TaxTMI 
TaxTMI 
2023 (11) TMI 1223
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....final order of assessment, the AO has erred in computing the Gross Total Income after taking into effect loss of Rs. 13,65,60,299/- as declared by the appellant in the Revised Computation of Income (filed during assessment proceedings on 03.09.2021) instead of loss of Rs. 14,22,89,453/- as declared by the appellant in the Revised Computation of Income (filed during assessment proceedings on 04.09.2021), despite the fact that in the final assessment order Ld. AD has admitted that the assessee has filed revised computation of income at loss of Rs.14,22,89,453/- and Hon'ble DRP has also confirmed the same. 3. That on the facts and in law the AO / DRP have erred in disallowing deduction of Rs. 226,31,98,158/-u/s 801A(4)(i) claimed by the appellant in the return of income. 3.1. That on the facts and in law the AO/DRP have erred in holding that: (a) Contractees, who have allotted work of infrastructural facility to the appellant, are not recognised u/s 80IA(4)(1)(b), and (b) Appellant is merely a contractor and not a "developer". 4. That on the facts and in law the AO has erred in making a disallowance of Rs.38,34,16,688/- on account of deduction of expenses u/s 40(a)(ia) d....
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.... 11. That on the facts and in law the AO has erred while making an addition of income-tax refund of Rs. 5,83,17,340/-issued to the assessee u/s 143(1) to the total demand of income- tax of Rs. 19,96,00,193/- raised after making above said additions without appreciating the fact that if refunds already issued have been added back, the assessee should be allowed credit of total taxes paid of Rs. 12,40,95,837/-" 3. Briefly stated, the assessee firm is a joint venture (JV) between two infrastructure companies, namely BSCPL Infrastructure Ltd. and C&C Construction Ltd. It is engaged in construction of roads, toll roads, highways and urban infrastructure including water, sanitation and sewage, power/ telecom transmission towers, commercial buildings, etc. For AY 2017-18, the assessee filed original return on 30.11.2017 declaring total income at Rs. NIL and deemed total income of Rs. 33,32,44,673/- under section 115JC of the Act. Its case was picked up for complete scrutiny through CASS. The assessee filed a revised return on 31.03.2018 declaring total income at Rs. NIL and deemed total income of Rs. 24,68,56,389/- under section 115JC of the Act. Statutory notice(s) along with questionna....
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....round No. 1 is general in nature not requiring adjudication. Ground No. 5 relating to disallowance of Rs. 57,29,154/- on account of deduction of education cess has not been pressed. It is, therefore dismissed as not pressed. 6. Now, we proceed to adjudicate the remaining grounds. We have heard the Ld. Representative of the parties, considered their respective arguments and perused the records. 7. Ground No. 2 relates to non-consideration by the Ld. AO of the revised computation of income filed during assessment proceedings on 04.09.2021 declaring loss of Rs. 14,22,89,453/-. The Ld. AR submitted that before Ld. DRP a specific grievance was raised in this regard on which the Ld. DRP directed the Ld. AO to make necessary verification and pass a speaking order. This has not been done. The Ld. CIT-DR concedes to this factual position. We, therefore direct the Ld. AO to look into the assessee's grievance and take remedial action as per law after due verification and allowing the reasonable opportunity of hearing to the assessee. 8. Ground No.3 relates to disallowance of deduction of Rs. 2,26,31,98,158/- under section 80IA(4)(i) of the Act claimed by the assessee in its revised return ....
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....to negate the assessee's claim which are identical in the year under consideration. He pointed out that in the preceding year also the contractee companies were formed under various Ministries of Govt. of India. The Ld. AR submitted that the allegation of the Ld. AO that the assessee is only an EPC contractor for carrying out work awarded by NHAI to Mokama-Munger Highway Ltd. has also been refuted by the Tribunal in para 23 of its decision (supra). The last allegation levelled by the Ld. AO is that the assesee is not a developer but only a contractor. The Ld. AR stated that it has also not been accepted by the Tribunal by recording a finding in para 25 of its decision (supra) that the assessee is not a simplicitor contractor, rather the assessee is a developer of the project and that the contention of the Ld. AO in this regard is misconceived. 8.2 The Ld. AR further submitted that the details of contracts on which benefit of section 80IA is claimed by the assessee in AY 2017-18 appear at pages 66-67 of the Ld. DRP's directions and similar details of the preceding year 2016-17 may be seen at pages 449-450 of the Paper Book forming part of Ld. DRP's directions at pages 54-55. The Ld....
