AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 196
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder passed u/s 153A r.w.s. 143(3) of the particularly in respect of deductions claimed originally and allowed in original order u/s 143(3) of the Act and not related to any incriminating material found during action u/s 132 of the Act. 2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure projects undertaken by the appellant: Sr. No. of site referred by CIT (Appeals) Name of the site 1 Naroda Sampa 3 Bhuj Sublate 4 Vanthali 5 Mehsana 8 Bhuj Khavda 11 Akalpada 3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above. 4. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of A.O. in disallowing Rs. 28,000/- u/s 40A(2)(b) and Rs. 88,432/- u/s 40A(3) of the act." 4. In ITA No. 199/RJT/2015 for A.Y. 2005-06 the Grounds of appeal raised ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....search, the AO could frame the search assessment u/s 153A of the Act by making additions without any incriminating materials found during the course of search. 8. The brief facts appearing in these cases are that there was a search and seizure operation conducted u/s 132(1) of the Act at the premises of the assessee dated 24-06-2010. The assessee is a contractor and mainly dealing in Government Contracts. The assessee had originally filed its returns of income for the Assessment Years 2005-06 and 2006-07 on 31.10.2005 & 25.12.2006 respectively which were assessed u/s 143(3) of the Act vide order dated 03-01- 2007, and 26-12-2008 respectively. Thus, as on the date of search i.e. 24.06.2010, both the assessment years became unabated. 9. The ld. AR before us has challenged the assessment proceedings framed under section 153A of the Act in ground no. 1 on the reasoning that the additions made by the AO in the assessment years 2005-06, & 2006-07 represents the items of the regular assessments being deduction under section 80-IA(4) of the Act and disallowance under section 40A(2)(b), 40A(3), 36(1)(va) of the Act including ad-hoc disallowance which were disclosed in the original inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of CIT vs. Continental warehousing corporation (Nhava Shiva) Ltd. and All Cargo Global Logistics ltd. reported in 374 ITR 645 has decided the impugned issue in favor of the assessee. The relevant extract is reproduced below: "Once it is held that the assessment has attained finality, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143 (3) could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order" 15. We draw support and guidance from the judgment of Hon'ble Bombay High Court in the case of CIT vs. Gurinder Singh Bawa reported in 79 taxmann.com 398 wherein it was held as under: "7. In view of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rected to be deleted. Since the legal issues are addressed, we refrain to give our findings on merits of additions under the provisions of the Act. Accordingly, the grounds raised by the assessee for Assessment Years 2005-06 and 2006-07 are allowed and the appeal of the Revenue for Assessment Years 2005-06 and 2006-07 are dismissed. 19. In the result, both the appeals of the assessee are partly allowed and the appeals of the Revenue are dismissed. 20. Coming to ITA No. 221/RJT/2015 for the AY 2008-09, the assessee has raised the following grounds of the appeal "1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the Act. 2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure project undertaken by the appellant: Sr. No. of site referred by CIT (Appeals) Name of the site 4 Bhuj Sublate & Bhuj Khavda 3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ects in respect of which the ITAT has given a finding that the assessee is acting as the developer, same projects were continued for the year under consideration. Therefore deduction in respect of the same project should also be allowed in the year under consideration. 26. However, the AO disagreed with the contention of the assessee by observing that the order passed by the ITAT in the own case of the assessee bearing ITA No. 1108/RJT/2010 vide order dated 27-09-2010 has been challenged before the Hon'ble Gujarat High Court which is pending for adjudication. Thus the issue whether the assessee is acting as developer or as work contractor has not been reached to its finality. 27. The AO also noted that the principles of rest judicata does not apply to the income tax proceedings. Therefore the decision of the earlier year period cannot be applied for the year under consideration. 28. The AO after verifying the contracts awarded to the assessee reached to the conclusion that the assessee is not acting as developer. Therefore he was of the view that the assessee cannot be allowed the deduction provided under section 80-IA (4) of the. Accordingly he disallowed the deduction cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eveloper for some of the projects and for some other projects which did not result into an infrastructure facility, he acted merely as a contractor. 