TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 536
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....ds raised therein are reproduced below: "1. On the facts and in the circumstances of the case, and in law, the CIT(A) erred in granting deduction u/s.80IA though the said claim was made for the first time in return filed in response to notice u/s. 153A. 2. Without prejudice to ground No.1, on the facts and in the circumstances of the case, and in law, the CIT(A) erred in allowing deduction u/s. 80IA without examining whether the assessee satisfies the parameters fixed by the ITAT in the case of Sushi Hitech (ITA No.269 & 1165/Hyd/2009 and ITA No.1171/Hyd/2010, dated 16.03.2012) to determine whether the assessee is (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. 3. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 3.1 The brief facts of the case are that the assessee is a Private Limited Company engaged in the business of infrastructural activities, filed the Return of Income originally, declaring income of Rs. 28,99,19,830 for the A.Y. 2009-10 and assessment was completed u/s. 143(3) of the Act determining the total ....
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....SS main canal from Km. 340.000 to Km. 360.000 excluding Tunnel from Km. 358.000 to 360.000 under HNSS Phase-II in Anantapur Dist. - Package No. 9. 5. Modernisation of Mylavaram South Canal (Package-91) Earthwork Excavation, C.C. Lining including Mylavaram Head works and improvements to the reservoir South Canal from Km 0.000 to Km.44.440 and its distributor system to brin under irrigation 25,000 acres. 6. Telugu Ganga Project, Kadapa - Providing Lift-Irrigation facilities under lift scheme to left over lands within and nearby the general boundary of Pulivendula Branch canal on both sides from Km. 0.00 to 35.025 - Package 92A and Km.35.025 to 68.00 - Package 93A and formation of distributor system for new additional ayacut including formation of new tanks and improvements to existing tanks. 7. Dr. B.R. Ambedkar Pranahita-Chevella Sujala Sravanthi Package No.24: Investigation, Designs and execution of water conveyor system consisting of lined gravity canal, CM & CD works, lined tunnel and lift with a carrying capacity of 7920 cumecs from Rawulapally village to Hussainpur village from Km 11500 to Km.124.250 and Pargi main canal from Km. 0.00 to Km37 80 and distributor system....
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....nd maintain or developing, operating, maintaining any infrastructure facility has to fulfill all the conditions as mentioned in the sub-clause a, b and c. As per clause-a, the basic eligibility is that the infrastructure facility should be owned by the assessee claiming deduction u/s.80IA(4). As has been discussed earlier, the assessee has awarded the contract of "Construction, Modernisation, Excavation, preparation of estimates and investigation" of facility by the concerned Govt. Dept. and the question of ownership of the infrastructure facility is totally out of place. The Department's Circular No. 717 14/8/1995 in respect of Sec. 80IA states as under: " ... 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 and rail system 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 a public authority ... The period within which the infrastructure facility has to be transferred....
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....med while filing the return of income in pursuance to the notice issued u/s 153A. The Ld. DR also relied upon the provisions of section 80AC and 80A(5) in support of the case of the revenue. 7.1. Further, it was submitted by the ld. DR that the Assessing Officer was correct in disallowing the claim of 80IA as the assessee was not the owner of the infrastructural facilities laid / installed / created by it. In fact, the owner of the said infrastructural facilities were the Superintendent Engineer / Chief Engineer / Project Director of the concerned Government Department. He drew our attention to pages 3 to 5 of the assessment order and had also drawn support from the decision of ITAT, Mumbai Bench in the case of B.B. Patil Vs. ACIT and the decision of Co-ordinate Bench of the Tribunal in the case of NEC NCC Maytas JV (supra). He has specifically drawn our attention to Paras 8, 13 to 17 of the said decision. 8. On the other hand, the ld.AR submitted that the case of the assessee is covered in its favour by the decisions of the Hon'ble High Court and the Tribunal. He referred to and relied upon the following decisions in support of his claim that assessee is permitted to file the re....
