TaxTMI 
TaxTMI 
2023 (1) TMI 605
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..... Commissioner of Income Tax (Appeals)- 8), Ahmedabad (in short 'CIT(A)' arising out of the orders dated 23.12.2019, 20.11.2010, 31.10.2011, 28.02.2013, 25.03.2014, 09.02.2015, 22.12.2015 & 12.12.2018 passed by the ACIT, Circle-8, Ahmedabad / Jt.CIT, Range-8, Ahmedabad / DCIT(OSD), Circle-8, Ahmedabad / DCIT, Circle-4(1)(2), Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to 'the Act') for Assessment Year 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 & penalty order dated 19.03.2018 by the Ld. ACIT Circle-4(1)(2), Ahmedabad, under Section 271(1)(c) of the Act for A.Y. 2012-13. 2. Since all these appeals are relating to identical issues that too in respect of the same assessee, the entire bunch of appeals are heard analogously and are being disposed of by this common order for the sake of convenience. 3. A perusal of the grounds of appeals, it would indicate that there are certain common grounds, which are as follows- (i) Denial of claim of deduction under Section 80IA of the Act by treating the assessee as a 'work contractor' and not 'developer' by the Revenue. (ii) Additional ground has also been taken in respect o....
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.... under Section 80IA of the Act since 2002-2003 and such claim was accepted by the Department as all the conditions laid down by the Act was duly fulfilled by the assessee earlier finalizing assessment under Section 143(3) of the Act accepting such claim made under Section 80IA of the Act. 8. In the year under consideration, the assessee claimed deduction under Section 80IA(4) of the Act of Rs.1,59,58,473/-. Upon a perusal of the details submitted by the assessee, the Ld. AO was of the view that the assessee's construction business was performed on contract/sub-contract basis and therefore on 23.11.2009 show cause was issued as to why the claim should not be disallowed in view of the Explanation to Section 80IA of the Act as substituted by the Finance Act (No.2), 2009 w.e.f. 01.04.2000 on the premise that the assessee carries on a business which is in the nature of work contract. The assessee duly replied by substantiating the details in regard to the claim made under Section 80IA(4) of the Act. It was contented that the activities carried out by the assessee involve development of project, engagement of various agencies, raises own finances and invests its own funds in the const....
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....tion and development of infra projects. The authorities gave only general specifications for the project. However, for the specific drawings & designs recommended by the assessee, the same has to be approved by the competent authority and becomes part of the tender. Further that once the tender is awarded, the assessee has to pay earnest money, security deposits, performance guarantee by placing fixed deposits with banks. The assessee is also liable for liquidated damages/penalty, free maintenance and repair during defect liability period. During the construction of project, the assessee has to make all the arrangements and is liable for procurement of water, electricity, all materials, skilled, semi-skilled staff, labourers, plant & machinery, equipments & tools, and also wellbeing of the staff/labourers. A perusal of the books of accounts reveals that the assessee has arranged own finance and fixed assets shown on plant & machinery, profit & loss account also demonstrates purchase and consumption of material. He submitted that the assessee is always burdened with financial risk to carry out the project work on own cost with the fixed rate specified in the tender. The payment woul....
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....t the assessee acted as works contract in the project awarded by the statutory bodies. The Ld.CIT(A) while upholding finding of the AO on this issue, also taken into consideration the submissions of the assessee as made before us. 12. Before the First Appellate Authority, the assessee submitted as follows: "The learned Assistants Commissioner of Income Tax has erred in disallowing our claim u/s 80 IA of Rs. 1,59,58,4731- on the ground that the assessee is only contractor and not the developer, so the relief u/s 80IA is not available to contractor and the legislature is also amended retrospectively and thus the claim is not eligible. During the course of hearing held on 06/11/2009, learned ACIT, has specifically raised a query why relief claim u/s 80IA (4) should not be disallowed on the basis of explanation inserted by Finance Act (No. 2) 2009. The inserted explanation is as follows, " Explanation- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub section (4) which is in nature of a works contract awarded by any person (including the Central or State Governme....
