TaxTMI 
TaxTMI 
2022 (6) TMI 1062
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.... Act). 2. In All the appeals, the assessee has raised certain common grounds of appeals, certain facts are common in all the appeals, thus, all the appeals are clubbed and heard and are decided by this consolidate order to avoid the conflicting decision. With the consent of parties, the appeal for A.Y. 2008-09 in ITA No. 2018/Ahd/2014 is treated as 'lead' case, wherein the assessee has raised following grounds of appeal:- "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) ['CIT (A)'] erred in upholding the re-opening of the assessment under section 148 of the Income-tax Act, 1961 ('Act'). 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer ('AO') in not granting deduction under section 80IA in respect of profits of the eligible undertaking amounting to Rs. 1,18,74,445/- on the ground that the appellant had not fulfilled the conditions specified in section 80IA(4) of the Act. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that after the agreement with ....
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....y and assessment was completed under Section 143(3) of the Act on 24/12/2010 determining total income of Rs. 94,51,000/-. The Assessing Officer while passing the assessment order, restricted the deduction under Section 80IA to the extent of Rs. 99,98,852/-. The Assessing officer also disallowed sludge disposal charges of Rs. 25,093/- and disallowed depreciation of Rs. 1,94,778/-. Aggrieved by the action of Assessing Officer, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) vide order dated 21/06/2013 allowed certain reliefs to the assessee. 4. Later on, the case of assessee was reopened under section 147 of Income-tax Act. Notice under Section 148 of the Act dated 28/03/2012 which was served to the assessee on 30/03/2012. The notice under Section 148 was served after recording reasons of reopening "that the deduction under Section 80IA was disallowed in A.Y. 2009-10 on the ground that the assessee did not fulfill the prerequisite condition for claiming deduction under Section 80IA of the Act. The assessee entered into an agreement with Gujarat Industrial Development Corporation (GIDS) o 15/12/2006, thus there was no agreement prior to that date with a local author....
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....er submits that observation of Assessing Officer is that assessee has not developed any new infrastructure facilities on the basis of agreement as required under section 80IA(4)(i)(b) and has only operated old infrastructure facilities. The provision of section 80IA(4) does not stipulate that the agreement should have been entered into on or before a particular date and even otherwise. There is enough evidence in the form of correspondence with the Gujarat Industrial Development Corporation ('GIDC') and the assessee that a agreement exist right from the inception. The Central Board of Direct Taxes ('CBDT') in its Circular No.1/2006 dated 12.01.2006 clarified that effluents treatment facilities as developed, operate and maintain by assessee is eligible for deduction under section 80IA(4) and subsequent to the aforesaid clarification by CBDT, the assessee entered into formal with GIDC on 15.12.2006 for development, operation and maintenance of effluent treatment plant. Thus, assessee is eligible condition for claiming under section 80IA was fulfilled by assessee. 6. The Ld. Senior Counsel for the assessee submits that he has two fold legal arguments; firstly, the action of Assessi....
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....5,093/- and disallowed depreciation of Rs. 1,94,778/-.The Assessing Officer re-opened the assessment for this year by recording the reasons that in case of assessee for AY 2009-10, the assessment under section 143(3) was completed on 30.12.2011. As per the same, deduction claimed under section 80IA was disallowed and assessee did not fulfil the perquisite the claiming of deduction under section 80IA in this year also and the assessee has claimed deduction of Rs.1.01 crores which was not allowable. On receipt of reasons recorded, the assessee filed objection dated 18.12.2012 against re-opening and said objection of assessee was rejected. The Assessing Officer after rejecting the objection for re-assessment, Assessing Officer recorded that for eligible claim of deduction under section 80IA, the assessee was required to enter into an agreement with government, local authority or statutory body. Before developing or operating and maintaining a new infrastructure facilities, the claim of assessee under section 80IA have been made on the basis of such agreement with GIDC dated 15.12.2006. In this case, infrastructure facilities came into existence on 15.02.1997 which is not before the da....
