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2025 (2) TMI 1489
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....assessee company is carrying on business of Infrastructure Projects. In the original return of income filed on 28.11.2013 for the impugned assessment year 2013-2014, the assessee declared income at Rs. 104,87,01,480/-, but has not claimed any deduction u/sec.80IA(4) of the Act. In this case, a search and seizure operation u/sec.132 of the Act was conducted and in response to notice u/sec.153A of the Act, the assessee had made claim of deduction u/sec.80IA(4) of the Act at Rs. 79,25,89,837/- for the first time. Therefore, the Assessing Officer issued show cause notice calling the assessee to show cause as to why the fresh claim of deduction u/sec.80IA(4) should not be disallowed. In response thereto, the assessee has furnished project wise details to the Assessing Officer. After examining the project details furnished by the assessee, the Assessing Officer noted that the unambiguous conditions laid down in the provisions of Section 80IA(4) of the Act is that an assessee will be entitled for deduction u/sec.80IA, only if it undertakes either Development work or Operation & maintenance works or both in respect of a Project. On perusal of the works executed by the assessee, the Assessi....
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...., the Assessing Officer again asked the assessee to show cause as to why the projects awarded JVs should not be disallowed u/sec.80IA of the Act. In response to the said show cause notice, the assessee furnished it's submissions. After examining the submissions of the assessee, the Assessing Officer noted that in all the Projects where agreements were entered with Government authorities by Joint Ventures, it is seen that the assessee is a constituent of Joint Ventures but not a SPV specifically formed for this purpose and the works were carried out by the assessee in proportion to its share as per the Joint Venture Agreement. However, as per the provisions of sec.80IA of the Act only an enterprise which enters into an Agreement with the Government/Statutory body is eligible for deduction u/s.80IA. Hence, the Assessing Officer treated the J. V. Projects i.e., from S.No.16 to 32 noted in the assessment order 37 and 38 involving a sum of Rs. 30,16,78,531/- out of the total claim of Rs. 79,25,89,837/- are not entitled for deduction u/sec.80IA of the Act since the Department has filed an appeal before the Hon'ble High Court on identical issue which is pending for adjudication. The Asses....
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....d JVs should not be disallowed u/sec.80IA of the Act. In response to the said show cause notice, the assessee furnished it's submissions. After examining the submissions of the assessee, the Assessing Officer noted that in all the Projects where agreements were entered with Government or Statutory Body by Joint Venture Consortium, it is seen that the assessee is a constituent of Joint Venture Consortium, but not a SPV specifically formed for this purpose and the works were carried out by the assessee in proportion to its share as per the Joint Venture Agreement. However, as per the provisions of sec.80IA of the Act only an enterprise which enters into an Agreement with the Government or Statutory Body is eligible for deduction u/s.80IA. Hence, the Assessing Officer treated the J. V. Projects i.e., from S.No.16 to 40 noted in the assessment order at pages 38 and 39 involving a sum of Rs. 42,56,24,216/- out of the total claim of Rs. 85,61,17,707/- are not entitled for deduction u/sec.80IA of the Act since the Department has filed an appeal before the Hon'ble High Court Andhra Pradesh in the case of Transtroy India Limited on identical issue which is pending for adjudication. The Asse....
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....laimed by it's constituent member i.e., the assessee in the present appeal as JV Member. Therefore, the Assessing Officer again asked the assessee to show cause as to why the projects awarded JVs should not be disallowed u/sec.80IA of the Act. In response to the said show cause notice, the assessee furnished it's submissions. After examining the submissions of the assessee, the Assessing Officer noted that in all the Projects where agreements were entered with Government or Statutory Body by Joint Venture Consortium, it is seen that the assessee is a constituent of Joint Venture Consortium, but not a SPV specifically formed for this purpose and the works were carried out by the assessee in proportion to its share as per the Joint Venture Agreement. However, as per the provisions of sec.80IA of the Act only an enterprise which enters into an Agreement with the Government or Statutory Body is eligible for deduction u/s.80IA. Hence, the Assessing Officer treated the J. V. Projects i.e., from S.No.16 to 35 noted in the assessment order at pages 32 and 33 involving a sum of Rs. 157,96,36,447/- out of the total claim of Rs. 195,36,03,522/- are not entitled for deduction u/sec.80IA of the....