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....ork done by the assessee made it a developer entitled to deduction. Further, the "works contract" has not been defined in the context of section 80-IA and hence in the absence of assignment of any definition by the statute, its meaning should be understood in the common parlance. Accordingly a developer is a person who develops the facility and such person may or may not be a contractor. For an example, if a contract to construct a highway from Mumbai to Delhi is given to a person he is contractor as well as developer. As against that a person who has been given a contract for painting or beautification is merely a contractor but not a developer. According to us while developing a project, a developer has to make technological inputs, entrepreneurial inputs etc. Besides, there is financial involvement in terms of deployment of man and machine as well as bank guarantees. Further, we explain that the developer undertakes the risk and reward of the project and is accountable to the authorities for the development work carried out by him. In our opinion, we in the present case cannot be characterized anything other than a developer. The meaning of the words "contractor" as wel....
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....radict with the term 'developer' and thus we must held to be developer of an infrastructure facility and hence the income from such business of construction activity should be eligible for deduction u/s. 80- IA Without prejudice to the above, we state that, first of all the explanation has come from 01-04-2009 and as such when the return of income for the current year was filed, this explanation was not there and hence, not applicable to current year as the same is inserted by Finance Act (No. 2) 2009. Moreover, the Act is not amended. Thus it is not substantive amendment and the same is inserted with retrospective effect which is unduly oppressive and confiscatory and bad in law. The explanation is direct conflict with and contrary to the main provision of the section. Explanation cannot override or be derogatory to the main provisions of the Act as held by the Hon'ble Supreme Court in the case of S. Sundaram Pillai & Others reported at AIR 1985 (SC) 582. The assessee company has always considered such relief while quoting and finalization the tender, which is the main activity of the company. In fact, the competitive bidding was priced by taking into consider....
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....tor executes it. The other difference is that of financial risk. The developer bears the financial risk and makes the investment whereas the contractor does not make the investment and take any financial risk, he gets the payment for the work done by him and is not concerned about anything else. The developer can modify the project as per his1 desire whereas the contractor has to stick to the specifications given to him. After ascertaining the meaning of the words 'developer' as well as the 'contractor', it would now be appropriate to apply the conditions prescribed in section 80IA(4) to each project on which the deduction u/s. 80IA has been claimed, executed by him during the year and also test whether the appellant has acted as a developer or contractor. The conditions prescribed in Section 80IA(4)(ia) is satisfied by the appellant company as the company is registered in India. The appellant has executed several projects during the year, but has claimed 80IA deduction only on six projects. Each project on which the deduction is claimed is discussed separately hereunder: (i) Construction of elevated road including approach roads connectin....
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....done by some other contractor who abandoned the work without construction. It involved construction of ten number of well foundations, out of which one was constructed by the earlier contractor and remaining nine were done by the appellant. The appellant has claimed that the design of the bridge was complicated as it fell in tidal zone. The design of floating caisson launching pad and trusses etc. were done by the appellant. The appellant has, therefore, claimed that it has acted as a 'developer'. The claim of the appellant is not acceptable. The bridge has been constructed as per the drawing issued by the department. The appellant did not make any investment in construction of the project. The appellant did not take any financial risk for the project as the payments were received from Executive Engineer, N. H. Division, Bharuch from time to time in accordance with the progress of the work. The payment conditions were clearly defined in the contract agreement. It was provided that the appellant would be paid money at various stages and in accordance with the progress of construction. It is notable that the appellant was given the work after part of it was executed ....
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....oject. The appellant did not take any financial risk as it was being paid from time to time in accordance the progress of the work. The payment conditions were clearly defined in the contract agreement. It was provided that the appellant would be paid money at various stages and in accordance with the progress of construction. The performance security in the form of fixed deposit of bank given by the appellant is also normal guarantee of the quality of project given by any contractor. Therefore, from above analysis it is clear that this project does not make the appellant entitle for deduction u/s. 80IA as the appellant has worked merely as a contractor and not as a developer. The appellant did not conceive, did not develop the project and did not make investment in it. The developer and the investor in this case is Indian Railways. (iv) Construction of 4 lane bridge across river Sabarmati for connecting 120 feet wide road from Vasna to Pirana. The project was executed for Ahmedabad Municipal Corporation (AMC) and involved construction of bridge across river Sabarmati. The bridge was constructed with the design and drawing issued by AMC. The appellant has claimed ....