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....s a power to reassess, but the reassessment has to be based on fulfilment of certain pre-conditions and if the concept of 'change of opinion' is removed as contemplated on behalf of revenue, then in the garb of reopening the assessment, review would take place. It was further held that after 01.04.1989, the assessing officer has a power to re-open, provided there is 'tangible material' to come to the conclusion that there is escapement of income. 11. We find that notice under section 148 of the Act in the present case was issued on 28.03.2012 i.e., within the period of four years from the end of relevant assessment year. Therefore, no tangible material has come to the notice of Assessing Officer as there is no such reference in the reasons recorded. The Assessing Officer solely relied on the material information available on record. Further, we find that the assessment order passed by Assessing Officer was the subject-matter of appeal before Ld. CIT(A) and principle of natural justice would apply. Therefore, we hold that the action of Assessing Officer for re-opening is not valid as the original scrutiny assessment was the subject-matter of appeal before Ld. CIT(A) and again app....
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....be excluded while computing deduction under Section 80IA of the Act. 6. On the facts and in the circumstances of the case and in law, it is submitted that expenditure estimated at 10% of interest earned on amounting to Rs.10,13,769/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 15. Brief facts for adjudication of various grounds of appeal are that for the year under consideration i.e. A.Y. 2009-10, the assessee filed return of income on 28/09/2009 declaring total income of Rs. 90,45,667/-. The case was selected for scrutiny. The Assessing Officer while passing the assessment order, noted that the assessee has claimed deduction under Section 80IA of Rs. 91,02,996/-. The assessee has included under the claim of Section 80IA of interest on fixed deposits and other deposits of Rs. 12,13,380/- and interest on GEB of Rs.1,28,136/- and interest on fixed deposit and other deposits amounting to....
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....rating and maintaining of CETP, set up for the purpose of water treatment system involving treatment of effluent generated by chemical industries in an around of Ankleshwar. The assessee was not formed by splitting up or reconstruction of a business already in existence.The assessee is registered under the companies Act.The assessee entered into an agreement with GIDC for developing, operating and maintaining new infrastructure facility. The assessee entered into an agreement on 15/12/2006 with GIDC, a statutory authority owned by the Government of India established under the Gujarat Industrial Development Act, 1962. The assessee is solely authorised by Gujarat Pollution Control Board (GPCB) and Central Pollution Control Board. The assessee stated the operating and maintaining infrastructure facility on or after 1st day of April, 1995. Further the old clause (b) of Section 80IA(4)(i) and appreciated clause (b) of Section 80IA(4)(i) w.e.f. 01/04/2002 nowhere stipulates that the agreement should be in writing or should be entered into on or before a particular date. Accordingly, the assessee stated that they fulfilled all the conditions for claiming deduction under Section 80IA of th....
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....s by taking a view that the assessee has not incurred any expenses during the year and claimed the deduction to reduce the tax liability by making provision on account of sludge disposal charges. The Assessing Officer further disallowed the same by considering the opening written down value of asset on the basis of assessment order passed in earlier years and held that the assessee claimed excess depreciation of Rs. 3,10,022/-. 16. On appeal before the ld. CIT(A), the action of Assessing Officer in disallowance of deduction under Section 80IA and depreciation was upheld, however, on other two disallowances, the assessee was granted relief i.e. excess depreciation on sludge disallowances. The ld. CIT(A) held that eligibility was available to the assessee from A.Y. 2007-08 only. Thus initial allowance from A.Y. 2006-07 is not as per law. If the assessee had entered into an agreement with GIDC during this Financial Year 2006-07, it could have been eligible for deduction under section 80-IA(4) on account of such infrastructure facility already in existence, as this infrastructure facility had been started in A.Y. 1997-98. But since this has not been done, hence the assessee is not e....