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....and Local Authorities is eligible for deduction u/sec.80IA of the Act. Whereas in case of JV/Consortium, the agreement was entered into by JV and the deduction u/sec.80IA was claimed by it's constituent member i.e., the assessee in the present appeal as JV Member. Therefore, the Assessing Officer again asked the assessee to show cause as to why the projects awarded JVs should not be disallowed u/sec.80IA of the Act. In response to the said show cause notice, the assessee furnished it's submissions. After examining the submissions of the assessee, the Assessing Officer noted that in all the Projects where agreements were entered with Central/State Governments and Local Authorities by Joint Venture Consortium, it is seen that the assessee is a constituent of Joint Venture Consortium, but not a SPV specifically formed for this purpose and the works were carried out by the assessee in proportion to its share as per the Joint Venture Agreement. However, as per the provisions of sec.80IA of the Act only an enterprise which enters into an Agreement with the Central/State Governments and Local Authorities is eligible for deduction u/s.80IA. Hence, the Assessing Officer treated the J. V. Pr....
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....sidering the submissions of the assessee-company in respect of disallowance of claim made by it u/sec.80IA of the Act and the judicial precedents thereto, the learned CIT(A) allowed the relief to the assessee by holding that the assessee is entitled for claiming deduction u/sec.80IA(4) of the Act even in the return of income filed in response to notice u/sec.153A of the Act if the profits on which the deduction claimed is otherwise entitled for deduction u/sec.80IA(4) of the Act. The learned CIT(A) while allowing the claim of assessee followed decision of the Coordinate Bench of Visakhapatnam Tribunal in the case of Transstroy (India) Ltd., vs. ITO, Ward-2(2), Guntur [2011] 16 taxmann.com 24 (Visakhapatnam); M/s. KNR Constructions Ltd., Hyderabad ITA.No. 946/Hyd./2015; decision of ITAT, Agra Bench, Agra in the case of PNC Construction Co. Ltd., vs. DCIT [2013] 44 ITD 577 (Agra-Tribu.) and on the Revenue's appeal against the Order of ITAT, Agra Bench, Agra in the case of CIT vs. PNC Construction Co. Ltd., [2015] 55 taxmann.com 21 (Allahabad-HC) dismissed the appeal of the Revenue by holding that assessee would be entitled to deduction u/sec.80IA even if project was not awarded solel....
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....ned CIT(A) noted that the assessee entered into direct agreement with Government/Statutory Body through it's J V Consortium and also projects on which agreement was entered into by the J V to execute the work through the Member of the JV. The learned CIT(A)-3, Hyderabad accordingly passed his order dated 29.07.2019 u/sec.143(3) of the Income Tax Act, 1961. 5. Aggrieved by the orders of the learned CIT(A), the Revenue carried in appeals before the Tribunal and has raised the following grounds and additional grounds in it's "lead" appeal ITA.No. 1721/Hyd/2017 for the assessment year 2013-2014 as under : i. "Although the Id. CIT(A) has confirmed the disallowance of deduction u/s 80IA(4) in terms of provision of section 80AC, the Id CIT(A) has erred in law in giving her finding that deduction not claimed in original return u/s 139(1) cannot be denied if claimed pursuant to notice u/s 153A. ii. Whether on the facts and circumstances of the case, and in law, the Id. CIT(A) erred in holding that the assessee is eligible for deduction u/s 80IA which was made first time in the return filed u/s 153A without appreciating the fact that the provisions of section 153A could ....