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....h Gauge conversion work of Pratapnagar -Chota Udaipur. The project was undertaken for western railway. It involved construction of bridge and related structures which were incidental to gauge conversion work of railway track between two stations. The drawing and design were issued by the railways. The appellant has claimed that it used its own machinery for piling work and other technical equipments were also used by it. The project was supervised by a qualified engineer. It financed the project with their own resources. The project was maintained by appellant for one year for making good the defects, if any, developed during the period. The appellant also deposited performance security in the form of bank guarantee from the start of the project till the end of defect liability period. The appellant has, therefore, claimed that it was a 'developer'. The claim of the appellant is not acceptable as it is clear from the details given by him that the railway provided all the specification and drawing. The project was not conceived and developed by him. In fact it was a project for gauge conversion of existing railway line and a bridge was to be constructed on ....
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.... the SMC and the railways. There was no financial risk involved in constructing the project except the risk that is there for any contractor in executing any contract. The appellant received the payment from time to time as per the progress of construction of bridge as per the terms of contract agreement. There is no doubt that the construction involved highly technical skills and manpower but the fact remains that it was a contract for construction of fly over / road over bridge as per specifications given by the contractee. Since the contract for construction of bridge, the contractor should have the requisite technical skills. The claim of the appellant that it maintained the bridge for 1 year after the completion is also not material as any contractor who executes some contract has to give this kind of guarantee for the quality of the contract executed by him. Therefore, from above analysis it is clear that this project does not make the appellant entitle for deduction u/s. 80IA as the appellant has worked merely as a contractor and not as a developer. The appellant did not conceive, finance and develop the project. The developer and the investor in this case is Surat ....
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....herefore, deliberation is required on the main issue as to whether the assessee is entitled to the deduction claimed under section 80IA(4) of the Act even after the Explanation inserted after sub-section 13 of section 80IA of the Act by the Finance (No.2) Act 2009 w.e.f. 1-4-2000. The Explanation reads as follows: Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in subsection (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1). 15. The above explanation has denied the benefit of deduction under section 80IA(4) of the Act to a person who executes a project which is in the nature of works contract. In that view of the matter, the first and foremost condition imposed upon an assessee is to establish that he worked not as 'works contractor', but as a 'developer'. 16. On the other hand, a 'contractor' is a person who undertakes work on a contract basis. He does not assume risks and responsibilities like that of a developer. He m....
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....provement is infrastructure. Our country is very deficient in infrastructure such as expressways, highways, airports, ports and rapid urban rail transport systems. Additional resources are needed to fulfil the requirements of the country within a reasonable time frame. In many countries the BOT (build-operate-transfer) or the BOOT (build-own-operate-transfer) concepts have been utilised for developing new infrastructure. Finance Act, 1995 34.3 Applying commercial principles in the operation of infrastructure facilities can provide both managerial and financial efficiency. In view of this, a ten-year concession including a five-year tax holiday has been allowed for any enterprise which develops, maintains and operates any new infrastructure facility such as roads, highways, expressways, bridges, airports, ports and rail systems or any other public facility of similar nature as may be notified by the Board on BOT or BOOT or similar other basis (where there is an ultimate transfer of the facility to a Government or public authority). The enterprise has to enter into an agreement with the Central or State Government or a local authority or any other statutory authority for thi....
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.... with a view to encourage the private participation in these developmental projects offered various business, models like BOOT, BOLT & BOT. BOOT means Build Own Operate & Transfer Under this scheme the private participant will get an opportunity to own and operate the facility for some time and during this period the developer can commercially exploit the facility so developed. After the specified period the facility would be transferred to the Government. BOLT means Build Own Lease & Transfer The Private participant will lease the facility to the Government and the Government will pay the lease charges for a specific period and on the completion of the lease period the facility is transferred to the Government. BOT means Build Operate & Transfer Under this scheme the private participant will not be owning the facility. The private participant would be entitled to operate the facility for a specific period during which the revenues from the operation would be shared between the private participant and the Government or the Government will be paid lease charges by the private participant. On completion of the specified time the f....
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....o encourage investment in the area of Surface transport, water supply, water treatment system, irrigation project, sanitation and sewerage system or solid waste management systems. With this in view, section 80 IAhas been amended to relax the existing two tier benefit to provide a ten year tax holiday.." 2.8 Thus, the only objective behind this scheme of deduction is to encourage private investment in development and augmentation of infrastructure facilities. However, the legislature came to realise how the benefit of deduction was being misused for purposes other than those envisaged by the enactment inasmuch as even activities in the nature of works contract also claimed and were allowed the benefit of deduction. To prohibit such misuse and unintended consequence, the legislature brought in a clarificatory amendment in the year 2007. An Explanation below Section 80 IA(13) was inserted with retrospective effect from 01.04.2000, which reads as under: "..For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise, as the case may be.." ....
