TaxTMI 
TaxTMI 
2020 (6) TMI 839
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....s claimed originally and allowed in original order u/s 143(3) of the Act and not related to any incriminating material found during action u/s 132 of the Act. 2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure projects undertaken by the appellant: Sr. No. of site referred by CIT (Appeals) Name of the site 1 Naroda Sampa 3 Bhuj Sublate 4 Vanthali 5 Mehsana 8 Bhuj Khavda 11 Akalpada 3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above. 4. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of A.O. in disallowing Rs. 28,000/- u/s 40A(2)(b) and Rs. 88,432/- u/s 40A(3) of the act." 4. In ITA No. 199/RJT/2015 for A.Y. 2005-06 the Grounds of appeal raised by the Revenue are as follows: "1) The Ld.CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects....
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.... u/s 132(1) of the Act at the premises of the assessee dated 24-06-2010. The assessee is a contractor and mainly dealing in Government Contracts. The assessee had originally filed its returns of income for the Assessment Years 2005-06 and 2006-07 on 31.10.2005 & 25.12.2006 respectively which were assessed u/s 143(3) of the Act vide order dated 03-012007, and 26-12-2008 respectively. Thus, as on the date of search i.e. 24.06.2010, both the assessment years became unabated. 9. The ld. AR before us has challenged the assessment proceedings framed under section 153A of the Act in ground no. 1 on the reasoning that the additions made by the AO in the assessment years 2005-06, & 2006-07 represents the items of the regular assessments being deduction under section 80-IA(4) of the Act and disallowance under section 40A(2)(b), 40A(3), 36(1)(va) of the Act including ad-hoc disallowance which were disclosed in the original income tax returns. As such the deduction under section 80-IA(4) of the Act was subject to the regular assessment framed under section 143(3) of the Act. 10. As per the ld. AR there was no incriminating material found during the search in respect of the unabated proceedin....
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....ity, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143 (3) could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order" 15. We draw support and guidance from the judgment of Hon'ble Bombay High Court in the case of CIT vs. Gurinder Singh Bawa reported in 79 taxmann.com 398 wherein it was held as under: "7. In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that....
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....nd 2006-07 are dismissed. 19. In the result, both the appeals of the assessee are partly allowed and the appeals of the Revenue are dismissed. 20. Coming to ITA No. 221/RJT/2015 for the AY 2008-09, the assessee has raised the following grounds of the appeal "1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the Act. 2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure project undertaken by the appellant: Sr. No. of referred by (Appeals) site CIT Name of the site 4 Bhuj Sublate & Bhuj Khavda 3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of project specified by him and listed in ground No. 2 above." 21. The assessee in the 1st ground of appeal has challenged the validity of the assessment framed under section 153A r.w.s. 143(3) of the Act. 22. At the outset it was noticed that the year under considerati....
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....ng ITA No. 1108/RJT/2010 vide order dated 27-09-2010 has been challenged before the Hon'ble Gujarat High Court which is pending for adjudication. Thus the issue whether the assessee is acting as developer or as work contractor has not been reached to its finality. 27. The AO also noted that the principles of rest judicata does not apply to the income tax proceedings. Therefore the decision of the earlier year period cannot be applied for the year under consideration. 28. The AO after verifying the contracts awarded to the assessee reached to the conclusion that the assessee is not acting as developer. Therefore he was of the view that the assessee cannot be allowed the deduction provided under section 80-IA (4) of the. Accordingly he disallowed the deduction claimed by the assessee for Rs. 10,48,13,775/- and added to the total income of the assessee. 29. Aggrieved assessee preferred an appeal to the learned CIT (A) who has partly allowed the appeal of the assessee by observing as under: "Findings in appeal 9. After perusal of the ratio laid down by the different courts and Tribunals and the relevant provisions of the Act, it emerged that an enterprise has to enter into....