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....A(4) is applicable to constituent of the JV/Consortia without appreciating that the assessee has not entered into an agreement with the Central Government or a State Government or a Local Authority or any other Statutory Body. 3. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating that the assessee herein is not a developer but merely a contractor in respect of the profit related to JVs. 4. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) ought to have confirmed the disallowance of entire deduction claimed U/s 80IA(4) Rs. 79,25,89,837/- which is related to profit attributable to works carried out by JVs and should not have restricted the same only to the extent double deduction claimed in the hands, JVs Rs. 2,07,650/- as well as that of the assessee. 5. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating that the facts of the case are not in conformity with clarificatory amendment to Section 80IA of IT Act Explanation 2 to Section 80IA vide Finance Act 2007) which was introduced to unambiguously explain that only those en....
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.... therefore, submitted that order of the learned CIT(A) should be set-aside and the additions made by the Assessing Officer in all these impugned assessment years should be sustained. 7. Learned Counsel for the Assessee, on the other hand, submitted that assessment for the A.Y. 2013-2014 is "abated" as on the date of search which is evident from the notice issued u/sec.143(2) of the Act dated 02.09.2014 which is before the date of search i.e., dated 18.12.2014 in the present case. Once the proceedings are initiated by issuing notice under section 143(2) of the Act, before the date of search, then, as per the proviso to section 153A, the assessment shall "abate" and the Assessing Officer shall have power to "assess or re-assess the total income including undisclosed income, if any, found as the result of search". Therefore, once assessment is abated, it is open for the assessee to make any claim of exemption/deduction in the return of income filed, in response to notice u/sec.153A of the Act. In this regard, he relied upon the decision of ITAT Hyderabad Special Bench in the case of DCIT vs., SEW Infrastructure Ltd., [2024] 167 taxmann.com 446 [Hyderabad-Trib.] [SB]. The Learned Co....
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....ion under Section 80IA(4) of the Act in the return of income filed under Section 139(1) of the Income Tax Act, 1961, for all five assessment years. Further, the appellant has made a claim for deduction under Section 80IA(4) of the Act, for the first time, in the return of income filed in response to the notice issued under Section 153A of the Act, in pursuant to search and seizure operation conducted under Section 132 of the Income Tax Act, 1961. Therefore, to answer the questions referred to, this Special Bench, it is necessary to understand the provisions of Section 132 and the consequent procedure of assessment under Section 153A of the Act etc. 18. The provisions relating to assessment in the case of a search under Section 153A, etc., were inserted by the Finance Act 2003, effective from 01-06-2003. These provisions are successor to the special procedure for the assessment of search cases under Chapter XIVB, starting with the provisions of Section 158B of the Income Tax Act, 1961. The special procedure for the assessment of search cases under Chapter XIVB required the assessment of undisclosed income as a result of search, which has been defined in Section 158B(b) of t....
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.... the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub- section, the expre....
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....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. The AO shall further assess or reassess the 'total income' of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted, or requisition is made. Further, as per the second proviso to Section 153A, assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of such search under Section 132 or making of a requisition under Section 132A, as the case may be, shall abate. The scope and effect of insertion of the new Section 153A of the Act by the Finance Act, 2003 has been explained by the CBDT in the Department's Circular No. 7 of 2003, dated 5-9-2003, reported in (2003) 184 CTR (ST) 33. On a combined reading of the provisions of Section 153A of the Act coupled with Circular No.7 of 2003, it is undisputedly clear that when a search is initiated under Section 132 of the Act, the AO shall issue a notice to such person for six assessment years and ass....
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....aterial unearthed during the course of the search. 20. The provisions of Section 153A, relating to the procedure of assessment in pursuant to search conducted under Section 132 of the Act, have been examined by various courts, including the Hon'ble Supreme Court, in many cases. Although few High Courts have taken a contrary view on the issue, but the majority of the High Courts have taken a consistent view on the issue and held that insofar as pending assessments are concerned, the jurisdiction to make original assessment and the assessment under Section 153A merges into one and only one assessment for each assessment year shall be made and insofar as non-abated assessments, the assessment shall be made on the basis of incriminating material unearthed during the course of the search. One leading case on this issue is from the Hon'ble High Court of Delhi in the case of Kabul Chawla Vs. CIT reported in [2015] 61 Taxmann.com 412, wherein it has been categorically held that in respect of non-abated assessments, the AO shall assume jurisdiction and the assessment shall be made based on incriminating material unearthed during the course of the search, and in case, there ....
