cognizance of oral agreement as held by the Hon'ble Supreme Court in the case of Brij Mohan and Others VS Smt. Subra Begum & Others 1990 SCR(3)413,1990 SSC (4) 147. c) Even a tenant of agricultural land who is not an owner and who does not have a pattadar pass book can also derive agricultural income by way of agricultural operation. Ownership of land is not necessary. The appellant cited in support, the decision of Hon'ble ITAT Pune Bench in the case of ITO Vs Gajanan Agro Farms 142 ITD 571. d) The A.O. cited clause no.36 of the Prospectus of the assessee submitted to SEBI in 2007. This clause mentioned the risk pertaining to not obtaining the mutation of title deed by the company even though an application was made to the relevant revenue authorities for mutation of said land in the name of the company. A disclosure to SEBI regarding pending transfer of ownership of agricultural lands in the revenue records does not mean that there are no agricultural lands or there is no leasing of such lands deriving agricultural income." 9.3. The Ld. CIT(....
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....ce adopted in giving agricultural lands on oral agreements and the claim of the assessee of having given its agricultural land to farmers which was duly supported by the declarations filed by the concerned farmers could not be denied merely for want of written agreement as done by the A.O. Having regard to all these finding of facts recorded by the Ld. CIT(A) based on the relevant documentary evidence, which have not been controverted or rebutted by the learned D.R. at the time of hearing before us, as well as other findings given by him in the impugned order, we find no justifiable reason to interfere with the impugned order of the Ld. CIT(A) accepting the claim of the assessee for exemption on account of agricultural income in all the four relevant years. Accordingly, Ground No.3 of the Revenue's appeal for A.Ys. 2008-09 to 2012-13 is dismissed. 11. The next issue raised by the Revenue in ground No.4 of its appeal for A.Ys. 2011-12 and 2012-13 relates to the deletion by the Ld. CIT(A) of the additions made by the A.O. on account of alleged inflation of subcontract expenses. 11.1. In its returns of income for A.Ys. 2011-12 and 2012-13, substantial sub-contract expenses were clai....
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.... amount was rounded-up by him at Rs. 6 crores and the sub-contract expenses calimed by the assessee were disallowed by him to that extent in A.Y. 2011-12. 11.2. On the similar line as adopted in A.Y. 2011-12, the A.O. verified the sub-contract expenses claimed by the assessee in A.Y. 2012-13 and held for the similar reasons as given in A.Y. 2011-12 that one sub-contractor namely M/s. AHA Projects P. Ltd., to whom sub-contract payment of Rs. 8.1 crores was made by the assessee, was used as conduit to inflate sub-contract expenditure. He however, adopted a different method to quantify the alleged inflated sub-contract expenditure for A.Y. 2012-13. In this regard, he adopted the rates given in NHAI Data Book 2009 and applying the same to the work of excavation of soil and embankment construction stated to be done by the concerned sub-contractor, he arrived at the estimated value of work of the said work at Rs. 5,03,47,000 as against sub-contract payment of Rs. 8.01 crores claimed to be made by the assessee to M/s. AHA Projects P. Ltd. The difference as rounded-off by him at Rs. 3 crores was taken by the A.O. as the expenditure inflated by the assessee on account of subcontract expens....
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....03.2015 was submitted as part of the second paper book. This assertion and action of the AO in the assessment order of the GTC actually goes in favour of the appellant. g) Sworn statement was recorded from the proprietor of GTC and it was confirmed that GTC has executed the work on its own. h) Photographs were taken showing the works executed by GTC at the time of the visit of the AO to the project site to inspect whether or not such works was completed on ground. i) The appellant had given as many as ten documents including the photographs of the works executed and referred supra to the AO which were also admitted in para VII & VIII on pages 12 and 13 of the asst. order. j) Contemporary Certificate dated 05.08.2010 obtained from the Sarpanch of that area for some other purpose was also submitted to the A.O. which clearly proved that M/s GTC had executed the work. Content of the certificate was reproduced in the second paper book filed in course of appellate proceedings. The letter indicated names of five sub-contractors who are involved in execution of works, among them GTC is one of the sub contractor. k) The A.O. opined that inflation of expenditure cannot be rule....
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.... as 25.76 crores (17.93 crores plus 7.83 crores) (b) The disallowance was quantified on the basis of outstanding liability of the sub-contractor in the balance sheet of the sub-contractor as on 31.03.2011. Firstly, it is assumed that 89% of this outstanding liability relates to the works given by the appellant. Then the second presumption is that this 89% of liabilities in the books of the sub contractor are "inflated" and are "income" of the main contractor. Now, liabilities in the books are linked to either capital or revenue expenditure and revenue expenditure is debited to P & L acct. The expenditure was accepted without rejecting books but the consequent liabilities, without any reference to the actual creditor in whose names such liabilities exist, are proposed to be rejected and considered as income of the main contractor. (c) There is also considerable merit in the argument of the appellant that if the AO has come across any discrepancies in the accounts of subcontractor, any addition or disallowance should have been made in the hands of the sub-contractor and not in the hands of the main contractor M/s KNRCL and the reliance placed in this context on the decision o....
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.... be "correct expenditure" is questionable, the inference drawn being that of inflation by main contractor is equally questionable." 11.6. On the basis of the findings and observations recorded as above, the Ld. CIT(A) held that the disallowance made by the A.O. on account of alleged inflated sub-contract expenses was not justified and the same was deleted by him in both the relevant years i.e., A.Ys. 2011-12 and 2012-13. Aggrieved by the same, the Revenue has raised this issue in ground No.4 of its appeal for A.Ys. 2011-12 and 2012-13. 12. At the time of hearing before us, the learned D.R. strongly relied on the order of the A.O. in support of Revenue's case on this issue and submitted that various adverse findings recorded by the A.O. pertaining to the case of the concerned contractors, which have been overlooked by the Ld. CIT(A), may be considered while deciding this issue. 13. The Ld. Counsel for the assessee on the other hand, strongly supported the impugned orders of the Ld. CIT(A) giving relief to the assessee on this issue and submitted that the detailed submissions made by the assessee before the Ld. CIT(A), which have been relied upon by him to delete the additions mad....