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....itself though the final agreement was entered into 05th December 2006. Accordingly, the said undertaking ought not to be treated as not a new infrastructure facility only on the ground that the agreement was not entered in FY 2001-02. The assessee is claiming deduction under section 80IA form A.Y. 2006-07. Further, the learned Senior Counsel invited our attention to the provisions of Section 80-IA(4)(i) and Explanation (c) to the aforesaid provision which reads as under; "(4) This section applies to- (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii)developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely:- (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or local authority or any statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining anew infrastructur....
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....ras High Court in the case of Shri Nagesh Chundur Vs CIT (358 ITR 521- Mad). The ld Counsel explained that in the said case, the assessee was claiming deduction under section 10A of the Act since it was a registered Software Technology Park ('STP') and fulfilled the requisite requirements as per the provisions of the Act. The assessee sought registration as a STP on 27th March 2002 whereas it had commenced production in the Financial Year 1999-00 itself. The revenue contended that since the assessee was already in the said business, it does not qualify to be a 'new' industrial undertaking. The Tribunal decided the issue in favour of the assessee and has held that "the fact of the assessee being in the business prior to the date of the registration of the STPI would not stand in the way of granting relief to the assessee". On further appeal before the High Court issue was held in favour of the assessee. 19. The learned Senior Counsel submitted that it is well settled position that if a deduction or exemption is granted subject to fulfillment of conditions, an assessee is entitled to claim the deduction/ exemption from the year in which he satisfies the conditions, so long as he i....
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....in subsequent assessment years for breach of conditions if the claim has been allowed in the initial assessment year. In view of the above, it is submitted that the appellant has fulfilled all the conditions as laid down in section 80IA(4) of the Act and accordingly, deduction under section 80-IA in respect of the infrastructure facility ought to be allowed to the appellant. To buttress his submissions the ld Counsel relied on the following decisions; • Shri Nagesh Chunder Vs CIT 358 ITR 521 (Mad), • CIT Vs Satellite Engineering Ltd (113 ITR 208 Gujarat), • PCIT Vs Maps Enzymes Ltd [2019] 111 taxmann.com 73 (Gujarat High Court), • Saurashtra Cement & Chemical Ltd Vs CIT (123 ITR 669) (Gujarat), • CIT Vs Paul Brothers (216 ITR 548 Bombay). 21. On the other hand the Ld. Sr DR for the revenue supported the order of the lower authorities. The assessee has not established new undertaking. Thus, no cognizance can be taken of the agreement dated 05th December 2006 with GIDC. 22. We have considered the rival submissions of the parties and deliberated on the various case laws relied by learned Senior Counsel. We find tha....
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....nitial allowance from A.Y. 2006-07 is not as per law. If the assessee had entered into an agreement with GIDC during this Financial Year 2006-07, it could have been eligible for deduction under section 80-IA(4) on account of such infrastructure facility already in existence, as this infrastructure facility had been started in A.Y. 1997-98. But since this has not been done, hence the assessee is not eligible for deduction under section 80-IA(4) as this is not a new infrastructure facility established in pursuance of an agreement entered into by the appellant with GIDC. The Ld. CIT(A) also held that assessment for 2006-07 and 2007-08 were reopened under section 147 and assessment was completed under section 143(3)/ 147 denying the claim of deduction under section 80IA. 24. Before us, the learned Senior Counsel for the assessee vehemently argued that it is well settled position in law that if a deduction or exemption is granted subject to fulfillment of conditions, an assessee is entitled to claim the deduction/ exemption from the year in which he satisfies the conditions, so long as he is within the overall exemption period. It was further argued that sub-section (2) of section 80....