9.3 The assessee has undertaken the responsibility of execution of the work, developed its own design and on getting approval applied the technology for completion of infrastructure facility. Terms and conditions of the agreements executed with Government Departments have also established that the risk in execution of work was also undertaken by the assessee. Rather, the assessee was held responsible for any damage or loss to the property and manpower. It is also worth mentioning that the AO. had wrongly interpreted the word "owned" in section 80IA(4)(i) (a) of the IT Act by relying on the decision of B.T. Patil & Sons Belgaum (Supra). As discussed hereinabove, it is concluded that the assessee developed the eligible infrastructure facilities by himself or as a consortium of companies duly registered in India. 9.4 The Act does not prescribe that the infrastructure facility is to be owned by such an enterprise. The infrastructure facility is always the property of the Government and an enterprise is bound by the agreem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ween a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed. The contract at Sr.No.2 was an agreement between the appellant and Water Resources Deptt, Govt. of Goa for construction of RCC Conduit from Ch. 28.970 km. to 37,425 km. of Left Bank Main Canal of Tillari Irrigation Project in Bardez Taluka - Goa State.lt was a work for construction of RCC Conduit on turnkey basis within stipulated period of 450 days along with defects liability period of 3 years. The cost of Project was of Rs. 51,43,72,473/-. The terms and conditions of the tender were examined and it was observed that the assessee developed infrastructure facility for pu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same is allowed. The contract at Sr.No.4 was an agreement between the appellant and other person was allotted the contract by the principal. The terms and conditions of the contract were perused and it was noticed that the work was originally not allotted to the appellant but he got the contract on subletting basis. The relevant provisions of section 80IA(4) of the IT. Act are very clear on this issue that benefit of deduction is allowable only for executing originally allotted contract for developing an infrastructure facility for public use. In view of the above facts and circumstances, the claim of the assessee is rejected. The terms and conditions of the contract were examined and it was revealed that the assessee executed the work of other contractor on subletting basis which was not in accordance with the provisions of section 80IA(4) the Act. Therefore, the assessee was not eligible for claim of deduction u/s.80IA (4) of the IT. Act. Accordingly, the action of the A.O. is confirmed. The contract at Sr.No.5 was an agreement between the appellant and Vidarbh Irrigation Development Corporation, Nagpur for construction of Central Spillway Mas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he same approved by the Engineer. The assessee's duty was to develop infrastructure whether it involved construction of a particular item as agreed to in the agreement or not. The agreement was not for a specific wok, it was for development of the facility as a whole. The assessee was not entrusted with any specific work to be done by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. The employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Vidarbh Irrigation Development Corporation, Nagpur on completion of the infrastructure facility. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of as per ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed ^ The contract at Sr. No.7 was an agreement between the appellant and Madhya Pradesh State Road Sector Development Project. For construction of " Vidisha-Korwai (SH-19) in Madhya Pradesh (Project Road No. 11) ". The work of construction included mainly construction, provision and maintenance of temporary diversion of public traffic, traffic management and safety during construction. Planting and maintenance of tree saplings as replacement of removed trees at road side and new planting at designated locations, clearing of site including cutting and stacking of trees, saw-cut existing pavement for clean edges, scarifications of existing granular surface and bituminous pavement etc., It was a work for construction of road within stipulated period of 24 months along with defects liability period of 3 years. The cost of the Project was of Rs. 44,45,80,0151-. The appellant, after completion of the work, handed over the developed infrastructure facility to the Madhya Pradesh Public Works D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eloped area and handed over the same to the Madhya Pradesh Public Works Department. Therefore, he was eligible for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed. The contract at Sr.No.8 was an agreement between the appellant and Narmada Water Resources and Kalpsar Department for construction of Waste Weir, Earthen Dam and Head Regulator near village at Bhakharwad, Malia Hatina Taluka of Junagadh District. The main work consists of construction of composite earthen dam with waste weir, earthen dam on both flanks, Head Regulator having discharging capacity of 45 Cusecs in left bank, excavation of tail channel A/c. and approach channel, other miscellaneous work like D/s road etc. However, the above information was only general outline of the project for the guidance of the tender. The construction work was to be completed within stipulated period of 24 months along with defects liability period of 3 years. The cost of the project was of Rs. 13,69,61,987/-. The appellant undertook an obligation to design the project which was approved by the competent authority of Gujarat and was assigned with the duty to develop the facility....