2023 (10) TMI 195

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....ting that the assessee has not entered into an agreement with the. Central Government or a State Government or a Local Authority or any other Statutory Body. 2) Whether on the facts and circumstances of the case, and in law, the id. CIT(A) erred in not appreciating that the assessee herein is not a developer but merely a contractor in respect of the project not directly awarded to it? 3) Whether on the facts and circumstances of the case, and in law, the id. CIT(A) erred in not appreciating that the facts of the case are not in conformity with clarificatory amendment to section 80IA of IT Act (Explanation 2 to. Section 80 IA vide Finance Act 2007) which was introduced to unambiguously explain that only those enterprises that have entered development agreement with Central or State or Local authorities and invest their own funds to develop such facilities will only be eligible for benefit of deduction." 2.1. As the facts and issues in both the appeals are same, except the amounts involved, we are reproducing the facts of appeal in ITA No.184/Hyd/2018 for the sake of brevity. 3. The brief facts of the case are that assessee company is in the business of undert....

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.... JVs is disallowed. However the demand arising due to such disallowance shall not be enforced, if the assessee files an appeal before the CIT(A). 2.6. In the light of the above facts and circumstances of the case, the deduction claimed u/s 80-IA on the Sreenivasapuram Reservoir Project amounting to Rs. 2,47,52,506/- is disallowed and added back to the total income of the assessee." 7. The ld. DR thereafter submitted that the ld.CIT(A) had granted relief to the assessee and in the above said purposes, she had drawn our attention to para 5.3 to 5.33 which is to the following effect : "5.3 I have carefully perused the submissions of the appellant as well as the order of the Assessing Officer. As could be seen from the facts/information brought on record, the assessee company is engaged in infrastructural activity of various kind, as enumerated in this order and among the works the company was awarded, some are shown to be awarded directly as a main contractor/builder, while some were awarded to JVs/Consortia, but executed by assessee company as constituent of the said iv, in proportion to their share. On these lines, the assessee claimed deduction of Rs. 19,31,63,....

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.... by Allahabad High Court (55 Taxmann.com 21). It was also rightly contended by the assessee/appellant that AO preferred not to allow deduction merely because the order of ITAT, Vishakhapatnam Bench, was not accepted by the department, and a further appeal was preferred before High Court. As regard to the binding nature of decision of ITAT, the appellant filed comprehensive explanations before the AO. Appellant also filed its submission drawing attention of the AO that the decision of (TAT is binding on lower authorities as per judicial precedents laid down by Apex Court, various High Courts and Tribunals. It was pointed out that till an order of (TAT is stayed or reversed at appropriate judicial forum, the same is binding. It was further contended that while not disputing the submission on the issue of binding precedent of the order of the Tribunal as also the merits of appellant's claim as to its eligibility, the AO did not allow the deduction for the reason that an appeal has been preferred against the order of the ITAT. There is no further discussion on merit/eligibility. Turning to the facts of the present case, the AO, having examined the nature of income that are attribut....

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....reference, unless the said order is stayed or suspended by a Superior Court or a different view is taken by the another Tribunal in the said jurisdiction. In this case, it was not the case of the AO to show that the decision of ITAT, Vishkapatnam, in the case of Transtroy (India) Ltd.(supra), as relied by the assessed, is not binding on him. Apart from relying on the order pf I1AT, Visakhapatnam in case of Transtroy (India) Ltd, (supra), whose decision is very much binding on the AO, the assesee made citation of the decision of ITAT, Agra, in the case of PNC Constructions Co Ltd Vs DCIT reported in 144 ITD 577, where the assessee was constituent in JV with M/s NCC and project agreements were between the State Government and JV/Consortia, the deduction claimed by assessee as constituent of JV/Consortia, was held to be allowable. The appellant also referred to the decision of Jurisdictional Tribunal in the case of Hindustan Ratna JV Vs. ITO, Ward-6(2), Hyderabad ITA No.372/HYD/2013, AY 2009-10, dated 18-12-2013, wherein it was held as under: "In other words, we can safely conclude that there is no sub-contract between iv and the constituents and since the iv has bee....

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....ibunal in the case of DCIT Vs. M/s. KNR Constructions Limited in ITA Nos. 190 & 191/Hyd/2018, relying upon M/s. Transtroy (India) Ltd (supra) had also granted similar relief to the assessee. The relevant portion of the said order reads as under : 5. We have given our thoughtful consideration to rival pleadings. Coming to Revenue's first and foremost argument regarding consortiums' and JVs entitlement to claim 80IA deduction relief, we make it clear that the tribunal's co-ordinate bench order in M/s. Transtroy India Limited(supra) has already decided the same issue in assessee's favour and against the department. No contrary judicial precedent has been quoted at the Revenue's behest to rebut the same. We thus, uphold the CIT(Appeals) findings qua this former grievance canvassed from the revenue's side. 6. Next comes equally important aspect of assessee's status as a developer or a mere works contractor u/s. 80IA(4) and 80IA Explanation; respectively. We note that the Assessing Officer detailed discussion in page No.9 of the assessment order has made it clear that the assessee itself satisfies all the three components of development, operation, and maintenan....

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.... for the purpose of claiming deduction, it is essential for the assessee to prove that the agreement has been entered by the assessee with the government / statutory body. Admittedly, in the present case, the agreement was not entered between the assessee with the government body and the agreement was entered into by the Joint Venture company namely, HES-MEIL-ZVS, whereas the deduction was claimed by assessee which happens to be one of its constituent member. In our view, the statue is unambiguous and clear which only provides that the enterprise in whose favour the work has been allotted or agreement has been entered shall alone be entitled to claim deduction under section 80IA(4) of the Act. 15. Therefore, in our view, the contention raised by the ld. DR for the Revenue is in accordance with the law and therefore, this legal issue is required to be decided in favour of the Revenue. However, the co-ordinate Bench of the Tribunal in the case of M/s. KNR Constructions (supra) has decided the issue in favour of the assessee. In our view, the above said proposition cannot be said to be binding on this Bench in view of the fact that in later decision of the Hon'ble Supreme Court in ....