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....isk in execution of work was also undertaken by the assessee. Rather, the assessee was held responsible for any damage or loss to the property and manpower. It is also worth mentioning that the AO. had wrongly interpreted the word "owned" in section 80IA(4)(i) (a) of the IT Act by relying on the decision of B.T. Patil & Sons Belgaum (Supra). As discussed hereinabove, it is concluded that the assessee developed the eligible infrastructure facilities by himself or as a consortium of companies duly registered in India. 9.4 The Act does not prescribe that the infrastructure facility is to be owned by such an enterprise. The infrastructure facility is always the property of the Government and an enterprise is bound by the agreement to transfer the same after the settled period. The assessee's execution of most of the works fall within first category i.e.developing of infrastructure facilities.. It was incorrect on the part of the AO to hold that the assessee being fallen within the first category was not entitled for the deduction. The decisions in the cases of ABG Heavy Industries Ltd. (supra), Koya & Co. Construction (P.) Ltd. (supra), Radhe Developers (supra), Bharat Udyog Ltd.....
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.... u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed. The contract at Sr.No.2 was an agreement between the appellant and Water Resources Deptt, Govt. of Goa for construction of RCC Conduit from Ch. 28.970 km. to 37,425 km. of Left Bank Main Canal of Tillari Irrigation Project in Bardez Taluka - Goa State.lt was a work for construction of RCC Conduit on turnkey basis within stipulated period of 450 days along with defects liability period of 3 years. The cost of Project was of Rs. 51,43,72,473/-. The terms and conditions of the tender were examined and it was observed that the assessee developed infrastructure facility for public purpose. The infrastructure developed was handed over to Goa Tillari Irrigation Development Corporation of Govt. of India. The terms and conditions of the contract were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted ....
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....above facts and circumstances, the claim of the assessee is rejected. The terms and conditions of the contract were examined and it was revealed that the assessee executed the work of other contractor on subletting basis which was not in accordance with the provisions of section 80IA(4) the Act. Therefore, the assessee was not eligible for claim of deduction u/s.80IA (4) of the IT. Act. Accordingly, the action of the A.O. is confirmed. The contract at Sr.No.5 was an agreement between the appellant and Vidarbh Irrigation Development Corporation, Nagpur for construction of Central Spillway Masonry Dam, Head Regulators and Balance Earth Work of khadakpurna Project.Tahsil-Deulgaon Raja Dist. Buldana, Maharashtra. The contract value was of Rs61 .007- crore. Terms and conditions of the agreement were analyzed. The contract was made for the project included planning, designing and developing all the necessary and required work as prescribed in the tender for contract. The appellant was to complete the project within 60 months and maintenance for 3 years after satisfactory erection and testing on turnkey basis. The terms and conditions of the contract were examined and it was notic....
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....ntract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Vidarbh Irrigation Development Corporation, Nagpur on completion of the infrastructure facility. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of as per terms of the agreement. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone. After having regard to the terms and conditions of the agreement for construction and its operation on Turnkey basis, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility. Accordingly, he is eligible for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed. The contract at Sr.No.6 was an agreement between the appellant and Narmada....
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....and new planting at designated locations, clearing of site including cutting and stacking of trees, saw-cut existing pavement for clean edges, scarifications of existing granular surface and bituminous pavement etc., It was a work for construction of road within stipulated period of 24 months along with defects liability period of 3 years. The cost of the Project was of Rs. 44,45,80,0151-. The appellant, after completion of the work, handed over the developed infrastructure facility to the Madhya Pradesh Public Works Department. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period as specified in the terms of the contract. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone. The appellant undertook an obligation to design the project which was approved by the competent authority and was assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property during the period of development agreement and he used to exercise complete domain over the ....
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....us work like D/s road etc. However, the above information was only general outline of the project for the guidance of the tender. The construction work was to be completed within stipulated period of 24 months along with defects liability period of 3 years. The cost of the project was of Rs13,69,61,987/-. The appellant undertook an obligation to design the project which was approved by the competent authority of Gujarat and was assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property during the period of development agreement and he used to exercise complete domain over the land and the project, he had to arrange finances, suitable man- power, machinery and equipments and managerial force. The risk in execution of work was also undertaken by the assessee as he was responsible for any damage or loss to the property. The assessee had to develop the infrastructure facility and in the process all the works were to be executed by him. It may be laying of drainage system, provision of way for traffic etc. without any hindrance. The assessee's duty was to develop infrastru....