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....lso submitted that the original return was filed within the due date prescribed under section 139(1) and even the revised return has been filed within time allowed under section 139(5) of the Act. Both the returns are valid in the eye of law. The Ld. AR drew our attention to para 7 of Ld. AO's order at page 20 wherein the Ld. AO made incorrect observation to the effect that a perusal of the original return of income dated 30.11.2017 shows that the assessee had not claimed deduction under section 80IA of the Act. The Ld. CIT-DR's argument of not claiming deduction under section 80IA in the original return is the result of the above incorrect observation of the Ld. AO. 10.1 The Ld. AR took us to the Ld. AO's order for AY 2016-17 wherein at para 9.2 the Ld. AO states that during the year under consideration the assessee has undertaken 16 projects including one in Afghanistan. However, the assessee has submitted auditor's report in Form 10CCB as required under section 80IA(7) of the Act only in respect of 15 projects. However, out of 15 projects, deduction under section 80IA was claimed in respect of 8 projects only. Out of the 8 projects the Ld. AO analysed the terms and conditions o....
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....iginal return of income filed on 30.11.2017 which claim was revised to Rs. 226,31,98,158/- in the revised return filed on 31.03.2018. There is no inkling in the order of the Ld. AO and / or of the Ld. DRP that the original or revised return so filed by the assessee was not within the prescribed time limit or in any way vitiated. The argument advanced by the Ld. CIT-DR that the assessee did not put in its claim of deduction under section 80IA in the original return with its attendant legal consequences seems to have stemmed from the incorrect appreciation of facts available in the records. Even the Ld. AO in para 7 of his assessment order at page 20 incorrectly observed that perusal of original return dated 30.11.2017 showed that no claim of deduction under section 80IA of the Act was made by the assesee which is contrary to the facts on record. We therefore reject this argument of the Ld. CIT-DR which will have no legal consequences in determining the admissibility of the assessee's claim of deduction under section 80IA of the Act. 13. We have no iota of doubt in our mind that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee's own case in ....
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....te Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that------------ Explanation. For the purposes of this clause, "infrastructure facility" means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea; (ii) any undertaking- (iii) any undertaking (iv) an undertaking which,- (vi) any undertaking carrying (5) Notwithstanding anything contained (6) Notwithstanding anything (7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to th....
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....Company Mokama- Munger Highway Ltd. Two laining with paved shoulder of Mokama Munger Section of NH-Bo 2.43.46,365 3. Danapur ROB Ircon International Ltd. Construction of Road over Bridge both railway span and adjacent approaches including Reinforced Earth Wall/Retaining Wall between section Phulwarishrif- Danapur on EC Railway, Bihar 72,30,449 4. Subansari Power Grid Corporation of India Ltd. Piling foundation package for lower Subansari Chariyal, Balipara, Bongaigaon, Biswanath Chariyal, Tanla-Kokrajhar, Bararbisa Assam Border 32,44,863 5. Ganga Bridge, Digha Ircon International Ltd. Casting RCC Road deck on erected steel truss of railcum-road bridge across river Ganga at Patna 9,96,421 6. Ganga Bridge, Sonpur Ircon International Ltd. Casting RCC Road deck on erected steel truss of railcum-road bridge across river Ganga at Patna 74.07.761 7. Muzzafarpur ROB Ircon International Ltd. Construction of Road over Bridge both railway span and adjacent approaches span including reinforced earth wall/retaining wall 1,14,58,821 8. Soanbarsa NHAI (Through Project Company North Bihar Highway Ltd. Augmenting the existing road from km 2.8 to km 89 on Muzaffa....
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.... further observe the purpose of incorporating the above said two companies as detailed below: Ircon International Limited (IRCON) Ircon International Limited (formally known as Indian Railway Construction Company Limited), a Mini Ratna and Schedule 'A' PSU, was incorporated on 28th April, 1976, mainly for the purpose of construction and development of Railway infrastructure in India and abroad with Indian Railways' expertise. The company diversified in other areas and considering its major share of business I from projects abroad, its name was changed to "Ircon International Limited" w.e.f. 17th October 1995. Your Honours may also observe from the copy of the agreement with IRCON International (submitted separately) that the Tender Documents were issued by the Ministry of Railways. IRCON International has executed the contracts under the Ministry of Railways. Organisational Structure of Ministry of Power: We are also submitting herewith relevant pages of the Annual Report for the FY 2015-16 of Ministry of Power. It explains complete Organisation Structure of Ministry of Power. Your Honour would observe that Power Grid Corporation of India Ltd. is a part of M....
