TaxTMI 
TaxTMI 
2025 (11) TMI 1248
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....UN/2025 (A.Y. 2013-14) 2. Facts of the case, in brief, are that the assessee is a Private Limited Company and engaged in the business as Civil Contractor. It filed its return of income on 30.11.2013 declaring total income of Rs. 8,32,52,939/-. The case was taken up for scrutiny under CASS. Accordingly statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') were issued and served on the assessee in response to which the assessee filed various details from time to time. 3. During the course of assessment proceedings the Assessing Officer noted that the assessee company in its return filed has claimed deduction u/s 80IA of the Act amounting to Rs. 5,60,11,420/-. He, therefore, asked the assessee to furnish complete Profit & Loss Account, all its schedules, balance sheet, computation of income and tax audit report copy etc. From the audited financials furnished by the assessee the Assessing Officer noted that the assessee has not filed tax audit report in form No. 3CD but has filed a copy of the statutory audit report only. He noted that the copy of the working of deduction u/s 80IA and copies of the agreements with the v....
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....works contracts relating to infrastructure projects, the assessee cannot be considered as an enterprise carrying on business of developing, operating and maintaining of any new infrastructure facility within the meaning of section 80IA of the Act. He further noted that in most of the cases, the copies submitted do not contain details of the nature of work. He referred to the bill of the Commissioner, City Corporation, Gulbarga where it has been mentioned as under: "Name of Work - Improvement of Road from Gulbarga Railway Station one way to join Ring road Via SVP Circle, Goa Hotel, Lalgeri Cross & Shahabazarcross to Ring Road in Gulbarga City" Further, in the bill of Contract Receipt Bidar, Karnataka it is also clearly mentioned as: Name of Work "Work services for Resurfacing of Runway & Taxi Tracks, Renovating Rigid Dispersal and Associated works at 406 AFS Bidar" 7. He, therefore, was of the opinion that the assessee has not carried out any work of development of new Infrastructure facility in these cases. He further noted in other cases also that it could not be verified for want of documents from the assessee's end. 8. The Assessing Officer r....
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....conceived the idea, put it together, raised the funds and then found the person to carry out the activity, according to the specific terms and conditions and through the procedure of calling for tenders from such persons that qualify. The assessee is therefore not a developer by any stretch of terminology. It is not developing the infrastructure project, but is merely constructing or building in for someone else as per the guidelines and specification provided." 9. Finally the Assessing Officer rejected the claim of deduction u/s 80IA(4) by observing as under: "The assessee has failed to discharge its onus for proving that it was eligible for deduction u/s 80IA by not furnishing copy of agreement executed by the assessee with Government or any other person/agency to the satisfaction of the undersigned. The assessee does not own any infrastructure facilities of its own which is a prime condition for allowance of deduction u/s 80IA(4) of the Act. The assessee has not fulfilled the prime conditions laid down for claiming deduction u/s 80IA(4) of the IT Act, 1961 therefore, the assessee is not eligible for deduction claimed u/s 80IA(4) of Rs. 5,60,11,420/-. In view of above....
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....he Act in respect of the following works: 1. Baner SWD work order No. 10237 2. Sancheti Work order No. 709 3. Sangamwadi Yerwada work order No. 833 4. Vitthalwadi work order No. 10293 5. Wadgapn BK. Works order No. 10239 6. Wadgapn Sheri works order No. 10238 12. It was submitted that a detailed note in respect of claim u/s 80IA was filed before the Income Tax Settlement Commission which was duly accepted after considering the legal position in this respect. It was argued that once the benefit of section 80IA is given in the initial year then it would continue for the subsequent years and it cannot be withdrawn intermittently without there being any change in the facts of the case. The assessee also submitted that in the e-filing portal Form No. 3CEB, 10CCB, 3CA and 29B have been filed online in time. Relying on various decisions it was submitted that the assessee is eligible for the claim of deduction u/s 80IA of the Act. 13. Based on the arguments advanced by the assessee the Ld. CIT(A) allowed the claim of deduction u/s 80IA by observing as under: "8.4.1 The findings of the AO and the submission of the appellan....
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....d in the circumstances of the case and in law the Ld.CIT(A) failed to appreciate the fact that the assessee upon completion of the contractual obligations has been paid the agreed contract price as per work completed whereas section 80IA stipulates development or maintenance of infrastructure facility. 4. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) failed to appreciate the fact that the relationship between assessee and the government is that of the contractor and the contractee and the assessee has acted as a contractor only on a specific contract allotted by its principals, cost of which has been reimbursed from the principals who are the actual owner/ developer. 5. The Appellant craves leave to amend or alter any grounds or add a new ground which may necessary. 15. The Ld. DR strongly challenged the order of the Ld. CIT(A) in allowing the claim of deduction u/s 80IA(4) of the Act. He submitted that the Assessing Officer after analyzing the nature of projects undertaken by the assessee and related facts, had disallowed the deduction claimed u/s 80IA(4) of the Act for all the three years mainly on two grounds i.e. (a) th....
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....had not discussed the findings of the Settlement Commission for assessment year 2013-14 or that of the CIT(A) for subsequent years and in a single paragraph has decided the issue. He submitted that the Ld. CIT(A) also failed to consider the fact that deduction u/s 80IA(4) of the Act depends upon the nature of projects executed by the assessee. He submitted that the nature of projects executed differed from year to year and therefore, the eligibility for deduction u/s 80IA(4) of the Act should be examined qua the nature of project and not qua the identity or status of the assessee as developer. He submitted that a particular assessee can be eligible for deduction u/s 80IA(4) for a particular project but can be ineligible for deduction u/s 80IA of the Act for another project executed during the same assessment year. He submitted that the assessee during the appeal proceedings has suo moto withdrawn claim of deduction u/s 80IA on certain projects for assessment year 2014-15 and 2015-16, the details of which are as under: Sr. No. Work in respect of which claim is withdrawn Amount of claim withdrawn for AY 2014-15 Amount of claim withdrawn for AY 2015-16 1 Renovation o....
