TaxTMI 
TaxTMI 
2019 (2) TMI 1201
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....tice u/s 153A, admitting net income of Rs. 2,21,04,67,400/- after claiming deduction u/s 80IA(4) of Income-tax Act, 1961 (in short 'the Act') to the extent of Rs. 1,88,00,33,014/- on eligible projects, which is shown to have not been claimed in return of income filed originally on 12-10-2010, where in the total income admitted was shown at Rs. 4,00,05,00,413/-. The revised return of income for the year was filed on 10-12-2013, in pursuance of notice u/s 153A dtd. 16-11-2012, served on 26-11-2012, in consequence to the search proceedings in this case on 24-04-2012. Observing that the claim of deduction was not claimed in original return of income and a fresh claim of deduction is not allowable for the assessee, the assessee was asked to show cause, why fresh claim of deduction u/s.80IA(4) should not be disallowed, in the light of the judgment in the case of Sun Engineering Pvt Ltd by Apex Court, with regard to making fresh claim in income escaping assessment, for which it was submitted by the assessee before the AO that legal position was ambiguous and assessee was ignorant on the issue of u/s.80IA(4) at the time of filing original return of income, as result of which they could not....
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....missions, which were extracted by the CIT(A) in his order at pages 7 to 12. 5. After considering the submissions of the assessee as well as analysing the order passed by the AO, the CIT(A) directed the AO to allow the claim of the assessee u/s 80IA(4), by observing as under: "6.0 However, while finalizing the assessment, the AO denied the deduction of Rs. 188,00,33,012/- made by assessee in return of income filed in response to the notice u/s.153A, holding that such claim would be made in return filed u/s.153A in completed assessment, based on the analogy of Rajsthan High Court in the case of Jai Steels (India) Ltd. At the same time the AO quantified the disallowance u/s.80IA(4), related to the works/ projects of JVs, but executed by the assessee as a constituent and proposed for disallowance, an alternate way/ground that assessee is not eligible for deductions on profits derived from such projects/works, on the ground that projects by Govt. and other Authorities as principals awarded the contracts to JVs/Consortia, not to the constituents, as such the claim of deduction u/s.80IA( 4) on such profit amounts to violation of provision. In this regard, the assessee's su....
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....ecision was not accepted by department. Further, the order of Allahabad High Court upheld the allowance of claim of deduction u/s.80IA(4), on the profits from the Joint Ventures, in the hands of the constituents. " 6.2.1 Thus, on similar facts, the AO is directed to allow the total amount of Rs. 188,00,33,012/-, claimed as deduction u/s.80IA(4), for the year including the deduction of Rs. 148,18,62,369/-, claimed on profits of JVs, as claimed in return of income. Accordingly, this ground of appeal also treated as Allowed." 6. Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal, which are common, in all the appeals under consideration: "1. On the facts and in the circumstances of the case, and in law, the CIT(A) erred in granting deduction u/s.80IA though the said claim was made for the first time in return filed in response to notice u/s. 153A. 2. Without prejudice to ground No.1, on the facts and in the circumstances of the case, and in law, the CIT(A) erred in allowing deduction u/s. 80IA in respect of contracts received by the assessee from its JVs and consortia. 3. The appellant pray....
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....ompleted assessment proceedings". 4. Reliance is also placed on the decision of Hon'ble Supreme Court in the case of Sun Engineering Works Pvt Lt (198 ITR 297) and in the case of Chettinad Corporation Pvt. Ltd. Vs. CIT reported in (200 ITR 320) on the point that fresh claim of deductions cannot be made in reassessment proceedings. In the present case, the proceedings are in the nature of reassessment proceedings because the original assessments were concluded earlier for most of the years. The return in response to notice u/s 153A is also not filed within the time specified. In light of the above, it is submitted that a search assessment cannot be used for the benefit of the appellant to make new claims of deduction in case of completed assessments because the search assessment is only a "reassessment" on the basis of material relate to search action u/s 132. 5. Reliance is also placed on the decision of Rajasthan High Court in the case of Jai Steel (India) Ltd [2013] 36 taxmann.com 523, where in it was clearly held in case of assessment or reassessment proceedings, which have already been completed and assessment orders have been passed determining assessee&#....
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....f Katira Constructions Ltd, the Hon'ble Gujarat High Court in its decision dated 04/03/2013 in SCA 11781/2009 held that deduction u/s 80lA is not applicable to a business in the nature of works contracts. It is humbly submitted that the contracts executed by the appellant upon assignment from JVs and Consortia are in the nature of works contracts as it does not carry any risk of the developer and the entire risk is carried by the main contractee or JV in most of the cases. The appellant carries only a business risk which is present in case of all enterprises in general and there is no risk of developer in his case. In light of the above, the Hon'ble ITAT may kindly allow the appeal of the Department." 8. The ld. AR made similar submissions as made before CIT(A) and further, he submitted that there is no incriminating material found in the search and for AY 2009-10, the assessment u/s 143(3) was completed and for other years, pending before the AO, at the time of search, therefore other years cases are abated. He relied on the following cases also: 1. ITO Vs. M/s Palavi - MRKV JV, ITA No. 762/Hyd/2015, dated 01/07/2016. 2. CIT Vs. Sheth Develope....