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....respect of assessments pursuant to search action under Section 132 of the Act, now let us come back whether the assessee is entitled to make a fresh claim under Chapter VI-A, which has not been claimed in the original return of income under Section 139(1). It is seen that the Department resists any new or subsequent claim in the return filed under Section 153A of the Act, primarily on the plea that such assessments are for the benefit of the Revenue rather than the assessee. The predominant view of the Department in this regard is the return filed under Section 153A of the Act is a consequence of search action taken under Section 132 on the assessee and, thus, cannot be for the benefit of the assessee and moreover, the proceedings under Section 153A are analogous to proceedings under Section 147 of the Act to the extent that these proceedings are for the benefit of the revenue and not for the assessee. The submission on behalf of the Revenue is that the assessee cannot be permitted to use reassessment proceedings as appeal or revision in disguise and seek relief in respect of items not claimed in the original return of income. The revenue has also taken support from various judicia....
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....nd thus, same cannot be construed as the original return filed under Section 139(1) of the Act for the purpose of deductions/exemptions. 22. Per contra, the primary contention of the appellant to substantiate the fresh claim is that Section 153A mandates the AO to assess or reassess the total income of six assessment years falling within six assessment years immediately preceding the assessment year, in which such search is conducted under Section 132 and further, as per second Proviso, all pending assessments on the date of initiation of search would stand abated and return of income filed by the person concerned for six assessment years in terms of Section 153A(1)(a) would be construed to be a return of income filed under Section 139(1) of the Act. Therefore, in view of the second Proviso to Section 153A of the Act, once the assessment got abated, it means that it is open for both parties, i.e., for the assessee as well as the revenue to make claims for allowances or deductions. The appellant further contended that the reliance placed by the AO on the case of CIT Vs. Sun Engineering Works (P) Ltd is misplaced, because the said decision was rendered in the context of reas....
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....on'ble High Court of Rajasthan in the case of Jai Steel (India) Vs. ACIT had considered an identical question of law in light of search conducted u/s 132 of the Act and the fresh claim made by an assessee for the first time in the return filed u/s 153A of the Act and after considering the relevant facts and also by analyzing various case laws, including the decision of Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar Bhatia reported in (2012) 211 Taxmann.com 453 (supra), which is in favour of the revenue held that it is not open for the assessee to seek deductions or claim expenses which have not been claimed in the original return for which assessment has already been completed only because assessment u/s 153A in pursuance of search or requisition is required to be made. Even otherwise, if we go by plain reading of provisions of Section 153A, it is analogous to erstwhile provisions of Section 158B(1) of the Act. From the above provisions, it is undisputedly clear that the purpose of assessment in relation to search cases is to assess undisclosed income, if any, on the basis of incriminating material found as a result of the search, but not to disturb the complete....
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....led u/s 153A of the Act takes the place of the original return. In such cases, the return of income filed u/s 153A(1) of the Act, would be construed to be one filed u/s 139(1) of the Act and the provisions of the Act, shall apply to the same and accordingly, all legitimate claims would be open to the assessee to raise in the return of income filed u/s 153A)(1) of the Act. Therefore, the argument advanced by the learned counsel for the assessee in light of judicial precedents, including the decision of the Hon'ble Supreme Court in the case of V.D.M.Rm.M.Rm. Muthaiah Chettiar Vs. CIT fails. 25. Further, in our considered view, the requirement of assessment or reassessment under the provisions of Section 153A has to be read in the context of Section 132 or Section 132A of the Act, inasmuch as, in case if no incriminating material is found as a result of the search or requisition, the question of reassessment of the concluded assessment does not arise, which would require mere reiteration and it is only in the context of the abated assessment under the second proviso, which is required to be assessed. The underlying purpose of making the 'total income', under Section 153A ....