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....e relevant facts arising in the present case and noted above would leave little doubt in one's mind that GSRDC was a nodal agency constituted by the State Government for the purpose of executing road development projects through private participation and was a Government agency as defined in section 2(e) of the Act of 1999. Significant factors in the present case are that the road widening project was cleared by the Government, land for such purpose was alloted by the Government. The concession agreement which GSRDC executed was approved by the Government. It was under the Government Resolution that the assessee would collect toll upon completion of such project. Upon the completion of the project period, the entire infrastructure so developed would vest in the Government. Signatory to the applicant may be GSRDC for all practical purposes and in essence, it was the agreement between the assessee and the State Government. We are conscious that condition (b) of subsection (4) of section 80IA requires the assessee to have entered into agreement with the Central Government or a State Government or a local authority or any other statutory authority. However, rigid interpretation of ....
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....hich shall be transferred to the Central Government, etc., within the period stipulated in the agreement. The definition of infrastructure as per sub-section (12) of section 80-IA includes a rail system also. 2. The Indian Railways have formulated a Build-Own-Lease-Transfer (BOLT) Scheme, whereunder a private enterprise will provide the necessary and crucial components of a Railway system, own them for a stipulated period but will not maintain or operate the same. Instead, the enterprise will lease the asset (only necessary and crucial components of a Railway System) back to Indian Railways for maintenance and operation, and shall ultimately transfer it to Indian Railways. 3. This is to clarify that, the said (BOLT) Scheme of the Indian Railways shall be eligible for the benefit of section 80-IA of the Income-tax Act, 1961, since it is not legally possible for any enterprise other than the Indian Railways to maintain and operate a Railway System. However, this concession shall be applicable only to an infrastructure facility meant for development of Rail System and not to any other infrastructure facility including Rolling Stocks." Circular: No. 733, dated 3-1-1996. ....
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....n regarding 18/05/2010 DEDUCTIONS SECTION 80-IA(4) References have been received by the Board as to whether widening of existing roads constitutes creation of new infrastructure facility for the purpose of section 80-IA(4)(i) of the Income-tax Act, 1961. Section 80-IA(4)() provides for a deduction to an undertaking engaged in developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility subject to satisfaction of the conditions laid down in the section. The Explanation to sub-section 80- IA(4)(i) states that for the purpose of this clause, infrastructure facility means inter alia:- "(a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; The issue has been examined by the Board. It has been decided that widening of an existing road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of section 80-IA(4)(). However, simply relaying of an existing road would not be classifiable as a new infrastructure facility for this ....
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....ay that a works contract is a contract which involves effort or in other words labour of the contractor. Further as per the Black's Law Dictionary, the term "work" means labour or in other words physical and mental exertion to attain an end esp. as controlled by and for the benefit of the employer. Thus as per Blacks's Law also, a works contract is a labour contract under which the contractor merely employs his labour as per the directions of the contractee. Further, attention is invited to relevant extracts of section 194C of the IT Act: "(iv)" work" shall include- (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) Carriage of goods or passengers by any mode of transport other than by railways; (d) Catering; (e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer." Thus as per section 194C of the Act also, "wor....
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....es for a ten-year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, industrial parks and special economic zones. The tax benefit was introduced for the reason that industrial modernization requires a passive expansion of, and qualitative improvement in, infrastructure (viz, expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract." Accordingly, it is proposed to clarify that the provisions of section 80- LA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, in a case where a person makes the investment and himself executes the development work, i.e. carries out the civil construction work he will be eligible for tax benefit under section 80- IA of the Act. In contrast to this, a person who enters into a contract with another pers....
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....ity as a whole. Indeed the ownership of the site or the ownership over the land remains with the Government/owner but during the period of development agreement the developer exercise complete realm over the land or the project. However, in some case there can be a situation that the developer has to take the approval of the design from the Government/contractee but that will not change the status of the developer as works contractor. (b) That the first phase for the developers is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. (c) That a developer has to execute managerial responsibility by engaging the requisite qualified/ skilled / semi-skilled staff and the labourers including the other supporting staff. As the developer under takes the complete responsibility of the manpower to be used in developing the infrastructure facility. (d) The assessee has to utilize its expertise, experience including its technical knowhow in the development of the project. (e) That a....