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Yojana. The work included (1) Excavation in all sorts of soil strata and formations including disposing the un-useful excavated stuff as and where directed including sorting and stacking useful materials as required up to lead of 200 mt. & all lifts etc. complete, (2) Providing and laying R.C.C. M-10 Class (Comparison to nominal mix proportion 1:3:6) using cement sand and crushed metal (up to 40 mm size) including providing necessary centering shuttering and form work vibrating smooth finishing curing as directed with ^all leads and lifts etc. complete, (3) Providing and laying M.S./Tor steel bar reinforcement for R.C.C. works and anchor bars with providing binding wire including cutting, bending binding in position, hooking placing in position with all leads and lifts etc. complete, (4) Providing the weep holes of 10 cm dia A.C. pipe in the retaining wall with required fixtures as directed etc. complete, (5) Pucca pitching of hammer dressed stones in specified thickness including laying to correct slopes after necessary trimming of earth work with necessary panels of 3 mt. clear size in stone masonry in C.M. (1:6) with 45 cms. Thick walls, hand packing of rubble stones wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee ,vas eligible for claim of deduction u/s.80IA 4) (i) of the Act. Accordingly, the same is allowed. This contract S.No.11 was entered between the appellant and Tapi Irrigation Development Corporation, Jalgaon for the Planning, Designing, Providing and Errecting vertical lift type mild steel gates of size 15 m x 11m for Sarangkheda Barrage in Tal. Shahada Dist. Nandurbarjncluding hoisting arrangement with all appurtenant works and testing it with further operation and maintenance for 3 years after satisfactory erection & testing etc. entire work (on turnkey basis). The contract cost was of Rs. 7357.969 lakhs. Terms and conditions of the agreement were examined. This contract was made for the project included planning, designing and developing all the necessary and required w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. The employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Tapi Irrigation Development Corporation of Jalgaon on completion of the infrastructure facility.Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of 3 years. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone. After having regard to the terms and conditions of the agreement for erection of vertical lift type gates of the barrage and other assigned works, the rulings of the courts and position ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also find that the explanation 13 to section 80 IA of the Act has also been duly considered for holding the assessee as the developer. The relevant extract of the order is reproduced as under: "7. We have carefully considered the rival submissions put forth before us by both the sides. We have also perused the orders of lower authorities and the case law cited before us alongwith the material on record. The main issue in controversy which is the subject matter of appeal before us is, whether the claim of the assessee-appellant for deduction of its profits and gains can be said to be admissible in law, in view of the specific provisions of Sec. 80-1A(4) read with the impugned Explanation as applied to the facts and circumstances of the case. While answering this question, it would first be relevant and appropriate for us to examine the past records of assessments of the assessee and of other similar cases dealt with by us and involving similar kinds of businesses. In this context, we find, and there is no dispute from either side in this regard, that the issue regarding nature of business in such cases came to be examined by this Bench in various cases for various assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es for earlier years cited supra, the assessee being developer of infrastructure facility, in our considered opinion, the deduction under subsection (4) cannot be denied on the ground of said Explanation. While so holding, we are conscious of the fact that the said Explanation was not on the statute book at the time of passing of our said orders in above-referred ITAs but our finding regarding nature of business of the respective assessees continues to apply even after the insertion of the said Explanation. The factual position regarding nature of business being same as in earlier years of the very same assessee as also in similar other casers before us, has not been controverted before us. Hence, in our view, although it is held that