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....der Section 153A of the Act. From the observation of the Hon'ble Supreme Court in Para 8, it is clear that it has approved the ratio laid down by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of PCIT Vs. Saumya Constructions reported in (2016) 387 ITR 529 (Guj) and the Hon'ble High Court of Rajasthan has followed or considered the ratio of these two cases while deciding the issue in the case of Jai Steel (India) Vs. ACIT (supra). Therefore, in our considered view, once the matter has been finally concluded by the Hon'ble Apex Court and held that in unabated or concluded assessment, the AO cannot make any additions in the absence of any incriminating material found as a result of the search, in our considered view, particularly in the case of unabated or concluded assessments, and since the AO cannot tinker with unabated or concluded assessments in the absence of any incriminating material, with equal force, the same ratio should be applicable to the assessee as well. Thus, based on the findings of the Hon'ble Apex Court, in our considered view, the appellant also cannot make any fresh claim of deduction or expenditure for the fi....
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....me. However, the second proviso to Section 153 A of the said act makes it clear that assessment relating to any assessment year filed within a period of the six assessment years pending on the date of search under Section 132 of the Act shall abate. Thus if on the date of initiation of search under Section 132, any assessment proceeding relating to any assessment year falling within the period of the said six assessment years is pending, the same shall stand abated and the Assessing Authority cannot proceed with such pending assessment after initiation of search under section 132 of the said Act. 13. In the present case, search was conducted on the assessee on 30.11.2010. At that point of time assessment in the case of assessee for the assessment year 2008-09 was pending scrutiny since notice under Section 143(2) of the Act was issued and assessment was not completed. Therefore, in view of the second proviso to Section 153A of the said Act, once assessment got abated, it meant that it was open for both the parties, i.e. the assessee as well as revenue to make claims for allowance or to make disallowance, as the case may be, etc. That apart, assessee could lodge a new claim....
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....nsequence of notice under Section 153A(1) of the Act is that assessee is required to furnish fresh return of income for each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessment by the Revenue for the first time in the case of abated assessment proceedings. Consequent to notice under Section 153A of the Act, the earlier return filed for the purpose of assessment which is pending would be treated as non est in law. Further, Section 153A(1) of the Act itself provides on filing of the return consequent to notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the respondent-assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore the provisions of the Act which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act would also continue to apply in case of return filed under Section 153A of the Act and the case laws on the pro....
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....aid provision only deals with assessment or reassessment of income escaping assessment, which is very clear from the use of the words "and also any other income chargeable to tax ..." in Section 147 and Explanation 3 thereto, as it stood prior to substitution vide Finance Act 2021". On the contrary, Section 153A deals with the assessment or reassessment of 'total income', as against assessment or re- assessment of such income i.e., income escaping assessment u/s 147 of the Act, and therefore, the Revenue cannot rely upon the decision of Hon'ble Apex Court to deny fresh claim of deduction under Section 80IA(4) of the Act. In our considered view, the argument of the learned counsel for the assessee in light of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works (P) Ltd. (supra) are fallacious for the simple reason that the provisions of Section 147 are analogous to provisions of Section 153A of the Act. Section 147 deals with income escaping assessment, and as per the said provisions, if any income chargeable to tax in case of an assessee has escaped assessment for any assessment year, the AO shall assess or reassess such income for such ass....