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....or developing, operating and maintaining the infrastructure facility the infrastructure facility whereas the contractors are those persons who merely execute part of these functions on behalf of developer and do not own any risks and responsibilities of the work. In such cases, the contractors may not be eligible for the deduction under section 80-IA of the Act, as they are not developing any infrastructure facility but only providing assistance to the actual developer. 13.4 In view of the above, we note that it is possible to ascertain whether a civil construction work is assigned on development basis or contract basis only on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a "work contract" or a "development contract....." TRUE TEST THEREFORE IS WHO IS CARRYING ON ENTREPRENEUR RISK. The above proposition has also echoed by the decision of Kolkatta ITAT in case of ACIT vs Ho Hup Simplex reported in (2018) 92 taxmann.com 106(Kol) and it is held as under: "6.15 We find that like any other entrepreneur who employs his material, plant, mach....
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....preneur who has employed his material, plant, machinery, labour etc in a project and has undertaken risk. This has been narrated in detail in for each project as follows: Before detailing the fulfilment of the above said conditions, we are giving hereby flow chart of getting construction contracts from NHAI, PWD, IRCON, DFCC, PGCIL etc. ELOW CHART FOR OBTAINING CONSTRUCTION CONTRACTS: * Different Ministries such as Road & Transport Ministry, Railway Ministry, Power Ministry etc. decide about the development of infrastructure facility as per their yearly plan and as provided in the budget every year. * According to the plan, these Ministries give work to different PSUs/PSES or other autonomous bodies - PWD, NHAI or other PSUs. * These PSUs/ PSES/ Autonomous Bodies float the Tender on the leading newspaper and on their web-site. * Interested parties collect the tender documents from the concerned offices. This tender documents contains, specifications, standards (including what type of material to be used), schedule, drawings of the entire project. * The department will also provide the Estimated Project Cost (bench mark). * The interested parties send their surve....
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.... BC, Bridges, Culverts, Retaining/ Breast Wall, Road Sign etc. The work shall, inter-alia, include the following, as specified or as directed. (A) Road Works Site clearance; setting-out and layout: widening of existing carriageway and strengthening including camber corrections; construction of new roads/ parallel service roads: bituminous pavements remodelling/construction of junctions, intersections, bus bays, lay byes; supplying and placing of drainage channels, flume, guard posts and construction/extensions of cross guard other related items: drainage works, bridges, approaches and other related stones; road marking, road signs and kilometre/ hectometre stones; protective works for roads/ bridges; all aspects of quality assurance of various components of the works; rectification of the defects in the completed works during the Defects Liability Period: submission of "As built" drawings and any other related documents; and other item of work as may be required to be carried out for completing the works in accordance with the drawings and provisions of the contact to ensure safety. (B) Bridge Works Site clearance; setting out, provision of foundations, piers abutment a....
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....lly equal to or better than those of the personnel listed in the Schedule. 12 Contractor's Risks 12.1 All risks of loss of or damage to physical property and of personal injury and death which arise during and in consequence of the performance of the Contract other than the excepted risks are the responsibility of the Contractor. 13 Insurance 13.1 The Contractor shall provide in the joint names of the Employer and the Contractor, insurance cover from the Start Date to the end of the Defect Liability Period in the amounts and deductibles stated in the Contract Data for the following events which are due to the Contractor's Risks: (a) loss of or damage to the Works, Plant and Materials; (b) loss of or damage to Equipment; (c) loss of or damage of property (except the Works, Plant, Materials and Equipments) in connection with the Contract; and (d) personal injury or death. 21. Possession of the Site 21.1 The Employer shall give possession of all parts of the Site to the Contractor. If possession of a part is not given by the date stated in the Contract Data the Employer is deemed to have delayed the start of the relevant activities and this will be Compe....