the principle of res judicata does not apply to income tax proceedings, at the same time, the equally well-established rule of consistency also cannot be overlooked. In the case of Radhasoami Satsang vs C.I.T. 193 ITR 321 (SC) the Hon'ble Supreme Court has laid down the rinciple which is well accepted all along that absence of any material change, a different than that taken in earlier years, could not be taken in later years. We are of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the appellant not only directly (and not indirectly) carried out work as per the contract but it employed various resources of its own by way of machineries, technical knowledge, technical and other manpower, materials etc. and also funded the same out of its own capital and borrowings. The appellant was required to furnish guarantees including free maintenance of the Infrastructure facilities. All these factors combined clearly go to show that the appellant also assumed considerable risk in the capacity of a businessman and the such tasks as undertaken, although under a contract as mandated by the Section, would require skills of planning of work, employing technical know-how to execute the work and to face the consequences of attendant risks. We find that the risks are upon the assessee and not upon the Govt. These elements are generally missing in the case of a sub-contractor. Here, the is directly engaged in performing its functions Further, in the case of Om Metals Infraprojects Ltd. (supra), it is held that if it is the assessee mobilizing people, plants, technical expertise etc., the assessee can be said to be a developer and that the assessee cannot be denied deduction....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. That is the reason why in a High Court, if a single Judge takes a view different from the one taken by another Judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly if a Division Bench differs from the view taken by another Division Bench it does not express disagreement and pronounce its different views, but has the matter posted before a Fuller Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal wants to take an opinion different from the one taken by an earlier Bench, it should place the matter before the President of the Tribunal, so that he could have the case referred to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the IT Act itself." 37. We also find that the Hon'ble supreme court case of AmbikaParsad Mishra Vs. State of U.P. and Others vide writ petition no 1543 of 1977 vide order dated 09-05-19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and the constitutional ground of Art. 141. Every now discovery or argumentative novelty cannot undo or compel reconsideration of a binding precedent. In this view, other submissions sparkling with creative ingenuity and presented with high-pressure advocacy, cannot persuade us to re-open, what was laid down for the guidance of the nation as a solemn pre-posion by the epic Fundamental Rights case. From Kameshwar Singh and GolakNath (supra) through Kesavananda (supra) and Kanan Devan to Gwalior Rayons and after Art. 31A has stood judicial scrutiny although, as stated earlier, we do not base the conclusion on Art. 31A. Even so, it is fundamental that the nation's Constitution is not kept in constant uncertainty by judicial review every season because it paralyses, by perennial suspense, all legislative and administrative action on vital issues deterred by the brooding threat of forensic blowup. This, if permitted, may well be a kind of judicial destabilisation of State action too dangerous to be indulged in save where national. crisis of great moment to the life, liberty and safety of this country and its millions are at stake, or the basic direction of the nation itsel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssue was also raised by the assessee in the assessment year 2008-09 which we have decided against the assessee vide paragraph No. 22 of this order. For detailed discussion please refer the relevant paragraph. Hence the ground of appeal of the assessee is dismissed. 43. The 2nd issue raised by the assessee and the revenue are common therefore we have clubbed both of them for the purpose of the adjudication. Both the assessee and the revenue has disputed on the allow ability of the claim for the deduction under section 80-IA (4) of the Act. 44. At the outset both the learned AR for the assessee and the DR for the Revenue has submitted that the issue raised in the respective appeals are identical to the issue raised in the appeal for the assessment year 2008-09 which have been elaborately discussed in the preceding paragraph except the figures involved in the dispute. Accordingly both the parties agreed that whatever will be the decision of the ITAT for the assessment year 2008-09 in ITA No. 221/RJ T/2015 and ITA No. 201/RJ T/2015 will be applied for the year under consideration. 45. From the preceding discussion we find that the assessee has been held as developer with respe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under: 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words "ordinarily", in t....