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....and KNR Constructions (supra) are binding on the Tribunal. 9.2. The ld.AR further referred to the following written submissions and submitted that assessee is entitled to relief u/s 80IA(5) of the Act for the following reasons : "The Assessee Company is engaged in the business of Contracts for Civil Works and development of Infrastructure Projects. During the Financial Year 2008-2009 relevant to Asst. Year 2009-2010, some of the major projects executed and developed by the Company are: 1. Package No.42: Construction of pick up weir and regulator near Kristipadu village, excavation and formation of Yadiki Canal system and excavation of Link Channel from chagallu to Pendekallu reservoir with 2200 cusecs capacity including investigation, design, estimation to create a total IP of 28,600 acres and formation of flood banks on right side of Penna river from Buggaramalingaswamy temple to Peddapappur road (3000 mtrs.) at Tadipatri town in Anantapur Dist. 2. Modernization of Mylavaram South Canal (Packagr-91) Earthwork Excavation, C.C. Lining including Mylavaram Head works and improvements of the reservoir South Canal from Km. 0.000 to Km. 44,440 and its Distributary system to irri....
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....rastructure projects relating to water supply scheme by designing, erecting, testing and functioning of the project. The ld.AR had drawn our attention to section 80IA(4) as the assessee fulfilled the essential conditions laid down by the said section. The Assessee submits the above projects being developed, operated, and maintained by the Assessee are covered under the definition of infrastructure facility. Therefore, there cannot be any dispute with regard to the fact that the Assessee herein is engaged in the activity of developing infrastructure facility. 9.4 The ld.AR submitted that from the plain reading of the section, it is clear that the Assessee is an enterprise for developing or operating and maintain or developing, operating, maintaining any infrastructure facility has to fulfill all the conditions as mentioned in the sub-clause a, b and c of the section. It was submitted that the Assessee was awarded the contract of "Construction, Modernization, Excavation, preparation of estimates and investigation" of facility by the concerned Govt. Dept. The Assessee has fulfilled all the conditions as mentioned under the provisions of Section 80IA(4) and in denying the claim of the....
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....iven above. The difference between a "developer" and a "contractor" has to be properly analyzed and understood after relying various case laws, various Appellate Fora have laid down the following parameters when to treat an Assessee as a developer or contractor. The Assessee does not have to develop the entire infrastructure facility to qualify for deduction u/s. 80IA(4) and if only a part of the infrastructure facility is developed, the Assessee would be eligible for deduction. The three requirements of section 80IA(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 80IA(4). Merely because the Assessee is referred to as a contractor in the agreement, it would not debar it from claiming deduction. It was emphasized that the direct agreement between the Assessee and the specified authority was not a mandatory requirement u/s.80IA(4) of the I.T. Act. He referred to the decisions in the case of PCIT Vs. Vijay Infrastructure (supra), wherein it was held as under : "5. Sri Manish Misra, the learned counsel for the appellant contended that the return under section 153A is n....
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....other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." 12. Referring to the decision in the case of Gopal Lal Bhadruka (supra), he drew our attention to the same wherein it is held as under : "17. By virtue of section 158BI of the Act, the various provisions of Chapter XIV-B of the Act are made inapplicable to proceedings under section 153A/153C of the Act. The effect of this is that while the provisions of Chapter XIV-B of the Act limit the inquiry by ....
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..... However, clause (a) of section 153A provides that the return of income so filed shall be filed "in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;" 15. It is essential for the assessee to file the return of income in the manner provided under section 139 and further, it is essential for the assessee to furnish such other particulars as may be required to be filed in accordance with law. The statute has used the word "such other particulars" in clause (a) of section 153A of Income Tax Act 1961. The word "such other particulars" should not be given a restrictive meaning as the assessee was duty-bound not only to disclose the income, expenditure but also the deduction and exemption in accordance with provisions of the Income Tax Act, which cast duty on the assessee to mention and provide all the details. In case, the assessee failed to provide the necessary information, which are beneficial to the Revenue and detrimental to the assessee, the Assessing Officer is e....
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....s any one of the following conditions, namely :- (i) is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified5 by the Board in this behalf; or (ii) is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; or (iii) 6[***] (iv) has incurred expenditure for himself or any other person on travel to any foreign country; or (v) is the holder of a credit card7, not being an "add-on" card, issued by any bank or institution; or (vi) is a member of a club where entrance fee charged is twenty-five thousand rupees or more, shall furnish a return, of his income 8[during any previous year ending before the 1st day of April, 2005], on or before the due date in the prescribed form 9 and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Provided further that the Central Government may, by notification 10 in the Official Gazette, specify the class or classes of persons to whom the provisions of the first pro....