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....ff and labour, local or other, and for their payment, housing, feeding and transport. 2. COMPLIANCE WITH LABOUR REGULATIONS: During the continuance of the contract, the Contractor and his sub-contractors shall abide at all times by all existing labour enactments and rules made there under, regulations, notifications and bye laws of the State or Central Government or local authority and any other labour law- ADDITIONAL SPECIAL CONDITION 1 From the date of taking over of site by contractor till the completion of the whole work, the entire responsibility for maintenance of the road portion including the portions where the work is not yet started (in addition to the maintenance of the already executed works) shall lie with the contractor. In case the contractor fails to carry out the maintenance works, he will be notified by the Executive Engineer to execute the same. If the contractor still then fails to carry out the same within 7 days from the date of receiving instruction etc. from the Executive Engineer in writing, the Executive Engineer will be done the work and the cost thereof will be recovered from the contractor's next bill for the works. The maintenance Road as....
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..../11-12 between section Phulwarisharif- Danapur, on EC Railway, Bihar." Detailed Scope of Work has been detailed in Special Conditions of the Contract, which provides as follows: "2.0 SCOPE OF WORK: The scope of the work shall comprises for carrying out all the construction activities related to "Construction of Road over Bridge both railway span and adjacent approaches span including Reinforced Earth wall/ Retaining wall in lieu of LC-35 B at Km 552/11-13 between section Phulwarisharif - Danapur Section on Patna Mughalsarai Route in Danapur Division of E C Railway, Bihar." The details of ROB is/are indicated elsewhere in the tender documents/ drawings. The scope described hereunder is only indicative in nature and shall be deemed inclusive all items to be executed for its completion as per Specifications and Drawings. This will be inclusive of: (i) Review all the available reports, drawings, and information, site details already available and consider the same while planning & executing the work. (ii) Checking approved General Arrangement Drawing (GAD) & all other relevant drawings for subject ROB and do inform for necessary correction for incorporation through The Empl....
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....he contractor shall carry out construction of all components of ROB based upon approved drawing, design & approved methodology, following codal provisions and requirements etc. for all safe & sound completion of the proposed ROB by providing his own Manpower, Machineries, Materials etc. complete. (viii) The contractor shall submit free of cost all "As' built" drawings "(in Hard copies and soft copies)" in appropriate size & sufficient number of copies, as directed by the Engineer. (ix) The contractor shall provide complete design for any/all load test e. g. Plate load test, Pile load test, Bridge load test etc. of required no & desired location during construction stage including all temporary works & arrangements etc. for the same, without claiming any extra cost & desired by the Engineer. (x) Preparation of detailed Girders launching scheme along with complete methodology and to make all arrangements for the same" approved from The Engineer and The Railways authorities. (xi) To organize, conduct & maintain required & quality control test and records for day to day work on regular basis. The contractor shall ensure that the work is executed conforming to the approved d....
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....ncludes complete responsibility of the contractor, which establishes development of "New Infrastructure Facility". C> THIRD CONDITION - The assessee is a developer of New Infrastructure Facility. Following clauses of the Contract Agreement would substantiate that the applicant is Developer of a New Infrastructure facility and not a mere contractor as the applicant has undertaken both managerial as well as financial responsibility; it is under an obligation to design the project; it is fully responsible for development or completion of the project; it has undertaken complete risk of the project; it has employed manpower, machinery and has also arranged finances. Responsibilities of the Contractor include following: Kindly see following Clauses of the Agreement for assessee's obligations with respect to the Project, which provides as follows: "4.5 Labour camps 4.5.1 Labour camps, if allowed to be removed from site on completion and site shall be cleared to the entire satisfaction of the Employer / Client in better manner. The contractor with prior permission may erect the labour camps at his own cost at: suitable place near the site of work if land is available or ....
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.... any specific case such as scarcity/shortage/Non production etc., the contractor may approach & request The Engineer, with supporting test certificates satisfying the required quality standards, to approve an alternative source. This will be at sole discretion of The Engineer to accept/reject contractor's request as he ascertains, in the interest of work. 6.4 STRUCTURAL STEEL Structural steel shall be procured by contractor from either of following: i. SAIL, ii. RINL, iii. TISCO iv. JINDAL The Contractor shall procure structural steel from any of the above manufacturers in accordance with the specifications & standards for the contract. The Contractor shall submit the proof of procurement of structural steel from the above agencies. The Contractor shall also submit the test certificates regarding the quality of the steel. In any specific case such as scarcity/shortage/Non production etc., the contractor may approach & request The Engineer, with supporting test certificates satisfying the required quality standards, to approve another sources. This will be at sole discretion of The Engineer to accept/reject contractor's request as her ascertains, in the intere....