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....s held as under: "The Tribunal was perfectly justified in taking the view that if the relief of tax holiday was granted to the assessee company for the asst. yr. 1968-69, the assessee was entitled to continuance of that relief for the subsequent four years and the ITO would not be justified in refusing to continue the allowance for the assessment year under reference, i.e., 1969-70, without disturbing the relief for the initial year The next question to which the Tribunal addressed itself, and in our opinion rightly, was whether the ITO was justified in refusing to continue the relief of tax holiday granted to the assessee-company for the asst. yr. 1968-69, in the assessment year under reference, that is, 1969-70, without disturbing the relief granted for the initial year. It should be stated that there is no provision in the scheme of s. 80J similar to the one which we find in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. No doubt, the relief of tax holiday under s. 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid groun....
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....frastructure Facility" and fulfills all the conditions as specified in subclause (a) to (c) of section 80IA(4) (i). Accordingly the assessee is eligible for claim of deduction under section 80IA of the Act. Thus, the assessee succeeded on both the counts. The assessing officer is directed to allow the deduction under section 80IA claimed by the assessee. 29. In the result, ground No. 1 to 4 of the appeal are allowed. 30. Ground No. 5 relates to excluding the interest earned on delayed payment received from customer, interest earned from GEB deposits and interest on other deposits. The learned Senior Counsel for the assessee submits that this ground of appeal is covered by the decision of Tribunal in assessee's group case in Bharuch Enviro Infrastructure Ltd in ITA No. 1849/Ahd/2014 dated 27.12.2021. 31. On the other hand the Ld. CIT-DR for the revenue supported the order of lower authorities. The Ld. CIT-DR for the revenue submits that income of impugned receipt has no nexus with the business carried out by undertaking. 32. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We find that this issue....
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....y reversed similar exclusion thereby treating identical interest income as eligible profits for the purpose of Section 80IA deduction. We quote the very reasoning herein as well assessee's former limb of the impugned disallowance pertaining to interest income." 40. Considering the consistent decision of the Tribunal on similar set of fact on similar component of income, and following the principle of consistency, we direct the AO to follow the order of Tribunal in AY 2007-08 dated 27.02.2017 and recomputed the eligible deduction under section 80IA accordingly." 33. Considering the decision of Tribunal in assessee's group case wherein interest income from fixed deposit in bank was allowed for deduction under Section 80IA, thus, the interest on deposits are allowed. So far as interest on delayed payment from customers is concerned, such payments were made by various members have direct nexus with the profit and gains derived from undertaking. So far as interest earned on deposits with GEB is concerned, the same is not derived from the business activity of the assessee nor flowing directly from the industrial undertaking therefore, not eligible for deduction under Sect....
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....s. 19,50,357/- while computing deduction under section 80IA of the Act. 7. On the facts and in the circumstances of the case and in law, it is submitted that expenditure for earning interest income estimated at 10% of interest earned on loan and interest earned on Inter Corporate deposit amounting to Rs.12,21,339/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. 8. Without prejudice to the above grounds of appeal, it is submitted that where the conditions necessary for claiming the deduction are fulfilled at any date subsequent to date from which the undertaking is eligible to claim such deduction, the deduction shall be allowable from such subsequent date. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 36. We find that ground No. 1 to 5 raised by assessee is similar as raised in ground No. 1 to 5 in appeal for A.Y. 2009-10 in ITA No. 2019/Ahd/2014 which we have allowed (supra). Thus, following the principle of consistency, t....
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....ciating that once deduction under section 80IA was granted in the initial assessment year, it ought to be allowed in the subsequent years for the remaining period. 6. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not adjudicating the ground in respect of non exclusion of interest earned on Bank deposits amounting to Rs. 20,07,149/- while computing deduction under section 80IA of the Act. 7. Without prejudice to Ground No. 6, if interest on fixed deposits amounting to Rs. 20,07,149/- is excluded then the interest in respect of membership deposit amounting to Rs.28,28,709/- debited to Profit and Loss Account ought not to be included the expenditure while computing the eligible profits. 8. On the facts and in the circumstances of the case and in law, it is submitted that expenditure for earning interest income estimated at 10% of interest earned on loan amounting to Rs.13,76,818/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. 9. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action ....
