AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 2073
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....for the assessment records of assessee. On examination of records of assessment, he was of the view that the order passed by the AO was erroneous and prejudicial to the interest of the Revenue. According to Ld. PCIT the order passed by the AO u/s 143(3) was erroneous and prejudicial to the interest of Revenue for two reasons. The first reason according to Ld. PCIT was that the assessee was not eligible to claim deduction u/s 80IA(4) of the Act but was allowed by AO. According to Ld. PCIT assessee was not entitled to claim deduction u/s 80IA(4) of the Act because assessee was a partnership firm. According to him, to be eligible to claim deduction U/s 80IA(4) of the Act, assessee should either be a Company or a Consortium of companies or a body established or constituted under the Central or State Act. According to the Ld. PCIT, since assessee was a partnership firm, it cannot be considered to be a consortium so as to be eligible for deduction u/s 80IA(4) of the Act. The second reason according to Ld. PCIT as to why the order of AO was erroneous and prejudicial was because assessee had claimed depreciation @ 25% on the project cost on WDV basis whereas as per CBDT Circular No.9/2014 ....
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....eciation u/s 32 of the Act as per the directions and observations in the order. Aggrieved by the order of Ld. PCIT, assessee is now in appeal before us and has raised the following grounds : "1] The learned CIT erred in holding that the asst. order u/s 143(3) passed by the A.O. is erroneous and prejudicial to the revenue on the following issues - a. The deduction u/s 80IA(4) is allowed wrongly as the A.O. has not examined the point as to whether the assessee firm is eligible for the above deduction. b. The A.O. has not examined the issue in the light of the Board Circular as to whether the assessee is entitled to depreciation @ 25% on the expenditure on construction of the roads / highways. 2] The learned CIT was not justified in holding that the asst. order is erroneous and prejudicial to the revenue for the following reasons - a. The assessee firm has only companies as partners and therefore, it constitutes a consortium of companies which is eligible for deduction u/s 80IA(4). b. No reason is given in the order as to why, the partnership firm of only the companies as partners does not constitute a consortium of companies. c. The assessee firm was allowed the deducti....
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.... Industrial Co., Ltd., Vs. CIT (2000) 243 ITR 83 (SC). The Ld AR further placing reliance on the decision of Bombay High Court in the case of CIT Vs. Gabriel India Ltd (1993) 203 ITR 108 (Bom) submitted that Hon'ble Bombay High Court has held that "An order cannot be termed as erroneous unless it is not in accordance with law. The section does not visualise a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. He further submitted that the Hon'ble High Court has held that when the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interest of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interest o....
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....er consideration is considered, he submitted that the assessee being partnership firm having the 3 companies as partners were disclosed by the assessee in the audited Balance Sheet, Tax Audit report and the copies of which were also filed before the AO during the assessment proceedings and also in the submissions that were made before the AO. He submitted that the claim of deduction u/s 80IA(4) has been allowed to the assessee in the past and since there was no change in the facts, the normal inquiry as required was made by the AO during the course of assessment proceedings. He further submitted that once the claim of the deduction u/s 80IA(4) has been allowed to the assessee in the past and when there are no change in the facts, then the benefit of deduction cannot be denied in subsequent years. He further submitted that during the course of assessment proceedings, the claim of the assessee for deduction was allowed by the AO after being satisfied of the claim by the assessee. He therefore submitted that since on the issue of deduction u/s 80IA(4), there was proper application of mind by the AO, no proceedings u/s 263 of the Act could be made by Ld. PCIT. 6. On the issue of the o....
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.... Cables Ltd (ITA No.360/PUN/2014 order dt.31.08.2015). 8. The Ld. D.R. on the other hand supported the order of Ld. PCIT. He submitted that when AO has allowed the claim of deduction u/s 80IA(4) of the Act without any discussion, the order was erroneous and prejudicial to the interest of the Revenue. He further submitted that in the present case there was no application of mind by the AO and therefore the Ld PCIT has rightly invoked provisions of Sec.263 of the Act. He submitted that deduction u/s 80IA(4), is available only to a company or a consortium of companies and since the assessee is a partnership firm, the assessee is not eligible for deduction and the AO without examination of the necessary facts, had allowed the deduction and therefore Ld PCIT has rightly held the order of the AO to be erroneous and prejudicial to the interest of the Revenue. In support of the contention that assessee being a firm, is not eligible for deduction u/s 80IA(4), he relied on the decision of Chennai Tribunal in the case of B. Dhanasekaran (ITA No 620/Mad/2013 order dated 06.11.2015), Hyderabad Tribunal in the case of NCCECCI( JV) (ITA Nos.124 & 125/Hyd/2009 order dated 17.06.2013) and Hyderaba....
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....f the above provision makes it very clear that the power of suo motu revision u/s 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision u/s 263, namely (i) the order is erroneous (ii) by virtue of being erroneous, prejudice has been caused to the interests of the Revenue. 12. Hon'ble Apex Court in the case of Malabar Industrial Co., Ltd., Vs CIT reported in (2000) 243 ITR 83 (SC) has held that CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to Sec.263(1). It was further held that the provision cannot be invoked to correct each and every type of mistake or error committed by the AO; when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the I....
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....d by the AO u/s 143(3) to be erroneous and prejudicial to the interest of the Revenue for two reasons firstly that since the assessee is a partnership firm, cannot be considered to be a consortium so as to be eligible for claiming deduction u/s 80IA(4) of the Act. According to Ld. PCIT, AO has ignored the aforesaid fact and had allowed the deduction and secondly for the reason that assessee had claimed depreciation @ 25% on the project cost on WDV basis and the claim of depreciation was allowed by the AO whereas as per CBDT Circular No.9/2014, the entire cost of construction and development had to be amortised evenly over the period of concession. 15. On the issue of depreciation @ 25% claimed by assessee and allowed by AO, it is an undisputed fact that assessee had entered into different concession agreements with Public Works Department of Maharashtra for construction of certain roads and its operation and maintenance for an agreed period on Build Operate and Transfer (BOT) basis. By virtue of the concession agreement, assessee was granted right to collect and retain toll for the defined concession period. The right to collect toll was considered by assessee to be a form of lice....
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....td, Rajdeep Buildcon Pvt., Ltd and Rajdeep Road Developers Pvt., Ltd with a profit sharing ratio of 50:40:10 respectively. It is also a fact that in the case of assessee apart from the aforesaid 3 partners, there are no other non-corporate entities, who are partners. It is also a fact that the partnership firm came into existence on 11.04.2001 and the same partners continued in the year under consideration without any change in the constitution. It is a fact that according to provisions of Sec.80IA(4)(i)(a), the section applies to an enterprise which is a company registered in India or a consortium of companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act. It is also a fact that the word "consortium" used in the provision has not been defined in the Income Tax Act. As per the Merriam Webster dictionary, the word "consortium" means "an agreement, combination, or group (as of companies) formed to undertake an enterprise beyond the resources of any one member". As per the Collins English Dictionary, a "Consortium" is a group of people or firms who have agreed to co-operate with each other". We find that the ....