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....ontractee governments. 3.5 In order to prohibit this misuse of tax holiday, the legislature, by Finance Act 2009, substituted the erstwhile Explanation (2007) by an new Explanation with retrospective effect from 01.04.2000 to make it clear that even those undertakings/enterprises which are direct recipients of contract from the government, shall not entitled for the benefit of deduction for profits derived from such contract business. The clarificatory Explanation is as under: "..For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1).." 3.6 Restricting the benefit of deduction only to the class of developers bearing investment and entrepreneurial risk is, therefore, a conscious legislative action and is not open to slightest of inferential latitude. 3.7 The clarificatory amendments represent a fine example of legislative discretion and parliamentary discernment an....
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....fferent Government entities. 4.2 In assessment proceedings for the different AYs, Ld. Assessing Officer observed that the assessee was ineligible for deduction since the assessee had worked as amerecontractor and not developer within the meaning of Section 80IA(4) in light of the following findings: i. The nature of work is contract execution and not development ii. TDS has been made u/s 194C which shows that the contracted as well as the contractor have themselves treated the relationship as a contractual arrangement. iii. Various government contractees have issued tenders for works contract to the lowest bidder. iv. Ownership risks never vested in the assessee. v. Assessee was required to complete the contract as per the specifications prescribed by the contractee entities. vi. For admissibility of the claim, income should have been derived from developing, operating & maintaining or developing, maintaining & operating the projects. Copies of works contracts how that the assessee was not involved in such stages as a developer. vii. The assessee company has no stake in the financial viability of any of the pro....
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....signing this project. The relevant submission and supporting papers are also evident from Page Nos. 75 to 104 of Paper Book-I. 19.4 The assessee has to arrange the necessary requirement of Water, Electricity Connection, Cement and other required qualitative materials, labour, supervision, erection, maintenance, insurance, at its own cost. It is evident from Clause 3 of Tender ( Bill of Quantities) at Page No. 176 of Paper Book-II. 19.5 The Audited Accounts, P & L account, appearing from Page 11 of Paper Book-I has been perused. Total materials consumed during the year are of Rs. 25,37,59,925/- as per schedule of P & L account at Page No. 16 of Paper Book-I, and creditors for goods are of Rs.7,64,24,928/- as per Balance Sheet at Page 14 of Paper Book-I filed before us. 19.6 It appears from Clause 2.1 of the Tender at Page No. 310 of Paper Book-II, that the various materials and mix, load testing of Foundation, from (Page No. 312 of Paper Book-II & from clause 2.3 of Tender) Fusion Bonded Epoxy Coating to Reinforcing Bars are also got to be tested by the assessee at its own cost from time to time at Government Approved Laboratories. 19.7 We have further gathered from Page....
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....in the Contract Data for each day that the Completion Date is later than the Intended Completion Dale (for the whole of the works or the milestone as staled in the contract data). The total amount of liquidated damages shall not exceed the amount defined in the Contract Data. The Employer may deduct liquidated damages from payments due to the Contractor. Payment of liquidated damages does not affect the Contractor's liabilities." 19.13 If the contractor fails to complete contract by the stipulated date, he shall pay penalty of 1/2000th of the contract value per day from the date of delaying said work up to the date of completion and handing over to contract upto maximum of 10% of contract price. The above condition is mentioned at clause 28 of the Tender document available at Page No. 288 of Paper Book-II. 19.14 It is evident from Clause 4 of the Tender document at Page No. 239 of Paper Book-II that 1 year free maintenance and guarantee period from the certified date of completion of work has been fixed. 19.15 Advance payment/ mobilisation advance will be given only against the provision by the Contractor of an unconditional Bank Guarantee. Same is evident from Clause ....