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.... 10.1 The Contractor shall provide and keep on the works, during the execution of the works, efficient and competent Engineers to ensure that the work is executed strictly as per provisions of the Contract. 18.0 INSURANCE (This clause supersedes the clause '9.0' of General Conditions of Contract). Before commencing of works, it shall be obligatory for the contractor to obtain, at his own cost, insurance cover in the joint name of the Contractor and Employer from reputed companies for the following requirements: a) Contractors All Risk (CAR) Policy. b) Liability for death of or injury to any person or loss of or damage to any property (other than the work) arising out the performance of the Contract. c) Construction Plant, Machinery and Equipment brought to site by the Contractor. d) Workmen Compensation Policy e) Any other insurance cover as may be required by the law of the land. f) The Contractor, if required, will engage a suitable consultant to liaise with insurer company in the interest of realization of insurance Claims at no cost to employer. 27.0 SAFE WORKING METHODS 27.1 The contractor shall at all times adopt such safe methods of wor....
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....r any other utility shall not be blocked, cut through, altered, diverted or obstructed in any way by the Contractor, except with the permission of the Engineer. All compensation claimed by any Department /Organisation for any unauthorized closure, cutting through, alteration, diversion or obstruction to such roads or water courses by the Contractor or his staff shall be recovered from any moneys due to the Contractor. 26.0 CARE OF WORKS From the commencement of the work until completion, acceptance and final take over of the works by the Engineer, the Contractor shall take full responsibility for the care of all works including temporary works. In case any damage, loss or injury happens to the work or to any temporary works from any cause whatsoever, the Contractor shall at his own cost repair and make good the same so that on completion and at the time of final take over, the work shall be in good condition and in conformity in every respect with the requirements of the contract and the Engineer's instructions. 35.0 TOOLS, PLANT AND EQUIPMENT Except for any specific item mentioned in the contract, the Contractor shall have to make his own arrangements, at his own cos....
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....oodself require submission of all the projects, we would be glad to submit the same. However, we are submitting the agreements of all other projects as below: 1. Sr. No. 2: Mokama-Munger Project: a. Agreement of Project Company (Mokama-Munger Highway Ltd. with NHAI). b. Agreement of assessee JV with the Project Company. 2. Sr. No. 4: Subansari Project 3. Sr. No. 5: Ganga Bridge- Digha Project 4. Sr. No. 6: Ganga Bridge- Sonepur Project 5. Sr. No. 7: Muzaffarpur ROB Project 6. Sr. No. 8: Sonbarsa Project a. Agreement of Project Company (North Bihar Highway Ltd. with NHAI). b. Agreement of assessee JV with the Project Company. 7: Sr. No. 9: SH-83 Project 2. Point No. 8 (Details of Expenses): With regard to details of expenses, vide our letter dated 18.02.2021, we had submitted that most of sites of the assessee are in ERP Package and the Central Computer System has got damaged due to rain. We have prepared site-wise details of all the expenses as have been asked for. The same are attached herewith for your kind perusal. Some of the work-sites are in Tally System. The assessee is in the process of extracting ledger accounts from the Tally System. We requir....
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....Ld. AO chose not to do so. Therefore, we do not find any substance in the argument of the Ld. CIT-DR that because claim of deduction under section 80IA has been made first time during the year for these two projects, the decision (supra) of the Tribunal does not cover the issue. 16. We have perused the decision (supra) of the Tribunal for AY 2016-17 in which same issue was involved. We find that the Tribunal has recorded its findings on all the points raised by the Ld. AO which have been repeated in the year under consideration as well. We reproduce hereunder the relevant observations and findings therefrom: "21. We observe that the assessee filed all the agreements entered into by it in respect of various projects with various undertakings for developing the infrastructural projects and made elaborate submissions as to why the assessee fulfills the conditions specified in Section 80IA(4) of the Act. The assessee contended that the Corporations with which it had entered into agreements are public sector undertakings of State/Central Governments, therefore, fulfills the basic condition u/s 80IA(4) of the Act. The assessee also explained the various clauses of the agreements enter....