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....ing in position with all leads and lifts etc. complete, (4) Providing the weep holes of 10 cm dia A.C. pipe in the retaining wall with required fixtures as directed etc. complete, (5) Pucca pitching of hammer dressed stones in specified thickness including laying to correct slopes after necessary trimming of earth work with necessary panels of 3 mt. clear size in stone masonry in C.M. (1:6) with 45 cms. Thick walls, hand packing of rubble stones with earth sluicing pointing of surface in C.M. (1:4) exclusive of filter base as directed etc. complete (a) 30 CM thick and (6) Supplying Marble data slabs of different size including engraving and painting figures and fixing in C.M. etc. complete (a) Size 45C.M. x 30C.M. x2.5C.M. Cost of Contract was of Rs. 5,24,00,913/- The terms and conditions of the tender were examined and it was observed that they were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on ....
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....barjncluding hoisting arrangement with all appurtenant works and testing it with further operation and maintenance for 3 years after satisfactory erection & testing etc. entire work (on turnkey basis). The contract cost was of Rs. 7357.969 lakhs. Terms and conditions of the agreement were examined. This contract was made for the project included planning, designing and developing all the necessary and required works as prescribed in the tender of contract. The appellant was to complete the project within 36 months including maintenance for 3 years after satisfactory erection and testing on Turnkey Basis. The terms and conditions of the contract were examined and it was noticed that the appellant was required to execute the contract work wherein he was to plan and design with drawings and after approval by the competent authority to erect vertical lift type steel gates for Sarangkheda Barrage including hoisting arrangement and its operation on turnkey basis. The appellant was required to obtain approval and clearance of all applicable national laws, safety codes and local regulations from the concerned statutory authorities. The project was to be developed by the appellant as pe....
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....the said infrastructure for a period of 3 years. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone. After having regard to the terms and conditions of the agreement for erection of vertical lift type gates of the barrage and other assigned works, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility. Accordingly, he is eligible for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed." 30. Being aggrieved by the order of the learned CIT (A), both the assessee and the Revenue are in appeal before us. The assessee is in appeal before us against the denial of the deduction claimed by the assessee with respect of project namely ' Bhuj Sublate & Bhuj Khavda' whereas the Revenue is in appeal against the deletion of the disallowance made by the AO for the deduction under section 80-IA (4) of the Act with respect to the remaining project. 31. The Revenue has raised the grounds in ITA No. 201/RJT/2015 for the assessment year 2008-09 as detailed under: "1) The Ld.CIT(A) h....
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....the past records of assessments of the assessee and of other similar cases dealt with by us and involving similar kinds of businesses. In this context, we find, and there is no dispute from either side in this regard, that the issue regarding nature of business in such cases came to be examined by this Bench in various cases for various assessment years. In I.T.A. Nos. 837 & 838/R/2009 for A.Ys. 2003-04 & 2004-05, in I.T.A. Nos. 835 & 836/R/2009 for A.Ys. 2003-04 & 2004-05, in I.T.A. Nos. 850 & 851/R/2009 for A.Y. 2003-04 & 2004-05, on the issue concerning deduction u/s 80-1A(4) and other connected issues, we have already upheld the claims for deduction u/s 80-IA(4) of the Act after duly examining the nature of businesses. Besides, in I.T.A. No. 168/R/08 for A.Y. 2004-05 and in I.T.A. No. 145/R/08 for A.Y. 2003-04, we find that the assessments were completed u/s 143(3) of the Act under which the impugned deduction was granted but thereafter the C.I.T. passed orders u/s 263 of the Act on the ground that the assessees were contractors and not developers. Against the said orders, appeals were filed wherein after duly examining the nature of business of those assessees, we have given a....
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....f consistency also cannot be overlooked. In the case of Radhasoami Satsang vs C.I.T. 193 ITR 321 (SC) the Hon'ble Supreme Court has laid down the rinciple which is well accepted all along that absence of any material change, a different than that taken in earlier years, could not be taken in later years. We are of the i that this proposition of law read with the rule of consistency in tax proceedings n applied all the more while granting various deductions from total income in the f another well recognized proposition that any provision granting rebate or benefit assessee should be liberally construed generally in favour of the assessee. If the present case is viewed in the light of the aforesaid perspectives and judicial propositions laid down by the highest Court of land, we find that the intention behind granting such deductions is for creation of infrastructure facilities in the country as a special benefit or rebate to eligible persons and therefore even if there could be more than one view regarding the particular nature of business of the assessee, the view favourable to the assessee can be taken. 8. The C.I.T. D.R. relied upon the decision of the Hon'ble Mumbai Be....