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....f any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act:] 72 [Provided that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A 73[, section 10AA], clause (b) of sub-section (1) of section 12A, section 44AB 73[, section 44DA, section 50B], section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E, 74[section 115JB 75[, section 115JC] or section 115VW] 76[or to give a notice under clause (a) of sub-section (2) of section 11] of the Act, he shall furnish the same electronically.] 20. The Rule 18BBB provides as under : [Form of audit report for claiming deduction under section 80-I or 80-IA or 74[80-IB or section 80-IC]. 18BBB. (1) The report of the audit of the accounts of an assessee, which is required to be furnished under sub-section (7) of section 80-IA or sub-section (7) of section 80-I, except in the cases of multiplex theatres as defined in sub-section (7A) of section 80-IB or convention centres as defined in sub-section (7B) of section 80-IB 75 [or h....
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....m any deduction. 22. In the present case, as per the assessment order, the assessee has not claimed any deduction in the original return of income filed on 30.09.2009. The assessee has not claimed such deduction under section 80IA during the assessment proceedings for the said assessment year, though order was passed under section 143(3) of the Act. 23. The assessee has claimed deduction for the first time in the return of income filed in response to notice under section 153A of the Act. The paper return was filed by the assessee on 09.10.2013, whereas the assessee was required to file electronic return. The assessee had filed the electronic return on 28.03.2014, claiming the deduction under section 80IA for an amount of Rs. 2,50,55,348/-. 24. For the purpose of claiming the deduction, it was essential to claim the deduction before or on the date of filing the return under section 139(1) of the Act. Admittedly, the assessee has neither claimed the deduction in the original return of income filed on 30.09.2009 nor had claimed the deduction during the original assessment proceedings for A.Y. 2009-10 passed u/s 143(3) of the Act. The Assessing Officer had passed the assessment orde....
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....y purpose ✓ (d) If yes, please specify value of machinery or plant received on transfer (e) Total value of machinery or plant used in business Rs. 27,71,93,962/- 27 Total Sales of the undertaking Rs. 406,09,16,733/- 30 Deduction under section 80-I/80-IA/80-IB/80-IC (strike out whichever is not applicable) Rs. 2,49,05,348/- 27.1. Similarly, at page 53 for the A.Y. 2010-11 at Sl. Nos. 26, 27 and 30, it was mentioned as under: 26 For claim of deduction under section 80-IA(4)(ii) and (iv)/80-IB(3), (4), (5), (7) and (11)/80-IC please indicate : Yes No (a) Whether the undertaking or enterprise has been formed by the splitting up or the reconstruction of a business already in existence ✓ (b) If yes, whether the circumstances and the period specified in section 33B is applicable (please give details) (c) Has the undertaking or enterprise received any machinery or plant on transfer which was previously used for any purpose ✓ (d) If yes, please specify value of machinery or plant received on transfer (e) Total value of ....
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....n 80IA of the Act in the original proceedings and also have not filed the audit report however, at the time of filing of return of income under section 153A of the Act, the assessee had filed the audit reports and claimed deduction under section 80IA of the Act. 29. A perusal of the assessment order passed under section 143(3) r.w. section 153A dated 31.03.2014, shows that the Assessing Officer has accepted the income determined as per the assessment order under section 143(3) dt. 22.12.2011 for Rs. 30,60,90,932/-. Thus, no addition was made by the Assessing Officer during the assessment proceedings under section 143(3) r.w. section 153A of the Act. In our view, the Assessing Officer was right in denying the claim of deduction u/s 80IA to the assessee as no addition was made in the hands of the assessee during the assessment proceedings on account of any incriminating material. Further, the issues which have attained finality, in an unabated assessment are required to be restricted having a live link with the incriminating material. 30. The Revenue relied upon three decisions in support of the legal claim that the assessee cannot be permitted to file the revised return of income ....