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....en Stations Belapur to Thuwavi in connection with Gauge conversion work of Pratapnagar - Chota Udaipur. 43260383 vi Construction of Road over Bridge at Railway Culvert No. 436 near Dindoli, Udhna at Surat. 5485870 Total 391563018 From the records available before us we gather that the terms and conditions of the tender documents in respect of the above projects are mostly identical. 21. As to whether the assessee can be termed as "developer" or a "contractor" as contended by the Revenue in its written submissions, we find, in fact, it only attempts to give a general meaning of the term "contractor" and "developer". In the cases in hand, we find that in terms of tender documents, audited accounts and facts on record suggest that the assessee has fully undertaken the work of development of various infrastructure projects as a whole by undertaking the risk & responsibility, arranged own finances, materials, personnel, labour, machinery, other equipments etc. and thereby fulfilled the test of being a "developer" as per the principles laid down by Hon'ble Gujarat High Court in the case of Radhe Developers, 341 ITR 403 (Guj). It is imperative upon us to ....
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....deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc. The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, construction and sale of the housing units to be located on the land belonging to the original land owners. It was also agreed between the parties that the assessee would be entitled to use the full FSI as per the existing rules and regulations. However, in future, rules be amended and additional FSI be available, the assessee would have the full right to use the same also. The sale proceeds of the units allotted by the assessee in favour of the members enrolled would be appropriated towards the land price. Eventually after paying off the land owner and the erstwhile proposed purchasers, the sur....
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....the assessee has undertaken entirely and exclusively the projects awarded by the Government authorities, as it is evident from the records as explained and already narrated hereinabove and therefore, there is hardly any basis for assuming that it is merely a contractor executing a works contract. The difference between a "developer" and a "contractor" has to be properly analyzed and understood. This issue has come up before the Hon'ble ITAT, Amritsar Bench in the case of M/s. TRG Industries P. Ltd. in ITA Nos. 433 etc./Asr/2009. The Tribunal after relying various case laws has laid down the following parameters when to treat an assessee as a developer or contractor. (i) The assessee does not have to develop the entire infrastructure facility to qualify for deduction u/s.80-IA(4) and if only a part of the infrastructure facility is developed, the assessee would be eligible for deduction. (ii) The three requirements of section 80-IA(4) viz. development, operation and maintenance are not cumulative. Thus, an enterprise which only develops facility would also be entitled to the benefit of section 80-IA(4). (iii) Merely because the assessee is referred to ....
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....ts. In the present case, the assessee itself had to procure materials for the projects and make payments. It has also to deploy men and machineries. Therefore, both the cases, i.e. case of the assessee before us and the assessee before the ITAT, Hyderabad (referred above) are clearly distinguishable on all respects. 27. However, this particular aspect has already been considered in the matter of CIT vs. ABG Heavy Industries Ltd. [2010] 189 Taxman 54 (Bombay). The paragraph 22 of the said judgment suggests that in the particular facts and circumstances of the case in hand, the assessee is entitled to relief claimed under Section 80IA(4) of the Act. The first and foremost condition imposed by the statutory provision is that the enterprise must start operating and maintaining the infrastructure facility on or after 01.04.1995. Thereafter, time-to-time the provision though has been amended under this particular condition enunciated therein, that the assessee has to be granted conditions stipulated, fulfilling of which the assessee said to be a developer and entitled to the claim under Section 80IA of the Act. The view has been narrated in the said judgment in the following manner: ....
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....he commencement of the operation and maintenance of the infrastructure facility should be after 1-4-1995. In the present case, the assessee clearly fulfilled this condition. 23. In the view which we have taken, all the assessment years in question to which this batch of appeals relates would be governed by the same principle. The subsequent amendment of section 80-IA(4A) of the Act to clarify that the provision would apply to an enterprise engaged in (i) developing; or (a) operating and maintaining; or (iii) developing, operating and maintaining an infrastructure facility was reflective of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by the Finance Act of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to section 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature." 28. It is contended by Revenue that the profit element is already embedded in the tender price quoted by the ass....