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....contractor. Here, the is directly engaged in performing its functions Further, in the case of Om Metals Infraprojects Ltd. (supra), it is held that if it is the assessee mobilizing people, plants, technical expertise etc., the assessee can be said to be a developer and that the assessee cannot be denied deduction from the profits of developing the infrastructure facility though it may not operate or maintain the same, particularly in view of the insertion of the word "or" in Sec. 80-IA(4). "9. Considering the totality of the facts on record as also the development of law concerning the granting of deductions from gross total income, we are of the considered view that the appellant is entitled to deduction u/s 80-IA(4) of the Act as it has been found to have fulfilled all conditions of eligibility. Accordingly, we direct that the deduction as claimed be allowed. In the result, both the grounds of appeal are allowed." 36. As the facts in the case on hand are identical to the facts of the case as discussed above, therefore we are bound to follow the same. We cannot change the stand taken by the ITAT in the own case of the assessee in the earlier year involving identical facts. Rega....
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....ed to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the IT Act itself." 37. We also find that the Hon'ble supreme court case of Ambika Parsad Mishra Vs. State of U.P. and Others vide writ petition no 1543 of 1977 vide order dated 09-05-1980 has taken the similar view as taken by the Hon'ble High court (supra) as under: "Thus we get the statutory perspective of agrarian reform and so, the constitutionality of the Act has to be tested on the touchstone of Art 31A which is the relevant protective armour for land reform laws. Even here, we must state that while we do refer to the range of constitutional immunity Art. 31 Aconfers on agrarian reform measures we do not rest our decision on that provision. Independently of Art. 31A, the impugned legislation can withstand constitutional invasion and so the further challenge to Art. 31A itself is of no consequence. The comprehensive vocabulary of that purposeful provision obviously catches within its protective net the present Act and, broadly speaking, the antiseptic effect of that Article is sufficient to immunise the Act against invalidation to the extent stated therein. The extreme ar....
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....rmitted, may well be a kind of judicial destabilisation of State action too dangerous to be indulged in save where national. crisis of great moment to the life, liberty and safety of this country and its millions are at stake, or the basic direction of the nation itself is in peril of a shakeup. It is surely wrong to prove Justice Roberts of the United States Supreme Court right when he said." 38. In view of the identical issue raised before us in the ground of appeal no. 2 which has already been considered by the ITAT in its own case with respect to all the project, we are taking the same view and accordingly holding that the assessee is in development of the infrastructure facilities eligible for deduction under section 80 IA(4) of the Act. The ground of appeal of the assessee is allowed and ground of appeal of the Revenue is dismissed. In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed. 39. Coming to the ITA No. 222/RJT/2015 for the AY 2009-10 where the assessee has raised the following grounds: "1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad Ahmedabad erred in upholding the validity of order passed u/s 153A ....
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....and ITA No. 201/RJ T/2015 will be applied for the year under consideration. 45. From the preceding discussion we find that the assessee has been held as developer with respect to all the projects involved in the dispute in the earlier assessment year as discussed somewhere in the preceding paragraph except one project located at Bhavnagr. As such the project located at Bhavnagar was not there in the assessment year 2007-08 and therefore we need to adjudicate the issue limited to this contract whether the assessee is acting of the developer or works contractor. 46. On perusal of the finding of the learned CIT (A), we note that the assessee is supplying heavy earthmoving machinery on hiring basis to GMDC. Accordingly, the learned CIT (A) held that there cannot be any deduction with respect to such projects under section 80-IA(4) of the Act, as the assessee is not executing any projects eligible for deduction specified under section 80-IA(4) of the Act. 47. The learned AR at the time of hearing before us has not advanced any argument against the finding of the learned CIT(A). Accordingly in the absence of any information/assistance from the side of the learned AR for the assessee, ....
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....preme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has....