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...., 1961. The learned counsel for the assessee vehemently argued that, once return is filed in response to notice under Section 153A of the Act, as per provisions of Section 153A(1)(a), such return should be considered as return filed under Section 139 of the Act, 1961, and further, it is treated as if, the appellant has satisfied all the conditions prescribed under Section 80A(5) and Section 80AC of the Act, 1961. We do not subscribe to the arguments advanced by the learned counsel for the assessee for the simple reason that, the provisions of Section 80AC are very clear, inasmuch as deduction shall not be allowed to any assessee, unless he furnishes return of income for such assessment year on or before the due date specified under Section 139(1) of the Act. Similarly, Section 80A(5), in clear terms, states that when the assessee fails to make a claim in the return of income for any deduction under the heading "C- Deductions in respect of certain incomes," no deduction shall be allowed to him thereunder. A combined reading of Section 80A(5) and Section 80AC makes it very clear that, in order to make any claim including deduction under Section 80IA(4) of the Act, the assessee must f....
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.... the case of PCIT Vs. Wipro Ltd (supra) has also considered the interpretation of provisions of Section 10B of the Act and held that such an option should be exercised before the due date under Section 139(1) by way of filing a declaration. Although the said decision was in the context of withdrawal of exemption under Section 10B of the Act, in our considered view, when it comes to the interpretation of exemption and deduction provisions, the said provisions should be strictly interpreted so as to achieve the larger intent of the Legislature. Therefore, we are of the considered view that the arguments of the learned counsel for the assessee that when the appellant filed its return of income in response to a notice under Section 153A of the Act, it partakes the nature of the return filed under Section 139 of the Act and thus, all the conditions prescribed under Section 80A(5) and Section 80AC are satisfied is contrary to law and devoid of merit and cannot be accepted. 32. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that the assessee cannot make a fresh claim of deduction under Chapter VI-A of the Income T....
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...."abated" as on the date of search i.e., 18.12.2014 because the Assessing Officer has issued notice u/sec.143(2) of the Act for having considered the case for scrutiny on 02.09.2014 before the date of search and, therefore, in our considered view, the assessment is "abated' and as per first proviso to sec.153A of the Act once assessment is abated, the Assessing Officer has power to "assess or re-assess the total income including undisclosed income, if any, found as the result of search." Similarly, by following the same analogy the assessee is also entitled to make fresh claim of any deduction/exemption in the return of income filed in response to notice u/sec.153A of the Act, consequent to search u/sec.132 of the Act and this principle is fully supported by the decision of ITAT Special Bench in the case of DCIT vs. SEW Infrastructure Ltd., (supra). Therefore, we are of the considered view that the claim made by the assessee for deduction u/sec.80IA(4) of the Act in the return of income filed in response to notice issued u/sec.153A of the Act is in accordance with law and further supported by the decision of ITAT, Special Bench in the case of DCIT vs. SEW Infrastructure Ltd., (supra....
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....e denied. 8.4. We have given our thoughtful consideration to the reasons given by the Assessing Officer to deny deduction claimed u/sec.80IA(4) of the Act, in light of arguments advanced by the Learned Counsel for the Assessee and we ourselves do not subscribe to the reasons given by the Assessing Officer for the simple reason that, once the projects developed by the assessee are infrastructure projects as defined u/sec.80IA(4) of the Act and the assessee has developed the projects, in our considered view, merely for the reason of not entering into direct agreement with Central/State Governments, Local Authority or Statutory Body etc., the deduction towards profits from eligible project cannot be denied. Further the benefit of deduction provided u/sec.80IA(4) of the Act is a "project specific" but not "assessee specific". If we go by the plain reading of the provisions of Sec.80IA(4) of the Act, it is very clear that any enterprise carrying in the business of development or operating and maintaining or developing operating and maintaining any infrastructure facility which fulfils certain conditions, such an "eligible assessee" is entitled to claim deduction u/sec.80IA(4) of the ....