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....tion of the AO. Various clauses in the agreement entered into by the assessee for execution of infra projects clearly shows that the assessee is the complete risk bearer, liable for liquidated damages in case of delay in execution of the projects. Some of the clauses in the agreement entered into by the assessee with the Chief Engineer PWD Highway, Meghalaya State Government are as follows: "9 Personnel 9.1 Contractor shall employ the key personnel named in the Schedule Key Personnel as referred to in the Contract Data to carry out the functions stated in the Schedule or other personnel approved by the Engineer. The Engineer will approve any proposed replacement of key personnel only if their qualifications abilities and relevant experience are substantially equal to or better than those of the personnel listed in the Schedule. 12 Contractor's Risks 12.1 All risks of loss of or damage to physical property and of personal injury and death which arise during and in consequence of the performance of the Contract other than the excepted risks are the responsibility of the Contractor. 13 Insurance 13.1 The Contractor shall provide in the joint names of the Employer and th....
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....mployer and denominated in Indian Rupees. The Performance Security shall be valid until a date 28 days from the date of expiry of Defect Liability Period and the additional security for unbalanced bids shall be valid until a date 28 days from the date of issue of the certificate of completion. 54 Cost of Repairs 54.1 Loss or damage to the Works or Materials to be incorporated in the Works between the Start Date and the end of the Defects Correction period shall be remedied by the Contractor at the Contractor's cost if the loss or damage arises from the Contractor's acts or omissions. SPECIAL CONDITIONS OF CONTRACT 1 LABOUR The Contractor shall, unless otherwise provided in the Contract, make his own arrangements for the engagement of all staff and labour, local or other, and for their payment, housing, feeding and transport. 2 COMPLIANCE WITH LABOUR REGULATIONS: During the continuance of the contract, the Contractor and his sub-contractors shall abide at all times by all existing labour enactments and rules made there under, regulations, notifications and bye laws of the State or Central Government or local authority and any other labour law. ADDITIONAL SPECIAL ....
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....ia to undertake work of construction of permanent banks of two canals in Kerala. The assessee claimed deduction under section 801A for maintenance of infrastructure facility. The issue for consideration was whether agreement in question was a mere works contract to effect repairs to infrastructure by construction of permanent bank protection measures to two canals and maintaining same for three years. The Hon'ble Karnataka High Court answered it in affirmative. In BT Patil & Sons Belgaum Construction (P) Ltd. (supra) it was noticed from records that sphere of work assigned to assessee was simply to do job of civil construction and it was not involved in planning and development of infrastructure facility as a whole. It was in the backdrop of the said factual finding that the assessee's claim of deduction under section 80IA was negatived. None of these two decisions (supra) relied upon by the Ld. CIT-DR assist him being distinguishable on facts. On the face of the clear cut finding of the Tribunal that the assessee is a developer of the Projects and not only a contractor, the contention of the Ld. CIT-DR is rejected being devoid of merit. 18. Following the decision (supra) of the T....
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....bjected the said adjustment before the Ld. DRP who followed the directions given by it in AY 2016-17 the issue being identical. Paras 4.2.2 & 4.2.3 of Ld. DRP's directions dated 31.05.2022 under section 144C(5) of the Act refer. 22. Before us the Ld. AR submitted that similar issue came up for consideration before the Tribunal in AY 2016-17 wherein the issue has been set aside and matter has been restored back to Ld. TPO for fresh adjudication. The Ld. CIT-DR conceded. 23. We have perused the order of the Tribunal in ITA No. 705/Del/2021 dated 30.11.2022. In para 30-35 thereof, the Tribunal recorded its observations and findings which we reproduce hereunder:- "30. Heard rival submissions, perused the orders of the authorities below. The TPO observed that as per the balance sheet assessee had given advance of Rs.8,14,37,921/- to BSE C&C JV Nepal Pvt. Ltd. which is an Associate Enterprise and required the assessee to show cause why it should not be treated as a separate transaction and ALP of interest chargeable be determined. Assessee submitted that it had charged no interest on such advance receivables as the AE Company is being established by JV Partners in the 50:50 ratio by ....
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....or which separate request has been made for its admission as these documents could not be submitted before AO due to paucity of time. Your Honours would observe from the above said ledger accounts that earlier there was a credit balance. After transfer of LCs issued by JV Partners, the amount due to Nepal Unit was converted to a debit balance. This debit balance was shown as receivable in the books of the applicant company. e) Your goodself would observe that the applicant company has not given any advance to its foreign AE. This is only the transfer of LCs issued by JV Partners on account of closure of business activities in Nepal which has turned credit balance to a debit balance. We are also enclosing year-wise detail of Credit and Debit Balances of M/s BSC C&C Nepal Pvt Limited (Site-wise) for your kind perusal. This is an additional evidence for which separate request has been made for its admission as these documents could not be submitted before AO due to paucity of time. From details submitted your goodself will appreciate that the account balance of M/s BSC C&C Nepal Pvt Limited got converted from a debit to credit in FY 2011-12. Thereafter in FYs 2012-13 to 2015-1....