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....ing portion of the Hon'ble Gujarat High Court in the case of Rachana Infrastructure which in turn had relied upon other decisions and which is as under : "7. So far as the first relief which is sought for by the writ applicant as regards the challenge to the impugned order dated 19-6-2020 passed by the Principal Commissioner of Income Tax-3, Ahmedabad is concerned, in our view, the same is squarely covered by the decision of the Bombay High Court in the case of EBR Enterprises v. Union of India [2019] 107 taxmann.com 220/266 Taxman 15 (Mag.)/415 ITR 139. The question for consideration which arose before the Bombay High Court in the aforesaid case was that whether the Commissioner was justified in exercise of powers conferred under section 264 of the Act in rejecting the revision application more particularly, when the assessee had failed to raise the claim of deduction under section 80-IB(10) and subsequently being raised before the Commissioner for the first time in revision. It appears that the attention of the Court was drawn to section 80A(5) of the Act and similar contention was raised by the assessee therein. The Bombay High Court after considering the submissions of the as....
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....ion of one year for the exercise of this revisional power, whether suo motu, or at the instance of the assessee. Power is also conferred on the CIT to condone delay in case he is satisfied that the assessee was prevented by sufficient cause from making the application within the prescribed period. Sub-s. (4) provides that the CIT has no power to revise any order under s. 264(1): (i) while an appeal against the order is pending before the AAC, and (ii) when the order has been subject to an appeal to the Tribunal. Subject to the above limitation, the revisional powers conferred on the CIT under s. 264 are very wide. He has the discretion to grant or refuse relief and the power to pass such order in revision as he may think fit. The discretion which the CIT has to exercise is undoubtedly to be exercised judicially and not arbitrarily according to his fancy. Therefore, subject to the limitation prescribed in S. 264, the CIT in exercise of his revisional power under the said section may pass such order as he thinks fit which is not prejudicial to the assessee. There is nothing in s. 264 which places any restriction on the CIT's revisional power to give relief to the assessee in a ca....
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....he said statutory provision and ordinary principle of the wide powers of the CIT exercising revisional jurisdiction under section 264 of the Act cannot be imported. What sub- section (5) of section 80A of the Act mandates is that, if the assessee fails to make a claim in his return of income for any deduction under the provisions specified therein, the same would not be granted to the assessee. This condition or restriction is not relatable to the Assessing Officer or the Income-tax Authority. This condition attaches to the claim of the assessee and has to be implemented by the Assessing Officer, CIT or the Appellate Tribunal as the case may be. There is no indication in sub-section (5) of section 80A of the Act as to why the restriction contained therein amounts to limiting the power of Assessing Officer but not that of Commissioner. 9. This issue can be looked from slightly different angle. In absence of the provision contained in sub-section (5) of section 80A of the Act has held by various decisions of the High Courts noted above, the CIT could entertain a fresh claim in Revision Application even if the claim was not made previously before the Assessing Officer. Provision co....
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....structure Ltd., Hyderabad (supra), ACIT Vs. M/s. Splendor Landbase Limited (supra), M/s. KNR Constructions Vs. DCIT (supra), PCIT Vs. Vijay Infrastructure (supra), Gopal Lal Bhadruka Vs. DCIT (supra) and PCIT Vs. Abhisar Buildwell (P) Ltd. (supra) are concerned, the same in our opinion are not applicable to the facts of the case and are clearly distinguishable. 34. The decision relied upon by the assessee in the case of Vijay Infrastructure(supra) is not applicable and is clearly distinguishable. Firstly, the said decision was not applicable as it has mentioned that "the time for filing the revised return has not expired." In the present case, the original return of income was filed on 30.09.2009 and the return u/s 153A of the Act was filed on 28.03.2014. Thus, the return by the assessee on 28.03.2014 cannot be said to be a revised return or a return filed within the period provided for filing the revised return. Secondly, in the said judgment, it was mentioned that the claim of 80IA would otherwise be admissible in law. As mentioned hereinabove, for claiming the deduction under 80IA, it is essential for the assessee to claim deduction on or before the due date of filing the retur....
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....what basis, the Assessing Officer can make the additions in the reassessment proceedings under section 153A of the Act. The Hon'ble Supreme Court has held as under : "14(iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns;". 37. In our opinion, the Hon'ble Supreme Court had only interpreted the scope and ambit of the power of the Assessing Officer to determine the total income, based on incriminating material or other material available with the assessee. Admittedly, the Hon'ble Supreme Court has not given a right to the assessee to claim a fresh deduction which was not claimed earlier even during the original assessment proceedings. Once the assessment proceedings have attained finality, then the additions can only be made in the hands of the assessee based on the incriminating material unearthed during the search. The Assessing Officer has no reason to ent....