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....jkot Bench and Katira construction passed by the Hon'ble jurisdictional High Court wherein the constitutional validity of insertion of explanation below sub Section 13 of Section 80 IA of the Act was challenged. The Ld. Representative appearing for the Revenue vehemently argued on this point that the jurisdictional High Court in the said matter already decided the issue against the assessee. Fact remains that the jurisdictional High Court in that particular matter dealt with the constitutional validity of the insertion of explanation as mentioned hereinabove and decided the same in favour of the revenue to this effect that such explanation brought with retrospective effect from 01.04.2000 by the Finance Act No. 2 of 2009 was very well within the competence of Parliament. As such there was no issue whether the assessee is acting as a developer or contractor was raised before the Hon'ble Jurisdictional High Court neither the said has been decided in the said judgement. 30. We have further considered the judgment passed by the Co-ordinate Bench in the matter of Rajkamal Builders Infrastructure Pvt. Ltd. in ITA No.441/Ahd/2011 & 20 Ors., order dated 13.05.2022, where the assessee ha....
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....cts of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits under section 80IA(4) of the Act. Thus, the issue of claim of deduction under section 80IA(4) of the Act is allowed in favour of the assessee and against the Revenue. This common ground raised in all the appeals are accordingly disposed of. 32. So far as the additional ground is concerned, we find that the Ld. AO denied the claim of the assessee under Section 80IA of the Act including the claim in respect of other income to the tune of Rs.42,62,716/-; the assessee is not entitled to any such deduction under Section 80IA of the Act as of the finding of the Ld. AO, which was further confirmed by the Ld. CIT(A). 33. We have heard the rival submissions made by the respective parties; we have also perused the relevant materials including the orders passed by the authorities below. 34. Upon going through the financial statement filed by the appellant, we find that the following are the component and/or break up of the said other income: "1. Bank Inte....
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....-05 in respect of the infrastructure project undertaken by the assessee. We find that before the lower authorities the assessee has explained regarding interest income earned by it from the fixed deposits, security deposits, margin-money and from the bond, with the banks and other institutions, as per the terms and conditions of the contract agreement with the Government authorities. Furnishing of fixed deposits for bank guarantees, security deposits etc. are the pre-condition for awarding the project work by the competent authority, and therefore, these are necessity of regular course of business and has direct nexus with the activities. Jurisdictional High Court in the case of Empire Pumps P. Ltd (supra) held that interest income having direct nexus with its business, was to be considered as income 'derived from' business. Thus, deduction under section 80I of the Act was allowed on such income. Yet in another decision by jurisdictional High Court in the case of CIT Vs. Shah Alloys Ltd. (supra) has held that interest received on margin money placed for business purpose cannot be treated as income from other sources and is, therefore, eligible for deduction under section 80IA of th....
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....fore it, arrived at a conclusion that the amount of interest was receivable by the beneficiaries, and considering the decision, the Tribunal has opined in favour of the assessee. No substantial question of law arises. The Tribunal relied on its earlier decision which has been accepted by the Revenue, and we would not like to refer these questions. So far as question No. 5 is concerned, learned counsel, Mr. Soparkar, drew our attention to Section 80-I of the Act and submitted that this section is meant for deduction in respect of profits and gains from industrial undertakings. With regard to the question raised by the Revenue that the amount received on sale of jute bags, barrels, etc., ought to have been deducted from the cost of the material, Mr. Soparkar, the learned advocate for the assessee, submitted that it would not make any difference if the amount received by the sale of empty barrel or "bardan" (jute bags) is deducted from the cost of the raw material. He submitted that if the cost is reduced by deducting the sum so received, the profit will increase and, ultimately, the total would be the same. He submitted that the Commissioner of Income Tax (Appeals) and the T....
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....(c) of the Act was issued and notice to that effect on 09.02.2015 was served upon the appellant for furnishing inaccurate particulars of income. As the assessee has not disclosed the true amount of income voluntarily as of the finding of the Ld. AO, minimum penalty of Rs.2,66,68,307/- under Section 271(1)(c) of the Act was, therefore, levied, which was, in turn, deleted by the Ld. CIT(A). Hence, the instant appeal, filed by the Revenue. Merely because, the assessee had claimed the expenditure, which was not acceptable to Revenue, would not attract penalty under Section 271(1)(c) of the Act, as the ratio laid down by Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd., reported in [2010] 322 ITR 158 (SC) was duly taken care of by the Ld. CIT(A) and having found the claim made by the appellant is a bonafide one, the penalty was deleted. 42. We have heard the rival submissions made by the respective parties; we have also perused the relevant materials including the orders passed by the authorities below. 43. At the very outset, the Ld. Counsel for the assessee submitted before us that the issue is squarely covered by the judgment passed by the Co-ordinate Benc....