TaxTMI 
TaxTMI 
2016 (3) TMI 407
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.... was fixed for hearing on 27.01.2016. In view of the above, this appeal is again heard by the present constitution of Bench. 3. Briefly, the facts of the case are that the assessee filed return of income declaring income of Rs. 16,62,910/-. The assessment u/s. 143(3) was completed on 05.05.2010 and income of the assessee was determined at Rs. 22,79,810/-. The AO examined the record and noticed that the assessee had claimed and has been allowed deduction u/s. 80IA(4) of the IT Act amounting to Rs. 2.24 crores. As per Explanation to section 80IA(13), the deduction will not be allowed u/s. 80IA(4) to the persons engaged in the contract work (works contractors). The assessee was considered as works contractor provided by the Government and thus, was not found entitled to deduction. The AO moved proposal u/s. 263 of the IT Act before the learned Commissioner who accordingly issued notice to the assessee, which have been responded by the assessee and the assessee explained that the deduction u/s. 80IA(4) has been claimed from assessment year 2003-04 regularly and deduction has been allowed u/s. 143(3) of the IT Act. The AO in the assessment year under appeal conducted detailed enquiry r....
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....to 68 of the paper book and submitted that Explanation to section 80IA(13) was also considered at the assessment stage as per explanation of the assessee. The AO examined the record and books of account of the assessee and verified the claim of the assessee. The assessee relied upon certain decisions of different benches of Tribunal. The AO after considering the detailed submissions and the decisions of different Benches of Tribunal and High Courts, allowed the claim of assessee. Therefore, it is not a case of inadequate enquiries. Similar claim was allowed by the AO u/s. 143(3) in preceding assessment years 2006-07 and 2007-08. The copies of the orders dated 27.12.2008 and 23.11.2009 have been placed on record. The view taken by the AO was legally permissible after conducting detailed enquiry in the matter. The amendment in Explanation to section 80IA(13) was also on record before the AO when he passed the assessment order on 05.05.2010. It was further submitted that the Explanation to section 80IA(13) introduced by Finance Act 2007 and Finance Act 2009 are almost same and deal with the works contract. Both the Explanations in sum and substance were similar in so far as they deny ....
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....s were taken by the assessee and huge investment has been made in the contract. He has relied on the CBDT Circular No. 3 dated 12.03.2008, in which in para 34.2, it is explained as under : "34.2. The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. The incentive has all along been intended to benefit developers who undertake entrepreneurial and investment risk and not contractors who only undertake business risk." 4.1 The ld. Counsel for the assessee, therefore, submitted that since the AO has taken one of the permissible view under the law, therefore, assessment order could not be stated to be erroneous in so far as prejudicial to the interest of Revenue. He has also relied upon the order of ITAT Indore....
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....ed the same are handed over to the department. After entering into the agreements with the railways, the assessee plans, mobilizes and synthesizing people, plans technical expertise, supervision, coordinating control and finance etc. to develop and create the railway tracks. It means that the project, when it was developed, is initially financed by the assessee and risk of any damage is borne by the assessee company. The assessee, therefore, explained that it satisfies the conditions of section 80IA(4) of the IT Act. The ld. Counsel for the assessee has referred to the sample copy of various agreements in respect of the context. The assessee also explained that Explanation to section 80IA(13) first inserted by Finance Act, 2007 and amended by Finance Act, 2009 as reproduced above would not apply to the assessee's case first because the nature of the work is not of work contract and second, that this Explanation applies to only sub-contractors. ITAT, Pune Bench in the case of Laxmi Civil Engg. P. Ltd. vs. Addl. CIT vide order dated 08.06.2011, considering the decision of Bombay High Court in the case of ABG Heavy Engg. Ltd. in para 5 & 6 held as under : "5. We heard both the parti....
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...., operates and maintains an infrastructure facility." A harmonious reading of the provisions in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or operates and maintains; or (iii) develops, maintain and operates that infrastructure facility. However, the commencement of the operation and maintenance of the infrastructure facility should be after 1st April, 1995. In the present case the assessee clearly fulfilled this condition." Before the amendment that was brought about by parliament by Finance Act, 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to S. 80-IA(4) of the Act, set the matter beyond any controversy by stipulating that the three conditions for developments, operation and maintenance were not intended to be cumulative in nature." 6. The above judgment of the Hon'ble High Court is delivered in the case of ABG Heavy Engg. Ltd. (supra), who is a contractor for the NJP Trust and that contractor, assessee is found to be an eligible developer for making claim of deduction u/s. 80IA (4) of the Act. From the above,....
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....ars as well as in the assessment year under appeal has considered the Explanation to section 80IA(13) of the IT Act and was satisfied with the explanation of the assessee on the eligibility for deduction u/s. 80IA(4) of the IT Act. The AO, therefore, took one of the plausible view in the matter and therefore, the assessment order could not be treated as erroneous and prejudicial to the interest of revenue. There is no change in the facts and circumstances of the case. Hon'ble Gujrat High Court in the case of Ganesh Housing Coprn. Ltd. 31 taxmann.com 359 in para 17 to 19 held as under : 17. After hearing the learned counsel for the parties and after going through the aforesaid materials on record, we find that the main reason for opening the assessment is that in the light of the Explanation inserted to section 80-IB(10) by the Finance (No. 2) Act, 2009 with retrospective effect from April 1, 2001, deduction under section 80IB(10) shall not be admissible to a contractor in respect of works contract awarded by any person. 18. Apart from the above fact, the Assessing Officer has on the basis of the materials originally placed by the assessee held that the Assessing Officer in the....
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.... because no adequate enquiry has been carried out by the AO on the issue of allowability of deduction u/s. 80IA(4) of the IT Act as raised in the show cause notice, but such finding of the CIT have not been approved by the Hon'ble Delhi High Court in the case of CIT vs. Anil Kumar Sharma, 335 ITR 83, in which it was held that inadequate enquiry would not give an occasion to the Commissioner to pass order u/s. 263 of the Act. 9. ITAT, Agra Bench on identical facts in the case of Shree Narayan Builtup (I) P. Ltd. vs. CIT 40 taxmann.com 104 held as under : An assessment order could not be said to be erroneous by Commissioner merely because, according to him, Assessing Officer should make adequate - enquiry and its order be written more elaborately." 10. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. , 243 ITR 83 held that where two views are possible and ITO has taken one view with which the CIT does not agree, it cannot be treated as erroneous or prejudicial to the interest of revenue unless the view taken by the ITO is unsustainable in law. The same view has been taken by the Hon'ble Supreme Court in the case of CIT vs. Max India Ltd., 295 ITR 282. Since the a....