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....at the order of the Settlement Commission is final only for the assessment years before it, and cannot be treated as binding precedent for other years. This is more so when the facts of the subsequent assessment years are different from that of the assessment years covered by the application before it. The findings in a settlement order cannot be mechanically applied in regular assessments for later years. The settlement orders are case-specific, non-precedential and limited to the facts and disclosures on record. Hence, the Ld. CIT(A) has misdirected himself in relying heavily on the order of the Settlement Commission for assessment year 2011-12 and 2012-13 without going into the details of the projects executed by the assessee. 19. He submitted that when the statutory auditors in their tax audit reports have categorically mentioned that the deduction claimed by the assessee u/s 80IA for its projects executed for infrastructure facilities is in conflict with the provisions of the Act, the Ld. CIT(A) should have applied his mind. However, he has failed to do so. Relying on various decisions including CBDT Circular No.4/2010, the Ld. DR submitted that the order of the Ld. CIT(A) ....
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.... to any enterprise carrying on the business of (i) developing, or (ii) maintaining and operating, or (iii) developing, maintaining and operating any infrastructure facility. Therefore, from assessment year 2000-01, deduction is available if the assessee carries on the business of any one of the abovementioned three types of activities, and accordingly also when the assessee is carrying on the activity of only developing. When an assessee is only developing an infrastructure facility/project and is not maintaining nor operating it, obviously, such an assessee will be paid for the cost incurred by it; otherwise, how will the person, who develops the infrastructure facility project, realise its cost? If the infrastructure facility is, just after its development, transferred to the Government, naturally the cost would be paid by the Government. Therefore, merely because the Maharashtra Government or APSEB has paid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. If the interpretation canvassed by the Revenue authorities is accepted, no enterprise, carrying on the business of only....
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....IT (Appeal) has further examined as to whether the project assigned to the assessee was in capacity of a contractor or the same was executed as a developer with respect to the canal projects, agreements were entered into by the assessee was analysed and tendered documents containing the terms and conditions of the project were taken into consideration with respect to the following aspects as to the entire investment in the project was to be made by the assessee. Interim payment to the tune of estimated contract value in respect of the development work done for each month after retention and other adjustments were to be made, security deposit was to be paid by the assessee, there was a penalty for delay, procurement of the material was the responsibility of the assessee, procurement of land for camp, for shop, labour camp etc. also the employment of qualified engineers, action and compensation in respect of bad work, defect liability of the accidents to persons in relation to Workman Compensation Act, indemnity insurance of the workmen employed. The CIT (Appeal) and the Tribunal considering such aspects of the tendered agreement, concurrently held that the assessee has entered into ....
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....llotted to it by its principals cost of which has been reimbursed from the principals who are the actual owners / developers. The assessee has not fulfilled the conditions prescribed under the provisions of section 80IA(4) and the statutory auditors of the assessee company in their audit report have also qualified for such claim. Further, the Revenue has not accepted the order of the Settlement Commission allowing the claim of deduction u/s 80IA for various assessment years till 2012-13 and filed appeals before the Hon'ble High Court which are pending before the Hon'ble High Court. 28. We find the Ld. CIT(A) allowed the claim of deduction u/s 80IA of the Act following the order of the Settlement Commission, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. DR that the Assessing Officer in the assessment order has categorically mentioned that the other projects for which deduction u/s 80IA has been claimed by the assessee could not be verified for want of documents. It is his submission that the order of the Ld. CIT(A) is a non-speaking one and displays blatant non-application of mind and he has not discussed the nature....
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....y the CIT(DR) and the learned AR of the applicants on the above issue. We have also taken note of the various decisions relied upon by both the parties in respect of the allowability or otherwise of the deduction under Section 80IA of the Act. The statutory provisions, the circulars issued by the CBDT and the legal issues arising from the various judicial pronouncements have also been examined with reference to the factual aspects of the contracts carried out by the applicants, in respect of which the deduction under Section 80IA has been claimed. We are of the considered opinion that the applicants have satisfactorily established the admissibility of the above deduction on the facts of the cases. We would also like to observe that the department's reliance upon the decision of the Hon'ble Supreme Court in the case of Sun Engineering is apparently misplaced, as the above judgement was rendered in the context of Section 147/148 of the Act and it cannot be applied to the provisions contained under Section 153A of the Act, as reproduced hereunder :- "153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and s....
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....or the years under settlement, wherever applicable. Accordingly, the above issue gets settled. 30. It is also an admitted fact that the Department has not accepted the order of the Settlement Commission and has gone on appeal before the Hon'ble High Court which is pending. Under these circumstances, we are of the considered opinion that while the assessee is entitled for deduction u/s 80IA in respect of the projects which were subject matter of application before the Settlement Commission, however, the same cannot be blindly applied to the other projects without considering the nature and terms and conditions of each contract. The new contracts undertaken during the year may or may not be eligible for deduction u/s 80IA(4). Under these circumstances, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to consider the allowability of deduction u/s 80IA in the following manner: (a) Verify and allow the claim of deduction u/s 80IA(4) in respect of the projects which were the subject matter of application before the Settlement Commission till assessment year 2012-13 which were still continuing in the above 3 years i.e. assessment....