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....a constituent of JV/Consortium Member, the Tribunal after considering relevant facts and various judicial precedents allowed the deduction claimed by the assessee towards profits derived from "eligible projects" u/sec.80IA(4) of the Act. The relevant findings of the Tribunal are as under : "10. We have heard both parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the appellant has executed several development projects as enumerated in the assessment order and among the works, some projects were directly awarded to the appellant as main developer / builder, while some projects were awarded to the JVs/Consortium, but executed by assessee company, as constituent partner of the said JV in proportion to their share. It is also not in dispute that the appellant has satisfied all the conditions except clause (b) of Section 80IA(4), as noted by the Assessing Officer. In other words, the AO accepted the fact that the projects executed by the appellant, including those projects which were awarded to JVs/ Consortiums, but executed by the assessee are infrastructure projects, as defined under S....
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....cope of works, but for no other purposes. We further noted that the JV / Consortia agreement between members clearly specify the scope of undertaking, its exclusivity, role and responsibility of the JV partners and risk to be undertaken by each of the JV partners. Further, immediately after JV / Consortium, the same has been informed to relevant authorities and also the plan of action has been submitted to the principles for execution of development projects. Further, in few cases, the appellant, being the constituent partner of the JV has directly submitted bills to the authorities and the principles has directly paid to appellant, instead of JV / Consortia, after deducting the TDS applicable as per law in the name of the appellant. From the above, it is undisputedly clear that although the JV/Consortium is a separate entity for the purpose of assessment, but all other activities, including designing, development, and maintenance of the project are undertaken by the assessee. Therefore, we are of the considered view that once the assessee, being a constituent partner of the JV/Consortium, has executed the project and also undertaken relevant risks, including financial risks, the a....
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....e eligible to claim deduction u/s 80IA. For the sake of clarity, we reproduce the findings of the Bench in the said case, as under: "Undisputedly the joint venture or the consortium was formed only to obtain the contract from the Government bodies. At the time of execution of the joint venture or the consortium, it has been made clear that work/project awarded to the joint venture would be executed by the joint venturers or the constituents. As per mutually agreed terms and conditions between them, it was also agreed that each party shall be responsible for the provisions of contract without limitation on resources required for the purpose of fulfilment of the scope and also solely responsible for the performance of its scope of work and shall bear all technical, commercial and facing risk involved in performing its scope of work. It was also agreed that none of the party shall assign its rights and obligations to any other party without written consent of other party. From a careful perusal of this joint venture agreement and the consortium agreement, it is evidently clear that the joint venture and the consortium was formed only with an object to bid contract. Once the p....
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....y have also not offered any income out of the work executed by its constituents, nor did they claim any deductions under s. 80IA(4). Therefore, in all practical purposes, the contract was awarded to the constituents of the joint venturers through joint venture and the work was executed by them. As per provisions of s. 80IA(4), the benefit of deduction under this section is to be given only to the enterprise who carried on the classified business. Therefore, in the light of this legal proposition, the assessee is entitled for the deductions under s. 80IA(4) on the profit earned from the execution of the work awarded to JV and consortium." Respectfully following the above decision, we dismiss the ground raised by the revenue in this regard." 12. A similar view has been taken by ITAT, Lucknow Bench in the case of PMC Constructions Co. P. Ltd Vs. DCIT (supra), wherein it has been held that the appellant is eligible for deduction under Section 80IA(4) in respect of the profits derived from the projects awarded to JV / Consortium but executed by the appellant. The decision of the ITAT Lucknow Bench has been upheld by the Hon'ble Allahabad High Court. The sum and substan....
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....by this 5- Judge Bench. It is well settled that a decision is only an authority for what it decides and not what it matters logically follow from it. This being the case, it is obvious that the beneficial purpose of exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of those cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand should be eschewed. Going by the subsequent decision of the Hon'ble Supreme Court in the above case, it is undisputedly clear that exemption provisions should be interpreted liberally in order to achieve the objectives of the legislature and going by the above ratio, in our considered view, there is no dispute with regard to the fact in the present case, the appellant is engaged in the business of developing infrastructure project like irrigation project, water supply system, hydropower plants and roads and railway lines and the statute provides for specific exemption under section 80IA(4) of the Act in respect of infrastructure projects, i....