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....sue, the main features of the relevant provisions were noticed by the Tribunal and after analysing the same, it was held by the Tribunal that any deduction claimed by the assessee in the proceedings under section 153A could not be rejected simply on the ground that it was not claimed in the original assessment. The relevant observations recorded by the Tribunal as contained in paragraph Nos. 6 to 9 of its order are extracted below : "6. From the prescription of the above section the following features are noticeable in so far as we are concerned with the instant appeal :- - Assessment pursuant to search is to be made notwithstanding anything contained inter alia in section 147 ; - Clause (a) of sub-section (1) provides that the relevant provisions shall apply as if the return filed in response to notice u/s 153A(1) is a return required to be furnished under section 139 ; - First proviso to sub-section (1) states that the Assessing Officer is required to assess or reassess "total income" in respect of each assessment falling within the relevant six assessment years. - The second proviso to sub-section (1) provides that the assessment or r....
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....d it was held that once an assessment is validly reopened it is not open to an assessee to seek a review of concluded items unconnected with the escapement of income. Here it is pertinent to note that the conditions for taking action u/s 147 vis- vis under section 153A are altogether different. Even though assessment u/s 147 is made read with section 143(3), but the initiation of assessment or reassessment u/s 147 originates from the belief of the AO, on the basis of some tangible material, that income chargeable to tax has escaped assessment. After forming such belief, the AO is called upon to record reasons for the reopening of the assessment before issuing mandatory notice u/s 148. If the foundation of reassessment, being the reasons about the escapement of some income do not exist, then it is impermissible to go ahead with the assessment u/s 147. It is sine qua non that some escaped income must be brought to charge in order to make a fresh assessment u/s 147. On the contrary, the search action itself mandates on the Assessing Officer to pass orders u/s. 153A computing total income for all the relevant six assessment years, irrespective of the fact whether some concealed income ....
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....#39;ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra), we find that the facts involved therein were materially different from the facts involved in the present case as rightly pointed out by the Ld. Counsel for the assessee. First of all, the claim made by the assessee in the said case in the return filed in response to the notice undersection 153A for the first time was that the Sales Tax incentive received by it was a capital receipt and the same being a subject matter of claim and not a regular allowable deduction as per the provisions of the Act, it was considered that the same required the initiation of claim and conclusion on the basis of facts and other judicial pronouncements. Moreover, no incriminating material was found in the said case before the Hon'ble Rajasthan High Court during the course of search and the absence of such incriminating material, it was held by their Lordships that the assessment or re-assessment under section 153A would not result in any addition and the assessment passed earlier may have to be reiterated. In this regard, Hon'ble Rajasthan High Court referred to the decision of Hon'ble Delhi High Court in the case....
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....) vs. ACIT (supra), thus is not applicable to the fact situation involved in the present case and the reliance of the Ld. CIT(A) thereon to hold that the assessee is not entitled to make a new claim for deduction under section 80IA for A.Ys. 2006-07 to 2008-09 wherein the assessments had been originally completed under section 143(3) is clearly misplaced. 5. At the time of hearing before us, the learned CIT/DR has relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Murali Agro Products Ltd., (I.T. Appeal No.36 of 2009 dated 29.10.2010) and that of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (Income Tax Appeal No.707 of 2014 and others dated 28th August, 2015) in support of Revenue's case. It is, however, observed that the issue involved in both these cases was whether the A.O. was empowered to make additions to the total income of the assessee in the assessments completed under section 153Awithout there being any incriminating material found during the course of search and it was held in this context by the Hon'ble Bombay High Court as well as Hon'ble Delhi High Court that when the original assessments had alr....
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....on the decision of its Coordinate Bench in the case of DCIT vs. Eversmile Construction Co. P. Ltd., (supra) and held that the returns filed by the assessee under section 153A are to be treated as returns filed under section 139(1) by virtue of the law stated in section 153A(1)(a) and the assessees therefore, are entitled for deduction available under section 80IB(1). 7. It is thus that the decision of Mumbai Bench of this Tribunal in the case of Eversmile Construction Co. P. Ltd., (supra) as well as the Chennai Bench in the case of V.N. Devodoss (supra) is based on the relevant provisions of law including especially that of section 153A(1)(a). In the case of Hyderabad Chemicals Supplies Ltd., (ITA.No.352/Hyd/2005 dated 21.01.2011) it was held that when the decision of the Tribunal is based on the relevant provisions of law, the same is to be followed over the decision of the non-jurisdictional High Court that has been rendered without considering such statutory provisions that are directly relevant. We, therefore, follow the decision of the Chennai Bench of this Tribunal in the case of ACIT vs. VN Devodoss 157 TTJ 165 (supra) as well as the decision of Mumbai Bench in the ....
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.... of work and shall bear all technical, commercial and facing risk involved in performing its scope of work. It was also agreed that none of the party shall assign its rights and obligations to any other party without written consent of other party. From a careful perusal of this joint venture agreement and the consortium agreement, it is evidently clear that the joint venture and the consortium was formed only with an object to bid contract. Once the project or contract is awarded to the joint venture or the consortium, it is to be executed by its constituents or the joint ventures in a ratio agreed upon by the parties. In the instant case in case of a joint venture agreement, the assessee was entitled to execute the 40 per cent of total work awarded by the Andhra Pradesh Government to the joint venture and in case of a consortium it was agreed that the entire work is to be executed by the assessee itself. Therefore for all practical purposes, it was the assessee who executed the work contract or the project awarded to the joint venture. No doubt the joint venture is an independent identity and has filed its return of income and was also assessed to tax but it did not offer any pro....