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....t appropriate direction may be given to the lower authorities for verification of fact and grant full credit of advance tax paid by assessee. 45. On the other hand, the Ld. CIT-DR for the Revenue submits that he has no objection, if the lower authorities is directed for proper verification of tax credit. 46. We have considered the submissions of both the parties. Considering the fact that assessee has claimed that full credit of advance tax is not made therefore, Assessing Officer is directed to verify the advance tax paid by or on behalf of assessee and grant credit thereon. Needless to order that before passing the order, the Assessing Officer shall grant adequate opportunity to the assessee. In the result, this ground of appeal is allowed for statistical purposes. 47. Ground No. 10 relates to interest under Section 234D of the Act. The ld. Sr. Counsel of the assessee submits that this ground of appeal is covered by the decision of Hon'ble Madras High Court in CIT Vs. United India Insurance Company Ltd. 438 ITR 301 (Mad), wherein the High Court has held that "interest under section 234D is leviable only if refund granted to assessee becomes collectable in order passe....
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....riate application under Section 154 on 18/08/2014 for rectification of mistake and furnished the necessary challan of dividend distribution tax. Therefore, we direct the Assessing Officer to pass order on application of assessee under Section 154 in accordance with law after giving opportunity of hearing to the assessee. In this result, this ground of appeal is allowed for statistical purpose. 53. Ground No. 12 relates to adjustment of refund of Rs. 11,51,038/-. The Sr. Counsel of the assessee submits that as per assessee's record, no demands were outstanding for this relevant year, thus adjustment of refund was erroneous. 54. On the other hand, the Ld. CIT_DR submits that the Assessing Officer may be directed to verify the defect. 55. We have considered the submissions and considering the fact that assessee claimed that no demands were outstanding, therefore, adjustment of refund is not correct. Therefore, the Assessing Officer is directed to verify the facts and pass the order if any adjustment of refund for relevant years were pending. In the result, this ground of appeal is allowed for statistical purpose. 56. In the result, this appeal is partly allowed. 57. Now....
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.... assets written off while computing eligible profits for the purpose of deduction under section 80IA on the ground that the appellant is not entitled to deduction under section 80IA. 8. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in rejecting the ground in respect of non-exclusion of interest on income tax paid amounting to Rs.3,03,204/- while computing eligible profits for the purpose of deduction under section 80IA on the ground that the appellant is not entitled to deduction under section 80IA. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 58. We find that grounds No. 1 to 5 of this appeal are similar to the grounds No. 1 to 5 in appeal for A.Y. 2009-10 which we have allowed. This is seventh year of claim under Section 80IA of the Act. Thus, following the principle of consistency, these grounds of appeal are allowed with similar directions. 59. Ground No. 6 relates to excluding interest earned on membership deposit. This ground of appeal is similar to the ground No. 6 in....
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....t ought to be allowed in the subsequent years for the remaining period. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 63. We find that grounds No. 1 to 5 of this appeal are similar to the grounds No. 1 to 5 in appeal for A.Y. 2009-10 which we have allowed. This is eighth year of claim under Section 80IA of the Act. Thus, following the principle of consistency, these grounds of appeal are allowed with similar directions. 64. In the result, this appeal of the assessee is partly allowed. 65. Now we take ITA No. 1473/Add/2017 for the A.Y. 2008-09 (penalty levied under Section 271(1)(c) of the Act) vide order dated 09/03/2015. 66. We find that the assessment order for A.Y. 2008-09 was initially completed under Section 143(3) on 24/12/2010. Thereafter, the case of assessee was reopened under Section 147. Later on, the case of assessee was reopened under Section 147 and assessment was completed under Section 143(3) r.w.s. 147 on 28/02/2013. The Assessing Officer while passing the reassessment order, made disallowance of d....