TaxTMI 
TaxTMI 
2023 (11) TMI 536
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....yd/2016 is taken as the lead case and the grounds 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 ass....
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.... 11 Works - Investigation, Preparation of HPs, design, excavation, construction of CM & CD works of HNSS 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 Hussa....
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....April, 1995: From the plain reading of the section as quoted above, it is clear that the assessee being an enterprise sharing of 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. 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....
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....53 would give way to the provisions of section 153A of the Act. It was submitted that once the assessee has not claimed the benefit of deduction u/s 80IA in the original return of income, then the same cannot be claimed 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....
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....nted by the hon'ble jurisdictional High Court in the case of Megha Engineering and Infrastructure (supra) and KNR Constructions (supra). Therefore, the decisions of the co-ordinate Bench rendered in the case of Megha Engineering and Infrastructure (supra) 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.)....
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....anded over to the Assessee for carrying out the work as per requirements and also operating system for certain period mentioned therein and completed the project at the end of above said period and as such Assessee is the developer and also operating the system for certain period. The Assessee developed infrastructure 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 sub....
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....e assumption that the Assessee is engaged in executing merely a work contract and it is not carrying on the business of developing an infrastructure facility. The Assessee has undertaken entirely and exclusively the projects awarded by the government authorities, as it is evident from the details of contracts given 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 an....
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.... pending assessments/reassessments shall stand abated; (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; 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 Gop....
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....3A of the Act. 14.1. For the above-said controversy, it is necessary to look into the provisions of Section 153A, 80AC, 80IA and 139 of the Act. From the bare reading of the provision of section 153A of the Act, it is clear that the assessee was required to file the return of income after receipt of notice in the search assessment for all the six assessment yeaRs. 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....
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.... Provided that a person referred to in clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification3 in the Official Gazette, and who 4[during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or] at any time during the previous year fulfils 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 ....
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....) The return of income required to be furnished in Form SAHAJ (ITR-1) or Form No. ITR-2 or Form No. ITR-3 or 70[Form SUGAM (ITR-4)] or Form No. ITR-5 or Form No. ITR-6 71[or Form No. ITR-7] shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of 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.] ....
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....greement / approval etc. were filed along with the original return as required as per Rule 18BBB r.w Form 10 CCB in this regard. In our view, the filing of the audit report and claiming the deduction in the return of income before filing the original return of income is mandatory. As the assessee failed to file the required audit report claiming the deduction under the prescribed Rules 12 and 18BBB r.w Form 10 CCB in the return of income filed on 30.09.2009, hence, the assessee in our opinion would not be entitled to claim 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 28.03.2....
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.... 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 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), ....
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....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 machinery or plant used in business 27 Total Sales of the undertaking Rs. 5,10,14,32,623/- 30 Deduction under section 80-I/80-IA/80-IB/80-IC (strike out whichever is not applicable) Rs. 17,16,76,560/- 28. On the basis of the above, it is clear that the assessee has not claimed deduction under section 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 Assessi....
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....Vs. Megha Engineering and Infrastructure Limited (ITA Nos.607 to 610/Hyd/2016 and others) and M/s. KNR Constructions Vs. DCIT, Central Circle - 3. (ITA No.946/Hyd/2015 and others). 32. We are of the opinion that re-assessment proceedings u/s 153A is not a denovo re-assessment as the re-assessment can only be made with respect to the incriminating material found during the course of search. The above said finding is based on the finding recorded by the Hon'ble High Courts in the cases of (1) GMR Infrastructure Limited Vs. DCIT (ITA 1036 of 2017 of Hon'ble Karnataka High Court), (2) Jai Steels (India) Jodhpur Vs. ACIT reported in 36 taxmann.com 523 (Bombay High Court) and (3) Rachana Infrastructure (P) Ltd., (2022) 138 taxmann.com 416 (Gujarat High Court). For the above said purposes, we are reproducing the finding 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,....
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....t time in Revision Application, though no such claim was made before the Assessing Officer, if from the facts on record, the Petitioners could sustain the said claim in law. This is very clear from the series of Judgments of various High Courts. Reference can be made to the decision of High Court of Gujarat in case of C. Parikh & Co. v. CIT [1980] 4 Taxman 224/122 ITR 610. In the said decision, the Court held that: "it is clear that under section 264, the CIT is empowered to exercise revisional powers in favour of the assessee. In exercise of this power, the CIT may, either of his own motion or on an application by the assessee, call for the record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the assessee, as the thinks fit. Sub - ss. (2) and (3) of section 264 provide for limitation 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 rev....
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....oner on account of the Petitioner's own mistake which it detected after the assessment was completed. Once it is found that there was a mistake in making an assessment, the CIT had power to correct it under s. 264(1). In our opinion, therefore, the CIT was wrong in not giving relief to the Petitioner in respect of over-assessment as a result of under- totalling of the purchases to the extent of Rs. 20,000." 7. This was reiterated in case of Ramdev Exports v. CIT [2002] 120 Taxman 315/[2001] 251 ITR 873 (Guj.). This Court also in case of Danny Denzongpa v. CIT [2010] 7 taxmann.com 81/194 Taxman 415 [2012] 344 ITR 166, has taken a similar view. 8. However, the Petitioners are faced with the statutory provision contained in sub-section (5) of section 80A of the Act. The Petitioners' claim cannot therefore be accepted de hors the 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 specifi....
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....ppellate Tribunal. 11. In the result, we do not find any merit in the Writ Petition, the same is therefore dismissed." 33. In view of the above, we are of the opinion that the assessee cannot be permitted to make a fresh claim of deduction in the re-assessment proceedings u/s 153A of the Act. The above said finding is not only based on the interpretation of the provision of section 153A read with section 139(1) of the Act, but also based on the mandatory provisions which require the assessee to file the audit report along with the original return of income for claiming the deduction under Chapter VI of the Act. 33.1. So far as the decisions relied upon by the learned counsel for the assessee in the case of PCIT - 2 Vs. M/s. JSW Steel Ltd., (ITA No.1934 of 2017 of Mumbai High Court), PCIT Vs. Shri Neeraj Jindal (supra), DCIT Vs. Megha Engineering and Infrastructure 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....
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....the Act. First of all, the said decision was not rendered in context of penalty provisions of Section 271(1)(c) of the Act. Further, in our understanding, the Hon'ble High Court has not decided the issue with respect to the time frame provided for claiming the deduction as per section 80AC r.w. section 139(1) and Rule 18BBB and Form 10CCB of the Act. In our considered opinion, the assessee can take the benefit of the re-assessment proceedings in an unabated assessment only with respect to the material or additions which are relatable to the incriminating material. Hence, the judgment of Hon'ble Delhi High Court in our opinion is also not applicable. 36. The reliance of the assessee on the decision of Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra), is of no help to the assessee as the Hon'ble Supreme Court in the said case has held that on 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 ....