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....ependent transaction which can be viewed on standalone basis. What can be examined on the touchstone of arm's length principles is the commercial transaction itself, as a result of which the debit balance has come into existence, and the terms and conditions, including terms of payment, on which the said commercial transaction has been entered into. The payment terms are an integral part of any commercial transaction, and the transaction value takes into account the terms of payment, such as permissible credit period, as well. The residuary clause in the definition of 'international transaction', i.e., any other transaction having a bearing on the proof its, incomes, losses or assets of such enterprises, does not apply to a continuing debit balance, on the given facts of the case, for the elementary reason that there is nothing on record to show that as a result of not realizing the debts from associated enterprises, there has been any impact on profits, incomes, losses or assets of the assessee. In view of these discussions, in our considered view, a continuing debit balance per se, in the account of the associated enterprises, does not amount to an international trans....
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....ance of Nepal Company should be made to the returned income of the applicant." 32. As could be seen from the above, the assessee contended before the DRP that the ledger accounts in earlier years showed credit balance and after transfer of LCs issued by JV Partners the amount due to Nepal Unit was converted to a debit balance and this was shown as receivable in the books of the assessee company. It was contended that the assessee company has not given any advance to its foreign AE and this is only transfer of LCs issued by JV Partners on account of closure of business activities in Nepal which has turned into credit balance to a debit balance and the assessee furnished year wise details of credit and debit balances of BSC C&C Nepal Pvt. Ltd. as additional evidences. It was also contended that the account balances of BSC C&C Nepal Pvt. Ltd. got converted from a debit to credit in FY 2011-12. Thereafter, in financial years 2012-13 to 2015-16 the account remained as debit due of Rs.8.14 crores. It was contended that in the assessments for these years it has never been the case of the Department that the debit balance is either "money advanced" or "sum receivable". It was also stated....
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....h were not made before the Assessing Officer." 24. Since the parties agree that the issue is covered by the decision (supra) of the Tribunal, respectfully following the same we send the matter back to the Ld. AO/TPO for deciding the issue afresh keeping in view the evidence submitted by the assessee as also the observations of the Hon'ble Delhi High Court in PCIT vs. Kusum Health Care (P) Ltd. 398 ITR 66 (Del.) and as per law. This ground is treated as allowed for statistical purpose. 25. Ground No. 7 and 8 relate to addition of Rs. 18,84,08,295/- on account of retention money retained by the employer. The Ld. AO has discussed this issue in para 5 of his order. He found that in its revised return/computation the assessee claimed the impugned deduction. On being asked for justification the assessee submitted that while claiming the impugned deduction the assessee has also offered for taxation a sum of Rs. 7,23,59,198/- released by the employer of the assessee for which project completion certificate was received during the year. Clause 48 of the contract agreement with PWD, Govt. of Meghalaya dealing with the receipt and payment of retention money was brought to the notice of the ....
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....ates to disallowance of Rs. 1,42,72,894/- on account of late deposit of EPF contribution of employees though deposited before due date of filing ITR. The Ld. AO discussed the issue in para 8 of his order. The Ld. DRP dismissed the assessee's objection holding that employee's contribution to EPF not deposited within the due date as per section 36(1)(va) of the Act cannot be allowed. Para 4.4.9 of Ld. DRP's directions refers. 30. The Ld. AR submitted that in the revised return the assessee had made suo-moto disallowance of Rs. 1,40,86,958/-. Our attention was drawn to page 89 of the Paper Book containing the revised computation dated 04.09.2021 and page 79 of the Paper Book which is revised Return filed on 31.03.2018. The Ld. AR pointed out that the said suo-moto disallowance is acknowledged in intimation dated 28.02.2019 issued under section 143(1) of the Act which is evident from page 519 of the Paper Book. It is submitted that the sum disallowed in Return of Income is Rs. 1,40,86,958/- and the sum disallowable as per statutory provisions is of Rs. 1,42,72,897/-. The additional difference of Rs. 1,85,939/- has been disallowed by CPC in intimation under section 143(1) of the Act. ....